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LOAN AND SERVICING AGREEMENT
dated as of April 30, 2009
among
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.,
as Borrower
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
THE COMMERCIAL PAPER CONDUITS FROM TIME TO TIME
PARTY HERETO AS CONDUIT LENDERS,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS COMMITTED LENDERS,
THE FINANCIAL INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ADMINISTRATIVE AGENTS,
JPMORGAN CHASE BANK, N.A.
and
CITICORP NORTH AMERICA, INC.,
as Syndication Agents
and
JPMORGAN CHASE BANK, N.A.,
as Program Agent
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J.P. MORGAN SECURITIES INC.
and
CITICORP NORTH AMERICA, INC.,
as Co-Lead Arrangers
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................1
SECTION 1.01. Certain Defined Terms..................................1
SECTION 1.02. Other Terms and Constructions.........................31
SECTION 1.03. Computation of Time Periods...........................31
ARTICLE II AMOUNTS AND TERMS OF THE LOANS.....................................31
SECTION 2.01. The Loan Facility.....................................31
SECTION 2.02. Making the Advance....................................32
SECTION 2.03. Reduction in the Aggregate Commitment.................35
SECTION 2.04. Tranches..............................................35
SECTION 2.05. Interest and Fees; Hedging............................36
SECTION 2.06. Maturity Date.........................................37
SECTION 2.07. Evidence of Debt......................................37
SECTION 2.08. Settlement Procedures.................................38
SECTION 2.09. Removal of Defaulted Contracts........................41
SECTION 2.10. Payments and Computations, Etc........................42
SECTION 2.11. Interest Protection...................................42
SECTION 2.12. Accounting Based Consolidation Event..................43
SECTION 2.13. Increased Capital.....................................43
SECTION 2.14. Funding Losses........................................44
SECTION 2.15. Taxes 44
SECTION 2.16. Security Interest.....................................45
SECTION 2.17. Take-Out Securitizations..............................48
SECTION 2.18. Defaulting Lenders....................................48
SECTION 2.19. Mitigation of Obligations; Replacement of
Lender Groups.........................................49
ARTICLE III CONDITIONS PRECEDENT..............................................50
SECTION 3.01. Conditions Precedent to Effectiveness of the Agreement
and the Initial Advance...............................50
SECTION 3.02. Conditions Precedent to each Advance Subsequent to the
Initial Advance.......................................50
SECTION 3.03. Conditions Precedent to Each Advance..................51
ARTICLE IV REPRESENTATIONS AND WARRANTIES.....................................52
SECTION 4.01. Representations and Warranties of the Borrower........52
SECTION 4.02. Representations and Warranties of the Servicer........57
SECTION 4.03. Financial Institution Representations and Warranties..61
ARTICLE V GENERAL COVENANTS...................................................61
SECTION 5.01. Affirmative Covenants of the Borrower.................61
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SECTION 5.02. Negative Covenants of the Borrower....................67
SECTION 5.03. Affirmative Covenants of the Servicer.................69
SECTION 5.04. Negative Covenants of the Servicer....................73
ARTICLE VI ADMINISTRATION OF CONTRACTS........................................74
SECTION 6.01. Designation of the Servicer...........................74
SECTION 6.02. Duties of the Servicer................................75
SECTION 6.03. Servicer Advances.....................................77
SECTION 6.04. Responsibilities of the Borrower......................77
SECTION 6.05. Further Action Evidencing Program Agent's Interest....77
SECTION 6.06. Collections...........................................78
SECTION 6.07. Reports...............................................78
SECTION 6.08. Servicer Fees.........................................78
ARTICLE VII EVENTS OF TERMINATION.............................................79
SECTION 7.01. Events of Termination.................................79
SECTION 7.02. Remedies..............................................80
SECTION 7.03. Additional Remedies of the Lenders....................82
ARTICLE VIII INDEMNIFICATION..................................................82
SECTION 8.01. Indemnities by the Borrower...........................82
SECTION 8.02. Indemnities by the Servicer...........................85
SECTION 8.03. Other Costs and Expenses..............................86
ARTICLE IX THE AGENTS.........................................................86
SECTION 9.01. Authorization and Action..............................86
SECTION 9.02. Agents' Reliance, Etc.................................87
SECTION 9.03. Agents and Affiliates.................................87
SECTION 9.04. Lender's Loan Decision................................88
SECTION 9.05. Delegation of Duties..................................88
SECTION 9.06. Indemnification.......................................88
SECTION 9.07. Successor Agents......................................88
ARTICLE X MISCELLANEOUS.......................................................89
SECTION 10.01. Amendments, Etc......................................89
SECTION 10.02. Notices, Etc.........................................91
SECTION 10.03. Assignability........................................91
SECTION 10.04. Additional Lender Groups.............................93
SECTION 10.05. Consent to Jurisdiction..............................93
SECTION 10.06. WAIVER OF JURY TRIAL.................................94
SECTION 10.07. Right of Setoff......................................94
SECTION 10.08. Ratable Payments.....................................94
SECTION 10.09. Limitation of Liability..............................94
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SECTION 10.10. Taxes................................................95
SECTION 10.11. No Proceedings.......................................96
SECTION 10.12. Confidentiality......................................96
SECTION 10.13. No Waiver; Remedies..................................97
SECTION 10.14. GOVERNING LAW........................................97
SECTION 10.15. Execution in Counterparts............................97
SECTION 10.16. Integration; Binding Effect; Survival of Termination.97
SECTION 10.17. Headings.............................................98
SECTION 10.18. Existing Credit Agreement............................98
SECTION 10.19. Third Party Beneficiaries............................98
EXHIBITS AND SCHEDULES
[Certain exhibits omitted as not material or separately filed]
EXHIBIT A Form of Borrowing Notice
EXHIBIT B-1 Form of Rated Note
EXHIBIT B-2 Form of Unrated Note
EXHIBIT C Form of Monthly Report
EXHIBIT D List of Offices of Borrower where Records are Kept
EXHIBIT E List of Closing Documents
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Joinder Agreement
EXHIBIT H Form of Custodial Agreement
EXHIBIT I HDI Credit Agreements
SCHEDULE I Lender Groups
SCHEDULE II Notice Addresses
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LOAN AND SERVICING AGREEMENT
This LOAN AND SERVICING AGREEMENT dated as of April 30, 2009
is among HARLEY-DAVIDSON WAREHOUSE FUNDING CORP., a Nevada corporation (the
"Borrower"), HARLEY-DAVIDSON CREDIT CORP., a Nevada corporation ("HDCC" and as
initial servicer, together with its successors and permitted assigns, the
"Servicer"), CERTAIN FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO AS
CONDUIT LENDERS, CERTAIN FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO
AS COMMITTED LENDERS, CERTAIN FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY
HERETO AS ADMINISTRATIVE AGENTS, JPMORGAN CHASE BANK, N.A. ("JPMorgan") as the
Program Agent and JPMORGAN and CITICORP NORTH AMERICA, INC. ("CNAI") as the
Syndication Agents. Capitalized terms used herein shall have the meanings
specified in Section 1.01.
PRELIMINARY STATEMENTS
WHEREAS, the Borrower from time to time shall purchase
Contracts from HDCC pursuant to the Receivables Sale Agreement;
WHEREAS, to fund its purchases under the Receivables Sale
Agreement, the Borrower has requested Loans, on a revolving basis, from the
Lenders on the terms and conditions of this Agreement and shall pledge to the
Lenders the assets and interests in property acquired by it under the
Receivables Sale Agreement as collateral security therefor;
WHEREAS, the Conduit Lenders may, in their sole discretion,
make the Loans so requested, and if a Conduit Lender in any Lender Group elects
not to make any such Loan, the Committed Lenders in such Lender Group have
agreed that they shall make such Loan, in each case subject to the terms and
conditions of this Agreement;
NOW THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each party agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Adjusted LIBO Rate" means, for any Tranche Period, an
interest rate per annum obtained by dividing (i) the LIBO Rate for such Tranche
Period by (ii) a percentage equal to 100% minus the LIBO Rate Reserve Percentage
for such Tranche Period.
"Adjusted Pool Balance" means, as of any date, an amount equal
to (i) the Outstanding Eligible Balance as of such date minus (ii) the Yield
Supplement Overcollateralization Amount.
"Administrative Agent" means, as to any Conduit Lender or
Committed Lender, the Person listed on Schedule I as the "Administrative Agent"
for such Lender, or in any Assignment and Acceptance or Joinder Agreement as an
"Administrative Agent", together with its respective successors and permitted
assigns.
"Advance" means a borrowing made hereunder on any Borrowing
Date in accordance with Article II and consisting of the aggregate amount of the
several Loans made by the Lenders to the Borrower on such Borrowing Date.
"Adverse Claim" means any lien (statutory or other), mortgage,
security interest, pledge, hypothecation, assignment for security, encumbrance
or other pledge and security agreement of any kind or nature whatsoever, whether
then in effect or capable of arising upon the occurrence of any specified events
or conditions, and including any UCC financing statement filed or other
perfection measure taken in respect of any asset or interest in property.
"Affected Party" means any Lender, the Program Agent, any
Administrative Agent, any Liquidity Provider, any insurance company, bank or
other funding entity providing liquidity, credit enhancement or back-up purchase
support or facilities to any Conduit Lender, any agent, administrator or manager
of a Conduit Lender, and, with respect to each of the foregoing, the parent
company that directly or indirectly controls such Person.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or is under
common control with such specified Person. A Person shall be deemed to control
another Person if the controlling Person owns, directly or indirectly, 5% or
more of any class of voting securities (or other voting interests) of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of stock or otherwise. None of the Program Agent, any
Administrative Agent or any Lender shall be deemed to be an Affiliate of the
Borrower or HDCC.
"Aggregate Commitment" means, at any time, the aggregate
amount of the Commitments at such time, as adjusted as necessary to give effect
to any Joinder Agreement, and as such amount may be reduced pursuant to Section
2.03 hereof; provided, however, that at all times on and after the Termination
Date, the Aggregate Commitment shall mean the Aggregate Principal Balance. As of
the Effective Date, the Aggregate Commitment is $1,200,000,000.
"Aggregate Principal Balance" means, at any time, the
aggregate outstanding principal balance of the Loans hereunder at such time.
"Agreement" means this Loan and Servicing Agreement, as
amended, restated, supplemented or otherwise modified from time to time.
"Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time in the United States,
applied in a manner consistent with that used by HDI in its preparation of its
audited financial statements for the year ended December 31, 2008 (except for
changes to such application as are concurred on by HDI's independent public
accountants); provided that, if HDI notifies the Global Administrative Agent
(under and as defined in the HDI Credit Agreement) that HDI wishes to amend the
terms set
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forth in clauses (h), (i), (j) and (k) of the definition of "Servicer
Termination Event" herein (as they are used in the HDI Credit Agreement) to
eliminate the effect of any change in Agreement Accounting Principles on the
operation of such Servicer Termination Events (or if the Global Administrative
Agent notifies HDI that the Required Lenders (under and as defined in the HDI
Credit Agreement) wish to amend such clauses for such purpose), then HDI's
compliance with such clauses shall be determined on the basis of Agreement
Accounting Principles in effect immediately before the relevant change in
Agreement Accounting Principles became effective, until either such notice is
withdrawn or such clauses are amended in a manner satisfactory to HDI and the
Required Lenders (under and as defined in the HDI Credit Agreement).
"Alternative Rate" means, for any Tranche during any Tranche
Period, an interest rate per annum equal to the sum of the Applicable Margin
plus the Adjusted LIBO Rate for such Tranche Period; provided, however, that in
case of:
(a) any Tranche Period with respect to which the Adjusted
LIBO Rate is not available pursuant to Section 2.04,
(b) any Tranche Period of less than one month in respect
of which the Syndication Agents have not agreed to allow Interest to accrue at
the Adjusted LIBO Rate,
(c) any Tranche Period as to which an Administrative
Agent does not receive a request, by no later than 1:00 P.M. (New York City
time) on the second Business Day preceding the first day of such Tranche Period,
that the related Tranche be funded at the Adjusted LIBO Rate, or
(d) any Tranche Period for a Tranche, the Principal Balance of
which is less than $500,000,
the Alternative Rate for such Tranche Period for the affected Lender(s) shall be
an interest rate per annum equal to the Base Rate plus the Applicable Margin in
effect from time to time during such Tranche Period.
"Applicable Margin" has the meaning set forth in the Fee
Letter.
"Asset Purchase Agreement" means any asset purchase agreement,
liquidity loan agreement or other agreement pursuant to which a Conduit Lender
may from time to time assign part or all of the Loans made by such Conduit
Lender to a Liquidity Provider, or incur indebtedness to a Liquidity Provider
and pledge part or all of the Loans made by such Conduit Lender as collateral
security to such Liquidity Provider, as such agreement may be amended, restated,
supplemented or otherwise modified from time to time.
"Assignment and Acceptance" means an agreement substantially
in the form set forth as Exhibit E hereto.
"Audit" has the meaning set forth in Section 5.01(d).
"Authorized Officer" means, with respect to any Person, its
president, vice president, secretary corporate controller, treasurer, assistant
treasurer or chief financial officer.
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"Bankruptcy Code" means Title 11 of the United States Code, 11
U.S.C. Section 101 et seq., as amended from time to time, or any successor
thereto.
"Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall at any time, in respect
of any Lender Group, be determined by the Administrative Agent of such Lender
Group to be equal to the highest of: (i) the Prime Rate, (ii) the Federal Funds
Rate plus 0.50%, and (iii) the Adjusted LIBO Rate for a Tranche Period of one
month plus 1.00%.
"Base Rate Tranche" means a Tranche for which Interest is
computed by reference to the Base Rate.
"Borrower" means Harley-Davidson Warehouse Funding Corp., a
Nevada corporation, in its capacity as the borrower hereunder, together with its
successors and permitted assigns.
"Borrower Obligations" means all present and future
indebtedness and other liabilities and obligations (howsoever created or
evidenced, whether direct or indirect, absolute or contingent, or due or to
become due) of the Borrower to the Secured Parties arising under this Agreement
or any other Facility Document or the transactions contemplated hereby or
thereby, and shall include, without limitation, the repayment of the Aggregate
Principal Balance and the payment of Interest, principal, Fees and all other
amounts due or to become due from the Borrower to the Secured Parties under the
Facility Documents (whether in respect of fees, expenses, indemnifications,
breakage costs, increased costs or otherwise), including, without limitation,
interest, fees and other obligations that accrue after the commencement of any
bankruptcy, insolvency or similar proceeding with respect to any Transaction
Party (in each case whether or not allowed as a claim in such proceeding).
"Borrowing Base" means, as of any Borrowing Date or Take-Out
Date, an amount equal to the (i) Adjusted Pool Balance at such time minus (ii)
the Required O/C Amount.
"Borrowing Date" means any date on or after the Effective Date
on which Loans are advanced hereunder.
"Borrowing Notice" means a written request for Loans to be
made hereunder substantially in the form of Exhibit A hereto and duly executed
by the Borrower.
"Business Day" means any day other than a Saturday, Sunday or
public holiday or the equivalent for banks in New York City, New York and
Chicago, Illinois and, if the term "Business Day" is used in connection with the
LIBO Rate, any day on which dealings are carried on in the London interbank
market.
"Change of Control" means (i) the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities and Exchange Act of 1934) directly or indirectly of voting stock (or
other securities convertible into voting stock) of HDI representing 30% or more
(by number of votes) of the outstanding shares of voting stock of HDI, (ii) HDI
ceases to own, directly or indirectly, at least 51% (by number of votes) of the
outstanding shares
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of voting stock of HDFS, free and clear of any Adverse Claim (such term to
exclude the filing of any non-consensual UCC financing statements), (iii) HDFS
ceases to own, directly or indirectly, 100% of the outstanding capital stock of
HDCC, free and clear and of any Adverse Claim (such term to exclude the filing
of any non-consensual UCC financing statements), or (iv) HDCC ceases to own,
directly or indirectly, 100% of the outstanding capital stock of the Borrower,
free and clear of any Adverse Claim (such term to exclude the filing of any
non-consensual UCC financing statements). Notwithstanding the foregoing, a
security interest granted on any of the stock of HDFS or HDCC to secure any of
the obligations existing under the HDI Credit Agreement from time to time shall
not constitute a Change of Control.
"CNAI" has the meaning set forth in the preamble to this
Agreement.
"Collateral" has the meaning set forth in Section 2.16.
"Collection Account" means an account at The Bank of New York
Mellon Trust Company, National Association maintained in the name of the
Borrower, subject to the security interest of the Program Agent for the benefit
of the Secured Parties, for the purpose of receiving Collections, or any other
account which may be designated by the Borrower and approved by the Program
Agent with respect to which all the actions required under Sections 5.01(j) and
5.03(g) shall have been taken.
"Collection Policy" means the billing, collection,
enforcement, write-off, modification and servicing policies, procedures and
practices of the Servicer for conditional sales contracts and promissory notes
and security agreements of the same general type as the Contracts, as set forth
in a written summary delivered to each Syndication Agent on or prior to the date
hereof, as modified from time to time in accordance with the terms of Sections
5.02(c) and 5.04(b).
"Collections" means, with respect to any Contract, any and all
cash collections and other cash proceeds of such Contract, including, without
limitation, all cash proceeds and insurance proceeds of Related Security with
respect to such Contract, and all Recoveries with respect to each charged-off
Contract (net of amounts, if any, retained by any third party collection agent
or by the Servicer in accordance with Section 6.02(g)). For the avoidance of
doubt, so long as HDCC is the Servicer, Collections constituting Late Payment
Penalty Fees or extension fees with respect to any Contract may, in accordance
with the Servicer's customary business practices, be retained by the Servicer as
part of its compensation hereunder.
"Commitment" of any Committed Lender means the Dollar amount
set forth on Schedule I hereto or, in the case of a Committed Lender that
becomes a party to this Agreement pursuant to an Assignment and Acceptance or
Joinder Agreement, as applicable, the amount set forth therein as such Committed
Lender's "Commitment", in each case as such amount may be reduced or increased
from time to time in accordance with this Agreement.
"Committed Lender" means, as to any Lender Group, each of the
financial institutions listed on Schedule I as a "Committed Lender" for such
Lender Group, or in any Assignment and Acceptance or Joinder Agreement as a
"Committed Lender" for the applicable Lender Group, together with its respective
successors and permitted assigns.
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"Computer File" means the computer files maintained by the
Servicer which provide information relating to the Contracts, and includes the
master file and the history file as well as servicing information with respect
to the Contracts.
"Concentration Criterion" has the meaning set forth in the
Receivables Sale Agreement.
"Concentration Limits" has the meaning set forth in the
Receivables Sale Agreement.
"Conduit Lenders" means, collectively, the Persons identified
as "Conduit Lenders" on Schedule I, or in any Assignment and Acceptance or
Joinder Agreement as a "Conduit Lender," and their respective successors and
permitted assigns.
"Conduit Lending Limit" means, for any Conduit Lender, the
maximum principal amount of the Loans which may be advanced by such Conduit
Lender as set forth on Schedule I (or on the signature page to the Assignment
and Acceptance or Schedule A to the Joinder Agreement, as applicable, pursuant
to which such Conduit Lender became a party hereto), subject to an assignment
pursuant to Section 10.03, as such amount may be modified from time to time in
accordance with this Agreement.
"Consolidated" refers to the consolidation of accounts in
accordance with Agreement Accounting Principles.
"Consolidated EBITDA" means, for any period, net income (or
net loss) of HDI and its Consolidated Subsidiaries in accordance with Agreement
Accounting Principles plus the sum of (a) Consolidated Interest Expense, (b)
taxes on or measured by income (including franchise taxes imposed in lieu of
income taxes), (c) depreciation expense, (d) amortization expense, (e)
non-recurring cash restructuring expenses not to exceed an aggregate amount of
$50,000,000 in any period of four consecutive fiscal quarters and (f) other
non-cash or extraordinary charges minus (g) any cash payments made during such
period in respect of any non-cash charges previously added back to Consolidated
EBITDA in accordance with the foregoing clause (f) and paid subsequent to the
fiscal quarter in which such non-cash charge was incurred, in each case
determined in accordance with Agreement Accounting Principles for such period.
For the purposes of calculating Consolidated EBITDA for any period, if during
such period HDI or any Subsidiary shall have made an acquisition or a
disposition, Consolidated EBITDA for such period shall be calculated after
giving pro forma effect thereto as if such acquisition or disposition occurred
on the first day of such period.
"Consolidated Equity" means and refers to, as of the end of
any period of determination, the sum, without duplication, of (i) Consolidated
Tangible Net Worth of HDFS, (ii) preferred stock and (iii) Subordinated
Indebtedness.
"Consolidated Finco Debt" means, at any time, all Indebtedness
(as defined in the HDI Credit Agreement) of HDFS and its Consolidated
Subsidiaries as reflected in the most recent Consolidated balance sheet of HDFS
in accordance with Agreement Accounting Principles; provided, there shall be
excluded from such amounts (i) Subordinated Indebtedness and (ii) Subordinated
Intercompany Indebtedness.
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"Consolidated Interest Expense" means, with respect to HDI and
its Consolidated Subsidiaries for any fiscal period, interest expense (whether
cash or non-cash) determined in accordance with Agreement Accounting Principles
for the relevant period ended on such date and including interest expense for
the relevant period that has been capitalized on the balance sheet.
"Consolidated Opco Debt" means, at any time, all Indebtedness
(as defined in the HDI Credit Agreement) of HDI and its Consolidated
Subsidiaries as reflected in the most recent Consolidated balance sheet of HDI
(but excluding HDFS and its Subsidiaries) in accordance with Agreement
Accounting Principles; provided, there shall be excluded from such amounts
intercompany Indebtedness (as defined in the HDI Credit Agreement).
"Consolidated Tangible Net Worth" of HDFS means its
consolidated shareholder's equity net of intangible assets, as shall be
determined in accordance with Agreement Accounting Principles.
"Contract" has the meaning set forth in the Receivables Sale
Agreement.
"Contract Assets" has the meaning set forth in the Receivables
Sale Agreement.
"Contract File" means, as to each Contract, (a) the fully
executed original of such Contract with the fully executed original assignment
from the related dealer, if any, to the applicable Originator including the
executed conditional sales contract or promissory note and security agreement or
other evidence of the obligation of the Obligor, (b) the original title
certificate to the Motorcycle and, where applicable, the certificate of lien
recordation, or if such title certificate has not yet been issued, an
application for such title certificate, or other appropriate evidence of a
security interest in the covered Motorcycle; (c) the assignments of the
Contracts, (d) the original copy of any agreement(s) modifying the Contract,
including, without limitation, any extension agreements, (e) a copy of the
related Obligor's credit application, and (f) documents evidencing the existence
of physical damage insurance covering such Motorcycle.
"Contract Rate" has the meaning set forth in the Receivables
Sale Agreement.
"Contract Schedule" has the meaning set forth in the
Receivables Sale Agreement.
"Control Agreement" means that certain Account Control
Agreement dated as of April 30, 2009 among the Borrower, the Servicer, The Bank
of New York Mellon Trust Company, National Association, as securities
intermediary, and the Program Agent, as amended, restated, supplemented or
otherwise modified from time to time.
"CP Costs" means, for each day, the sum of (i) discount or
yield accrued on Pooled Commercial Paper of any Conduit Lender administered by
JPMorgan on such day, plus (ii) any and all accrued commissions in respect of
placement agents and commercial paper dealers, and issuing and paying agent fees
incurred, in respect of Pooled Commercial Paper of such Conduit Lender for such
day, plus (iii) other costs associated with funding small or odd-lot amounts
with respect to all receivable purchase facilities which are funded by Pooled
Commercial Paper of such Conduit Lender for such day, minus (iv) any accrual of
income net of
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expenses received on such day from investment of collections received under all
receivable purchase or financing facilities funded substantially with Pooled
Commercial Paper of such Conduit Lender, minus (v) any payment received on such
day net of expenses in respect of Liquidation Fees related to the prepayment of
any purchaser interest of such Conduit Lender pursuant to the terms of any
receivable purchase or financing facilities funded substantially with Pooled
Commercial Paper.
"CP Rate" means:
(a) with respect to any Conduit Lender for
which CNAI is the Administrative Agent, for any Tranche Period
for any Tranche, to the extent such Conduit Lender funds such
Tranche by issuing Promissory Notes, the per annum rate equal
to the weighted average of the per annum rates paid or payable
by such Conduit Lender from time to time as interest on or
otherwise (by means of interest rate hedges or otherwise) in
respect of those Promissory Notes issued by such Conduit
Lender that are allocated, in whole or in part, by CNAI (on
behalf of such Conduit Lender) to fund or maintain such
Tranche during such Tranche Period, and reported to the
Borrower and the Servicer, which rates shall reflect and give
effect to the commissions of placement agents and dealers in
respect of such Promissory Notes, to the extent such
commissions are allocated, in whole or in part, to such
Promissory Notes by CNAI (on behalf of such Conduit Lender);
provided, however, that if any component of such rate is a
discount rate, CNAI shall for such component use the rate
resulting from converting such discount rate to an interest
bearing equivalent rate per annum;
(b) with respect to any Conduit Lender for
which JPMorgan is the Administrative Agent, for any Tranche
Period for any Tranche, to the extent such Conduit Lender
funds such Tranche by issuing Promissory Notes, a per annum
rate equal to a fraction, expressed as a percentage, the
numerator of which shall be equal to the sum of the CP Costs,
determined on a pro rata basis, based upon the percentage
share that the dollar amount of such Tranche represents in
relation to all assets or investments associated with any
assets held by such Conduit Lender and funded substantially
with Pooled Commercial Paper, for each day during such Tranche
Period (or portion thereof), and the denominator of which is
the weighted daily average Principal Balance of such Tranche
during such Tranche Period;
(c) with respect to any Conduit Lender for
which Deutsche Bank AG, New York Branch is the Administrative
Agent, for any Tranche Period for any Tranche, to the extent
such Conduit Lender funds such Tranche by issuing Promissory
Notes, a per annum rate equal to the weighted average of the
rates on all of those Promissory Notes allocated by Deutsche
Bank AG, New York Branch (on behalf of such Conduit Lender) to
the funding or maintenance of such Tranche during such Tranche
Period, and reported to the Borrower and the Servicer,
(converted, if any such rates are discount rates, to annual
yield-equivalent rates on the basis of a 365-day year (or
360-day year, if such Promissory Notes are denominated in U.S.
Dollars)), as weighted by the portion of the Aggregate
Principal Balance funded by such Conduit Lender at each such
rate; provided that the "CP Rate" calculated with respect to
such Conduit Lender will be inclusive of any dealer fees,
commissions or similar fees;
8
(d) with respect to any Conduit Lender for
which The Royal Bank of Scotland plc is the Administrative
Agent, for any Tranche Period for any Tranche, to the extent
such Conduit Lender funds such Tranche by issuing Promissory
Notes, a per annum rate (expressed as a percentage and an
interest yield equivalent and calculated on the basis of a
360-day year) equal to the weighted average of the per annum
rates paid or payable by such Conduit Lender from time to time
as interest on or otherwise in respect of those Promissory
Notes issued by such Conduit Lender that are allocated, in
whole or in part, by The Royal Bank of Scotland plc (on behalf
of such Conduit Lender) to fund or maintain such Tranche
during such Tranche Period, and reported to the Borrower and
the Servicer, which rates shall reflect and give effect to (i)
certain documentation and transaction costs associated with
the issuance of such Promissory Notes, including dealer and
placement agent commissions, and (ii) other borrowings by such
Conduit Lender, including borrowings to fund small or odd
dollar amounts that are not easily accommodated in the
commercial paper market, to the extent such amounts are
allocated, in whole or in part, by The Royal Bank of Scotland
plc to fund the Conduit Lender's purchase or maintenance of
such Tranche during such Tranche Period; and
(e) with respect to any other Conduit
Lender, the comparable rate identified as being the "CP Rate"
in respect of such Lender pursuant to an Assignment and
Acceptance or Joinder Agreement, as applicable, by which such
Conduit Lender became a party to this Agreement.
"Credit Policy" has the meaning set forth in the Receivables
Sale Agreement.
"Custodial Agreement" means an agreement among the Custodian,
the Borrower, the Servicer and the Program Agent substantially in the form of
Exhibit H attached hereto, with such modifications as may be acceptable to the
Syndication Agents from time to time.
"Custodian" means Iron Mountain Information Management, Inc.
and any other Person from time to time designated by the Servicer and the
Borrower with the consent of the Syndication Agents to maintain custody of the
original Records.
"Cutoff Date" has the meaning set forth in the Receivables
Sale Agreement.
"Deal Rating Agency" means Moody's.
"Debt Rating" means, with respect to any Person at any time
the issuer rating assigned by S&P for such Person or the corporate credit rating
assigned by Moody's to such Person, in each case without giving effect to any
third party credit enhancement.
"Default Applicable Margin" has the meaning set forth in the
Fee Letter.
"Default Rate" means (i) in the case of any Tranche in respect
of which Interest is computed by reference to the CP Rate, a fluctuating
interest rate per annum equal to the higher of (a) the CP Rate plus the Default
Applicable Margin and (b) the Base Rate plus the Default Applicable Margin, (ii)
in the case of any Tranche in respect of which Interest is computed by reference
to the Alternative Rate, a fluctuating interest rate per annum equal to the Base
Rate plus the Default Applicable Margin, and (iii) in the case of any other
amount due hereunder, a fluctuating interest rate per annum equal to the Base
Rate plus the Default Applicable Margin.
9
"Defaulted Contract" has the meaning set forth in the
Receivables Sale Agreement.
"Defaulting Lender" means any Committed Lender that, as
determined by the Program Agent, has (a) failed to fund any portion of its Loans
within three (3) Business Days of the date required to be funded by it
hereunder, (b) notified the Borrower or the Program Agent in writing that it
does not intend to comply with any of its funding obligations under this
Agreement or has made a public statement to the effect that it does not intend
to comply with its funding obligations under this Agreement, (c) failed, within
three (3) Business Days after request by the Program Agent, to confirm that it
will comply with the terms of this Agreement relating to its obligations to fund
prospective Loans, (d) otherwise failed to pay over to the Program Agent, the
Administrative Agent in its Lender Group or any other Lender in its Lender Group
any other amount required to be paid by it hereunder within three (3) Business
Days of the date when due, unless the subject of a good faith dispute, or (e)
(i) become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or (ii) has a
parent company that has become the subject of a bankruptcy or insolvency
proceeding, or a receiver, conservator, trustee or custodian has been appointed
for such parent company.
"Delinquent Contract" means, at any time, a Contract (i) as to
which any portion of the payments on the Outstanding Balance remain unpaid for
thirty (30) or more days after the date the same shall have been due and (ii)
that is not a Defaulted Contract.
"Delinquency Ratio" means, for any month, the ratio of (i) the
Outstanding Eligible Balance of Contracts that are Delinquent Contracts as of
the last day of such month, to (ii) the Outstanding Eligible Balance as of the
beginning of such month.
"Dollars" and "$" each mean the lawful currency of the United
States of America.
"During the continuance" and words of similar import mean,
when used in connection with an Event of Termination or Servicer Termination
Event, the period commencing with the occurrence of such Event of Termination or
Servicer Termination Event, after giving effect to any applicable grace period,
and ending (if at all) on the effective date of a waiver in respect of such
Event of Termination or Servicer Termination Event issued in accordance with the
terms of Section 10.01, it being understood that an Event of Termination or
Servicer Termination Event shall continue to exist unless and until waived in
accordance with the terms of Section 10.01, notwithstanding the cure of the
underlying event or condition that shall have given rise to such Event of
Termination or Servicer Termination Event at any time after the lapse of the
applicable grace period.
"Dynamic Enhancement Percentage" has the meaning set forth in
the Fee Letter.
"Early Amortization Event" means the occurrence and
continuation of any one of the following events:
10
(i) For any month, the average of the Managed Pool
Loss-to-Liquidation Ratio at the end of such month and the two preceding months
exceeds (a) 11.00% (in the case of any such three-month period, the last month
of which is any month from April through September) and (b) 13.00% (in the case
of any such three-month period, the last month of which is any month from
October through March); or
(ii) The Rated Notes (if any) shall at any time fail to be
rated "AAA/Aaa" (or its equivalent) by any Rating Agency then providing ratings
in respect of the Rated Notes; or
(iii) As at the end of any calendar month:
(a) the average of the Delinquency Ratios for the three months
then most recently ended in respect of which the Delinquency Ratio shall have
been greater than zero shall exceed 6.00%; or
(b) the average of the Loss-to-Liquidation Ratios as at the
end of such month and the two preceding months shall exceed the applicable
percentage set forth in the Fee Letter.
The calculation of the Delinquency Ratio and the
Loss-to-Liquidation Ratio shall commence on July 31, 2009.
"Early Amortization Period" means a period commencing on the
occurrence of an Early Amortization Event and ending on the earliest to occur of
(i) the cure of such Early Amortization Event (whether by additions to the
Collateral or following a period of amortization), (ii) the reduction to zero of
the Aggregate Principal Balance of the Loans or (iii) such Early Amortization
Event being waived.
"Effective Date" means the later of (i) April 30, 2009 and
(ii) the date the conditions precedent set forth in Section 3.01 shall have been
satisfied or waived by the Syndication Agents.
"Eligible Contract" has the meaning set forth in the
Receivables Sale Agreement.
"Eligible Hedge Agreement" means a Hedge Agreement in the form
of an interest rate cap agreement that complies with the requirements set forth
in Section 2.05(e).
"Eligible Hedge Counterparty" means a Hedge Counterparty that
satisfies, as applicable, (i) the Moody's Second Trigger Ratings Threshold, or
(ii) a rating equivalent to the foregoing of the rating agency that is then
providing a publicly announced credit rating of such Hedge Counterparty, if
Moody's is not then rating such Hedge Counterparty.
"Eligible Post-Sale Contract" has the meaning set forth in the
Receivables Sale Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended or any successor statute.
11
"ERISA Affiliate" means (a) a corporation which is a member of
a controlled group of corporations with HDCC within the meaning of Section
414(b) of the IRC, (b) a trade or business (whether or not incorporated) which
is under common control with HDCC within the meaning of Section 414(c) of the
IRC or Section 4001(b)(1) of ERISA, (c) a member of an affiliated service group
with HDCC within the meaning of Section 414(m) of the IRC, or (d) an entity
treated as under common control with HDCC by reason of Section 414(o) of the
IRC.
"ERISA Plan" means any employee benefit plan (a) maintained by
HDCC or any ERISA Affiliate, or to which any of them contributes or is obligated
to contribute, for its employees and (b) covered by Title IV of ERISA or to
which Section 412 of the IRC applies.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Event of Termination" has the meaning set forth in Section
7.01.
"Excluded Taxes" has the meaning set forth in Section 2.15.
"Existing Credit Agreement" means that certain Loan and
Security Agreement, dated as of December 12, 2008, among the Borrower, the
Servicer, the lenders and administrative agents party thereto and the program
agent, as amended, restated, supplemented or otherwise modified from time to
time prior to the date hereof.
"Facility Documents" means, collectively, this Agreement, the
Receivables Sale Agreement, the Control Agreement, the Custodial Agreement, each
Hedge Agreement, the Lockbox Agreement, the Reserve Account Agreement, the Fee
Letter and all other agreements, documents and instruments delivered pursuant
thereto or in connection therewith.
"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 rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York; or if such rate is not so
published for any day which is a Business Day, the average of the quotations for
such day on such transactions received by the Program Agent from three federal
funds brokers of recognized standing selected by it.
"Fee Letter" means the Fee Letter dated as of the date hereof
among the Administrative Agents and the Borrower, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"Fees" means, collectively, all Usage Fees, Unused Fees,
Make-Whole Fees and Other Fees.
"Final Collection Date" means the date on or following the
Termination Date on which the Aggregate Principal Balance has been reduced to
zero and all other Borrower Obligations (other than contingent obligations that
are not then manifest) have been paid in full.
12
"Finance Receivables" means dealer wholesale receivables,
retail installment contracts, promissory notes, retail leases, charge accounts
or other receivables, chattel paper or other similar financial assets
originated, acquired or serviced in the ordinary course of business of HDI or
any of its Subsidiaries and shall include all related collateral and assets and
any retained assets in respect of any of the foregoing.
"Finco Leverage Ratio" means the ratio of (a) Consolidated
Finco Debt to (b) Consolidated Equity.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof or
any other governmental, quasi-governmental, judicial, regulatory, public or
statutory instrumentality, authority, body, agency, bureau or entity (including,
the Comptroller of the Currency, the Federal Reserve Board, any central bank or
any comparable authority), or any arbitrator with authority to bind a party to
this Agreement at law.
"HDCC" has the meaning set forth in the preamble to this
Agreement.
"HDFS" means Harley-Davidson Financial Services, Inc., a
Delaware corporation.
"HDI" means Harley-Davidson, Inc., a Wisconsin corporation.
"HDI Credit Agreement" means, collectively, the 3-Year Credit
Agreement dated as of July 16, 2008 and the 364-Day Credit Agreement dated as of
April 30, 2009, each by, among others, HDI, Harley-Davidson Funding Corp., HDFS,
Harley-Davidson Financial Services International, Inc., HDCC, the institutions
from time to time party thereto as lenders, JPMorgan, as the global
administrative agent, and various other agents from time to time party thereto,
attached hereto as Exhibit I, as the same may from time to time be amended,
restated, supplemented or otherwise modified, and any other credit facility that
shall refinance or otherwise be established in substitution for all or any part
of either of the foregoing; provided that, with respect to any reference made
herein to the HDI Credit Agreement for purposes of incorporation by reference
herein of any term defined therein or any other provision, (i) such incorporated
definition or other provision shall be in the form set forth on Exhibit I
hereto, without giving effect to any amendment, restatement, supplement or other
modification of the HDI Credit Agreement that may occur after the date hereof,
and (ii) if there shall be any inconsistency between the terms and provisions of
the 3-Year Credit Agreement and the 364-Day Credit Agreement, the terms and
provisions of the 364-Day Credit Agreement shall prevail for purposes of this
Agreement.
"Hedge Agreement" means documentation to which the Borrower is
party relating to a hedge transaction that provides protection to the Borrower
against fluctuations in interest rates, whether such protection is in the form
of an interest rate swap, interest rate cap or similar derivative transaction.
13
"Hedge Counterparty" means the counterparty to the Borrower
under the applicable Hedge Agreement, together with its successors and permitted
assigns.
"Hedging Rate" means, in the case of any Hedge Agreement at
any time, the greater at such time of the cap rate and the swap fixed rate, if
any, set forth in such Hedge Agreement.
"Incipient Event of Termination" means any event which, with
the giving of notice or lapse of time or both, would constitute an Event of
Termination.
"Indebtedness" of a Person means such Person's (i) obligations
for borrowed money, (ii) obligations representing the deferred purchase price of
property or services (other than accounts payable arising in the ordinary course
of such Person's business payable on terms customary in the trade), (iii)
obligations, whether or not assumed, secured by Adverse Claims or payable out of
the proceeds or production from property now or hereafter owned or acquired by
such Person, (iv) obligations which are evidenced by notes, bankers'
acceptances, or other instruments, (v) obligations to purchase accounts,
securities or other property arising out of or in connection with the sale of
the same or substantially similar accounts, securities or property, (vi)
capitalized lease obligations, (vii) other obligations for borrowed money or
other financial accommodation which, in accordance with GAAP, would be shown as
a liability on the consolidated balance sheet of such Person, (viii) net
liabilities under interest rate swap, exchange or cap agreements, obligations or
other liabilities with respect to accounts or notes, (ix) sale and leaseback
transactions which create a liability on the consolidated balance sheet of such
Person, (x) obligations in connection with other transactions (excluding
operating leases under GAAP) which are the functional equivalent, or take the
place, of borrowing but which do not constitute a liability on the consolidated
balance sheet of such Person, (xi) obligations in respect of Permitted Finance
Receivables Securitizations, and (xii) any guaranty or any other agreement
providing support for any of the foregoing.
"Indemnified Party" has the meaning set forth in Section 8.01.
"Independent Director" has the meaning set forth in the
Borrower's Articles of Incorporation as in effect on the date hereof.
"Insolvency Event" means for any Person (i) such Person or any
of its material Subsidiaries shall generally not pay 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 (ii) any
proceeding shall be instituted by such Person or any of its material
Subsidiaries seeking to adjudicate it bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or any substantial part of its property; or (iii) any proceeding
shall be instituted against such Person or any of its material Subsidiaries
seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or composition
of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or
any substantial part of its property, which proceeding continues undismissed or
unstayed for a period of 60 consecutive days or (iv) such Person or any of its
material Subsidiaries shall take any corporate action to authorize any of the
actions set forth in clauses (i), (ii) or (iii) above.
14
"Interest" means, for any Tranche and any Tranche Period, the
sum for each day during such Tranche Period of the following:
IR x PB/CB where:
where:
IR = the Interest Rate for such Tranche for such day.
PB = the Principal Balance of such Tranche on such day.
CB = (i) in the case of a Base Rate Tranche, 365 or 366 and (ii)
in the case of any other Tranche, 360.
"Interest Coverage Ratio" means the ratio of (i) Consolidated
EBITDA to (ii) Consolidated Interest Expense.
"Interest Rate" means, with respect to any Tranche for any day
(a) to the extent such Tranche is funded on such day by a Conduit Lender through
the issuance of Promissory Notes, the CP Rate and (ii) otherwise, the
Alternative Rate; provided, that at all times following the Termination Date
and/or the occurrence and during the continuation of an Event of Termination,
the Interest Rate for each Tranche on each day shall be an interest rate per
annum equal to the Default Rate.
"IRC" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"IRS" means the Internal Revenue Service of the United States
of America.
"Joinder Agreement" means a joinder agreement substantially
similar to Exhibit G attached hereto.
"JPMorgan" has the meaning set forth in the preamble to this
Agreement.
"Late Payment Penalty Fees" means any late payment fees paid
by Obligors on Contracts and retained by the Servicer in accordance with its
customary business practices as part of its compensation hereunder after all
sums received from or on behalf of such Obligors have been allocated first to
regularly scheduled payments of interest and past due interest on the related
Contracts.
"Lender" means any Conduit Lender or Committed Lender, as
applicable, and "Lenders" means, collectively, the Conduit Lenders and the
Committed Lenders.
15
"Lender Group" means any Administrative Agent and its related
Conduit Lenders and Committed Lenders.
"Lender Group Limit" means, for any Lender Group, the amount
set forth on Schedule I (or in an Assignment and Assumption or a Joinder
Agreement pursuant to which such Lender Group became party hereto), as such
amount may be modified in accordance with Section 2.03, subject to an assignment
pursuant to Section 10.03.
"LIBO Rate" means, for any LIBOR Tranche and the related
Tranche Period, the rate determined by the related Administrative Agent by
reference to the British Bankers' Association Interest Settlement Rate for
deposits in Dollars, with a maturity comparable to such Tranche Period,
appearing on Reuters Screen LIBOR01 (or any such screen as may replace such
screen on such service or any successor to or substitute for such service,
providing rate quotations comparable to those currently provided by such
service, as determined by the related Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to deposits in
Dollars in the London interbank market) at approximately 11:00 a.m., London
time, on the second Business Day before the first day of such Tranche Period. In
the event that such rate is not available at such time for any reason, then the
"LIBO Rate" for the applicable LIBOR Tranche and related Tranche Period shall be
the rate at which deposits in Dollars in a principal amount which approximates
the portion of the Loan allocated to such Tranche (but not less than $1,000,000)
and for a maturity comparable to such Tranche Period are offered by the related
Reference Bank in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, on the second Business Day before (and
for value on) the first day of such Tranche Period.
"LIBO Rate Reserve Percentage" means, for any LIBOR Tranche
and the related Tranche Period, the reserve percentage applicable two Business
Days before the first day of such Tranche Period under regulations issued from
time to time by the Board of Governors of the Federal Reserve System (or any
successor) (or, if more than one such percentage shall be applicable, the daily
average of such percentages for those days in such Tranche Period during which
any such percentage shall be so applicable) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities (or with respect to any other category
of liabilities that includes deposits by reference to which the interest rate on
Eurocurrency Liabilities is determined) having a term equal to such Tranche
Period.
"LIBOR Tranche" means a Tranche for which Interest is computed
by reference to the Adjusted LIBO Rate.
"Liquidation Fee" means for any Tranche held by a Lender the
Principal Balance of which is reduced on any date other than the last day of the
related Tranche Period, (i) the amount, if any, by which the additional Interest
which would have accrued during such Tranche Period on the reductions of the
Principal Balance of such Tranche had a reduction of the Principal Balance not
occurred, exceeds (ii) the income, if any, received by such Lender from the
investment of the proceeds of such reductions of Principal Balance during such
Tranche Period. A certificate as to the amount of any Liquidation Fee (including
the computation of such amount in reasonable detail) shall be submitted by the
affected Lender to the Borrower and shall be conclusive and binding for all
purposes, absent manifest error.
16
"Liquidity Provider" means any of the financial institutions
from time to time party to any Asset Purchase Agreement or any liquidity loan
agreement or similar arrangement with a Conduit Lender.
"Loan" means, in respect of any Lender Group and any Advance,
the portion of such Advance funded by such Lender Group and advanced to the
Borrower from time to time pursuant to Article II.
"Lock-Box" means the post office box maintained pursuant to
the Lockbox Agreement for the purpose of receiving payments on Contracts or
other Collections.
"Lockbox Account" means the lockbox account maintained by the
Lockbox Bank and subject to the Lockbox Agreement.
"Lockbox Agreement" means that certain Fifth Amended and
Restated Agreement Regarding Lockbox Administration, dated as of November 1,
2000, among HDCC, the trust depositors party thereto and the Lockbox Bank and
acknowledged by the trustees thereunder, as the same may be from time to time
amended or supplemented with the consent of the Syndication Agents.
"Lockbox Bank" means Bank of America, N.A. and its successors
and assigns.
"Loss-to-Liquidation Ratio" means, for any Monthly Period, an
amount equal to (i) the Outstanding Balance of the Contracts that became
Defaulted Contracts during such Monthly Period minus the amount of Recoveries
received by the Servicer during such Monthly Period, divided by (ii) the sum of
(a) the Outstanding Balance of the Contracts that became Defaulted Contracts
during such Monthly Period and (ii) the aggregate amount of principal
Collections (excluding any Recoveries) received by the Servicer during such
Monthly Period; provided that for any Monthly Period for which the foregoing
calculation would result in a percentage less than 1.50%, the
Loss-to-Liquidation Ratio for such Monthly Period shall be deemed to be 1.50%.
"Make-Whole Fee" means a fee in respect of any reduction in
the Aggregate Commitment equal to the Unused Fee that would have accrued at
2.00% per annum on the Unused Commitment if such portion of the Aggregate
Commitment had remained in effect and unused during the period beginning on the
applicable Reduction Date and ending on the Maturity Date then in effect.
"Managed Pool Loss-to-Liquidation Ratio" means, for any month
with respect to HDFS's U.S. retail Motorcycle managed portfolio, a ratio equal
to (a) the sum of (i) the aggregate principal balance of such finance
receivables that were charged-off during such month in accordance with HDFS's
internal accounting procedures minus (ii) any post-charge-off recoveries made on
such charged-off finance receivables, divided by (b) the sum of (i) the
aggregate principal balance of such finance receivables that were charged-off
during such month in accordance with HDFS's internal accounting procedures minus
(ii) any post-charge-off recoveries made on such charged-off finance receivables
plus (iii) the aggregate amount of principal collections, fees and expenses
received on all such finance receivables during such month.
17
"Material Adverse Effect" means a material adverse effect on
(i) a significant portion (as determined by any Syndication Agent in its
reasonable discretion) of either the Contracts or any of the other Collateral
(including, without limitation, the enforceability or collectibility of the
Contracts), (ii) the financial condition or operations of the Borrower, the
Servicer or HDCC, in each case, individually, or with its respective Affiliates,
taken as a whole, (iii) the ability of the Borrower, the Servicer or HDCC to
perform its obligations under this Agreement or any other Facility Document,
(iv) the legality, validity or enforceability of this Agreement or any other
Facility Document, (v) any Secured Party's interest in the Contracts generally
or in any significant portion of the Contracts, the Related Security or the
Collections with respect thereto, or (vi) the timely payment of the principal
and interest on the Loans or other amounts payable in connection therewith.
"Maturity Date" means April 29, 2010, as such date may be
extended from time to time pursuant to Section 2.02(c).
"Minimum Excess Spread Percentage" means 4.00% per annum.
"Minimum Reserve Amount" means, as of any date of
determination, an amount equal to the product of (a) 1.00% times (b) the
Adjusted Pool Balance.
"Monthly Period" means a calendar month and, with respect to
any Settlement Date or Monthly Reporting Date, the immediately preceding
calendar month, except that the final Monthly Period shall end on the Final
Collection Date.
"Monthly Report" means a report, in substantially the form of
Exhibit C (with such changes as the Borrower and the Syndication Agents may
agree to from time to time), furnished by the Servicer to the Administrative
Agents for the Lenders pursuant to Section 6.07.
"Monthly Reporting Date" means the third Business Day
preceding each Settlement Date, other than a Provisional Settlement Date (or, if
such day is not a Business Day, the immediately preceding Business Day).
"Moody's" means Moody's Investors Service, Inc., and its
successors.
"Moody's Second Trigger Ratings Threshold" means, with respect
to a Hedge Counterparty, (i) if such entity has both a long-term unsecured and
unsubordinated Debt Rating or counterparty rating from Moody's and a short-term
unsecured and unsubordinated Debt Rating from Moody's, a long-term unsecured and
unsubordinated Debt Rating or counterparty rating from Moody's of "A3" or above
and a short-term unsecured and unsubordinated Debt Rating from Moody's of
"Prime-2" or above, or (ii) if such entity has only a long-term unsecured and
unsubordinated Debt Rating or counterparty rating from Moody's, a long-term
unsecured and unsubordinated Debt Rating or counterparty rating from Moody's of
"A3" or above.
18
"Motorcycle" means a new or used motorcycle manufactured by
Harley-Davidson Motor Company, a wholly-owned subsidiary of HDI, the sale and
financing of which shall have given rise to a Contract.
"New Contracts" has the meaning set forth in Section 2.02(a).
"Note" has the meaning set forth in Section 2.07.
"Notice of Sale" has the meaning set forth in the Receivables
Sale Agreement.
"Obligor" means any Person obligated to make payments pursuant
to a Contract.
"O/C Floor Amount" means, the greater of (i) $50,000,000 and
(ii) an amount equal to 5.00% of the Aggregate Commitment as of the Effective
Date, as such amount may be increased upon any subsequent increase in the
Aggregate Commitment.
"Official Body" means any Governmental Authority or any
accounting board or authority (whether or not part of a government) which is
responsible for the establishment or interpretation of national or international
accounting principles, in each case whether foreign or domestic.
"Opco Leverage Ratio" means the ratio of (a) Consolidated Opco
Debt to (b) Consolidated EBITDA.
"Originator" means, in the case of any Contract, Eaglemark
Savings Bank or HDCC as the Person that shall have originated such Contract.
"Other Fees" means amounts owed by the Borrower hereunder
pursuant to Sections 2.11, 2.12, 2.13, 2.14, 2.15, 8.01, 8.03 and 10.10.
"Outstanding Balance" means, with respect to a Contract at any
time, the then outstanding principal balance thereof.
"Outstanding Eligible Balance" means, at any time, the sum at
such time of (i) in the case of any Contracts then being included for the first
time (which, in the case of the initial Advance hereunder, shall mean all
Contracts then constituting Collateral), the Outstanding Balance of all such
Contracts that are Eligible Contracts as of their respective Cutoff Dates, and
(ii) in the case of any other Contracts, the Outstanding Balance of all such
Contracts that are Eligible Post-Sale Contracts; provided that with respect to
(i) any Contract identified in the initial Contract Schedule delivered under the
original Receivables Sale Agreement that is not an Eligible Contract as of the
date of the initial Advance hereunder, or (ii) any Contract that, on or after
the date hereof, becomes part of the Collateral as an Eligible Contract but
subsequently ceases to be an Eligible Post-Sale Contract, and as a result in
either such case such Contract is not or ceases to be included in the
Outstanding Eligible Balance, such Contract may be included in the Outstanding
Eligible Balance on any later date only if such Contract constitutes an Eligible
Contract as of such later date (and thereafter may be included in the
Outstanding Eligible Balance so long as it remains an Eligible Post-Sale
Contract). In the case of Contracts the Obligor of which resides in Texas, in
the event the Concentration Limit for such Contracts exceeds zero, it shall be a
further condition to the initial inclusion of any such Contracts in the
Outstanding Eligible Balance that the inclusion of all such Contracts in the
Outstanding Eligible Balance would not cause the Overconcentration Amount in
respect of such Concentration Limit to exceed zero.
19
"Overconcentration Amount" means, as of any Borrowing Date or
Take-Out Date, the aggregate amount for all Concentration Criteria, calculated
as of such date for each Concentration Criterion as being the sum of (i) the
amount, if positive, equal to (A) the Outstanding Eligible Balance in respect of
all Contracts having such Concentration Criterion minus (B) an amount equal to
(1) the Outstanding Eligible Balance in respect of all Contracts multiplied by
(2) the Concentration Limit associated with such Concentration Criterion and
(ii) the aggregate Outstanding Balance in respect of all Contracts then included
in the Outstanding Eligible Balance that would need to be removed from the
Borrowing Base to cause the Concentration Limits set forth in Sections
4.01(o)(ii) and (iii) of the Receivables Sale Agreement to be observed; provided
that in calculating the Overconcentration Amount at any time, the Outstanding
Balance of a Contract shall not be counted more than once.
"Participant" has the meaning set forth in Section 10.03(g).
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"Permitted Finance Receivables Securitization" means any
financial asset financing (whether a program or otherwise) providing for the
sale, conveyance, pledge or other transfer of Finance Receivables by HDI or any
of its Subsidiaries to a trust or to one or more limited purpose finance
companies, special purpose entities or financial institutions or other third
party investors or financiers, either directly or through one or more
Subsidiaries.
"Permitted Liens" means any liens (a) for taxes, assessments
and governmental charges or levies that in each case are either (i) not overdue
or (ii) being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained and (b) of a collecting bank in the
ordinary course of processing items for collection.
"Permitted Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the laws of
the United States of America or any State (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or State banking or
depository institution authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein, the commercial paper or
other short-term senior unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit rating from
the Rating Agencies in the highest investment category granted thereby;
20
(c) commercial paper, master notes, promissory notes, demand
notes or other short-term debt obligations having, at the time of the investment
or contractual commitment to invest therein, a rating from the Rating Agencies
in the highest investment category granted thereby;
(d) investments in money market funds having a rating from the
Rating Agencies in the highest investment category granted thereby (including
funds for which the Program Agent or any Administrative Agent or any of their
respective Affiliates is investment manager or advisor);
(e) notes or bankers' acceptances issued by any depository
institution or trust company referred to in clause (b);
(f) repurchase and reverse repurchase agreements
collateralized by securities issued or guaranteed by the United States
government or any agency, instrumentality or establishment of the United States
government, in either case entered into with a depository institution or trust
company (acting as principal) described in clause (b), or entered into with an
entity (acting as principal) which has, or whose parent has, a credit rating
from the Rating Agencies in the highest credit category granted thereby; and
(g) any other investment approved by the Syndication Agents.
Solely for purposes of amounts from time to time held in the Reserve Account,
"Permitted Investments" shall include, in addition to the foregoing, any
investments permitted under the Reserve Account Agreement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity.
"Pooled Commercial Paper" means Promissory Notes of a Conduit
Lender subject to any particular pooling arrangement by such Conduit Lender, but
excluding Promissory Notes issued by such Conduit Lender for a tenor and in an
amount specifically requested by any Person in connection with any agreement
effected by such Conduit Lender.
"Prime Rate" means, with respect to any Lender Group, the rate
of interest announced publicly by the related Reference Bank from time to time
as its prime or base rate (such rate not necessarily being the lowest or best
rate charged by such Reference Bank).
"Principal Balance" means with respect to any Tranche, the
original principal amount of a Loan made hereunder that has been allocated to
such Tranche pursuant to Section 2.04, as such amount may be divided or combined
in accordance therewith, in each case as reduced from time to time by
Collections and other amounts received by the applicable Lender holding such
Tranche from distributions made pursuant to Sections 2.08(b) and 2.08(c), as
applicable, or otherwise that have been applied to reduce the Principal Balance
of such Tranche; provided, that if such Principal Balance shall have been
reduced by any distribution and thereafter all or a portion of such distribution
is rescinded or must otherwise be returned for any reason, such Principal
Balance shall be increased by the amount of such rescinded or returned
distribution, as though it had not been received by such Lender.
21
"Priority Finance Charges" means, in respect of any period,
the sum of (i) all accrued at any time and remaining unpaid Interest, Usage
Fees, Unused Fees and Make-Whole Fees, and (ii) all unreimbursed costs and
expenses of the type described in Section 8.03 incurred by the Program Agent at
any time in connection with the enforcement of any Facility Document or the
collection of any amounts due thereunder, to the extent such sum does not exceed
an amount equal to the amount of Interest that would have accrued on the
Aggregate Principal Balance of the Loans during such period at a rate equal to
the Adjusted LIBO Rate plus the Applicable Margin.
"Program Agent" means JPMorgan, in its capacity as agent for
the Lenders, together with its successors and permitted assigns.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the IRC which is not exempt under
Section 408 of ERISA or Section 4975(d) of the IRC (or any exemption issued
thereunder).
"Promissory Notes" means with respect to a Conduit Lender, (i)
the short-term promissory notes or extendable money market notes issued by such
Conduit Lender which are allocated by such Conduit Lender directly or indirectly
as its funding for its purchasing or maintaining its portion of the Advances
hereunder and (ii) participations sold by a Conduit Lender pursuant to Section
10.03(g); provided, that the term "Promissory Notes" shall not include the
interests sold or indebtedness incurred by a Conduit Lender pursuant to the
provisions of any of its program-level liquidity facilities or Asset Purchase
Agreements.
"Pro Rata Share" means, at any time, as the context may
require:
(i) for any Committed Lender, (a) the ratio (expressed as a
percentage) of the Commitment of such Committed Lender at such time divided by
the sum of the Commitments of all Committed Lenders at such time and (b) after
the Commitments of all of the Committed Lenders have been terminated, the ratio
(expressed as a percentage) of the outstanding principal amount of the Loans
funded by such Committed Lender at such time divided by the outstanding
principal amount of the Loans funded by all of the Committed Lenders at such
time; and
(ii) for any Lender Group, (a) the ratio (expressed as a
percentage) of the aggregate of the Commitments of the Committed Lenders in such
Lender Group at such time divided by the Aggregate Commitment at such time and
(b) after the Commitments of all of the Committed Lenders in such Lender Group
have been terminated, the ratio (expressed as a percentage) of the outstanding
principal amount of the Loans funded by the Committed Lenders in such Lender
Group at such time divided by the outstanding principal amount of the Loans
funded by all of the Committed Lenders in all of the Lender Groups at such time.
"Provisional Settlement Date" means any Business Day declared
by the Program Agent (at the direction of any Administrative Agent, which, in
the discretion of any Administrative Agent, may be as frequently as each
Business Day) to be a Settlement Date on one (1) Business Day's written notice
(which may specify an ongoing Provisional Settlement Date arrangement) to the
Borrower and the Servicer at any time on or after the Termination Date, or at
any time during the continuance of an Event of Termination.
22
"Rated Note" has the meaning set forth in Section 2.07.
"Rate Type" means the Adjusted LIBO Rate, the Base Rate or the
CP Rate.
"Rating Agencies" means each of S&P and Moody's or their
respective successors.
"Receivables Sale Agreement" means that certain Amended and
Restated Receivables Sale Agreement dated as of the date hereof between HDCC and
the Borrower, as amended, restated, supplemented or otherwise modified from time
to time.
"Records" means all Contracts and related Contract Files, and
all other agreements, documents, instruments, books, records and other
information (including, without limitation, computer programs, tapes, discs,
punch cards, data processing software and related property and rights) with
respect to the Contracts, the related Obligors and the Related Security.
"Recoveries" means any payments that the Servicer receives
from or on behalf of the related Obligor in respect of a Contract that has
become a Defaulted Contract, including any net proceeds from the liquidation of
the related Motorcycle.
"Reduction Date" means any Business Day on which the Borrower
reduces the Aggregate Commitment pursuant to Section 2.03.
"Reference Bank" means, with respect to any Lender Group at
any time, the Committed Lender in such Lender Group designated by the applicable
Administrative Agent to be the "Reference Bank" for such Lender Group.
"Related Entity" means HDI, any Originator and each of their
respective Affiliates and successors.
"Related Security" means, with respect to any Contract:
(a) all of the Borrower's interest in the Motorcycle and
related goods (including returned or repossessed goods), if any, the sale or
financing of which gave rise to such Contract, and all insurance contracts with
respect thereto,
(b) all other security interests or liens and property subject
thereto from time to time, if any, purporting to secure payment of such
Contract, whether pursuant to such Contract or otherwise, together with all
financing statements and security agreements describing any collateral securing
such Contract,
(c) all guaranties, insurance, "supporting obligations"
(within the meaning of Section 9-102(a) of the UCC of all applicable
jurisdictions) and other agreements or arrangements of whatever character from
time to time supporting or securing payment of such Contract,
23
(d) all service contracts and other contracts and agreements
associated with such Contract,
(e) all Records related to such Contract,
(f) all of the Borrower's right, title and interest in, to and
under the Receivables Sale Agreement with respect to such Contract,
(g) all of the Borrower's right, title and interest in and to
the Collection Account and the contractual arrangements existing from time to
time between the Custodian and the Borrower (or any person on behalf of the
Borrower), and any and all agreements related thereto, and
(h) all proceeds of any of the foregoing.
"Repurchase Price" has the meaning set forth in the
Receivables Sale Agreement.
"Required Lenders" means, at any time, Committed Lenders
holding, in the aggregate, sixty-six and two-thirds percent (66-2/3%) or more of
the Aggregate Commitment in effect at such time; provided, however, that, in the
event that the Commitments have been terminated pursuant to the terms hereof,
"Required Lenders" means the Lenders whose Pro Rata Shares of the Aggregate
Principal Balance are equal to or greater than sixty-six and two-thirds percent
(66-2/3%). On each date of determination, the Commitment and the Aggregate
Principal Balance in respect of any Defaulting Lender shall be excluded.
"Required O/C Amount" means, as of any date, an amount equal
to the greater of (i) the product of (a) the Required O/C Percentage times (b)
the Adjusted Pool Balance, and (ii) the O/C Floor Amount.
"Required O/C Percentage" means, as of any date, a percentage
equal to the greater of (i) the Dynamic Enhancement Percentage as of such date
and (ii) the percentage, if any, specified by any Rating Agency as being the
minimum overcollateralization percentage necessary to maintain the rating of
"AAA/Aaa" (or its equivalent) on the Rated Notes, if any.
"Required Rate" means, at any time, a rate equal to the sum at
such time of (i) the Hedging Rate, (ii) the Applicable Margin, (iii) the
Servicer Fee and (iv) the Minimum Excess Spread Percentage.
"Reserve Account" means an account at the Program Agent
maintained in the name of the Borrower, subject to the security interest of the
Program Agent for the benefit of the Secured Parties, with respect to which the
action required under Sections 5.01(m) and 5.03(j) shall have been taken.
"Reserve Account Agreement" means that certain Securities
Account, Depositary Account and Account Control Agreement dated as of April 30,
2009 among the Borrower, the Servicer, JPMorgan, as securities intermediary, and
the Program Agent, as amended, restated, supplemented or otherwise modified from
time to time.
24
"Reserve Account Shortfall" means the circumstance where the
Minimum Reserve Amount in effect at any time exceeds the amount then on deposit
in the Reserve Account.
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of the Borrower now or hereafter outstanding, except a dividend
payable solely in shares of that class of stock or in any junior class of stock
of the Borrower, (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of any
shares of any class of capital stock of the Borrower now or hereafter
outstanding, (iii) any payment made to redeem, purchase, repurchase or retire,
or to obtain the surrender of, any outstanding warrants, options or other rights
to acquire shares of any class of capital stock of the Borrower now or hereafter
outstanding, and (iv) any payment of management fees by the Borrower (except for
Servicer Fees, the allocable share of overhead expenses, and reasonable
management fees to HDCC or its Affiliates in reimbursement of actual management
services performed).
"Revolving Period" means the period commencing on the
Effective Date and ending on the Termination Date.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and its successors.
"Secured Parties" means, collectively, each Hedge
Counterparty, the Lenders, each Administrative Agent, the Program Agent, the
Liquidity Providers and each other Indemnified Party.
"Servicer" means HDCC, solely in its capacity as Servicer
hereunder, or such other Person(s) then authorized pursuant to Section 6.01 to
service, administer, bill and collect payments under the Contracts and enforce
the Contracts.
"Servicer Advance" has the meaning set forth in Section 6.03.
"Servicer Fee" has the meaning set forth in Section 6.08;
provided, that if the Servicer is not HDCC or an Affiliate of HDCC, the Servicer
Fee shall be an amount equal to the then-prevailing market rate for servicing
similar Contracts.
"Servicer Termination Event" means the occurrence and
continuation of any one of the following events:
(a) the Servicer shall fail to remit Collections to the
Collection Account in accordance with Section 2.08(a) or shall fail to remit
Collections that are then available to the Servicer in the amount and order
provided in Section 2.08(b), and such failure shall continue for three (3)
consecutive Business Days; or
(b) the Servicer shall fail to deliver the Monthly Report when
due and such failure continues unremedied by the applicable Settlement Date; or
25
(c) the Servicer shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement or any other Facility
Document, and any such failure shall remain unremedied for thirty (30)
consecutive days; or
(d) an Insolvency Event has occurred with respect to the
Servicer, HDI or HDFS; or
(e) any representation, warranty, certification or statement
made by the Servicer under or in connection with this Agreement, any other
Facility Document or in any other document delivered pursuant hereto or thereto
shall be determined to have been false in any material respect on the date as of
which made or deemed made; or
(f) (i) the Servicer, HDI or HDFS or any of their material
Subsidiaries shall fail to pay any principal of or premium or interest on any
Indebtedness that is outstanding in a principal or net amount of at least
$60,000,000 in the aggregate (but excluding Indebtedness outstanding hereunder)
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness, or (ii) any event shall occur or
condition shall exist under any agreement or instrument relating to any such
Indebtedness or any Permitted Finance Receivables Securitization and shall
continue after the applicable grace period, if any, specified in such agreement
or instrument, if such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness or to permit an early
amortization or early liquidation, in the case of a Permitted Finance
Receivables Securitization; or any such Indebtedness shall be declared to be due
and payable, or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or an offer
to prepay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof; provided that in the
case of any intercompany indebtedness, the occurrence of a default thereunder
shall not constitute a Servicer Termination Event unless either (x) in the case
of a payment default, demand shall have been made and the obligor thereon shall
have failed to cure the same in a reasonable period of time, or (y) such
intercompany indebtedness shall have been accelerated; or
(g) one of more final judgments for the payment of money in an
amount in excess of $60,000,000 in the aggregate shall be entered against the
Servicer, HDI or HDFS or any of their material Subsidiaries with respect to
which (i) enforcement proceedings shall have been commenced by any creditor upon
such judgments or orders or (ii) there shall be any period of ten (10)
consecutive days during which a stay of enforcement of such judgments or orders,
by reason of a pending appeal or otherwise, shall not be in effect; provided,
however, that any such judgment or order shall not be a Servicer Termination
Event or included in the calculation of the aggregate amount of judgments or
orders under this clause (g) if and for so long as (A) the amount of such
judgment or order is covered by a valid and binding policy of insurance between
the defendant and the insurer covering payment thereof and (B) such insurer,
which shall be rated at least "A" by A.M. Best Company, has been notified of,
and has not disputed the claim made for payment of, the amount of such judgment
or order; or
26
(h) HDFS shall, as of the end of any fiscal month, fail to
have a minimum Consolidated Tangible Net Worth of $500,000,000; or
(i) The Finco Leverage Ratio, as of the end of any fiscal
month, shall exceed 10.00 to 1.00; or
(j) The Opco Leverage Ratio, as of the end of any fiscal
quarter ending prior to the Guaranty Ratings Threshold Date, shall exceed 2.75
to 1.00; provided that this clause (j) shall cease to be a Servicer Termination
Event on and after the Guaranty Ratings Threshold Date, and any Servicer
Termination Event existing as of the expiration of the Guaranty Ratings
Threshold Date solely by virtue of this clause (j) shall automatically cease to
exist (each capitalized term not otherwise defined herein being used in this
clause (j) as defined in the HDI Credit Agreement); or
(k) The Interest Coverage Ratio of HDI, as of the end of any
fiscal quarter for the period of four consecutive fiscal quarters then ended,
shall be less than 2.50 to 1.00; or
(l) any "Default" under and as defined in the HDI Credit
Agreement shall occur, without giving effect to any amendment or waiver
thereunder.
"Settlement Date" means (i) May 12, 2009, in the case of the
first Settlement Date and, thereafter, the 12th day of each calendar month, or
if such day is not a Business Day, the next following day that is a Business
Day, or (ii) any Provisional Settlement Date.
"Solvent" means, as to any Person at any time, that (a) the
fair value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for purposes
of Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the property of such Person in an orderly liquidation of such Person is not
less than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"Subordinated Finance Charges" means, in respect of any
period, the sum of (i) all accrued at any time and remaining unpaid Interest,
Usage Fees, Unused Fees and Make-Whole Fees, and (ii) all unreimbursed costs and
expenses of the type described in Section 8.03 incurred by the Program Agent at
any time in connection with the enforcement of any Facility Document or the
collection of any amounts due thereunder, to the extent such sum exceeds the
Priority Finance Charges in respect of such period.
"Subordinated Indebtedness" means Indebtedness of HDI or its
Subsidiaries, whether direct or indirect, to non-affiliated Persons which is
subordinated to the Obligations on a basis acceptable to the Agent (each
capitalized term being used in this definition as defined in the HDI Credit
Agreement as in effect on the date hereof).
27
"Subordinated Intercompany Indebtedness" means Indebtedness
arising from intercompany loans; provided that if the obligor of such
Indebtedness is one of more of the Companies (whether as a primary obligor or a
secondary obligor), such Indebtedness shall be subordinated to the Obligations
pursuant to the subordination terms set forth in the HDI Credit Agreement (each
capitalized term being used in this definition as defined in the HDI Credit
Agreement as in effect on the date hereof).
"Subordinated Swap Termination Payment" means any termination
payment due under any Hedge Agreement resulting from the occurrence of an "Early
Termination Date" under and as defined in such Hedge Agreement, where the Hedge
Counterparty is the "Defaulting Party" or sole "Affected Party" (each as defined
in such Hedge Agreement) other than any termination payment resulting from a
"Tax Event" or "Illegality" (each as defined in such Hedge Agreement).
"Subsidiary" of a Person means (i) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall at
the time be owned or controlled, directly or indirectly, by such Person or by
one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (ii) any partnership, limited liability company, association,
joint venture or similar business organization more than 50% of the ownership
interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a direct or indirect Subsidiary of HDI.
"Syndication Agent" means either JPMorgan or CNAI.
"Take-Out Date" means any date on which a Take-Out
Securitization occurs.
"Take-Out Securitization" means a financing transaction
undertaken by the Borrower or an Affiliate of the Borrower involving the direct
or indirect sale or other conveyance of Contracts with an aggregate Outstanding
Balance of at least $200,000,000 that comprise Collateral hereunder and the
Related Security and the Collections related thereto, to a Person that shall
privately or publicly issue securities, notes or certificates backed by such
Contracts, Related Security and the Collections related thereto.
"Target Principal Amount" means:
(a) as of any Settlement Date occurring during the Revolving
Period, except as provided in clause (b)(i), an amount equal to (i) the
Aggregate Principal Balance of the Loans then outstanding minus (ii) the sum of
(A) the Adjusted Pool Balance at such time, minus (B) the Required O/C Amount
(as calculated on the basis of the Dynamic Enhancement Percentage as of the last
day of the Monthly Period then most recently ended), and
(b) as of any Settlement Date (i) during an Early Amortization
Period or (ii) following the end of the Revolving Period, an amount equal to the
Aggregate Principal Balance of the Loans then outstanding.
28
"Termination Date" means the earlier to occur of (i) the
Maturity Date and (ii) the declaration or automatic occurrence of the
Termination Date pursuant to Section 7.02.
"Total Distribution Amount" means:
(a) with respect to any Settlement Date other than a
Provisional Settlement Date, the sum of, without duplication, (i) all
Collections deposited in the Collection Account or otherwise received by the
Servicer or the Borrower during the immediately preceding Monthly Period, (ii)
the aggregate of the Repurchase Prices (if any) received since the last
Settlement Date, (iii) any amounts paid or deposited into the Collection Account
since the last Settlement Date pursuant to Section 2.09 or 2.17, (iv) any net
monthly payments and termination payments received from any Hedge Counterparty
on such Settlement Date (except to the extent any such termination payment is
used by the Borrower to enter into a replacement Eligible Hedge Agreement), (v)
any Servicer Advance made on such Settlement Date, (vi) any investment earnings
received and not previously remitted to the Collection Account and the Reserve
Account, as applicable, and (vii) any distributions of amounts on deposit in the
Reserve Account in accordance with Section 2.08(d); and
(b) with respect to any Provisional Settlement Date, (i) all
Collections then held in the Collection Account or otherwise received and then
being held by the Servicer or the Borrower, (ii) the aggregate of the Repurchase
Prices (if any) received and not previously distributed under Sections 2.08(b)
or 2.08(c), (iii) any amounts paid or deposited into the Collection Account
since the last Settlement Date pursuant to Section 2.09 or 2.17, (iv) any
payments received from any Hedge Counterparty and not previously distributed
under Sections 2.08(b) or 2.08(c) (except to the extent any such termination
payment is used by the Borrower to enter into a replacement Eligible Hedge
Agreement), (v) any Servicer Advance made on such Settlement Date, (vi) any
investment earnings received and not previously remitted to the Collection
Account and the Reserve Account, as applicable, and (vii) any distributions of
amounts on deposit in the Reserve Account in accordance with Section 2.08(d).
"Tranche" has the meaning specified in Section 2.04(a).
"Tranche Period" means, with respect to any Tranche:
(a) in the case of any Tranche in respect of which Interest is
computed by reference to the CP Rate, (i) initially, the period commencing on
(and including) the Effective Date and ending on (and including) the last day of
the calendar month in which the Effective Date occurs, and (ii) thereafter, each
successive calendar month commencing on (but excluding) the last day of the
immediately preceding calendar month for such Tranche and ending on (and
including) the last day of such calendar month; and
(b) in the case of any Base Rate Tranche, (i) a period from
one to and including 31 days, or such other period as may be mutually agreeable
to the Syndication Agents and the Borrower; and
(c) in the case of any LIBOR Tranche, a period of one month,
or such other period as may be mutually agreeable to the Syndication Agents and
the Borrower, as the Borrower shall select in a written notice to the Program
Agent and the Lenders not later than 1:00 P.M. (New York City time) on the
second Business Day immediately before the first day of such Tranche Period,
each such Tranche Period for such Tranche to commence on the last day of the
immediately preceding Tranche Period for such Tranche (or, if applicable, the
Effective Date), except that if the Program Agent and the Lenders shall not have
received such notice before 1:00 P.M. on such second preceding Business Day,
such Tranche Period shall be one day; provided, however, that:
29
(i) any Tranche Period (other than of one
day) which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business
Day (provided, however, that in the case of a LIBOR Tranche,
if such Tranche Period would otherwise end on a day which is
not a Business Day, and there is no subsequent Business Day in
the same calendar month as such day, such Tranche Period shall
end on the immediately preceding Business Day);
(ii) in the case of any Tranche Period of
one day, (A) if commencing on the Effective Date, such Tranche
Period shall be the Effective Date; (B) any subsequently
occurring Tranche Period which is one day shall, if the
immediately preceding Tranche Period is more than one day, be
the last day of such immediately preceding Tranche Period and,
if the immediately preceding Tranche Period is one day, be the
day next following such immediately preceding Tranche Period;
and (C) if such Tranche Period occurs on a day immediately
preceding a day which is not a Business Day, such Tranche
Period shall be extended to the next succeeding Business Day;
and
(iii) in the case of any Tranche Period for
any Tranche which commences before the Termination Date and
would otherwise end on a date occurring after the Termination
Date, such Tranche Period shall end on the Termination Date.
"Transaction Parties" means, collectively, the Borrower,
HDCC, and the Servicer.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdiction.
"Unrated Note" has the meaning set forth in Section 2.07.
"Unused Commitment" has the meaning set forth in Section 2.03.
"Unused Fee" has the meaning set forth in the Fee Letter.
"Usage Fee" has the meaning set forth in the Fee Letter.
"Yield Supplemented Contract" means a Contract for which the
Contract Rate is less than the Required Rate.
"Yield Supplement Overcollateralization Amount" means, during
the Revolving Period, as calculated on each Borrowing Date (in respect of the
Contracts then becoming part of the Collateral), each Settlement Date (in
respect of all Contracts then comprising Collateral) and each Take-Out Date (in
respect of all Contracts remaining as Collateral after giving effect to the
applicable Take-Out), an aggregate amount for all applicable Contracts,
calculated in respect of each such Contract as being an amount equal to, if
positive, (A) the Outstanding Balance of each Yield Supplemented Contract minus
(B) the present value of such Yield Supplemented Contract discounted at the
Required Rate. The Required Rate for each Contract shall be determined on the
basis of the Hedging Rate set forth in the Borrowing Notice for the Borrowing
Date such Contract first became part of the Collateral.
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SECTION 1.02. Other Terms and Constructions. Under this
Agreement, all accounting terms not specifically defined herein shall be
construed in accordance with GAAP as in effect in the United States, and all
accounting determinations made and all financial statements prepared hereunder
shall be made and prepared in accordance with GAAP (except for those accounting
determinations made with respect to the financial covenants set forth in clauses
(h), (i), (j) and (k) of the definition of "Servicer Termination Event", which
shall be made in accordance with Agreement Accounting Principles). All terms
used in Article 9 of the UCC in the State of New York, and not specifically
defined herein, are used herein as defined in such Article 9. The words
"herein," "hereof," and "hereunder" and other words of similar import refer to
this Agreement as a whole, including the exhibits and schedules hereto, as the
same may from time to time be amended or supplemented and not to any particular
section, subsection, or clause contained in this Agreement, and all references
to Sections, Exhibits and Schedules shall mean, unless the context clearly
indicates otherwise, the Sections hereof and the Exhibits and Schedules attached
hereto, the terms of which Exhibits and Schedules are hereby incorporated into
this Agreement. The captions and section numbers appearing in this Agreement are
inserted only as a matter of convenience and do not define, limit, construe or
describe the scope or intent of the provisions of this Agreement. Each of the
definitions set forth in Section 1.01 hereof shall be equally applicable to both
the singular and plural forms of the defined terms. Unless specifically stated
otherwise, all references herein to any agreements, documents or instruments
shall be references to the same as amended, restated, supplemented or otherwise
modified from time to time.
SECTION 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
SECTION 2.01. The Loan Facility.
(a) Generally. On the terms and subject to the conditions
hereof, each Conduit Lender may in its sole discretion make, and each Committed
Lender severally and not jointly agrees to make (if the Conduit Lender in its
related Group elects not to make), Loans to the Borrower from time to time on
any day during the Revolving Period, but no more than once a week, in an amount
in respect of any Lender Group not to exceed at any time its Lender Group's Pro
Rata Share of the Aggregate Commitment. No Lender shall be required to extend
its portion of any Advance hereunder, and no Advance shall be extended, if:
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(i) such Lender's portion of any requested
Advance would exceed its Pro Rata Share of such Advance or
such Lender's Lending Group's portion of such Advance would
exceed its Pro Rata share of the Aggregate Commitment;
(ii) if such Lender is a Conduit Lender, the
extension of the related Loan would result in the aggregate
principal amount of the Loans extended by such Conduit Lender
exceeding its Conduit Lending Limit, or if such Lender is a
Committed Lender, the extension of the related Loan would
result in the aggregate principal amount of the Loans extended
by such Committed Lender exceeding its Commitment;
(iii) the Termination Date has occurred; or
(iv) any condition to making such Advance
set forth in Article III shall not have been satisfied.
Subject to the terms, conditions, provisions and limitations set forth herein,
the Borrower may borrow, repay or prepay and reborrow Loans during the Revolving
Period. The Loans shall be secured by the Collateral pursuant to Section 2.16.
Collections received in respect of the Collateral shall be applied in accordance
with the provisions of Section 2.08.
(b) Conduit Lender Participation. On or prior to each
Borrowing Date, each Conduit Lender shall advise its related Administrative
Agent as to whether and the extent to which it shall participate in the making
of the Loan to be made by its Lender Group on such Borrowing Date. The related
Administrative Agent shall promptly notify the Borrower, the Program Agent and
the Committed Lenders in its Lender Group of such Conduit Lender's election. At
no time will a Conduit Lender be obligated to make all or any portion of any
Loan to be made by its Lender Group hereunder.
(c) Committed Lender's Commitment.
(i) If a Conduit Lender elects not to make all or any portion
of the Loan to be made by its Lender Group, the same shall be made by
the Committed Lenders in its Lender Group on a pro rata basis in
accordance with their respective Commitments.
(ii) The obligation of any Committed Lender to make its
ratable portion of any Advance hereunder is several from the obligation
of any other Committed Lender (whether or not in the same Lender
Group). The failure of any Committed Lender to make its ratable portion
of any Advance hereunder shall not release the obligation of any other
Committed Lender (whether or not in the same Lender Group) to make its
ratable portion of any Advance hereunder, but no Committed Lender shall
be responsible for the failure of any other Committed Lender to make
its ratable portion of any Advance hereunder.
SECTION 2.02. Making the Advance.
(a) Each Advance made under this Article II shall consist of
the Loans made by each Lender Group ratably in proportion to such Lender Group's
respective Pro Rata Share and shall be made pursuant to a Borrowing Notice
issued by the Borrower to the Administrative Agents and the Hedge
Counterparties. To be effective, a Borrowing Notice must be received by each
Administrative Agent not less than two (2) Business Days prior to the requested
Borrowing Date; provided that the initial Borrowing Notice issued by the
Borrower hereunder may be issued to the Administrative Agents on the Effective
Date. Each Administrative Agent shall forward each Borrowing Notice to the
Lenders in its Lender Group. Each Borrowing Notice shall, except as set forth
below, be irrevocable and shall specify:
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(i) the new Contracts being pledged in
connection with such Advance (the "New Contracts"),
(ii) the requested aggregate principal
amount of such Advance and the amount of the Loan,
(iii) the Borrowing Date,
(iv) the Cutoff Date in respect of the New
Contracts,
(v) the initial Tranche Period and Rate Type
requested by the Borrower, and
(vi) the Hedging Rate existing under the
Hedge Agreements for the Loans to be made by each Lender Group
on such Borrowing Date, which Hedging Rate shall be used in
the calculation of the Yield Supplement Overcollateralization
Amount in respect of the New Contracts.
On each Borrowing Date, upon satisfaction of the applicable conditions precedent
set forth in Article III, and so long as such Advance does not otherwise violate
the terms and conditions hereof, each Conduit Lender or each Committed Lender,
as applicable, shall remit to the account specified by the Administrative Agent
in its Lender Group by wire transfer in same day funds at such time as shall
enable such Administrative Agent to remit such funds to the Borrower by 12:00
p.m. (New York City time) on the Borrowing Date, an amount equal to (1) in the
case of a Conduit Lender, its Lender Group's Pro Rata Share of the Advance, and
(2) in the case of a Committed Lender, its individual Pro Rata Share thereof.
Upon receipt of such funds, each Administrative Agent shall by 12:00 pm (New
York City time) on such Borrowing Date initiate a wire transfer of same day
funds in such amount to account #35099879 maintained on behalf of the Borrower
at The Northern Trust Company (the "NTC Account"); provided that, with respect
to the funds remitted to the Administrative Agent of the JPMorgan Lender Group
in respect of such Advance, such Administrative Agent shall (x) deposit or cause
to be deposited in the Reserve Account a portion of such funds, to the extent
available, up to the amount necessary to cause the funds then held in the
Reserve Account to equal the Minimum Reserve Amount after giving effect to such
Advance, and (y) initiate a wire transfer of the balance of such funds, if any,
to the NTC Account. Upon the making of such wire transfers and deposits, each
Lender Group shall be deemed to have extended its Loan to the Borrower as part
of such Advance.
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Notwithstanding the foregoing, the initial Advance hereunder
shall be disbursed in the following manner: (i) in the case of each of the
Lender Groups of which JPMorgan and CNAI is Administrative Agent, such
Administrative Agent shall apply the proceeds of its Lender Group's Pro Rata
Share of the initial Advance to the "Borrower Obligations" then owing such
Lender Group under the Existing Credit Agreement, (ii) in the case of each other
Lender Group, the Administrative Agent of such Lender Group shall remit the
proceeds of such Lender Group's Pro Rata Share of the initial Advance to the
Program Agent, and (iii) the Program Agent shall distribute funds received by it
from the Administrative Agents of such other Lender Groups to (A) JPMorgan and
CNAI, for application to the "Borrower Obligations" then outstanding under the
Existing Credit Agreement, (B) the Program Agent, for deposit to the Reserve
Account in an amount equal to the Minimum Reserve Amount, and (C) the Borrower,
to the extent of any balance remaining. Upon the making of such disbursements in
accordance with the foregoing, each Lender Group shall be deemed to have
extended its Pro Rata Share of the initial Advance to the Borrower.
(b) Borrowing Notice Irrevocable. Each Borrowing Notice shall
be irrevocable and binding on the Borrower. The Borrower shall reimburse each
Lender for any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or prior to the Borrowing Date specified in such Borrowing
Notice the applicable conditions set forth in Article III or any other term or
condition described in this Agreement, including any loss, cost or expense
incurred by reason of the liquidation or redeployment of funds acquired by such
Lender to fund its Loan when the Loan, as a result of such failure, is not made
on such date.
(c) Extension of the Maturity Date. The Borrower may request,
no more frequently than once each year, by delivering written notice to the
Administrative Agents and the Program Agent, that the Lenders extend the
Maturity Date for an additional 364 days, with such extension to become
effective as of and from the date all of the Lenders consenting thereto shall in
their sole discretion consent to such extension. The Administrative Agents will
forward such requests to the Lenders in their respective Lender Groups. Any such
request shall be subject to the following conditions: (w) at no time shall any
Commitment have a term of more than 364 days and, if any such request would
result in a term of more than 364 days, such request shall be deemed to have
been made for such number of days so that, after giving effect to such extension
on the date requested, such term will not exceed 364 days, (x) none of the
Lenders will have any obligation to extend any Commitment, (y) if fewer than all
of the Lenders agree to extend the Maturity Date at such time, then any such
extension of the Maturity Date will be effective only if (1) those Lenders who
initially agreed to extend the Maturity Date for an additional 364 days
subsequently reaffirm their agreement to extend, acknowledging that it would
then be without the participation of the non-extending Lenders, and (2) the
Borrower shall have made payment in full of the principal balance of the Loans
together with all other Borrower Obligations accrued hereunder and owing to each
of the non-extending Lenders and their related Lender Groups on the Maturity
Date in effect prior to such extension, and (z) any request for such extension
shall be made not more than sixty (60) days prior to the then effective Maturity
Date. Each Administrative Agent shall respond to such request in writing, on
behalf of the Lenders in its Lender Group (with a copy to the Program Agent),
within thirty (30) days after receipt of such request; provided that if such
request was received less than thirty (30) days prior to the then effective
Maturity Date, each Administrative Agent shall be given at least ten (10) days
to respond thereto (meaning that no such request may be delivered fewer than ten
(10) days before the Maturity Date). Any Administrative Agent's failure for any
reason to respond to such a request within the applicable time period shall be
deemed a rejection of the requested extension by the Lenders in its Lender
Group. In the case of any Lender that shall not have agreed to (or been deemed
to have rejected) an extension request, the Principal Balance of all Loans made
by such Lender, together with all Borrower Obligations accrued hereunder and
owing to such Lender shall be due and payable in full to such Lender on the
Maturity Date that shall have been in effect at the time the request by the
Borrower for an extension was made.
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SECTION 2.03. Reduction in the Aggregate Commitment. The Borrower may, on
any Settlement Date prior to the Maturity Date on not less than ten (10) days'
prior irrevocable written notice to the Administrative Agents, (i) prepay in
whole all of the outstanding Borrower Obligations, together with any additional
amount as may be necessary to pay all amounts, including any termination
payments, due to the Hedge Counterparties on such Settlement Date as a result of
such prepayment, or (ii) permanently reduce in part (ratably among the Committed
Lenders) that portion of the Aggregate Commitment that exceeds the Aggregate
Principal Balance (the "Unused Commitment"); provided, that upon each such
reduction, the Borrower shall pay on the applicable Reduction Date a Make-Whole
Fee to the Administrative Agents ratably based on the Pro Rata Share of each
Lender Group's Lender Group Limit at such time; provided further, that if on any
Reduction Date a Lender is a Defaulting Lender, such Lender shall not be
entitled to a Make-Whole Fee in connection with the reduction being given effect
on such Reduction Date. Any such reduction in the Aggregate Commitment shall be
applied ratably to the Lenders and shall result in reductions of each of the
Commitments, the Conduit Lending Limits and the Lender Group Limits based on
their respective Pro Rata Shares of the applicable reduction. Notwithstanding
the foregoing, the Borrower may elect to reduce the Unused Commitment of any
Defaulting Lender prior to reducing the Aggregate Commitment ratably among the
non-defaulting Committed Lenders.
SECTION 2.04. Tranches.
(a) Generally. Each Loan shall be allocated to one or more
Tranche Periods. Any portion of a Loan having one Tranche Period and one Rate
Type and held by one Lender is referred to herein as a "Tranche". From time to
time the Borrower shall select Tranche Periods and Rate Types with respect to
Tranches funded by the Committed Lenders, subject to the provisions of this
Agreement and provided that no Event of Termination has occurred. At all times
after the occurrence of and during the continuation of an Event of Termination,
each Committed Lender shall select the Tranche Periods and Rate Types with
respect to the Tranches it funds hereunder. Either the Borrower or, following an
Event of Termination, the applicable Lender, may, upon notice to the other party
received at least three (3) Business Days prior to the last day of any Tranche
Period in the case of the Borrower giving notice, or up to the last day of such
Tranche Period in the case of the Lender giving notice, either (i) divide any
Tranche originating on such last day or having a Tranche Period ending on such
last day into two or more Tranches having an aggregate Principal Balance equal
to the Principal Balance of such undivided Tranche, or (ii) combine any two or
more Tranches originating on such last day or having Tranche Periods ending on
such last day into a single Tranche having a Principal Balance equal to the
aggregate of the Principal Balance of such Tranches; provided, however, that no
Tranche with respect to which Interest is determined by reference to the CP Rate
may be combined with a Tranche with respect to which Interest is determined by
reference to the Alternative Rate, and a Tranche held by one Lender may not be
combined with any Tranche held by any other Lender.
35
(b) Illegality. Notwithstanding any other provision of this
Agreement, if the adoption of or any change in any Law or in the interpretation
or application thereof by any relevant Governmental Authority shall make it
unlawful for any Lender, in its reasonable determination, to fund or maintain
LIBOR Tranches as contemplated by this Agreement or to obtain in the interbank
Eurodollar market the funds with which to make or maintain any such LIBOR
Tranche, such Lender shall promptly notify the Program Agent, its Administrative
Agent and the Borrower thereof whereupon, until such Lender notifies the
Borrower and the Program Agent that the circumstances giving rise to such
suspension no longer exist (which notice such Lender shall promptly give), (i)
the obligation of such Lender to fund or maintain LIBOR Tranches shall forthwith
be suspended and (ii) such Lender's then outstanding LIBOR Tranches, if any,
shall be converted on the last day of the Tranche Period for such Tranches or
within such earlier period as required by Law into Base Rate Tranches. Before
giving any notice to the Program Agent, its Administrative Agent and the
Borrower pursuant to this clause (b), such Lender shall designate a different
office as its lending office if such designation would avoid the need for giving
such notice and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
(c) LIBO Rate Inadequate; Inability to Determine LIBO Rate. If
prior to the commencement of any Tranche Period for a LIBOR Tranche, either (i)
the related Lender reasonably determines that the rate at which deposits of
Dollars are being offered to such Lender in the London interbank market does not
accurately reflect the cost to such Lender of funding or maintaining LIBOR
Tranches for such Tranche Period or (ii) the related Lender is unable, after
reasonable attempts, to obtain Dollars in the London interbank market to fund or
maintain such Tranche for such Tranche Period, then such Lender shall give
notice thereof to the Borrower, its Administrative Agent and the Program Agent
by telephone or telecopy as promptly as practicable thereafter and, until such
Lender notifies the Borrower, its Administrative Agent and the Program Agent
that the circumstances giving rise to such suspension no longer exist (which
notice such Lender shall promptly give), (A) the obligations of such Lender to
fund or maintain LIBOR Tranches shall be suspended, and (B) each outstanding
LIBOR Tranche funded by such Lender shall be converted into a Base Rate Tranche
on the last day of the Tranche Period applicable thereto.
SECTION 2.05. Interest and Fees; Hedging. (a) The Borrower
shall pay Interest on the Principal Balance of each Tranche, which interest
shall accrue for each day that such Principal Balance shall be outstanding.
(b) On each Settlement Date, the Borrower shall pay to each
Lender (or its related Administrative Agent) all accrued and unpaid Interest
with respect to all Tranches funded by such Lender during the related Monthly
Period (or, in the case of a Provisional Settlement Date, all accrued and unpaid
Interest to such Settlement Date); provided that, in the case of any LIBOR
Tranche, the Borrower shall, if so requested by the applicable Lender, pay to
such Lender all accrued and unpaid Interest thereon on the last day of the
related Tranche Period.
(c) On each Settlement Date, the Borrower shall pay to each
Administrative Agent an amount equal to the sum of the Usage Fee and the Unused
Fee, if any, accrued in respect of each day during the related Monthly Period
(or, in the case of a Provisional Settlement Date, all accrued and unpaid Usage
Fees and Unused Fees to such Settlement Date) for the benefit of each Lender in
such Administrative Agent's Lender Group, which fees shall accrue on each day
during the period from the Effective Date to the date the Loans shall be repaid
in full as specified herein. Notwithstanding the foregoing, the Usage Fee shall
not accrue on any day that the Default Rate shall then be in effect as the
Interest Rate.
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(d) On or before the fifth Business Day prior to each
Settlement Date (or, in the case of a Provisional Settlement Date, such notice
as may be reasonably practicable under the circumstances), each Administrative
Agent, on behalf of the Lenders in its Lender Group, shall furnish the Borrower
with an invoice setting forth (i) the amount of the accrued and unpaid Interest
and the calculation thereof for all Tranches funded by the Lenders in its Lender
Group during the related Monthly Period (or other applicable period), and (ii)
the amount of the accrued and unpaid Usage Fee payable to the Lenders in such
Administrative Agent's Lender Group during such period.
(e) From and after the initial Borrowing Date, at all times
that any Loan shall be outstanding, the Borrower shall cause Eligible Hedging
Agreements to be in place and to be maintained with Eligible Hedge
Counterparties in respect of the Aggregate Principal Balance then outstanding.
The Borrower shall confer with each Administrative Agent as to the Hedge
Agreements that shall correspond to the Loans made such Administrative Agent's
Lender Group. Each Hedge Agreement proposed to be effective on the initial
Borrowing Date in respect of the Loans being made on such date shall, if in form
and substance reasonably satisfactory to the Syndication Agents, constitute an
Eligible Hedge Agreement. Each new Hedge Agreement, and each amended, restated,
supplemented or otherwise modified Hedge Agreement, that is proposed to be
effective at any time after the initial Borrowing Date shall constitute an
Eligible Hedge Agreement if it is either (i) in form and substance substantially
similar to the corresponding Hedge Agreement that shall have been in effect on
the initial Borrowing Date or (ii) otherwise in form and substance reasonably
satisfactory to the Syndication Agents, with approval by the Syndication Agents
not to be unreasonably withheld, conditioned or delayed. The Borrower shall
cause the Hedge Agreements in respect of all Loans made on the same Borrowing
Date to be uniform in terms of cap rate, amortization schedule, and such other
terms as otherwise necessary to cause each such Hedge Agreement to be in
substantially the same form such that no one Hedge Agreement contains material
provisions which are more favorable than the provisions included in the other
Hedge Agreements.
SECTION 2.06. Maturity Date. The Aggregate Principal Balance
of the Loans together with other Borrower Obligations accrued hereunder shall be
due and payable in full, together with all Interest thereon accrued to such
date, on the Maturity Date unless (i) earlier repaid pursuant to the provisions
of this Agreement (including, without limitation, Section 2.08), or (ii) the
Borrower Obligations are required to be repaid on any earlier date in accordance
Section 7.02.
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SECTION 2.07. Evidence of Debt. The Loans may be evidenced by
two series of promissory notes (each, a "Note") executed and delivered by the
Borrower to each Lender in the principal amount of the Loan or portion thereof
made by such Lender. If such a series is requested by any of the Lender Groups,
one series of Notes will be explicitly rated by at least one Rating Agency as
having a long-term debt rating equivalent to AAA/Aaa and each such Note shall be
substantially in the form of Exhibit B-1 hereto (a "Rated Note"). The other
series of Notes will not require an explicit rating from the Rating Agencies and
each such Note shall be substantially in the form of Exhibit B-2 hereto (an
"Unrated Note"). In all respects other than the classification of the Notes as
rated or unrated, the Notes will be entitled to identical rights and priority.
The Notes will be ranked pari passu and the Lenders holding such Notes will
share equally in the Collateral and will be entitled to the same rights and
remedies under this Agreement and the other Facility Documents. Each Lender
Group may elect, in its sole discretion, to have either a Rated Note or an
Unrated Note issued by the Borrower to its Lender Group. In the case of any
Lender that does not request a Note, such Lender shall maintain an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from the Loan or portion thereof made by such Lender, including the outstanding
principal balance of such Loan and the amount of Interest payable and paid to
such Lender from time to time hereunder. The entries made in such accounts of
the Lenders shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any Lender
to maintain such accounts or any error therein shall not in any manner affect
the obligation of the Borrower to repay any Loan in accordance with the terms of
this Agreement.
SECTION 2.08. Settlement Procedures.
(a) Deposits to Collection Account. The Servicer shall
instruct the Lockbox Bank to remit all Collections identified with the Contracts
from the Lockbox Account directly to the Collection Account within two (2)
Business Days of identification. In the event that the Borrower and/or the
Servicer receives any Collections or other proceeds of the Collateral, each
shall remit the same directly to the Collection Account within two (2) Business
Days of receipt. On each Settlement Date, each of the Borrower and the Servicer
shall deposit or shall cause to be deposited to the Collection Account all
amounts described in "Total Distribution Amount" together with any other
Collections received by either of them that have not previously been deposited
to the Collection Account. The Servicer shall not make any withdrawals from the
Collection Account or the Reserve Account, as applicable, at any time except for
the purpose of distributing such Collections and other amounts in accordance
with Sections 2.08(b) and 2.08(c), as applicable; provided, that the Servicer
may, from time to time, withdraw amounts from the Collection Account as
contemplated in Section 6.06, and the Servicer may cause amounts in the
Collection Account and the Reserve Account, as applicable, to be invested in
Permitted Investments maturing not later than the Settlement Date next following
such investment.
(b) Application of Collections - Revolving Period. On each
Settlement Date, the Servicer shall apply the Total Distribution Amount for such
Settlement Date in the following order of priority:
(i) first, to the Servicer for the repayment
of any outstanding Servicer Advance made in respect of any
Contract;
(ii) second, to the Servicer the accrued and
unpaid Servicer Fee, including any unpaid Servicer Fees with
respect to any prior Monthly Periods;
(iii) third, to be distributed pari passu to
the Administrative Agents, the Program Agent and the Hedge
Counterparties, as applicable: (A) to each Administrative
Agent for the Lenders in its respective Lender Group, on a pro
rata basis, and if applicable to the Program Agent, an amount
equal to the aggregate accrued and unpaid Priority Finance
Charges, and (B) to the Hedge Counterparties, on a pro rata
basis, all net monthly payments, if any, due to the Hedge
Counterparties on such Settlement Date (other than such
payments due upon the termination of any Hedge Agreement);
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(iv) fourth, to be distributed pari passu to
the Administrative Agents and the Hedge Counterparties, as
applicable: (A) to the Administrative Agents for the Lenders
in their respective Lender Groups, an amount equal to each
Lender Group's Pro Rata Share of the Target Principal Amount,
and (B) to the Hedge Counterparties, on a pro rata basis, any
payments due upon the termination of any Hedge Agreement to
which they are party (other than Subordinated Swap Termination
Payments);
(v) fifth, to be distributed to the
Administrative Agents for the Lenders in their respective
Lender Group, on a pro rata basis, an amount equal to the
aggregate accrued and unpaid Subordinated Finance Charges (to
the extent the same constitute Interest or Fees), if any;
(vi) sixth, to be deposited to the Reserve
Account, the amount of any Reserve Account Shortfall;
(vii) seventh, to be distributed to the
Program Agent, an amount equal to the aggregate accrued and
unpaid Subordinated Finance Charges due and payable to the
Program Agent (to the extent constituting reimbursement for
enforcement costs and expenses);
(viii) eighth, to be distributed to any
applicable Hedge Counterparties, on a pro rata basis, any
Subordinated Swap Termination Payments then due and payable;
(ix) ninth, if any Borrower Obligations
(including "Unpaid Amounts" (as defined in the Hedge
Agreements)) (other than the amounts paid pursuant to clauses
(i) through (vii) above) are then due and payable by the
Borrower to any Secured Party, to each such Secured Party
(ratably in accordance with the amounts owing to each) the
Borrower Obligations so due and payable;
(x) tenth, to be distributed pari passu, all
unpaid amounts then payable to The Bank of New York Mellon
Trust Company, National Association under the Control
Agreement and to the Program Agent under the Reserve Account
Agreement; and
(xi) eleventh, any remaining funds to the
Borrower.
In addition to the foregoing, the Servicer shall, to the extent of
funds then available in the Collection Account, on the last day of any Tranche
Period for a LIBOR Tranche, disburse to the applicable Administrative Agent for
the Committed Lender that shall have funded or maintained such LIBOR Tranche, an
amount equal to the Interest on such LIBOR Tranche.
(c) Application of Collections - Post-Revolving Period. Upon
the occurrence of and during the continuation of an Event of Termination and at
all times following the end of the Revolving Period, the Servicer shall apply
the Total Distribution Amount on each Settlement Date in the following order of
priority:
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(i) first, to the Servicer for the repayment
of any outstanding Servicer Advance made in respect of any
Contract;
(ii) second, to the Servicer, if the
Servicer is not HDCC or an Affiliate of HDCC, the accrued and
unpaid Servicer Fee, including any unpaid Servicer Fees with
respect to any prior Monthly Periods;
(iii) third, to be distributed pari passu to
the Administrative Agents, the Program Agent and the Hedge
Counterparties, as applicable: (A) to each Administrative
Agent for the benefit of the Lenders in its respective Lender
Group, on a pro rata basis, and if applicable to the Program
Agent, an amount equal to the aggregate accrued and unpaid
Priority Finance Charges, and (B) to the Hedge Counterparties,
on a pro rata basis, all net monthly payments, if any, due to
the Hedge Counterparties on such Settlement Date (other than
such payments due upon the termination of any Hedge
Agreement);
(iv) fourth, to be distributed pari passu to
the Administrative Agents and the Hedge Counterparties, as
applicable: (A) to the Administrative Agents for the Lenders
in their respective Lender Groups, an amount equal to each
Lender Group's Pro Rata Share of the Target Principal Amount,
and (B) to the Hedge Counterparties, on a pro rata basis, any
payments due upon the termination of any Hedge Agreement to
which they are party (other than Subordinated Swap Termination
Payments);
(v) fifth, to be distributed to the
Administrative Agents for the Lenders in their respective
Lender Group, on a pro rata basis, and if applicable to the
Program Agent, an amount equal to the aggregate accrued and
unpaid Subordinated Finance Charges, if any;
(vi) sixth, to be distributed to any
applicable Hedge Counterparties, on a pro rata basis, any
Subordinated Swap Termination Payments then due and payable;
(vii) seventh, if any Borrower Obligations
(including "Unpaid Amounts" (as defined in the Hedge
Agreements)) (other than the amounts paid pursuant to clauses
(i) through (vi) above) are then due and payable by the
Borrower to any Secured Party, to each such Secured Party
(ratably in accordance with the amounts owing to each) the
Borrower Obligations so due and payable;
(viii) eighth, to be distributed pari passu,
all unpaid amounts then payable to The Bank of New York Mellon
Trust Company, National Association under the Control
Agreement and to the Program Agent under the Reserve Account
Agreement;
(ix) ninth, if the Servicer is HDCC or an
Affiliate thereof, to the Servicer the amounts specified in
clause (ii) above; and
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(x) tenth, on the Final Collection Date, any
remaining funds to the Borrower.
Any payment to be made to the Lenders hereunder shall be made
to the applicable Administrative Agent on behalf of its related Lenders as
described in clauses (b) and (c) above and such payment shall conclusively
satisfy the Borrower's or the Servicer's payment duties hereunder.
(d) Reserve Account.
(i) On each Settlement Date, if the Total
Distribution Amount is estimated to be less than the aggregate
amount required to be paid pursuant to Section 2.08(b)(i)
through (iii), then the Servicer shall withdraw from the
Reserve Account and remit to the Collection Account on the
Business Day preceding the Settlement Date the amount of such
deficiency and shall apply such amount in accordance with
Section 2.08(b).
(ii) Upon the occurrence and during the
continuation of an Event of Termination and at all times
following the end of the Revolving Period, if at any time the
Total Distribution Amount is less than the aggregate amount
required to be paid pursuant to Section 2.08(c)(i) through
(vi), the Servicer shall withdraw from the Reserve Account the
amount of such deficiency and shall apply such amount in
accordance with Section 2.08(c).
(iii) On each Settlement Date during the
Revolving Period, if (A) the Total Distribution Amount is
sufficient in amount to pay all amounts then due under Section
2.08(b)(i) through (x), and (B) no Event of Termination or
Incipient Event of Termination shall have occurred and then be
continuing, the Servicer may distribute to the Borrower the
excess of the aggregate amount then held in the Reserve
Account over the Minimum Reserve Amount.
(iv) Upon the Aggregate Principal Balance
being reduced to zero and all other Borrower Obligations being
indefeasibly paid in full, after giving effect to any
withdrawals on such date pursuant to clauses (i) and (ii)
above, all amounts then remaining in the Reserve Account shall
be released to the Borrower.
(e) The Borrower hereby represents and warrants that each
remittance of Collections to the Program Agent or the Administrative Agents, as
applicable, hereunder will have been (i) in payment of a debt incurred by the
Borrower in the ordinary course of its business or financial affairs and (ii)
made in the ordinary course of business or financial affairs of the Borrower.
SECTION 2.09. Removal of Defaulted Contracts. In the event the
Borrower shall be capable of selling, assigning or otherwise transferring a
Contract that has become a Defaulted Contract for an amount not less than the
Repurchase Price (or such other price as shall be acceptable to the Syndication
Agents in their sole discretion), the Borrower may, with the consent of the
Syndication Agents, remove from the Collateral such Defaulted Contract and the
related Contract Assets by depositing to the Collection Account on the
Settlement Date immediately following the Monthly Period in which such Contract
became a Defaulted Contract an amount equal to the Repurchase Price (or such
other price) from the proceeds of such sale, assignment or other transfer.
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SECTION 2.10. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by the Borrower or the
Servicer hereunder shall be paid or deposited in accordance with the terms
hereof no later than 1:00 p.m. (New York City time) on the day when due in
lawful money of the United States of America in immediately available funds to
an account the Program Agent or the relevant Administrative Agents may designate
prior to such payment from time to time in writing. The Borrower and the
Servicer shall, to the extent permitted by law, pay to the Affected Party
interest on all amounts not paid or deposited or debited by such Person when due
hereunder at the Default Rate, payable on demand. All computations of interest
and all computations of Interest and Fees hereunder shall be made on the basis
of a year of 360 days for the actual number of days (including the first but
excluding the last day) elapsed; provided that all computations of Interest on
Base Rate Tranches shall be made on the basis of a year of 365 or 366 days for
the actual number of days (including the first but excluding the last day)
elapsed. In no event shall any provision of this Agreement require the payment
or permit the collection of Interest in excess of the maximum permitted by
applicable law. In the event that any payment hereunder (whether constituting a
repayment of Loans or a payment of Interest or any other amount) is rescinded or
must otherwise be returned for any reason, the amount of such payment shall be
restored and such payment shall be considered not to have been made.
SECTION 2.11. Interest Protection.
(a) If due to either: (i) the introduction of or any change
(including, without limitation, any change by way of imposition or increase of
reserve requirements) in or in the interpretation by any Governmental Authority
of any law or regulation (other than laws or regulations relating to taxes)
after the date hereof, (ii) the compliance by any Affected Party with any
directive or request from any central bank or other Governmental Authority
(whether or not having the force of law) imposed after the date hereof, or (iii)
any change in any accounting guideline by an accounting board or authority
(whether or not part of a government or instrumentality thereof) which is
responsible for the establishment of or interpretation of national or
international accounting principles (in each case whether foreign or domestic);
(1) there shall be an increase in the cost to such Affected Party of funding or
maintaining any Tranche which accrues Interest at the Adjusted LIBO Rate or the
CP Rate hereunder or of extending a commitment in respect thereof, or (2) such
Affected Party shall be required to make a payment calculated by reference to
any Tranche which accrues Interest at the Adjusted LIBO Rate or the CP Rate
funded by it or Interest received by it, then the Borrower shall, on the next
Settlement Date which is at least five (5) Business Days after receipt of the
certificate described in Section 2.11(b), pay such Administrative Agent for the
account of such Affected Party (as a third party beneficiary, in the case of any
Affected Party other than one of the Lenders), that portion of such increased
costs incurred, amounts not received or required payment made or to be made,
which such Administrative Agent reasonably determines is attributable to funding
and maintaining, or extending a commitment to fund, any Tranche which accrues
Interest at the Adjusted LIBO Rate or the CP Rate hereunder or pursuant to any
Asset Purchase Agreement or similar liquidity facility.
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(b) Each Administrative Agent will promptly notify the
Borrower and the Program Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle any Affected Party in its Lender Group
to compensation pursuant to Section 2.11(a). Each Affected Party will designate
a different lending office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Affected Party, be otherwise disadvantageous to it. In determining the amount of
such compensation, such Affected Party may use any reasonable averaging and
attribution methods. The applicable Affected Party (or such party's related
Administrative Agent) shall submit to the Borrower a certificate describing in
reasonable detail such increased costs incurred, amounts not received or
receivable or required payment made or to be made (including the calculation
thereof), which certificate shall be conclusive in the absence of manifest
error.
SECTION 2.12. Accounting Based Consolidation Event. (a) If an
Accounting Based Consolidation Event shall at any time occur, the Borrower
shall, on the next Settlement Date which is at least five (5) Business Days
after receipt of the certificate described below, pay the applicable
Administrative Agent, for the benefit of the relevant Affected Party, such
amounts as such Affected Party reasonably determines will compensate or
reimburse such Affected Party for any resulting (i) fee, expense or increased
cost, including without limitation, charged to, incurred or otherwise suffered
by such Affected Party, or (ii) reduction in the rate of return on such Affected
Party's capital or reduction in the amount of any sum received or receivable by
such Affected Party, in each case determined by such Affected Party to be
allocable to the Borrower or the transactions contemplated in this Agreement in
connection therewith. Amounts under this Section 2.12 may be demanded at any
time without regard to the timing of issuance of any financial statement by any
Conduit Lender or by any Affected Party; provided that a Conduit Lender on
behalf of such Affected Party shall provide to the Borrower a calculation in
reasonable detail of the amounts payable to each Affected Party pursuant to this
Section 2.12 and such calculation shall be binding in the absence of manifest
error; provided, further, in respect of any Monthly Period, the amount due to an
Affected Party under this Section 2.12 when combined with the Interest payable
to such Affected Party for such Monthly Period shall be equal to the amount of
Interest that would have accrued if the Tranche held by such Affected Party were
a Base Rate Tranche during such Monthly Period.
(b) For purposes of this Section 2.12, "Accounting Based
Consolidation Event" means the consolidation, for financial and/or regulatory
accounting purposes, of all or any portion of the assets and liabilities of any
Conduit Lender that are subject to this Agreement or any other Facility Document
with all or any portion of the assets and liabilities of an Affected Party. An
Accounting Based Consolidation Event shall be deemed to occur on the date any
Affected Party shall acknowledge in writing that any such consolidation of the
assets and liabilities of a Conduit Lender shall occur.
SECTION 2.13. Increased Capital.
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(a) If, after the date hereof, (i) the introduction of or any
change in or in the interpretation by any Official Body of any law or
regulation, (ii) compliance by any Affected Party with any new or changed
directive or request from any central bank or other Official Body (whether or
not having the force of law), or (iii) any change in any accounting guideline by
an accounting board or authority (whether or not part of a government or
instrumentality thereof) which is responsible for the establishment of or
interpretation of national or international accounting principles (in each case
whether foreign or domestic), affects or would affect the amount of capital
required or expected to be maintained by such Affected Party or such Affected
Party reasonably determines that the amount of such capital is increased by or
based upon the existence of any Lender's agreement to make or maintain Loans
hereunder and other similar agreements or facilities and such event would have
the effect of reducing the rate of return on capital of such Affected Party by
an amount deemed by such Affected Party to be material, then, on the next
Settlement Date which occurs at least five (5) days after receipt of the
certificate described in Section 2.13(b), the Borrower shall pay to such
Affected Party (as a third party beneficiary, in the case of any Affected Party
other than one of the Lenders) or the related Administrative Agent for the
account of such Affected Party from time to time, as specified by such Affected
Party or such Administrative Agent, additional amounts sufficient to compensate
such Affected Party in light of such circumstances, to the extent that such
Affected Party or such Administrative Agent on behalf of such Affected Party
reasonably determines such increase in capital to be attributable to the
existence of the applicable Lender's agreements hereunder.
(b) Each Administrative Agent will promptly notify the
Borrower and the Program Agent of any event of which it has knowledge, occurring
after the date hereof, which will entitle any Lender or Affected Party in its
Lender Group to compensation pursuant to Section 2.13(a). Each Lender or
Affected Party will designate a different lending office if such designation
will avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Lender or Affected Party, be otherwise
disadvantageous to it. In determining the amount of such compensation, such
Lender or Affected Party may use any reasonable averaging and attribution
methods. The applicable Lender or Affected Party (or such party's related
Administrative Agent) shall submit to the Borrower a certificate describing in
reasonable detail such compensation (including the calculations thereof), which
certificate shall be conclusive in the absence of manifest error.
SECTION 2.14. Funding Losses. In the event that any Liquidity
Provider or any Lender shall incur any loss, expense or Liquidation Fees
(including, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Liquidity Provider or Lender in order to fund or maintain any Loan or interest
therein) as a result of any reduction of the Principal Balance of any Tranche at
any time or conversion of any Tranche to another Tranche prior to the originally
scheduled last day of the applicable Tranche Period, then, on the Settlement
Date following written demand from the related Administrative Agent to the
Borrower, the Borrower shall pay to such Administrative Agent for the account of
such Liquidity Provider or Lender, the amount of such loss, expense or
Liquidation Fees. Such written demand shall describe in reasonable detail the
components of such funding loss and shall, in the absence of manifest error, be
conclusive and binding upon the Borrower.
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SECTION 2.15. Taxes. Except to the extent required by
applicable law, any and all payments and deposits required to be made hereunder
or under any instrument delivered hereunder by the Borrower 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 (except for net income taxes that are imposed by the United
States and franchise taxes, gross receipts taxes imposed in lieu of income
taxes, and net income taxes that are imposed on such Affected Party by the state
or foreign jurisdiction under the laws of which such Affected Party is organized
or any political subdivision thereof, collectively, "Excluded Taxes"). If the
Borrower or the Servicer shall be required by law to make any such deduction,
(i) the Borrower shall, except in the case of any deduction on account of
Excluded Taxes, make an additional payment to such Affected Party, in an amount
sufficient so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.15), such Affected
Party receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower (or the Servicer, on its behalf) shall
make such deductions and (iii) the Borrower (or the Servicer, on its behalf)
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(a) In addition, the Borrower agrees to pay any present or
future stamp or other documentary taxes or any other excise or property taxes or
similar levies which arise from any payment made hereunder or under any
instrument delivered hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any instrument delivered
hereunder.
(b) Each Affected Party which is not organized under the laws
of the United States or any State thereof shall, on or prior to the date that
such Affected Party becomes a party to or obtains rights under this Agreement,
and prior to any payment being made by the Borrower to such Affected Party,
deliver to the Borrower (i) two duly completed and executed copies of the IRS
Form W-8 BEN or W-8 ECI (or any successor form) as applicable; and (ii) such
other forms or certificates as may be required under the laws of any applicable
jurisdiction (on or before the date that any such form expires or becomes
obsolete), in order to permit the Borrower to make payments to, and deposit
funds to or for the account of, such Affected Party hereunder and under the
other Facility Documents without any deduction or withholding for or on account
of any tax. Each such Affected Party shall submit to the Borrower (with copies
to the Program Agent) two updated, completed, and duly executed versions of: (i)
all forms referred to in the previous sentence upon the expiry of, or the
occurrence of any event requiring a change in, the most recent form previously
delivered by it to the Borrower or the substitution of such form; and (ii) such
extensions or renewals thereof as may reasonably be requested by the Borrower.
(c) If the Borrower is required to pay additional amounts to
or for the benefit of any Affected Party pursuant to this Section 2.15 as a
result of a change of law or treaty occurring after such Affected Party first
became a party to this Agreement, such Affected Party will, at the Borrower's
request, change the jurisdiction of its applicable lending office if, in the
reasonable judgment of such Affected Party, such change (i) will eliminate or
reduce any such additional payment which may thereafter accrue and (ii) is not
otherwise disadvantageous to such Affected Party.
SECTION 2.16. Security Interest. (a) As security for the
performance by the Borrower of all the terms, covenants and agreements on the
part of the Borrower to be performed under this Agreement or any other Facility
Document, including the payment when due of all Borrower Obligations, the
Borrower hereby grants to the Program Agent, for the benefit of the Secured
Parties, a security interest in all of the Borrower's right, title and interest
in and to all of its assets and interests in property, whether now existing or
hereafter arising or acquired, including, without limitation, the following:
45
(i) all Contracts, together with all Related
Security and Collections with respect thereto;
(ii) the Collection Account, including,
without limitation, (A) all Collections held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Collection Account or any
Collections held therein, (B) all investment property and
other financial assets representing Collections or proceeds
thereof on deposit in, credited to, held in, or acquired with
funds from, the Collection Account and all certificates and
instruments from time to time representing or evidencing such
investment property and financial assets, (C) all notes,
certificates of deposit and other instruments from time to
time hereafter delivered or transferred to, or otherwise
possessed by, the Program Agent in substitution for the then
existing investments in the Collection Account and (D) all
interest, dividends, cash, instruments, financial assets,
investment property and other property from time to time
received, receivable or otherwise distributed in respect of or
in exchange for the Collection Account, in each case, related
to Contracts;
(iii) the Reserve Account, including,
without limitation, (A) all amounts held therein and all
certificates and instruments, if any, from time to time
representing or evidencing the Reserve Account or any amounts
held therein, (B) all investment property and other financial
assets representing amounts or proceeds thereof on deposit in,
credited to, held in, or acquired with funds from, the Reserve
Account and all certificates and instruments from time to time
representing or evidencing such investment property and
financial assets, (C) all notes, certificates of deposit and
other instruments from time to time hereafter delivered or
transferred to, or otherwise possessed by, the Program Agent
in substitution for the then existing investments in the
Reserve Account and (D) all interest, dividends, cash,
instruments, financial assets, investment property and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for the Reserve
Account;
(iv) all rights and remedies of the Borrower
under the Receivables Sale Agreement, together with all
financing statements filed by the Borrower against HDCC in
connection therewith;
(v) to the extent not included in the
foregoing, the Contract Assets conveyed to the Borrower under
the Receivables Sale Agreement;
(vi) all rights and remedies of the Borrower
under each Hedge Agreement;
(vii) all accounts, chattel paper,
inventory, equipment, instruments, investment property,
deposit accounts, letter-of-credit rights, general intangibles
and supporting obligations (all terms in this clause (vii)
having the meaning assigned to them in Article 9 of the UCC of
the applicable jurisdiction) constituting or relating to the
foregoing; and
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(viii) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing (the
assets and interests in property described above in this
Section 2.16(a), collectively, the "Collateral").
The Borrower hereby authorizes the filing of financing
statements, and continuation statements and amendments thereto and assignments
thereof, describing the collateral covered thereby as "all of debtor's personal
property or assets" or words to that effect. This Agreement shall constitute a
security agreement under applicable law.
(b) (i) With respect to any Contract that has been repurchased
by HDCC in accordance with Section 6.01 of the Receivables Sale Agreement, the
Program Agent's security interest in such Contract and the Related Security and
Collections with respect thereto shall be automatically released upon the
deposit to the Collection Account of proceeds of such repurchase in an amount
not less than the Repurchase Price.
(ii) Upon prepayment in full of all of the
Borrower Obligations in accordance with Section 2.03 or upon
removal from the Collateral of any Defaulted Contract in
accordance with Section 2.09 (including payment of the amount
specified in Section 2.09), the Program Agent's security
interest, on behalf of the Secured Parties, in all the
Contracts (in the case of Section 2.03) or the removed
Contract (in the case of Section 2.09), and the Related
Security and Collections with respect thereto shall be
automatically released on the date of prepayment or payment of
removal proceeds, as applicable.
(iii) On acknowledgement by the Program
Agent of the occurrence of the Final Collection Date, the
Program Agent's security interest in the Collateral shall
automatically terminate.
(iv) Upon the release or termination of the
Program Agent's security interest in all or any portion of the
Collateral as provided in this Section 2.16(b) or in Section
2.17, the Program Agent will, at the request and expense of
the Borrower, (x) execute and deliver to the Borrower such
instruments of release with respect to such Collateral, in
recordable form if necessary, in favor of the Borrower as the
Borrower may reasonably request, (y) deliver any such
Collateral in its possession to the Borrower or its designee,
and (z) take such other actions as the Borrower may reasonably
request (all without recourse to, and without representation
or warranty by, the Program Agent, any Administrative Agent or
any Lender, other than a representation to the effect that no
Adverse Claim in the Collateral has been created by or through
such Person) to evidence the release or termination of the
Program Agent's security interest in the Collateral or the
portion thereof in which the Program Agent's security interest
has been released or terminated.
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SECTION 2.17. Take-Out Securitizations. The Borrower may, upon
no less than five (5) Business Day's prior written notice to the Administrative
Agents and the Hedge Counterparties, request that certain Collateral be released
from the Program Agent's security interest in order to effect a Take-Out
Securitization. Notwithstanding the foregoing, no Take-Out Securitization shall
be permitted unless the proceeds received in connection with any Take-Out
Securitization are remitted directly to the Collection Account pursuant to
Section 2.08(a) and applied in accordance with the priority of payment
provisions set forth in Section 2.08(b) on the immediately following Settlement
Date (or, if such Take-Out Securitization occurs on a Settlement Date, on such
Settlement Date) and that such proceeds are in an aggregate amount not less than
the Repurchase Price for the Contracts that are the subject of such Take-Out
Securitization together with any additional amount as may be necessary to pay
all amounts due to the Hedge Counterparties on such Settlement Date, including
any termination payment due on such Settlement Date as a result of such Take-Out
Securitization. Prior to any such Take-Out Securitization being effected, the
Program Agent and the Administrative Agents shall have received satisfactory
evidence that before and after giving effect to such Take-Out Securitization,
(A) no Event of Termination, Incipient Event of Termination, Early Amortization
Event or an event that but for notice or lapse of time or both would constitute
an Early Amortization Event shall have occurred and be continuing, (B) the
Aggregate Principal Balance shall not exceed an amount equal to the Borrowing
Base, (C) the Overconcentration Amount shall be zero, (D) with respect to the
Contracts that are (a) 30 to 60 days past due and (b) 60 to 90 days past due,
the percentage of each such category of Contracts remaining as Collateral
hereunder after giving effect to the Take-Out Securitization must not exceed the
percentage of such Contracts that constituted Collateral hereunder immediately
prior to giving effect to such Take-Out Securitization and (E) the transaction
documents to which the Borrower is a party and which set forth the terms of the
Take-Out Securitization include limited recourse and non-petition provisions for
the benefit of the Borrower similar in all material respects to those set forth
in Sections 10.09 and 10.11 hereof. In any calculation to be made in connection
with a Take-Out Securitization hereunder, the Outstanding Balance of a Contract
shall be that set forth in (i) the then most recently delivered Monthly Report
in respect of which the related Settlement Date shall have occurred, or (ii) if
such Contract was acquired by the Borrower after the last date covered by such
Monthly Report, the related Notice of Sale. Upon satisfaction of the conditions
precedent set forth in this Section 2.17 (except for the application of the
proceeds in accordance with Section 2.08(b) as set forth herein), and receipt by
the Borrower of the proceeds thereof in an amount not less than the Repurchase
Price of the Contracts that are the subject of such Take-Out Securitization, the
Program Agent's security interest, on behalf of the Secured Parties, in such
Contracts and the Related Security and Collections shall be released.
SECTION 2.18. Defaulting Lenders. Notwithstanding any
provision of this Agreement to the contrary, if any Committed Lender becomes a
Defaulting Lender, then the following provisions shall apply for so long as such
Committed Lender is a Defaulting Lender:
(a) The Unused Fee shall cease to accrue on the unfunded
portion of the Commitment of such Defaulting Lender pursuant to Section 2.05 and
such Defaulting Lender shall not be entitled to the payment of any Make-Whole
Fee if it remains a Defaulting Lender at the time of any reduction of the
Aggregate Commitment pursuant to Section 2.03.
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(b) The Commitment of such Defaulting Lender shall not be
included in determining whether all Lenders or the Required Lenders have taken
or may take any action hereunder (including any consent to any amendment or
waiver pursuant to Section 10.01), provided that any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender which
affects such Defaulting Lender differently than other affected Lenders shall
require the consent of such Defaulting Lender.
(c) So long as an Event of Termination has not occurred and is
continuing, any amount payable to such Defaulting Lender or any member of its
Lender Group hereunder (whether on account of principal, interest, fees or
otherwise and including any amount that would otherwise be payable to such
Defaulting Lender pursuant to Section 2.04 hereof) shall, in lieu of being
distributed to such Defaulting Lender or member, be retained by the Program
Agent in a segregated account and, subject to any applicable requirements of
law, be applied at such time or times as may be determined by the Program Agent
to (i) the funding or cash collateralization of the Commitment of such
Defaulting Lender as required by this Agreement, (ii) the funding of any Advance
in respect of which such Defaulting Lender has failed to fund its Pro Rata Share
as required by this Agreement, and (iii) if so determined by the Program Agent
and the Borrower, be held in such account as cash collateral for future funding
obligations of the Defaulting Lender's Lender Group under this Agreement.
Amounts held in such segregated account will not accrue Interest or Fees. Any
investment income earned from investments in the segregated account shall be
retained in the segregated account.
(d) In the event that the Program Agent, the Syndication
Agents and the Borrower agree that a Defaulting Lender has adequately remedied
all matters that caused such Lender to be a Defaulting Lender, then the
Commitments of the Lenders and the Lender Group Limit of the Lender's related
Lender Group shall be readjusted to reflect the inclusion of such Lender's
Commitment and on such date such Lender shall purchase at par such of the Loans
of the other Lenders in its Lender Group as its related Administrative Agent
shall determine may be necessary in order for such Lender to hold such Loans in
accordance with its Pro Rata Share of the Lender Group Limit and all funds held
in a segregated account in respect of such Lender Group under Section 2.18(c)
shall be released to the Administrative Agent of such Lender Group.
SECTION 2.19. Mitigation of Obligations; Replacement of Lender
Groups. (a) If any Lender requests compensation under Sections 2.11, 2.12 or
2.13, or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
2.15, then such Lender shall use reasonable efforts to designate a different
lending office for funding or booking its Loans hereunder or to assign its
rights and obligations hereunder to another of its offices, branches or
Affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Sections 2.11, 2.12,
2.13 or 2.15, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable
costs and expenses incurred by any Lender in connection with any such
designation or assignment. The Borrower shall not be required to pay any amount
otherwise payable under Section 2.11, 2.12, 2.13 or 2.15 to the extent such
amount accrued prior to the date that is 180 days prior to the date of the
demand for payment thereof hereunder; provided that if the circumstances giving
rise to such amounts are retroactive, then such 180-day period shall be extended
to include the period of retroactive effect thereof.
49
(b) If any Lender becomes a Defaulting Lender, then the
Borrower may, at its sole expense and effort, upon notice to such Lender, its
related Administrative Agent and the Syndication Agents, require such Lender and
its Lender Group to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in Section 10.03), all of its
interests, rights and obligations under this Agreement to an assignee identified
by the Borrower that shall assume such obligations (which assignee may be a
Lender in another Lender Group, if such Lender and its related Lender Group
accepts such assignment); provided that (i) the Borrower shall have received the
prior written consent of the Syndication Agents, which consent shall not be
unreasonably withheld, and (ii) such Lender and its related Lender Group shall
have received payment of an amount equal to the principal balance of the Loans
made by the Lender and its related Lender Group, accrued interest thereon,
accrued fees and all other amounts payable to such Lender and its related Lender
Group hereunder, from the assignee (to the extent of such principal balance and
accrued interest and fees) or the Borrower (in the case of all other amounts)
together with all amounts then held in any segregated account with respect to
such Lender Group in accordance with Section 2.18(c).
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to Effectiveness of the
Agreement and the Initial Advance. As conditions precedent to the effectiveness
of this Agreement and the initial Advance hereunder, on or prior to the
Effective Date, (i) the Administrative Agents shall have received each of the
documents, instruments, legal opinions and other agreements listed on Exhibit E,
together with all fees and expenses due and payable on or prior to the date
hereof in connection with this Agreement, (ii) since December 31, 2008, no event
has occurred which would have a Material Adverse Effect with respect to the
Servicer, (iii) each Lender shall have received all necessary credit approvals
in order to consummate the transactions contemplated by this Agreement, (iv)
each of the conditions precedent set forth in Section 3.01 of the Receivables
Sale Agreement shall have been met or waived to the satisfaction of the
Administrative Agents, (v) no Event of Termination, Early Amortization Event,
Servicer Termination Event or Incipient Event of Termination shall have occurred
and then be continuing or would occur on giving effect to the transactions
contemplated herein, (vi) all ratings issued by the Rating Agencies in respect
of HDI, HDFS or any of HDFS's Subsidiaries are at a level of at least BBB- (or
its equivalent) and (vii) the Administrative Agents shall have received a pro
forma Monthly Report from the Servicer and such other documents and information
relating to the Collateral as any Administrative Agent may have reasonably
requested.
SECTION 3.02. Conditions Precedent to each Advance Subsequent
to the Initial Advance. In connection with each subsequent Advance after the
initial Advance, the Administrative Agents shall have received, prior to any
such Advance being made, satisfactory evidence that:
(a) a Borrowing Notice has been delivered to
all of the Administrative Agents,
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(b) the Records related to the Contracts
subject to such Advance have been delivered to the Servicer or
the Custodian for the benefit of the Administrative Agent and
the Lenders, and
(c) the Receivables Sale Agreement shall be
full force and effect.
SECTION 3.03. Conditions Precedent to Each Advance. The making
of each Advance (including the initial Advance) by the Lenders to the Borrower
shall be subject to the further conditions precedent that on each Borrowing
Date, each of the following shall be true and correct on such Borrowing Date,
and, with respect to such Advance, both before (except with respect to clauses
(f) and (g) below) and after giving effect to such Advance:
(a) The representations and warranties
contained in Article IV are correct in all material respects
on and as of such date as though made on and as of such date
(except (i) for those representations and warranties which are
specifically made only as of a specific date, which such
representations and warranties shall be correct in all
material respects on and as of the date made and (ii) in the
case of any Advance after the date of the initial Advance, the
representation and warranty made in Section 4.02(i)(i)) and
the Borrower and the Servicer are in compliance in all
material respects with the covenants set forth in Article V as
of such date;
(b) The Aggregate Principal Balance at such
time is less than or equal to the lesser of (i) the Aggregate
Commitments and (ii) the Borrowing Base;
(c) The Overconcentration Amount shall be
zero;
(d) No event has occurred, or would result
from such Advance which constitutes an Event of Termination,
an Early Amortization Event, a Servicer Termination Event, an
Incipient Event of Termination or an event that but for notice
or lapse of time or both would constitute an Early
Amortization Event;
(e) If, at such time, a Purchase is then
being made under the Receivables Sale Agreement, each of the
conditions precedent set forth in Section 3.02 and Section
3.03 of the Receivables Sale Agreement shall have been met or
waived to the satisfaction of the Administrative Agents;
(f) After giving effect to such Advance, the
amount then held in the Reserve Account shall be not less than
the Minimum Reserve Amount; and
(g) The Borrower shall have procured
Eligible Hedge Agreements with Eligible Hedge Counterparties
in an amount not less than the Aggregate Principal Balance
after giving affect to such Advance.
Each delivery of a Borrowing Notice to the Program Agent and the Administrative
Agents, and the acceptance by the Borrower of the Advance, shall constitute a
representation and warranty by the Borrower that, as of the date of such
Advance, both immediately before (except with respect to clauses (f) and (g)
above) and after giving effect thereto and the application of the proceeds
thereof, the statements in the foregoing clauses (a) through (g) above are true
and correct.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower hereby represents and warrants to the Program Agent, each
Administrative Agent and the Lenders, as of the date hereof and as of each
Borrowing Date, as follows:
(a) Corporate Existence and Power. The Borrower is (i) a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (ii) has all requisite corporate
power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its property and carry on its business as now being
conducted; (iii) is qualified to do business as a foreign entity and is in good
standing under the laws of each jurisdiction in which the nature of the business
conducted by it makes such qualification necessary; and (iv) is properly
licensed in each jurisdiction to the extent required by the laws of such
jurisdiction to own and pledge the Contracts in accordance with the terms of
this Agreement, except in the case of clauses (ii), (iii) and (iv), where the
failure to have such license, authorization, consent or approval or to be so
qualified could not reasonably be expected to have a material adverse effect on
the financial condition of the Borrower, the Secured Parties' interest in the
Collateral, the collectibility or enforceability of the Contracts generally or
any material portion of the Contracts, or the Borrower's ability to perform its
obligations under this Agreement or the other Facility Documents.
(b) Power and Authority; Due Authorization, Execution and
Delivery. The Borrower has all necessary corporate power and authority to (i)
execute and deliver this Agreement and each other Facility Document to which it
is a party, and to perform its obligations hereunder and thereunder (ii) use the
proceeds of Loans made hereunder, and (iii) make a grant of a security interest
in the Collateral to the Program Agent on behalf of the Secured Parties on the
terms and conditions herein provided. The Borrower's (i) execution and delivery
of this Agreement and each other Facility Document to which it is a party, (ii)
performance of its obligations hereunder and thereunder, (iii) use of the
proceeds of Loans made hereunder and (iv) the grant of a security interest in
the Collateral to the Program Agent on behalf of the Secured Parties on the
terms and conditions herein provided, have been duly authorized by all necessary
corporate action on the part of the Borrower; and this Agreement and each other
Facility Document to which the Borrower is a party has been duly and validly
executed and delivered by the Borrower.
(c) No Conflict. None of the execution and delivery by the
Borrower of this Agreement and each other Facility Document to which it is a
party, nor the performance of its obligations hereunder and thereunder will
conflict with or result in a breach of, or a default under, or require any
consent under, (i) its certificate or articles of incorporation or by-laws, (ii)
any law, rule or regulation applicable to it, (iii) any agreement or instrument
to which it is a party or by which it or any of its property is bound or
subject, or (iv) any order, writ, judgment, injunction or decree of any court or
Governmental Authority or agency binding on or affecting it or its property, and
will not result in or require the creation or imposition of any Adverse Claim
upon any of the revenues or assets of the Borrower or its Subsidiaries (except
as created hereunder); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
52
(d) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorizations, approvals or
consents of, and no notices to, or filings or registrations with, any
Governmental Authority or regulatory authority or agency (other than
informational filings) are necessary for the execution and delivery by the
Borrower of this Agreement and each other Facility Document to which it is a
party and the performance of its obligations hereunder and thereunder or for the
validity or enforceability hereof or thereof.
(e) Actions, Suits. There are not, in any court or before any
arbitrator of any kind or before or by any governmental body, any actions, suits
or proceedings pending or, to the Borrower's knowledge, threatened against or
affecting the Borrower or any of its businesses or properties which (i) name the
Borrower as a defendant, (ii) affect in any adverse manner the binding nature,
validity or enforceability of any Facility Document or (iii) could reasonably be
expected to have a Material Adverse Effect. The Borrower is not in default with
respect to any order of any court, arbitrator or governmental body, which
default could reasonably be expected to have a Material Adverse Effect.
(f) Binding Effect. This Agreement and each other Facility
Document to which the Borrower is a party constitute the legal, valid and
binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All written information, exhibits
or reports furnished by the Borrower or any of its Affiliates to the Program
Agent, any Administrative Agent or the Lenders in connection with the
negotiation of, or compliance with, this Agreement (including any Monthly
Report) or any of the other Facility Documents are true and complete in all
material respects on the date when furnished and do not contain any material
misstatement of fact or omit to state a material fact or any fact necessary to
make the statements contained therein not materially misleading on the date
furnished.
(h) Use of Proceeds. The Borrower is not engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock, as defined in Regulation U promulgated by the Board of Governors
of the Federal Reserve System from time to time, and no part of the proceeds of
any Loan will be used to buy or carry any margin stock.
(i) Good Title. The Borrower is the legal and beneficial owner
of the Contracts, Related Security and the Collections related thereto purchased
by it under the Receivables Sale Agreement, free and clear of any Adverse Claim,
except such Adverse Claims created pursuant to the terms of the Facility
Documents and Permitted Liens. There have been duly filed all financing
statements or other similar instruments or documents necessary under the UCC (or
any comparable law) of all appropriate jurisdictions to perfect the Borrower's
ownership interest in each Contract, the Related Security, and the Collections
related thereto.
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(j) Perfection. This Agreement, together with the filing of
the financing statements contemplated hereby, is effective to, and shall
transfer to the Program Agent for the benefit of the Lenders (and the Program
Agent for the benefit of the Lenders shall acquire from the Borrower) a valid
and perfected first priority security interest in the Collateral and the
proceeds thereof, free and clear of any Adverse Claim, except such Adverse
Claims created pursuant to the terms of the Facility Documents and Permitted
Liens. There have been duly filed all financing statements or other similar
instruments or documents necessary under the UCC (or any comparable law) of all
appropriate jurisdictions to perfect the Program Agent's (for the benefit of the
Secured Parties) security interest in the Collateral and (i) other than the
filings permitted under this clause (j), no other consensual filings of
financing statements have been made against the Borrower and (ii) to the
Borrower's knowledge, no non-consensual filings of financing statements have
been filed which describe any interest in the Collateral.
(k) Jurisdiction of Organization; Places of Business and
Locations of Records. The jurisdiction of organization, principal places of
business and chief executive office of the Borrower and the offices where it
keeps all of its Records are located at the address(es) listed on Exhibit D or
such other locations of which the Program Agent has been notified in accordance
with Section 5.02(a) in jurisdictions where all action required by Section
5.01(h) has been taken and completed. The Borrower's organizational number
assigned to it by its jurisdiction of organization and the Borrower's Federal
Employer Identification Number are correctly set forth on Exhibit D. The
Borrower has not, within a period of one year prior to the date hereof, (i)
changed the location of its principal place of business or chief executive
office or its organizational structure, (ii) changed its legal name, (iii)
changed its "location" (within the meaning of Section 9-307 of the UCC as in
effect in all applicable jurisdictions), (iv) become a "new debtor" (as defined
in Section 9-102(a)(56) of the UCC as in effect in all applicable jurisdictions)
with respect to a currently effective security agreement previously entered into
by any other Person, or (v) changed its jurisdiction of organization. The
Borrower is a Nevada corporation and is a "registered organization" (within the
meaning of Section 9-102 of the UCC as in effect in the State of Nevada).
(l) Collections. The conditions and requirements set forth in
Sections 5.01(j) and 6.06 have at all times been satisfied and duly performed by
the Borrower. The Borrower has not granted any Person, other than the Program
Agent as contemplated by this Agreement or as otherwise contemplated in the
Lockbox Agreement, "control" (within the meaning of Section 9-104 of the UCC of
all applicable jurisdictions) of the Lock-Box or Lockbox Account, or the right
to take "control" (within the meaning of Section 9-104 of the UCC of all
applicable jurisdictions) of such Lock-Box or Lockbox Account at a future time
or upon the occurrence of a future event. The Borrower has taken all steps
necessary to ensure that the Program Agent has "control" (within the meaning of
Section 8-106(d) of the UCC of all applicable jurisdictions) over the Collection
Account and that the Collection Account is not subject to any Adverse Claim
other than Permitted Liens and Adverse Claims in favor of the Secured Parties
hereunder.
(m) Material Adverse Effect. Since the date of its formation,
no event has occurred that would have a material adverse effect on (i) the
financial condition or operations of the Borrower, (ii) the ability of the
Borrower to perform its obligations under the Facility Documents, or (iii) the
collectibility of the Contracts generally or any material portion of the
Contracts.
54
(n) Names. The Borrower has not used any corporate or other
names, trade names or assumed names other than the name in which it has executed
this Agreement.
(o) Ownership of the Borrower. HDCC owns, directly or
indirectly, 100% of the issued and outstanding capital stock of the Borrower.
Such capital stock is validly issued, fully paid and nonassessable, and there
are no options, warrants or other rights to acquire securities of the Borrower.
(p) Investment Company Act. The Borrower is not, and after
giving effect to the transactions contemplated hereby, will not be required to
register as, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or any successor statute.
(q) Compliance with Law. The Borrower has complied in all
material respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of its businesses or the
ownership of its property (including, without limitation, laws, rules and
regulations relating to truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and
privacy), except where the failure to so comply with any of the foregoing could
not reasonably be expected to have a material adverse effect on the financial
condition of the Borrower, the Secured Parties' interest in the Collateral, the
collectibility or enforceability of the Contracts generally or any material
portion of the Contracts, or the Borrower's ability to perform its obligations
under this Agreement or the other Facility Documents.
(r) Compliance with the Contracts and the Collection Policy.
The Borrower has (i) fully performed and complied in all material respects with
all provisions, covenants and other promises required to be observed by it under
the Contracts pledged hereunder as Collateral and (ii) complied (and has at all
times instructed the Servicer to comply) in all material respects with the
Collection Policy with regard to each such Contract.
(s) Payments to HDCC. With respect to each Contract
transferred to the Borrower under the Receivables Sale Agreement, (i) the
Borrower has given reasonably equivalent value to HDCC in consideration therefor
and such transfer was not made for or on account of an antecedent debt and (ii)
such Contract was purchased by the Borrower in full compliance with the terms of
the Receivables Sale Agreement. No transfer of any Contract under the
Receivables Sale Agreement is or may be voidable under any section of the
Bankruptcy Code.
(t) Eligible Contracts. Each Contract included in the
Collateral is an Eligible Contract as of its respective Cutoff Date. Each of the
representations and warranties made in Sections 4.01(l), (m), (n) and (o),
Section 4.02(d) and Section 4.03 of the Receivables Sale Agreement is hereunder
made by the Borrower. There are a sufficient number of Eligible Contracts and
Eligible Post-Sale Contracts constituting Collateral such that the Borrowing
Base exceeds the Aggregate Principal Balance.
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(u) Accounting. The Borrower shall treat the transactions
contemplated by the Receivables Sale Agreement as a sale or capital contribution
for all purposes, although the Borrower acknowledges that the consolidated
financial statements of HDCC and the Borrower shall be prepared in accordance
with GAAP and, as a result of the consolidation required by GAAP, the transfers
will be reflected as a financing by HDCC in its consolidated financial
statements; provided, however, that (i) appropriate notations shall be made in
any such consolidated financial statements (or in the accompanying notes) to
indicate that the Borrower is a separate legal entity from HDCC and to indicate
that the Borrower's assets and credit are not available to satisfy the debts and
obligations of HDCC, (ii) such assets shall also be listed separately on any
balance sheet of the Borrower prepared on a stand alone basis, and (iii)
following the occurrence of any Insolvency Event in respect of HDCC, the
Contracts and other Contract Assets purportedly conveyed to the Borrower
pursuant to the Receivables Sale Agreement would not constitute part of HDCC's
estate in bankruptcy.
(v) Borrowing Notice. The information regarding the Contracts
as set forth in the Borrowing Notice is true and correct as of the applicable
Borrowing Date.
(w) Contract Schedule. The Contract Schedule delivered to the
Borrower in connection with the closing of the predecessor to the Receivables
Sale Agreement on December 12, 2008 is true, accurate and complete as of
November 30, 2008. Each Contract Schedule Supplement delivered to the Borrower
under the Receivables Sale Agreement is true, accurate and complete as of its
respective Cutoff Date.
(x) Receivables Sale Agreement. The Receivables Sale Agreement
is the only agreement pursuant to which the Borrower purchases the Collateral
pledged hereunder, and this Agreement and the Receivables Sale Agreement
represent all agreements between HDCC and the Borrower relating to the
conveyance by HDCC to the Borrower of any Contracts or Contract Assets or the
provision by HDCC of collection services in respect thereof (it being understood
that the Borrower may be required to repurchase Contracts from time to time
conveyed by it in connection with a Take-Out Securitization in accordance with
limited recourse obligations of the type described in Section 4.01(cc)(ii)).
Upon the sale of each Contract and Related Security pursuant to the Receivables
Sale Agreement, the Borrower shall be the lawful owner of, and have good title
to, such Collateral, free and clear of any Adverse Claim (except for Permitted
Liens).
(y) Business. Since its formation, the Borrower has not
conducted any business other than the purchase of the Contracts from HDCC under
the Receivables Sale Agreement, the pledge and assignment of the Collateral
under this Agreement and the Existing Credit Agreement, and such other
activities as are contemplated in this Agreement or that are incidental to the
foregoing (including, without limitation, the consummation of the transactions
contemplated by any Facility Document). The Facility Documents are the only
agreements to which the Borrower is a party, other than its organization
documents, intercompany service agreements and certain other agreements
permitted hereunder.
(z) Taxes. The Borrower has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, if
any, and has paid or caused to be paid all taxes and assessments, prior to the
same becoming delinquent, other than any such taxes or assessments the validity
of which are being contested in good faith by appropriate proceedings.
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(aa) Solvency. The Borrower is Solvent and will not be
rendered insolvent by the transactions contemplated by the Facility Documents.
(bb) Marking Records. The Borrower has caused, or shall
instruct the Servicer to cause, the portions of the Computer Files in possession
by, or on behalf of, the Servicer and subject to this Agreement to be clearly
and unambiguously marked with a legend, reasonably acceptable to the
Administrative Agents, to indicate that each Contract constitutes part of the
Collateral. Such marking shall be in a form which can be readily deciphered by
any Person reading such Computer Files.
(cc) No Indebtedness. The Borrower has no Indebtedness, other
than Indebtedness incurred under (i) the terms of this Agreement and the other
Facility Documents, (ii) limited recourse obligations as may arise from time to
time in connection with a Take-Out Securitization by reason of representations,
warranties and other provisions required to be made by the Borrower and which
are consistent with representations, warranties and other provisions
conventionally made or agreed to by a transferor in an arm's length "true sale"
transaction, (iii) Hedge Agreements permitted under the terms of this Agreement
and (iv) other Indebtedness not constituting obligations for borrowed money in
an aggregate amount up to $10,000.
(dd) No Fraudulent Conveyance. The Borrower is not in default
under any material obligation to pay money to any Person. The Borrower is not
contemplating 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. The Borrower is not transferring any Collateral with any intent to
hinder, delay or defraud any of its creditors. The Borrower will not use the
proceeds from the transactions contemplated by this Agreement to give any
preference to any creditor or class of creditors.
(ee) Reserve Account. The Borrower has taken all steps
necessary to ensure that the Program Agent has "control" (within the meaning of
Section 8-106(d) of the UCC of all applicable jurisdictions) over the Reserve
Account and that the Reserve Account is not subject to any Adverse Claim other
than Permitted Liens and Adverse Claims in favor of the Secured Parties
hereunder.
(ff) Independent Existence. At all times during the period the
Existing Credit Agreement shall have been in effect, the Borrower was in
compliance in all material respects with the terms of Section 5.01(g), Section
5.01(h) and Section 5.01(i) of the Existing Credit Agreement.
SECTION 4.02. Representations and Warranties of the Servicer.
The Servicer, in its capacity as such, hereby represents and warrants to the
Borrower, the Program Agent, each Administrative Agent and the Lenders, as of
the date hereof and as of each Borrowing Date, as follows:
57
(a) Corporate Existence and Power. The Servicer is (i) a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (ii) has all requisite corporate
power, and has all material governmental licenses, authorizations, consents and
approvals, necessary to own its property and carry on its business as now being
conducted; (iii) is qualified to do business as a foreign entity and is in good
standing under the laws of each jurisdiction in which the nature of the business
conducted by it makes such qualification necessary other than such jurisdictions
where failure so to qualify would not have a Material Adverse Effect, and (iv)
is properly licensed in each jurisdiction to the extent required by the laws of
such jurisdiction to service the Contracts in accordance with the terms of this
Agreement, except in the case of clauses (ii), (iii) and (iv), where the failure
to have such license, authorization, consent or approval would not have a
Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and
Delivery. The Servicer has all necessary corporate power and authority to
execute and deliver this Agreement and each other Facility Document to which it
is a party, and to perform its obligations hereunder and thereunder. The
execution and delivery by the Servicer of this Agreement and each other Facility
Document to which it is a party, and the performance of its obligations
hereunder and thereunder, have been duly authorized by all necessary corporate
action on the part of the Servicer; and this Agreement and each other Facility
Document to which the Servicer is a party has been duly and validly executed and
delivered by the Servicer.
(c) No Conflict. None of the execution and delivery by the
Servicer of this Agreement and each other Facility Document to which it is a
party, nor the performance of its obligations hereunder and thereunder will
conflict with or result in a breach of, or a default under, or require any
consent under, (i) its certificate or articles of incorporation or by-laws, (ii)
any law, rule or regulation applicable to it, (iii) any agreement or instrument
to which it is a party or by which it or any of its property is bound or
subject, or (iv) any order, writ, judgment, injunction or decree of any court or
Governmental Authority or agency binding on or affecting it or its property, and
will not result in or require the creation or imposition of any Adverse Claim
upon any of the revenues or assets of the Servicer or its Subsidiaries (except
as created hereunder).
(d) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorizations, approvals or
consents of, and no notices to, or filings or registrations with, any
Governmental Authority or regulatory authority or agency (other than
informational filings) are necessary for the execution and delivery by the
Servicer of this Agreement and each other Facility Document to which it is a
party and the performance of its obligations hereunder and thereunder or for the
validity or enforceability hereof or thereof.
(e) Actions, Suits. There are not, in any court or before any
arbitrator of any kind or before or by any governmental body, any actions, suits
or proceedings pending or, to the Servicer's knowledge, threatened against or
affecting the Servicer or any of its respective businesses or properties which
name the Servicer as a defendant and (i) affect in any adverse manner the
binding nature, validity or enforceability of any Facility Document or (ii)
could reasonably be expected to have a Material Adverse Effect. The Servicer is
not in default with respect to any order of any court, arbitrator or
governmental body, which default could reasonably be expected to have a Material
Adverse Effect.
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(f) Binding Effect. This Agreement and each other Facility
Document to which the Servicer is a party constitute the legal, valid and
binding obligations of the Servicer enforceable against the Servicer in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All written information, exhibits
or reports furnished by the Servicer or any of its Affiliates to the Program
Agent, any Administrative Agent or the Lenders in connection with the
negotiation of, or compliance with, this Agreement (including any Monthly
Report) or any of the other Facility Documents are true and complete in all
material respects on the date furnished and do not contain any material
misstatement of fact or omit to state a material fact or any fact necessary to
make the statements contained therein not materially misleading on the date
furnished.
(h) Collections. The conditions and requirements set forth in
Sections 5.03(g) and 6.06 have at all times been satisfied and duly performed by
the Servicer. The Servicer has not granted any Person, other than the Program
Agent as contemplated by this Agreement or as otherwise contemplated in the
Lockbox Agreement, "control" (within the meaning of Section 9-104 of the UCC of
all applicable jurisdictions) of the Lock-Box or Lockbox Account, or the right
to take "control" (within the meaning of Section 9-104 of the UCC of all
applicable jurisdictions) of such Lock-Box or Lockbox Account at a future time
or upon the occurrence of a future event. The Servicer has assisted the Borrower
in the Borrower taking all steps necessary to ensure that the Program Agent has
"control" (within the meaning of Section 8-106(d) of the UCC of all applicable
jurisdictions) over the Collection Account and that the Collection Account is
not subject to any Adverse Claim other than Permitted Liens and Adverse Claims
in favor of the Secured Parties hereunder. The Servicer has the ability to
confirm the accuracy of the identification and allocation of Collections by the
Lockbox Bank within one (1) Business Day of remittance by the Lockbox Bank to
the Collection Account.
(i) Material Adverse Effect. Since December 31, 2008, no event
has occurred that (i) would have a material adverse effect on the financial
condition or operations of the Servicer and its Subsidiaries, taken as a whole,
or (ii) would have a material adverse effect on the ability of the Servicer to
perform its obligations under this Agreement or any other Facility Document to
which it is a party (excluding changes or effects in connection with specific
events (and not general economic or industry conditions) applicable specifically
to the Servicer or its Subsidiaries as disclosed in any annual report on Form
10-K, quarterly report on Form 10-Q or current report on Form 8-K filed with the
Securities and Exchange Commission at any time on or prior to March 31, 2009).
(j) Ownership of the Borrower. HDCC owns, directly or
indirectly, 100% of the issued and outstanding capital stock of the Borrower,
free and clear of any Adverse Claim (other than any non-consensual UCC financing
statements of which the Servicer is not presently aware). Such capital stock is
validly issued, fully paid and nonassessable, and there are no options, warrants
or other rights to acquire securities of the Borrower.
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(k) Investment Company Act. The Servicer is not, and after
giving effect to the transactions contemplated hereby, will not be required to
register as, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or any successor statute.
(l) Compliance with Law. The Servicer has complied in all
material respects with all applicable statutes, rules, regulations, orders and
restrictions of any domestic or foreign government or any instrumentality or
agency thereof having jurisdiction over the conduct of its businesses or the
ownership of its property, except for any failure to comply with any of the
foregoing that could not reasonably be expected to have a Material Adverse
Effect.
(m) Compliance with the Collection Policy. The Servicer has
complied in all material respects with the Collection Policy with regard to each
Contract.
(n) ERISA. HDCC and any other Person which is under common
control (within the meaning of Section 414(b) or (c) of the IRC) with HDCC have
fulfilled their obligations (if any) under the minimum funding standards of
ERISA and the IRC for each ERISA Plan in compliance in all material respects
with the currently applicable provisions of ERISA and the IRC and have not
incurred any material liability to the PBGC or an ERISA Plan under Title IV of
ERISA (other than liability for premiums due in the ordinary course). Assuming
that the credit extended hereby does not involve the assets of any employee
benefit plan subject to ERISA or any plan subject to Section 4975 of the IRC,
neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby will involve a Prohibited Transaction.
(o) Taxes. The Servicer has filed or caused to be filed all
Federal, state and local tax returns which are required to be filed by it, if
any, and has paid or caused to be paid all taxes and assessments, prior to the
same becoming delinquent, other than any taxes or assessments the validity of
which are being contested in good faith by appropriate proceedings or for which
the non-payment or non-filing of the same would not have a Material Adverse
Effect.
(p) Solvency. The Servicer is Solvent and will not be rendered
insolvent by the transactions contemplated by the Facility Documents.
(q) Marking Records. The Servicer has caused, or will cause,
the portions of the Computer Files in its possession and subject to this
Agreement to be clearly and unambiguously marked with a legend, reasonably
acceptable to the Administrative Agents, to indicate that each Contract
constitutes part of the Collateral. Such marking shall be in a form which can be
readily deciphered by any Person reading such Computer Files.
(r) Reserve Account. The Servicer has assisted the Borrower in
the Borrower taking all steps necessary to ensure that the Program Agent has
"control" (within the meaning of Section 8-106(d) of the UCC of all applicable
jurisdictions) over the Reserve Account and that the Reserve Account is not
subject to any Adverse Claim other than Permitted Liens and Adverse Claims in
favor of the Secured Parties hereunder.
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SECTION 4.03. Financial Institution Representations and
Warranties. Each Committed Lender hereby represents and warrants to its
Administrative Agent and the Conduit Lenders in its Lender Group that:
(a) Existence and Power. Such Committed Lender is a
corporation or a banking association duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization, and has all corporate power to perform its obligations hereunder.
(b) No Conflict. The execution and delivery by such Committed
Lender of this Agreement and the performance of its obligations hereunder are
within its corporate powers, have been duly authorized by all necessary
corporate action, do not contravene or violate (i) its certificate or articles
of incorporation or association or by-laws, (ii) any law, rule or regulation
applicable to it, (iii) any restrictions under any agreement, contract or
instrument to which it is a party or any of its property is bound, or (iv) any
order, writ, judgment, award, injunction or decree binding on or affecting it or
its property, and do not result in the creation or imposition of any Adverse
Claim on its assets. This Agreement has been duly authorized, executed and
delivered by such Committed Lender.
(c) Governmental Authorization. No authorization or approval
or other action by, and no notice to or filing with, any Governmental Authority
or regulatory body is required for the due execution and delivery by such
financial institution of this Agreement and the performance of its obligations
hereunder.
(d) Binding Effect. This Agreement constitutes the legal,
valid and binding obligation of such Committed Lender enforceable against such
Committed Lender in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law).
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants of the Borrower. Until the
date on which the Borrower Obligations have been indefeasibly paid in full and
this Agreement terminates in accordance with its terms, the Borrower hereby
covenants as set forth below:
(a) Reporting. The Borrower will furnish or cause to be
furnished to each Administrative Agent:
(i) Copies of Notices. Promptly upon its
receipt of any notice, request for consent, financial
statements, certification, report or other communication under
or in connection with any Facility Document from any Person
that is a party thereto, copies of the same; provided that in
the case of oral communications, notice thereof is required to
be given only when such communication relates to the
occurrence of any breach, default or other material event
under or in connection with a Facility Document.
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(ii) Change in the Credit Policy or the
Collection Policy. At least (A) five (5) days prior to the
effectiveness of any material change in or material amendment
to the Credit Policy and (B) thirty (30) days prior to the
effectiveness of any material change in or material amendment
to the Collection Policy, a copy of the Credit Policy or
Collection Policy, as applicable, then in effect and a notice
(1) indicating such change or amendment, and (2) if such
proposed change or amendment would be reasonably likely to
adversely affect the origination or collectibility of the
Contracts, requesting each Syndication Agent's consent
thereto.
(iii) Other Information. Promptly, from time
to time, such other information, documents, records or reports
relating to the Contracts or the condition or operations,
financial or otherwise, of the Borrower as any Administrative
Agent may from time to time reasonably request in order to
protect the interests of the Program Agent, the Administrative
Agents and the Lenders under or as contemplated by this
Agreement.
(b) Notices. The Borrower will notify the Program Agent in
writing of any of the following promptly upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with
respect thereto:
(i) Events of Termination, Incipient Events
of Termination, Early Amortization Event or Servicer
Termination Event. By the statement of an Authorized Officer
of the Borrower (A) the occurrence of each Event of
Termination, (B) the occurrence of each Incipient Event of
Termination, (C) the occurrence of each Early Amortization
Event, and (D) the occurrence of each Servicer Termination
Event.
(ii) Judgment and Proceedings. (A) The entry
of any judgment or decree or the institution of any
litigation, arbitration proceeding, investigation or
governmental proceeding against the Borrower and (B) any
material adverse development in any previously disclosed
litigation, arbitration proceeding, investigation or
governmental proceeding.
(iii) Material Adverse Effect. The
occurrence of any event or condition that has had, or could
reasonably be expected to have, a Material Adverse Effect.
(iv) Defaults Under Other Agreements. The
occurrence of (A) any "event of default" or "default" or other
event of which the Borrower has knowledge which, with the
giving of notice or the passage of time or both, would
constitute an "event of default" or a "default" under any
financing arrangement in excess of $25,000,000 pursuant to
which the Servicer is a debtor or an obligor, (B) the creation
of any Adverse Claim (other than Permitted Liens) on, or the
occurrence of any event which, with the giving of notice or
passage of time or both, would result in, or with further
action by any third party would result in, the creation of any
Adverse Claim (other than Permitted Liens) on the Contracts,
the Related Security or the Collections pursuant to any
indenture, agreement, instrument or filing, or (C) a default
or an event of default under any other financing arrangement
pursuant to which the Borrower is a debtor or an obligor.
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(c) Compliance with Laws and Preservation of Corporate
Existence.
(i) The Borrower will comply in all material
respects with the requirements of all applicable statutes,
rules, regulations, orders, and restrictions of any domestic
or foreign government or any instrumentality or agency thereof
having jurisdiction over the conduct of its business or the
ownership of its property, except where the failure to so
comply with any of the foregoing could not reasonably be
expected to have a material adverse effect on the financial
condition of the Borrower, the Secured Parties' interest in
the Collateral, the collectibility or enforceability of the
Contracts generally or any material portion of the Contracts,
or the Borrower's ability to perform its obligations under
this Agreement or the other Facility Documents.
(ii) The Borrower (A) will preserve and
maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation and (B)
will qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where its business is
conducted, except, in each case, where the failure to so
preserve, maintain and qualify could not reasonably be
expected to have a material adverse effect on the financial
condition of the Borrower, the Secured Parties' interest in
the Collateral, the collectibility or enforceability of the
Contracts generally or a material portion of the Contracts, or
the Borrower's ability to perform its obligations under this
Agreement or the other Facility Documents.
(d) Audits. The Borrower will furnish to each Administrative
Agent from time to time such information with respect to it and the Contracts as
such Administrative Agent may reasonably request. The Borrower will from time to
time during regular business hours upon reasonable prior written notice and at
the sole cost of the Borrower, permit each Administrative Agent, or its agents
or representatives (including an independent auditor or accounting firm selected
by an Administrative Agent), to (i) examine and make copies of abstracts from
all Records in the possession or under the control of such Person relating to
the Contracts and the Related Security and (ii) visit the offices and properties
of such Person for the purpose of examining such materials described in clause
(i) above, and to discuss matters relating to such Person's financial condition
or the Contracts and the Related Security or any Person's performance under any
of the Facility Documents or any Person's performance under the Contracts, in
each case, with any of the Authorized Officers of the Borrower having knowledge
of such matters (the activities referred to in the preceding clauses (i) and
(ii), collectively, an "Audit"). The Administrative Agents shall make reasonable
efforts to coordinate Audits. Any Audit provided for herein shall be conducted
in accordance with the Borrower's rules respecting safety and security on its
premises and without materially disrupting operations. Nothing in this Section
5.01(d) shall affect the obligation of the Borrower to observe any applicable
law prohibiting the disclosure of information regarding the Obligors, and the
failure of the Borrower to provide access to information as a result of such
obligation shall not constitute a breach of this Section 5.01(d). The Borrower
will not be responsible for the costs of more than one (1) Audit performed
during any calendar year in respect of the Borrower under this Section 5.01(d)
and in respect of the Servicer under Section 5.03(d) on a combined basis (which,
in the event there shall have been more than one Audit in any calendar year,
shall be the Audit designated for this purpose by the Program Agent); provided,
that following the occurrence and during the continuation of an Event of
Termination, the one Audit per calendar year limitation shall be inapplicable.
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(e) Keeping and Marking of Records and Books. The Borrower
will (i) on or prior to the date hereof, mark the portions of the Computer Files
in its possession or in possession by, or on behalf of, the Servicer, with a
legend, reasonably acceptable to the Administrative Agents, to indicate that
each Contract constitutes part of the Collateral, and (ii) upon the request of
any Administrative Agent after the occurrence and during the continuation of an
Event of Termination (A) mark each Contract with a legend describing the
interests of the Program Agent and the Secured Parties therein and (B) deliver
to the Program Agent all Records (including, without limitation, all multiple
originals of any such Contract) relating to the Contracts.
(f) Compliance with Contracts and Collection Policy. The
Borrower will (and will exercise its contractual rights to cause the Servicer
to) timely (i) fully perform and comply with all provisions, covenants and other
promises required to be observed by it under the Contracts, and (ii) comply in
all material respects with the Collection Policy in regard to each Contract.
(g) Performance and Enforcement of Receivables Sale Agreement.
The Borrower will, and will exercise its contractual rights to require HDCC to,
perform each of their respective obligations and undertakings under and pursuant
to the Receivables Sale Agreement and will vigorously enforce the rights and
remedies accorded to the Borrower under the Receivables Sale Agreement,
including making prompt demands for payment and reimbursement under Articles VI
and VII thereof. The Borrower will take all actions to perfect and enforce its
rights and interests (and the rights and interests of the Program Agent and the
Lenders as set forth herein) under the Receivables Sale Agreement, as any
Administrative Agent may from time to time reasonably request, including,
without limitation, making claims to which it may be entitled under any
indemnity, reimbursement or similar provision contained in the Receivables Sale
Agreement.
(h) Ownership. The Borrower will take all necessary action to
(i) vest legal and equitable title to the Contracts, the Related Security and
the Collections purchased under the Receivables Sale Agreement irrevocably in
the Borrower, free and clear of any Adverse Claims other than Adverse Claims in
favor of the Program Agent and the Secured Parties and Permitted Liens
(including, without limitation, the filing of all financing statements or other
similar instruments or documents necessary under the UCC (or any comparable law)
of all appropriate jurisdictions to perfect the Borrower's interest in such
Contracts, Related Security and Collections, the prompt termination of any
non-consensual financing statements that describe any interest in the
Collateral, and such other action to perfect, protect or more fully evidence the
interest of the Borrower therein as the Program Agent or any Administrative
Agent may reasonably request), and (ii) establish and maintain, in favor of the
Program Agent, for the benefit of the Secured Parties, a valid and perfected
first priority security interest in all Contracts, Related Security and
Collections to the full extent contemplated herein, free and clear of any
Adverse Claims other than Adverse Claims in favor of the Program Agent for the
benefit of the Secured Parties and Permitted Liens (including, without
limitation, the filing of all financing statements or other similar instruments
or documents necessary under the UCC (or any comparable law) of all appropriate
jurisdictions to perfect the Program Agent's (for the benefit of the Secured
Parties) interest in such Contracts, Related Security and Collections, the
prompt termination of any non-consensual financing statements that describe any
interest in the Collateral, and such other action to perfect, protect or more
fully evidence the interest of the Program Agent for the benefit of the Secured
Parties as the Program Agent or any Administrative Agent may reasonably
request).
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(i) Lenders' Reliance. The Borrower acknowledges that the
Lenders are entering into the transactions contemplated by this Agreement in
reliance upon the Borrower's identity as a legal entity that is separate from
each Related Entity. Therefore, from and after the date of execution and
delivery of this Agreement, the Borrower shall take all reasonable steps,
including, without limitation, all steps that the Program Agent, any
Administrative Agent or any Lender may from time to time reasonably request, to
maintain the Borrower's identity as a separate legal entity and to make it
manifest to third parties that the Borrower is an entity with assets and
liabilities distinct from those of each Related Entity and not just a division
of any Related Entity. Without limiting the generality of the foregoing and in
addition to the other covenants set forth herein, the Borrower will:
(i) comply with the provisions of Articles 3
and 14 of its Articles of Incorporation as in effect on the
date hereof;
(ii) require that all full-time employees of
the Borrower, if any, identify themselves as such and not as
employees of any Related Entity (including, without
limitation, by means of providing appropriate employees with
business or identification cards identifying such employees as
the Borrower's employees);
(iii) maintain a separate office for the
operation of its business and clearly identify its offices (by
signage or otherwise) as its offices;
(iv) conduct all transactions with each
Related Entity and the Servicer and their respective
Affiliates (including, without limitation, any delegation of
its obligations hereunder as the Servicer, the declaration and
payment of dividends and distributions and the performance of
any Take-Out Securitization) strictly on an arm's-length
basis, allocate all overhead expenses (including, without
limitation, telephone and other utility charges and insurance
coverage) for items shared between, or centrally acquired for
the benefit of, the Borrower and any Related Entity on the
basis of actual use to the extent practicable and, to the
extent such allocation is not practicable, on a basis
reasonably related to actual use or benefit;
(v) observe all corporate formalities
material to its separateness as a distinct entity, and ensure
that all corporate actions relating to (A) the dissolution or
liquidation of the Borrower or (B) the initiation of,
participation in, acquiescence in or consent to any
bankruptcy, insolvency, reorganization or similar proceeding
of the Borrower, are duly authorized by unanimous vote of its
Board of Directors (including the Independent Director);
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(vi) maintain its corporate charter in
conformity with this Agreement, such that it does not amend,
restate, supplement or otherwise modify its Articles of
Incorporation or By-Laws in any respect that would impair its
ability to comply with the terms or provisions of any of the
Facility Documents, including, without limitation, Section
5.01(i) of this Agreement;
(vii) from and after the Effective Date,
maintain the effectiveness of, and continue to perform under
the Receivables Sale Agreement, such that it does not amend,
restate, supplement, cancel, terminate or otherwise modify the
Receivables Sale Agreement, or give any consent, waiver,
directive or approval thereunder or waive any default, action,
omission or breach under the Receivables Sale Agreement or
otherwise grant any indulgence thereunder, without (in each
case) the prior written consent of each Administrative Agent;
(viii) not merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions,
and except as otherwise contemplated herein) all or
substantially all of its assets (whether now owned or
hereafter acquired) to, or acquire all or substantially all of
the assets of, any Person, nor at any time create, have,
acquire, maintain or hold any interest in any Subsidiary; and
(ix) take such other actions as are
necessary on its part to ensure that the facts and assumptions
set forth in the opinion issued by Foley & Lardner LLP, as
counsel for the Borrower, in connection with the closing or
the borrowing under this Agreement and relating to substantive
consolidation issues, and in the certificates accompanying
such opinion, remain true and correct in all material respects
at all times.
(j) Collections. The Borrower will (and will exercise its
contractual rights to cause the Servicer to) instruct all Obligors to remit all
Collections directly to the Lock-Box or the Lockbox Account (except as
contemplated by clause (f) of the definition of "Eligible Contract"). The
Borrower will cause (i) HDCC, as the Servicer under the Lockbox Agreement, to
remit all Collections deposited in the Lock-Box and the Lockbox Account to the
Collection Account as provided in Section 2.08(a), and (ii) the Collection
Account to be subject at all times on and after the Effective Date to the
Control Agreement. In the event any payments relating to Contracts are remitted
directly to the Borrower or any Affiliate of the Borrower, the Borrower will
remit (or will cause all such payments to be remitted) to the Collection Account
as contemplated in Section 2.08(a). The Borrower shall not grant "control" or
the right to take "control" (within the meaning of Section 9-104 of the UCC of
all applicable jurisdictions) of the Lock-Box or Lockbox Account at a future
time or upon the occurrence of a future event to any Person, except as
contemplated in this Agreement or as otherwise contemplated in the Lockbox
Agreement. The Borrower shall take all steps necessary to ensure that the
Program Agent has "control" (within the meaning of Section 8-106(d) of the UCC
of all applicable jurisdictions) over the Collection Account and that the
Collection Account is not subject to any Adverse Claim other than Permitted
Liens and Adverse Claims in favor of the Secured Parties hereunder.
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(k) Taxes. The Borrower will file all Federal, state and local
tax returns required by law to be filed by it and will promptly pay and
discharge, before the same shall become delinquent, all taxes and assessments
imposed upon it or upon its property, except any such taxes or assessments that
are being contested in good faith by appropriate proceedings. The Borrower will
pay when due any taxes payable in connection with the Contracts.
(l) Insurance. The Borrower will ensure it is covered, with
responsible insurance companies, by insurance against at least such risks and in
at least such amounts as is customarily maintained by similar businesses, or as
may be required by any applicable law, rule or regulation, any governmental
approval, or any order, writ, injunction or decree of any court or Governmental
Authority or agency.
(m) Reserve Account. The Borrower will cause the Reserve
Account to be subject at all times on and after the Effective Date to the
Reserve Account Agreement.
(n) Certain Security Entitlements. The Borrower will take all
steps necessary to ensure that no "security entitlement" (within the meaning of
Section 8-102(a)(17) of the UCC of all applicable jurisdictions) (i) that is
subject to federal regulations governing security entitlements maintained on the
books of a federal reserve bank (including, without limitation, Treasury
securities subject to 31 C.F.R. Part 357), or (ii) where the underlying security
(within the meaning of Section 8-102(a)(15) of the UCC of all applicable
jurisdictions) or other financial asset (within the meaning of Section
8-102(a)(9) of the UCC of all applicable jurisdictions) has not been either
endorsed to the securities intermediary (within the meaning of Section 8-501(a)
of the UCC of all applicable jurisdictions) under the Control Agreement or
Reserve Account Agreement, as applicable, or in blank or credited to a
securities account (within the meaning of Section 8-102(a)(9) of the UCC of all
applicable jurisdictions) in the name of Securities Intermediary will be held in
the Collection Account or Reserve Account.
(o) Maryland Opinion of Counsel. The Borrower will cause an
opinion of counsel relating to licensing matters in the state of Maryland and in
form and substance reasonably satisfactory to the Syndication Agents to be
delivered to the Administrative Agents no later than the close of business on
May 6, 2009.
SECTION 5.02. Negative Covenants of the Borrower. Until the
date on which the Borrower Obligations have been indefeasibly paid in full and
this Agreement terminates in accordance with its terms, the Borrower hereby
covenants that:
(a) Name and Jurisdiction Change, Offices and Records. The
Borrower will not change its name, jurisdiction of organization, identity or
corporate structure (within the meaning of Sections 9-503 and/or 9-507 of the
UCC of all applicable jurisdictions), become a "new debtor" (as defined in
Section 9-102(a)(56) of the UCC of all applicable jurisdictions) with respect to
a currently effective security agreement previously entered into by any other
Person, change its "location" (within the meaning of Section 9-307 of the UCC of
all applicable jurisdictions) or relocate its chief executive office, principal
place of business or any office where Records are kept unless it shall have: (i)
given the Program Agent at least thirty (30) days' prior written notice, and
(ii) delivered to the Program Agent all financing statements, instruments and
other documents reasonably requested by the Program Agent or any Administrative
Agent in connection with such change, event or relocation.
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(b) Change in Payment Instructions to Obligors. Except as may
be required by the Program Agent pursuant to Section 6.06, the Borrower will
not, and will not permit the Servicer to, make any change in the instructions to
Obligors regarding payments to be made to the Lock-Box or Lockbox Account,
unless such change is necessary to allow the Borrower to comply with Section
5.01(j).
(c) Modifications to Business, Contracts, Credit Policy and
Collection Policy. The Borrower will not (i) make any change in the character of
its business or (ii) permit any change to the Credit Policy or the Collection
Policy that could reasonably be likely to adversely affect the collectibility of
the Contracts generally without the prior consent of the Syndication Agents
following notice thereof given in accordance with the reporting requirements set
forth in Section 5.01(a)(ii).
(d) Sales, Liens. The Borrower will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Adverse Claim upon (including,
without limitation, the filing of any financing statement) or with respect to,
any Collateral, or assign any right to receive income with respect thereto
(other than (i) the creation of the interests in favor of the Program Agent and
the Secured Parties as provided for herein and the sufferance of Permitted Liens
and (ii) a sale or conveyance (A) in connection with a Take-Out Securitization
pursuant to Section 2.17, (B) to effect the removal from the Collateral of any
Defaulted Contract and related Contract Assets in accordance with Section 2.09
or (C) to effect a repurchase by HDCC of Contract Assets in accordance with
Section 6.01 of the Receivables Sale Agreement), and the Borrower will defend
the right, title and interest of the Program Agent and the Lenders in, to and
under any of the foregoing property, against all claims of third parties
claiming through or under the Borrower or HDCC.
(e) Restricted Junior Payments. The Borrower will not make any
Restricted Junior Payment at any time prior to the Final Collection Date;
provided that, unless an Event of Termination has occurred and is then
continuing, the Borrower may declare and distribute cash dividends with and to
the extent of funds made available to the Borrower in accordance with Section
2.08(b).
(f) Collections. The Borrower will not (and will not permit
the Servicer to) deposit or otherwise credit, or cause or permit to be so
deposited or credited, to the Collection Account cash or cash proceeds other
than (i) Collections, (ii) other amounts required or permitted to be deposited
in the Collection Account in accordance with the terms of this Agreement and
(iii) amounts deposited in the Collection Account in error, as long as the
Servicer withdraws such amounts as contemplated in Section 6.06.
(g) Indebtedness. The Borrower shall not create, incur, assume
or suffer to exist any Indebtedness, except for Indebtedness of the type
contemplated in Section 4.01(cc).
(h) Facility Documents. Except as otherwise permitted herein,
the Borrower shall not terminate, amend or otherwise modify any Facility
Document or grant any waiver or consent thereunder without the prior written
consent of the Administrative Agents; provided that (i) as provided in Section
5.01(a)(ii) or as otherwise expressly contemplated herein, the Syndication
Agents may provide the requisite consent and (ii) in the case of any Hedge
Agreement, such Facility Documents may, subject to the terms of Section 2.05(e),
be terminated, amended or otherwise modified with the consent of the
Administrative Agent for the applicable Lender Group.
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(i) Adverse Transactions. Except for a Take-Out Securitization
permitted hereunder, the Borrower shall not enter into any transaction which
adversely affects the Collateral or the Program Agent's or any Administrative
Agent's or Lender's rights under this Agreement.
SECTION 5.03. Affirmative Covenants of the Servicer. Until the
date on which the Borrower Obligations have been indefeasibly paid in full and
this Agreement terminates in accordance with its terms, the Servicer hereby
covenants as set forth below:
(a) Financial Reporting. The Servicer will maintain a system
of accounting established and administered in accordance with GAAP, and furnish
or cause to be furnished to each Administrative Agent:
(i) Annual Report. As soon as available and
in any event no later than the date which is the earlier of
(i) one hundred twenty (120) days after the end of each fiscal
year of HDI and (ii) the date the Annual Report on Form 10-K
for such fiscal year of HDI would have been required to have
been filed under the rules and regulations of the Securities
and Exchange Commission giving effect to any automatic
extension available thereunder for filing of such form, (A) a
copy of the annual audit report for such year for HDI and its
Subsidiaries, containing the consolidated balance sheet of HDI
and its Subsidiaries and the consolidated balance sheet of
HDFS and its Subsidiaries, in each case as of the end of such
fiscal year, (B) a copy of the consolidated statements of
income and cash flows of HDI and its Subsidiaries and the
consolidated statements of income and cash flows of HDFS and
its Subsidiaries, in each case for such fiscal year; and
together with (x) an opinion by Ernst & Young LLP or other
independent public accountants acceptable to the
Administrative Agents ((1) without a "going concern" or like
qualification or like exception and (2) other than a
qualification permitted by the Securities and Exchange
Commission regarding the internal controls of a company
acquired during such period pursuant to a material acquisition
by HDI or any Subsidiary, without any qualification or
exception as to the scope of such audit), and (y) a
certificate of the chief financial officer or treasurer of HDI
(on behalf of HDI and HDFS) certifying that the reports
delivered in accordance with subclauses (A) and (B) above have
been prepared in accordance with GAAP, and (C) a certificate
of the chief financial officer or treasurer of HDI (on behalf
of HDI and HDFS) as to compliance with clauses (h) through (j)
in the definition of Servicer Termination Event and setting
forth in reasonable detail the calculations necessary to
demonstrate the same.
(ii) Quarterly Report. As soon as available
and in any event no later than the date which is the earlier
of (i) sixty (60) days after the end of each of the first
three quarters of each fiscal year of HDI and (ii) the date
the Quarterly Report on Form 10-Q for such quarter of HDI
would have been required to have been filed under the rules
and regulations of the Securities and Exchange Commission
giving effect to any automatic extension available thereunder
for filing of such form, (A) a copy of the consolidated
balance sheet of HDI and its Subsidiaries and the consolidated
balance sheet of HDFS and its Subsidiaries, in each case as of
the end of such quarter, (B) a copy of the consolidated
statements of income and cash flows of HDI and its
Subsidiaries and the consolidated income and cash flows of
HDFS and its Subsidiaries, in each case for the period
commencing at the end of the previous fiscal year and ending
with the end of such quarter duly certified (subject to the
absence of footnotes and to year-end audit adjustments) by the
chief financial officer or treasurer of HDI (on behalf of HDI
and HDFS) as having been prepared in accordance with GAAP, and
(C) a certificate of the chief financial officer or treasurer
of HDI as to compliance with clauses (h) through (j) in the
definition of Servicer Termination Event and setting forth in
reasonable detail the calculations necessary to demonstrate
the same.
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(iii) Financial statements (other than the
certificate of the chief financial officer or the treasurer)
required to be delivered pursuant to clauses (i) and (ii)
above may be delivered electronically and if so delivered,
shall be deemed to have been delivered on the date on which
such financial statements are filed for public availability on
the Securities and Exchange Commission's Electronic Data
Gathering and Retrieval System; provided that HDI shall notify
(which may be by facsimile or electronic mail) the Program
Agent of the filing of any such financial statements.
(iv) Monthly Report. On each Monthly
Reporting Date, the Servicer shall deliver a Monthly Report in
accordance with Section 6.07 hereof.
(v) Copies of Notices. Promptly upon its
receipt of any notice, request for consent, financial
statements, certification, report or other communication under
or in connection with this Agreement or any other Facility
Document from any Person that is a party thereto, copies of
the same; provided that in the case of oral communications,
notice thereof is required to be given only when such
communication relates to the occurrence of any breach, default
or other material event under or in connection with a Facility
Document.
(vi) Change in Collection Policy. At least
thirty (30) days prior to the effectiveness of any material
change in or material amendment to the Collection Policy, a
copy of the Collection Policy then in effect and a notice (A)
indicating such change or amendment, and (B) if such proposed
change or amendment would be reasonably likely to adversely
affect the collectibility of the Contracts, requesting each
Syndication Agent's consent thereto.
(vii) Other Information. Promptly, from time
to time, such other information, documents, records or reports
relating to the Contracts or the condition or operations,
financial or otherwise, of the Servicer as any Administrative
Agent may from time to time reasonably request in order to
protect the interests of the Program Agent, the Administrative
Agents and the Lenders under or as contemplated by this
Agreement.
(b) Notices. The Servicer will notify the Program Agent in
writing of any of the following promptly upon learning of the occurrence
thereof, describing the same and, if applicable, the steps being taken with
respect thereto:
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(i) Servicer Termination Event. The
occurrence of each Servicer Termination Event, by a statement
of an Authorized Officer of the Servicer.
(ii) Judgment and Proceedings. (1) The entry
of any judgment or decree against the Servicer or any of its
material Subsidiaries if the aggregate amount of all judgments
and decrees then outstanding against the Servicer and its
material Subsidiaries exceeds $25,000,000, (2) the institution
of any litigation, arbitration proceeding, investigation or
governmental proceeding against the Servicer which,
individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect; and (3) any material
adverse development in any previously disclosed litigation,
arbitration proceeding, investigation or governmental
proceeding.
(iii) Material Adverse Effect. The
occurrence of any event or condition that has had, or could
reasonably be expected to have, a Material Adverse Effect.
(iv) Defaults Under Other Agreements. The
occurrence of (A) any "event of default" or "default" or other
event which, with the giving of notice or the passage of time
or both, would constitute an "event of default" or a "default"
under any financing arrangement in excess of $25,000,000
pursuant to which the Servicer is a debtor or an obligor or
(B) the creation of any Adverse Claim (other than Permitted
Liens) on, or the occurrence of any event which, with the
giving of notice or passage of time or both, would result in,
or with further action by any third party would result in, the
creation of any Adverse Claim (other than Permitted Liens) on
the Contracts, the Related Security or the Collections
pursuant to any indenture, agreement, instrument or filing.
(c) Compliance with Laws and Preservation of Corporate
Existence.
(i) The Servicer will comply with the
requirements of all applicable statutes, rules, regulations,
orders, and restrictions of any domestic or foreign government
or any instrumentality or agency thereof having jurisdiction
over the conduct of its businesses or the ownership of its
property, except where the failure to comply with any of the
foregoing could not reasonably be expected to have a Material
Adverse Effect.
(ii) The Servicer (A) will preserve and
maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation and (B)
will qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where its business is
conducted, except where the failure to so qualify could not
reasonably be expected to have a Material Adverse Effect.
(d) Audits. The Servicer will furnish to each Administrative
Agent from time to time such information with respect to it and the Contracts as
such Administrative Agent may reasonably request. The Servicer will during
regular business hours upon reasonable prior written notice and at the sole cost
of the Servicer, permit each Administrative Agent, or its agents or
representatives (including an independent auditor or accounting firm selected by
an Administrative Agent) to perform an Audit. The Administrative Agents shall
make reasonable efforts to coordinate Audits. Any Audit provided for herein
shall be conducted in accordance with the Servicer's rules respecting safety and
security on its premises and without materially disrupting operations. Nothing
in this Section 5.03(d) shall affect the obligation of the Servicer to observe
any applicable law prohibiting the disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 5.03(d).
The Servicer will not be responsible for the costs of more than one (1) Audit
performed during any calendar year in respect of the Servicer under this Section
5.03(d) and in respect of the Borrower under Section 5.01(d) on a combined basis
(which, in the event there shall have been more than one Audit in any calendar
year, shall be the Audit designated for this purpose by the Program Agent);
provided, that following the occurrence and during the continuation of an Event
of Termination, the one audit per calendar year limitation shall be
inapplicable.
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(e) Keeping and Marking of Records and Books.
(i) The Servicer will maintain and implement
administrative and operating procedures (including, without
limitation, an ability to recreate records evidencing
Contracts in the event of the destruction of the originals
thereof), and keep and maintain all documents, books, records
and other information reasonably necessary or advisable as
will enable the Program Agent and the Lenders to determine the
status of all Contracts (including, without limitation,
records adequate to permit the immediate identification of all
Collections of and adjustments to each existing Contract). The
Servicer will give the Program Agent notice of any material
change in the administrative and operating procedures referred
to in the previous sentence.
(ii) The Servicer will (A) on or prior to
the date hereof, mark the portions of the Computer Files in
its possession or the possession by the Custodian with a
legend, reasonably acceptable to the Administrative Agents, to
indicate that each Contract constitutes part of the
Collateral, and (B) upon the request of any Administrative
Agent after the occurrence and during the continuation of an
Event of Termination, (x) mark each Contract with a legend
describing the interests of the Program Agent and the Secured
Parties therein and (y) deliver to the Program Agent all
Contracts (including, without limitation, all multiple
originals of any such Contract).
(f) Compliance with Contracts and Collection Policy. The
Servicer will timely (i) fully perform and comply with all provisions, covenants
and other promises required to be observed by it under the Contracts, and (ii)
comply in all material respects with the Collection Policy in regard to each
Contract.
(g) Collections. The Servicer will instruct all Obligors to
remit all Collections directly to the Lock-Box or the Lockbox Account (except as
contemplated by clause (f) of the definition of "Eligible Contract"). The
Servicer will remit all Collections deposited in the Lock-Box and Lockbox
Account to the Collection Account as provided in Section 2.08(a). In the event
any payments relating to Contracts are remitted directly to the Servicer or any
Affiliate of the Servicer, the Servicer will remit (or will cause all such
payments to be remitted) to the Collection Account in accordance with Section
2.08(a). The Servicer shall assist the Borrower in taking all steps necessary to
ensure that the Program Agent has "control" (within the meaning of Section and
8-106(d) of the UCC of all applicable jurisdictions) over the Collection Account
and that the Collection Account is not subject to any Adverse Claim other than
Permitted Liens and Adverse Claims in favor of the Secured Parties hereunder.
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(h) Taxes. The Servicer will file all Federal, state and local
tax returns required by law to be filed by it and will promptly pay and
discharge, before the same shall become delinquent, all taxes and assessments
imposed upon it or upon its property, except any such taxes or assessments (i)
that are being contested in good faith by appropriate proceedings or (ii) the
non-payment or non-filing of which could not reasonably be expected to have a
Material Adverse Effect.
(i) Insurance. The Servicer will ensure it is covered, with
responsible insurance companies, by insurance against at least such risks and in
at least such amounts as is customarily maintained by similar businesses, or as
may be required by any applicable law, rule or regulation, any governmental
approval, or any order, writ, injunction or decree of any court or Governmental
Authority or agency.
(j) Reserve Account. The Servicer shall assist the Borrower in
taking all steps necessary to ensure that the Program Agent has "control"
(within the meaning of Section and 8-106(d) of the UCC of all applicable
jurisdictions) over the Reserve Account and that the Reserve Account is not
subject to any Adverse Claim other than Permitted Liens and Adverse Claims in
favor of the Secured Parties hereunder.
(k) Certain Security Entitlements. The Servicer will take all
steps necessary to ensure that no "security entitlement" (within the meaning of
Section 8-102(a)(17) of the UCC of all applicable jurisdictions) (i) that is
subject to federal regulations governing security entitlements maintained on the
books of a federal reserve bank (including, without limitation, Treasury
securities subject to 31 C.F.R. Part 357), or (ii) where the underlying security
(within the meaning of Section 8-102(a)(15) of the UCC of all applicable
jurisdictions) or other financial asset (within the meaning of Section
8-102(a)(9) of the UCC of all applicable jurisdictions) has not been either
endorsed to the securities intermediary (within the meaning of Section 8-501(a)
of the UCC of all applicable jurisdictions) under the Control Agreement or
Reserve Account Agreement, as applicable, or in blank or credited to a
securities account (within the meaning of Section 8-102(a)(9) of the UCC of all
applicable jurisdictions) in the name of Securities Intermediary will be held in
the Collection Account or Reserve Account.
SECTION 5.04. Negative Covenants of the Servicer. Until the
date on which the Borrower Obligations have been indefeasibly paid in full and
this Agreement terminates in accordance with its terms, the Servicer hereby
covenants that:
(a) Change in Payment Instructions to Obligors. Except as may
be required by the Program Agent pursuant to Section 6.06, the Servicer will not
make any change in the instructions to Obligors regarding payments to be made to
the Lock-Box or Lockbox Account, unless such change is necessary to allow the
Servicer to comply with Section 5.03(g).
(b) Modifications to Business, Contracts and Collection
Policy. The Servicer will not (i) make any change in the character of its
business or (ii) permit any change to the Collection Policy that could
reasonably be likely to adversely affect the collectibility of the Contracts
generally, without the prior consent of the Syndication Agents in accordance
with the reporting requirements set forth in Section 5.03(a)(vi). Except as
provided in Section 6.02(d), the Servicer will not extend, amend or otherwise
modify the terms of any Contract other than in accordance with the Collection
Policy.
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(c) Collections. The Servicer will not deposit or otherwise
credit, or cause or permit to be so deposited or credited, to the Collection
Account cash or cash proceeds other than (i) Collections, (ii) other amounts
required or permitted to be deposited in the Collection Account in accordance
with the terms of this Agreement and (iii) amounts deposited in the Collection
Account in error, as long as the Servicer withdraws such amounts as contemplated
in Section 6.06.
(d) Facility Documents. Except as otherwise permitted herein,
the Servicer shall not terminate, amend or otherwise modify any Facility
Document to which it is a party or grant any waiver or consent thereunder
without the prior written consent of the Syndication Agents.
ARTICLE VI
ADMINISTRATION OF CONTRACTS
SECTION 6.01. Designation of the Servicer.
(a) The servicing, administering and collection of the
Contracts shall be conducted by the Person so designated from time to time in
accordance with this Section 6.01. Until the Program Agent, with the consent or
at the direction of the Required Lenders, gives notice to the Borrower and the
Servicer of the designation of a new Servicer as provided in Section 6.01(b)
below, HDCC is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. The Borrower hereby
grants to the Servicer an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of the Borrower any
and all steps which are necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind in connection with
any Contract or other Collateral.
(b) Upon the occurrence and during the continuation of any
Servicer Termination Event, the Program Agent may, with the consent or shall at
the direction of the Required Lenders, upon written notice to the parties hereto
designate as the Servicer any Person to succeed HDCC (or any successor Servicer)
subject to the condition that any such Person so designated shall agree to
perform, and shall be qualified to perform, the duties and obligations of the
Servicer under each of the Facility Documents to which it is a party. The
Servicer shall not resign from the obligations and duties hereby imposed on it
except upon the reasonable determination by the Servicer that (x) the
performance of its duties hereunder is no longer permissible under applicable
law and (y) there is no reasonable action which the Servicer could take to make
the performance of its duties hereunder permissible under applicable law.
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(c) HDCC and any successor Servicer agrees that, upon its
resignation or replacement as the Servicer pursuant to Section 6.01(b) above, it
will cooperate with the Borrower, the Program Agent and the successor Servicer
in effecting the termination of its responsibilities and rights as the Servicer
hereunder, including, without limitation, (i) assisting the successor Servicer
in enforcing all rights under the Contracts and Related Security, (ii)
transferring, promptly upon receipt, to the successor Servicer, any Collections
or other amounts related to the Contracts received by such Servicer, (iii)
transferring to the successor Servicer all Records held by or under the control
of such Servicer and (iv) permitting the successor Servicer to have access to
all tapes, discs, diskettes and related property containing information
concerning the Contracts and the Records and taking all actions necessary in its
control to permit the successor Servicer to use all computer software (to the
extent it is permitted to do so) that may facilitate the successor Servicer's
access to and use of such information and acting as data processing agent for
such successor Servicer if requested. Upon the resignation or replacement of
HDCC as the Servicer, HDCC shall no longer be entitled to the Servicer Fee
accruing from and after the effective date of such resignation or replacement.
If HDCC or a successor Servicer resigns or is replaced, it shall be entitled to
reimbursement for all outstanding Servicer Advances at the time and in the order
of priority set forth in Section 2.08(b) and 2.08(c), as applicable,
notwithstanding its resignation or termination hereunder.
(d) The Servicer may (i) delegate to any of the Servicer's
Affiliates some or all of the Servicer's duties hereunder, (ii) delegate to a
non-Affiliate discrete portions of its duties hereunder, such as, collection,
bankruptcy services, repossession, in order to enable the Servicer to maximize
Collections on the Receivables, and (iii) to a non-Affiliate all or
substantially all of its duties hereunder with the prior consent of the
Syndication Agents, such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Servicer shall remain primarily liable for
any and all duties delegated in accordance with this clause (d).
SECTION 6.02. Duties of the Servicer.
(a) The Servicer shall take or cause to be taken all such
actions as it deems necessary or advisable to collect all amounts due and
related to each Contract from time to time, all in accordance with applicable
laws, tariffs, rules, regulations and the Collection Policy. Each of the
Borrower, each Lender, each Administrative Agent and the Program Agent hereby
appoints as its agent the Servicer, from time to time designated pursuant to
Section 6.01, to enforce its respective rights and interests in and under the
Contracts and the Related Security. The Servicer (so long as it is HDCC) will at
all times apply the same standards and follow the same procedures with respect
to the decision to commence litigation with respect to the Contracts, and in
prosecuting and litigating with respect to the Contracts, as it applies and
follows with respect to motorcycle conditional sales contracts and promissory
note and security agreements serviced by it which are not Contracts; provided,
however, that from and after the Termination Date, the Servicer shall commence
or settle any legal action to enforce collection of any Contract or to foreclose
upon or repossess any Related Security with respect thereto as directed by the
Program Agent. In no event shall the Servicer be entitled to make the Program
Agent, any Administrative Agent or any Lender a party to any litigation without
such Person's express prior written consent.
(b) The Servicer shall apply all Collections to the Contracts
owed by the applicable Obligors in a timely manner in accordance with the
business practices of the Servicer as of the date of this Agreement unless
mutually agreed otherwise with the Syndication Agents. In the event the Servicer
receives any Collections or other proceeds of the Collateral, it shall set aside
and hold in trust for the Borrower and the Secured Parties such Collections and
other proceeds for application and remittance in accordance with Section
2.08(a), and it shall remit the same to the Collection Account to the extent
required hereunder.
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(c) The Servicer shall, as soon as practicable following
receipt, turn over to the Person entitled thereto collections in respect of any
receivable which is not a Contract less, to the extent the Servicer performed
any collection or enforcement actions which it was authorized by such Person to
perform, all reasonable and appropriate out of pocket costs and expenses of such
Servicer incurred in collecting and enforcing such receivable. The Servicer's
authorization and obligations hereunder shall terminate on the Business Day
immediately after the Final Collection Date. After such termination, if HDCC or
an Affiliate thereof was not the Servicer on the date of such termination, the
Servicer shall promptly deliver to the Borrower, all books, copies of records
and related materials that the Borrower previously provided to the Servicer, or
that otherwise have been obtained by the Servicer, in connection with this
Agreement.
(d) The Servicer may, in accordance with the Collection
Policy, extend the maturity of any Contract as the Servicer determines to be
appropriate to maximize Collections thereof; provided, however, that such
extension shall not limit the rights of any Secured Party under this Agreement.
The parties acknowledge that, in accordance with the Servicer's customary
business practices as they relate to the management of its securitization
facilities, the Servicer will recognize a given Contract as being a Defaulted
Contract and thereupon mark the Outstanding Balance of such Contract to zero in
its books and records. Such internal practices will not impair or diminish (i)
the claim of the Borrower against the applicable Obligor for payment in full of
such Contract, (ii) any right of the Borrower to realize any Recoveries
subsequently made on any Contract so recorded or (iii) the obligation of the
Servicer and the Borrower to remit in full to the Collection Account for
application in accordance with Section 2.08 any and all such Recoveries.
Notwithstanding anything to the contrary contained herein, during the existence
of any Event of Termination, the Program Agent shall have the absolute and
unlimited right to direct the Servicer to commence or settle any legal action
with respect to any Contract or to foreclose upon or repossess any Related
Security; provided, further, that the Servicer shall not release or waive the
right to collect the Outstanding Balance of any Contract, except that, with
respect to a Contract that has become a Defaulted Contract or has been
written-off as uncollectible, the Servicer, consistent with its Collection
Policy, may release or waive the right to collect the Outstanding Balance of
such Contract in an effort to maximize collections thereon.
(e) The Servicer shall hold in trust for the Borrower and the
Secured Parties all Records that (i) evidence or relate to the Contracts, the
related Contracts and Related Security or (ii) are otherwise necessary or
desirable to collect the Contracts and shall, as soon as practicable upon demand
of any Administrative Agent or the Program Agent, during the existence of any
Event of Termination, deliver or make available to the Program Agent all such
Records, at a place selected by the Program Agent.
(f) If the Servicer shall have repossessed a Motorcycle on
behalf of the Program Agent for the benefit of the Secured Parties, the Servicer
shall either (i) maintain at its expense physical damage insurance with respect
to such Motorcycle, or (ii) indemnify the Program Agent against any damage to
such Motorcycle prior to resale or other disposition. The Servicer shall not
allow such repossessed Motorcycle to be used in an active trade or business, but
rather shall dispose of the Motorcycle in a reasonable time in accordance with
the Servicer's normal business practices.
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(g) The Servicer will be entitled to recover all reasonable
out-of-pocket expenses incurred by it in liquidating a Contract and disposing of
the related Motorcycle.
SECTION 6.03. Servicer Advances. The Servicer may, in its sole
discretion, advance (a "Servicer Advance") with respect to any Contract on any
Settlement Date, any scheduled principal and/or interest payment thereunder
which became due during any Monthly Period ending prior to such Settlement Date
and was not paid by the Obligor of such Contract as of the close of business on
that last day of the most recently ended Monthly Period (unless a Servicer
Advance with respect to and in the amount of such scheduled payment has
previously been made), subject to its determination that any such Servicer
Advance is expected to be recoverable from future payments made by such Obligor.
Any such Servicer Advance, if made, shall be remitted to the Collection Account
on the Settlement Date following such Monthly Reporting Date. The Servicer shall
not be entitled to interest or any other fees on or with respect to Servicer
Advances. The Servicer shall be reimbursed its respective Servicer Advance as
provided in Sections 2.08(b) and 2.08(c), as applicable.
SECTION 6.04. Responsibilities of the Borrower. Anything
herein to the contrary notwithstanding, the Borrower shall (i) perform all of
its obligations with respect to the Contracts to the same extent as if a
security interest in the Contracts had not been granted hereunder and the
exercise by the Program Agent of its rights hereunder shall not relieve the
Borrower from such obligations and (ii) pay when due any taxes, including
without limitation, sales, excise and personal property taxes payable by it in
connection with the Contracts. None of the Program Agent, the Administrative
Agents, the Lenders or the Liquidity Providers shall have any obligation or
liability with respect to any Contracts or other Collateral, nor shall any of
them be obligated to perform any of the obligations of the Borrower thereunder.
SECTION 6.05. Further Action Evidencing Program Agent's
Interest. Each of the Borrower and the Servicer agrees that from time to time,
at its expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that any Administrative Agent or the
Program Agent may reasonably request in order to perfect, protect or more fully
evidence the interest of the Program Agent or the Secured Parties granted
hereunder or to enable the Program Agent to exercise or enforce any of its or
the Secured Parties' rights hereunder. Without limiting the generality of the
foregoing, each of the Borrower and the Servicer will (i) code its master data
processing records evidencing such Contracts to evidence that a security
interest therein has been granted to the Program Agent on behalf of the Secured
Parties under this Agreement, and (ii) upon the request of any Administrative
Agent or the Program Agent, file such financing statements, continuation
statements or amendments thereto or assignments thereof, and execute and file
such other instruments or notices, as may be necessary or appropriate or as the
Program Agent or any Administrative Agent may reasonably request. If either the
Borrower or the Servicer fails to perform any of its respective agreements or
obligations under this Agreement, the Program Agent may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the reasonable out-of-pocket expenses of the Program Agent
incurred in connection therewith shall be payable by the Borrower or the
Servicer, as applicable, upon the Program Agent's demand therefor.
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SECTION 6.06. Collections. In the case of any remittances
received in the Collection Account that shall have been identified, to the
satisfaction of the Servicer, to not constitute Collections or other proceeds of
the Contracts or the Related Security, the Servicer shall promptly remit such
items to the Person identified to it (or determined by it) as being the owner of
such remittances. From and after the occurrence of a Servicer Termination Event,
the Program Agent may request that the Servicer, and the Servicer thereupon
promptly shall instruct all Obligors with respect to the Contracts, to remit all
payments thereon directly to the Collection Account and, at all times
thereafter, the Borrower and the Servicer shall not deposit or otherwise credit,
and shall not permit any other Person to deposit or otherwise credit to the
Collection Account any cash or payment item other than Collections or other
amounts permitted or required to be deposited therein pursuant to this
Agreement.
SECTION 6.07. Reports. The Servicer shall prepare and forward
to each Administrative Agent (i) on each Monthly Reporting Date, a Monthly
Report, and the Servicer shall provide a copy thereof to the Deal Rating Agency
and the Hedge Counterparties, (ii) at such times as any Administrative Agent
shall reasonably request, a listing by Obligor of all Contracts and (iii) if
Provisional Settlement Dates are then in effect, a report substantially in the
form of a Monthly Report at such times as any Administrative Agent shall
reasonably request. The Servicer shall deliver to each Administrative Agent, the
Deal Rating Agency and the Hedge Counterparties: (x) on each Monthly Reporting
Date as part of the Monthly Report, information regarding loss-to-liquidations
on HDFS's U.S. retail Motorcycle managed portfolio and (y) on a quarterly basis,
information regarding delinquencies and annual losses on such managed portfolio.
SECTION 6.08. Servicer Fees. In consideration of HDCC's
agreement to act as the Servicer hereunder, the Lenders hereby agree that,
during the period that HDCC shall perform as the Servicer hereunder, the
Borrower shall pay over to HDCC a fee (the "Servicer Fee") on each Settlement
Date in accordance with Sections 2.08(b) and 2.08(c), as applicable, which
Servicer Fee shall be equal, in respect of any Monthly Period (or portion
thereof), to:
(i) (A) the sum of the aggregate Outstanding Balance of
all Contracts constituting Collateral as of the first
day of such period and the aggregate Outstanding
Balance of all Contracts constituting Collateral as
of the last day of such period, divided by (B) two,
times
(ii) 1.00%, times
(ii) the actual number of days during such period divided
by 360.
The Servicer shall retain all Late Payment Penalty Fees and extension fees paid
in the prior Monthly Period, as compensation for its servicing activities.
Notwithstanding the foregoing, if the Servicer is replaced by the Program Agent,
the successor Servicer shall receive a servicing fee in an amount agreed upon by
the Program Agent and the successor Servicer which reflects the then-prevailing
market rates for servicing similar portfolios of Contracts.
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ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. "Event of Termination,"
wherever used herein, means any one of the following events:
(a) The Borrower shall fail to, or shall fail to cause the
Servicer to, make any payment required hereunder when due and, (i) in the case
of any payment of principal, such failure continues for two (2) consecutive
Business Days, or (ii) in the case of any payment of Interest or other amount
payable hereunder, such failure continues for three (3) consecutive Business
Days; or
(b) The Borrower or shall fail to perform or observe any other
term, covenant or agreement hereunder (other than as described in Section
7.01(a)) or any other Facility Document and such failure shall continue for
thirty (30) consecutive days after the earlier of (i) the Borrower obtaining
knowledge thereof or (ii) the Program Agent or any Administrative Agent delivers
written notice thereof.
(c) Any representation, warranty, certification or statement
made by the Borrower under or in connection with this Agreement, any other
Facility Document or in any other document delivered pursuant hereto or thereto
shall be determined to have been false in any material respect on the date as of
which made or deemed made.
(d) (i) the Borrower shall fail to pay any principal of or
premium or interest on any Indebtedness that is outstanding in a principal or
net amount of at least $10,000 in the aggregate (but excluding Indebtedness
outstanding hereunder) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Indebtedness, or (ii) any event
shall occur or condition shall exist under any agreement or instrument relating
to any such Indebtedness and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if such event or condition is
to accelerate, or to permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid or redeemed (other than by a regularly scheduled
required prepayment or redemption), purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Indebtedness shall be required to be
made, in each case prior to the stated maturity thereof.
(e) An Insolvency Event has occurred with respect to the
Borrower.
(f) A Servicer Termination Event shall have occurred and be
continuing and remain unwaived.
(g) A Change of Control shall occur.
(h) The Program Agent or an Administrative Agent, in its
reasonable, good faith judgment, has cause to believe that there has been a
Material Adverse Effect (excluding for this purpose a Material Adverse Effect of
the type discussed in clause (ii) of the definition thereof relating to the
Servicer or HDCC).
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(i) The Borrower shall fail, or shall fail to cause the
Servicer, to reduce the Aggregate Principal Balance of the Loans to zero on the
Maturity Date then in effect.
(j) One or more final judgments for the payment of money in
excess of $500,000 in the aggregate shall be entered against the Borrower with
respect to which (i) enforcement proceedings shall have been commenced by any
creditor upon such judgments or orders or (ii) there shall be any period of ten
(10) consecutive days during which a stay of enforcement of such judgments or
orders, by reason of a pending appeal or otherwise, shall not be in effect;
provided, however, that any such judgment or order shall not be an Event of
Termination or included in the calculation of the aggregate amount of judgments
or orders under this Section 7.1(j) if and for so long as (A) the amount of such
judgment or order is covered by a valid and binding policy of insurance between
the defendant and the insurer covering payment thereof and (B) such insurer,
which shall be rated at least "A" by A.M. Best Company, has been notified of,
and has not disputed the claim made for payment of, the amount of such judgment
or order.
(k) This Agreement or any other Facility Document shall
terminate in whole or in part (except in accordance with its terms), or shall
cease to be effective or to be the legally valid, binding and enforceable
obligation of the Borrower or the Servicer; or any Obligor shall directly or
indirectly contest in any manner such effectiveness, validity, binding nature or
enforceability and HDCC fails to repurchase such Obligor's related Contract upon
the terms set forth in the Receivables Sale Agreement.
(l) The Program Agent for the benefit of the Secured Parties
shall cease to have a valid and perfected first priority security interest in a
material (as determined in the sole discretion of either of the Syndication
Agents) portion of the Collateral.
(m) The Borrower shall fail to maintain an Eligible Hedge
Agreement and such failure continues unremedied for thirty (30) consecutive
days.
(n) The Borrower shall fail to maintain a valid Custodial
Agreement in full force and effect with its Custodian.
(o) The Aggregate Principal Balance shall at any time exceed
an amount equal to (i) the Adjusted Pool Balance minus (ii) the product of (A)
the Adjusted Pool Balance and (B) the Dynamic Enhancement Percentage (Level I),
for more than five (5) consecutive Business Days following the earlier to occur
of (x) the Servicer or the Borrower obtaining knowledge thereof and (y) the
Monthly Reporting Date on which such deficiency would first be reported.
(p) A Reserve Account Shortfall shall occur on any date and
such failure shall continue unremedied as of the immediately following
Settlement Date after giving effect to all distributions made on such Settlement
Date in accordance with Section 2.08.
SECTION 7.02. Remedies. (a) If an Event of Termination has
occurred and is continuing, then the Program Agent shall, at the request, or may
with the consent of the Required Lenders by notice to the Borrower, declare the
Termination Date to have occurred; provided, however, that, in the case of any
event described in Section 7.01(e) above, the Termination Date shall be deemed
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to have occurred automatically upon the occurrence of such event. Upon the
declaration or automatic occurrence of the Termination Date in accordance with
this Section 7.02, the Loans and all other obligations of the Borrower hereunder
shall become and be immediately due and payable, without any presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower. In addition to the foregoing, upon the occurrence and
during the continuance of an Event of Termination, (i) all Borrower Obligations
hereunder shall bear interest at the Default Rate, (ii) the Program Agent, on
behalf of the Lenders, may direct the Servicer to deposit to the Collection
Account all Collections received by it within two (2) Business Days in
accordance with Section 2.08(a), (iii) the Program Agent, on behalf of the
Lenders, may exercise exclusive dominion and control over the Collection Account
in accordance with Sections 5.01(j) and 5.03(g), and the Reserve Account by
delivering the requisite notice of control to the applicable account banks, and
following such exercise of control, the Program Agent shall direct all
withdrawals and distributions from and to the Collection Account, (iv) the
Program Agent may, upon the direction of the Required Lenders, notify the
Obligors of the Secured Parties' interest in the Collateral (or direct the
Servicer to do so pursuant to Section 6.06) and direct such Obligors to make
payment of all amounts due under Contracts as designated by the Program Agent,
including making payment directly to the Collection Account, (v) the Program
Agent may, upon the direction of the Required Lenders, without notice, demand or
advertisement of any kind to the Borrower or any other Person, enter the
premises of the Borrower where any Collateral is located (through self-help and
without judicial process) to collect, receive, assemble, process, appropriate,
sell, lease, assign, foreclose, grant an option or options to purchase or
otherwise dispose of, deliver, or realize upon, the Collateral or any part
thereof in one or more parcels at public or private sale or sales (which sales
may be adjourned or continued from time to time with or without notice and may
take place at the Borrower's premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other terms
as the Required Lenders may deem commercially reasonable, and the Lenders shall
have the right upon any such public sale or sales and, to the extent permitted
by law, upon any such private sale or sales, to purchase for the benefit of the
Lenders, the whole or any part of the Collateral so sold, free of any right of
equity redemption, which equity redemption the Borrower hereby expressly
releases; (vi) if such event described in Section 7.01(g) has occurred with
respect to the Servicer, the Program Agent may, with the consent or shall at the
direction of the Required Lenders, designate as the Servicer any Person to
succeed HDCC (or any successor Servicer), and (vii) the Program Agent and the
Secured Parties shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided under the
UCC of the applicable jurisdiction and other applicable laws, which rights shall
be cumulative.
(b) Upon the occurrence and during the continuance of an Event
of Termination, each of the Borrower and the Servicer shall take or cause to be
taken all actions necessary as reasonably requested by the Program Agent (i) to
cause the Program Agent to have all of the rights and remedies of a "Trustee"
under and as defined in the Lockbox Agreement, (ii) to cause the Borrower to be
treated as or deemed a "Trust" and a "Trust Depositor" under and as defined in
the Lockbox Agreement, (iii) to cause the Contracts to be treated as or deemed
"CFC Contracts" under and as defined in the Lockbox Agreement and (iv) to
obligate HDCC, as servicer under the Lockbox Agreement, to remit to the
Collection Account any Collections received in any Lockbox Account that is
subject to the Lockbox Agreement in accordance with the terms of the Lockbox
Agreement. The Borrower hereby grants to the Program Agent an irrevocable power
of attorney, with full power of substitution, coupled with an interest, to take
in the name of the Borrower, following the occurrence and during the continuance
of an Event of Termination, any and all steps which are necessary or advisable
to endorse, negotiate or otherwise realize on any writing or other right of any
kind in connection with any Contract or other Contract Asset.
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(c) The Borrower recognizes that the Lenders may be unable to
effect a public sale of any or all the Collateral and may be compelled to resort
to one or more private sales thereof. The Borrower acknowledges that any private
sale may result in prices and other terms less favorable to the seller than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private. In
the event of any sale, assignment or other transfer of all or any portion of the
Collateral by the Lenders in the exercise of their remedies under this
Agreement, all rights and obligations of the Servicer hereunder in respect of
the servicing, collecting or other handling of the Collateral so sold, assigned
or otherwise transferred shall thereupon terminate without any requirement that
notice be given to or any payment (other than any then accrued and unpaid
Servicer Fees) be made to the Servicer or that any other action on the part of
any Person be taken to give effect to such termination.
SECTION 7.03. Additional Remedies of the Lenders. (a) During
an Early Amortization Period, (i) no new Loans shall be extended by the Lenders
hereunder, and (ii) on each Settlement Date, the Target Principal Amount shall
be an amount equal to the Aggregate Principal Balance of the Loans then
outstanding.
(b) If (x) the Aggregate Principal Balance at any time exceeds
the Borrowing Base and (y) such circumstance does not constitute an Event of
Termination under Section 7.01(o) because it arises solely as a result of a
change in the Loss-to-Liquidation Ratio causing an increase in the Dynamic
Enhancement Percentage, no new Loans will be extended by the Lenders until such
time as such deficiency is eliminated by (i) the pledge of additional Collateral
by the Borrower to the Program Agent on behalf of the Secured Parties or (ii)
the payment of the Total Distribution Amount by the Borrower, or the Servicer on
its behalf, in accordance with Section 2.08(b) hereof such that the Aggregate
Principal Balance of the Loans is less than the Borrowing Base.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Borrower. (a) Without
limiting any other rights that the Program Agent, any Administrative Agent or
any Lender may have hereunder or under applicable law, the Borrower hereby
agrees to indemnify (and pay upon demand to) the Program Agent, each
Administrative Agent and each Lender and their respective Affiliates,
successors, assigns, officers, directors, agents and employees (each, an
"Indemnified Party") from and against any and all damages, losses, claims,
taxes, liabilities, costs, expenses and for all other amounts payable, including
reasonable attorneys' fees (which attorneys may be employees of the Program
Agent, such Administrative Agent or such Lender) and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred
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by any of them arising out of or by reason of (i) the Borrower's or Servicer's
(in its capacity as Servicer) failure to perform any of its duties, covenants or
other obligations in accordance with the provisions of this Agreement or any
other Facility Document, (ii) any representation or warranty made by the
Borrower or Servicer (in its capacity as Servicer) (or any of their respective
officers) under or in connection with this Agreement, any other Facility
Document or any other written information or report delivered by the Borrower or
Servicer pursuant hereto or thereto, which shall have been false or incorrect
when made or deemed made, (iii) any products liability, personal injury or
damage suit, or other similar claim arising out of or in connection with any
Motorcycle or other merchandise, insurance or services that are performed by the
Servicer or any of its Affiliates and that are the subject of any Contract, (iv)
any taxes (other than Excluded Taxes) that may at any time be asserted against
any Indemnified Party as a result of or relating to the transactions
contemplated herein and in the other Facility Documents, including any sales,
gross receipts in respect of the Contracts, gross margin, general corporation,
tangible personal property, Illinois personal property replacement privilege or
license taxes and costs, expenses and reasonable counsel fees in defending
against the same, whether arising by reason of the acts to be performed by the
Borrower or the Servicer under this Agreement or imposed against the Program
Agent, any Administrative Agent or any Lender or otherwise, (v) any Contract
being determined to not constitute an Eligible Contract or Eligible Post-Sale
Contract, as applicable, as of any Borrowing Date, Settlement Date, Take-Out
Date or other date on which such Contract is then being included in the
calculation of Outstanding Eligible Balance, (vi) any statement set forth in
Sections 4.01(a), 4.01(e), 4.01(q), 4.02(a), 4.02(e), 4.02(l) or 4.02(o)
(deleting for this purpose any exception or qualification otherwise contained
therein referring to material adverse effect or any similar concept) not being
true and accurate on the date the related representation and warranty is made,
or (vii) the Borrower's failure to obtain licenses in the appropriate
jurisdictions required for the Borrower to own, engage a servicer and pledge the
Contracts hereunder or otherwise to comply with the law, including without
limitation, Indemnified Amounts based on or resulting from:
(i) the failure by the Borrower, the
Servicer or any Originator to comply with any applicable law,
rule or regulation with respect to any Contract, or the
nonconformity of any Contract with any such applicable law,
rule or regulation or any failure of any Originator to keep or
perform any of its obligations, express or implied, with
respect to any Contract;
(ii) any dispute, claim, offset or defense
of the Obligor (other than discharge or stay in bankruptcy of
the Obligor) to the payment of any Contract (including,
without limitation, a defense based on such Contract not being
a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms), or any
other claim resulting from the sale of the Motorcycle or other
merchandise or service provided by the Borrower or any of its
Affiliates related to such Contract or the furnishing or
failure to furnish such merchandise or services;
(iii) the commingling of Collections of
Contracts with other funds;
(iv) any investigation, litigation or
proceeding related to or arising from this Agreement or any
other Facility Document, the transactions contemplated hereby,
the use of the proceeds of the Borrowing, the ownership of the
Contracts or any other investigation, litigation or proceeding
relating to the Borrower, the Servicer or any Originator in
which any Indemnified Party becomes involved as a result of
any of the transactions contemplated hereby;
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(v) any inability to litigate any claim
against any Obligor in respect of any Contract as a result of
such Obligor being immune from civil and commercial law and
suit on the grounds of sovereignty from any legal action, suit
or proceeding;
(vi) an Insolvency Event has occurred with
respect to HDI, HDFS, any Originator or the Borrower;
(vii) any failure of Borrower to acquire and
maintain legal and equitable title to, and ownership of any
Contract and the Related Security and Collections with respect
thereto from HDCC, free and clear of any Adverse Claim (other
than as created hereunder); or any failure of Borrower to give
reasonably equivalent value to HDCC under the Receivables Sale
Agreement in consideration of the transfer by HDCC of any
Contract, or any attempt by any Person to void such transfer
under statutory provisions or common law or equitable action;
(viii) any failure to vest and maintain
vested in the Program Agent, for the benefit of the Secured
Parties, or to transfer to the Program Agent, for the benefit
of the Secured Parties, a first priority perfected security
interest in the Collateral, free and clear of any Adverse
Claim (except as created pursuant to the terms of the Facility
Documents);
(ix) the failure to have filed, or any delay
in filing, financing statements or other similar instruments
or documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to the Collateral, and the
proceeds of any thereof in accordance with this Agreement,
whether at the time of the Borrowing or at any subsequent
time;
(x) any action or omission by the Borrower
or the Servicer (in its capacity as such) which reduces or
impairs the rights of the Program Agent or the Secured Parties
(or any of their respective assigns) with respect to any
Collateral or the value of any Collateral;
(xi) any attempt by the Borrower or any of
its Affiliates to void the security interest in the Collateral
granted hereunder under statutory provisions or common law or
equitable action;
(xii) (i) with respect to the Contracts set
forth on the Contract Schedule as of the Effective Date, the
failure of any such Contract to be an Eligible Contract on the
Effective Date or (ii) with respect to the Contracts on any
date included in the calculation of the Outstanding Eligible
Balance, the failure of any such Contracts to be Eligible
Contracts or Eligible Post-Sale Contracts, as applicable, on
such date; and
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(xiii) the failure of the Servicer under the
Lockbox Agreement to remit any Collections to the Collection
Account or otherwise in accordance with the instruction of the
Program Agent, whether by reason of the exercise of setoff
rights or otherwise.
(b) Notwithstanding anything to the contrary contained in
Section 8.01(a), the Borrower shall have no obligation to indemnify (and shall
not indemnify) any Indemnified Party for:
(i) Indemnified Amounts to the extent that
such Indemnified Amounts resulted from gross negligence or
willful misconduct on the part of the Indemnified Party
seeking indemnification; or
(ii) Franchise taxes imposed upon any
Indemnified Party or taxes imposed by the federal government
or jurisdiction in which such Indemnified Party's principal
executive office is located, on or measured by the overall net
income of such Indemnified Party.
SECTION 8.02. Indemnities by the Servicer. (a) Without
limiting any other rights that the Program Agent, any Administrative Agent or
any Lender may have hereunder or under applicable law, the Servicer hereby
agrees to indemnify (and pay upon demand to) each Indemnified Party from and
against any and all Indemnified Amounts awarded against or incurred by any of
them arising out of or by reason of (i) the Servicer's failure to perform any of
its servicing duties, covenants or other obligations in accordance with the
provisions of this Agreement or any other Facility Document, (ii) any
representation or warranty made by the Servicer (or any officers of the
Servicer), in its capacity as servicer, under or in connection with this
Agreement, any other Facility Document or any other written information or
report delivered by the Servicer pursuant hereto or thereto, which shall have
been false or incorrect when made or deemed made, (iii) any statement set forth
in Sections 4.02(a), 4.02(e), 4.02(l) or 4.02(o) (deleting for this purpose any
exception or qualification otherwise contained therein referring to material
adverse effect or any similar concept) not being true and accurate on the date
the related representation and warranty is made, or (iv) the Servicer's failure
to obtain licenses in the appropriate jurisdictions required to service the
Contracts, without giving effect to any materiality qualifiers, including
without limitation, Indemnified Amounts based on or resulting from:
(i) the failure by the Servicer to comply
with any applicable law, rule or regulation with respect to
any Contract;
(ii) the commingling of Collections of
Contracts with other funds;
(iii) any investigation, litigation or
proceeding related to or arising from this Agreement or any
other Facility Document, the transactions contemplated hereby,
or any other investigation, litigation or proceeding relating
to the Servicer and its servicing duties hereunder in which
any Indemnified Party becomes involved as a result of any of
the transactions contemplated hereby;
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(iv) any action or omission by the Servicer
which reduces or impairs the rights of the Program Agent or
the Secured Parties (or any of their respective assigns) with
respect to any Collateral or the value of any Collateral;
(v) the failure of the Servicer to remit any
Collections to the Collection Account or otherwise in
accordance with the instruction of the Program Agent, whether
by reason of the exercise of setoff rights or otherwise.
(b) Notwithstanding anything to the contrary contained in
Section 8.02(a), the Servicer shall have no obligation to indemnify (and shall
not indemnify) any Indemnified Party for Indemnified Amounts to the extent that
such Indemnified Amounts resulted from gross negligence or willful misconduct on
the part of the Indemnified Party seeking indemnification.
SECTION 8.03. Other Costs and Expenses. The Borrower shall
reimburse the Program Agent and each Syndication Agent on demand for all
reasonable costs and out-of-pocket expenses in connection with the preparation,
negotiation, arrangement, execution, delivery, and administration of this
Agreement, the transactions contemplated hereby and the other documents to be
delivered hereunder, including, without limitation, the cost of any such
Person's auditors auditing the books, records and procedures of the Borrower,
all rating agency fees, reasonable fees and out-of-pocket expenses of legal
counsel for the Lenders (which such counsel may be employees of any of the
Lenders, the Administrative Agents or the Program Agent) with respect thereto
and with respect to advising the Lenders as to their rights and remedies under
this Agreement; provided that the Borrower shall not be obligated to reimburse
the costs and expenses of more than one law firm serving as external counsel for
the Program Agent and the Syndication Agents in connection with any such
preparation, negotiation, arrangement, execution, delivery, and administration
of this Agreement and the other documents delivered hereunder. The cost of
auditors will be paid in accordance with Sections 5.01(d) and 5.03(d). The
Borrower shall reimburse the Program Agent, any Syndication Agent and any Lender
on demand for any and all costs and expenses of such Person, if any, including
reasonable counsel fees and expenses in connection with the enforcement of this
Agreement and the other documents delivered hereunder and in connection with any
restructuring, amendment or workout of this Agreement or such documents, or the
administration of this Agreement following an Event of Termination; provided
that the Borrower shall not be obligated to reimburse the costs and expenses of
more than one primary law firm (and, in addition to such primary law firm, one
local counsel engaged in each relevant jurisdiction by such primary law firm)
serving as counsel for the Program Agent and Syndication Agents and one primary
law firm (and, in addition to such primary law firm, one local counsel engaged
in each relevant jurisdiction by such primary law firm) as counsel for the
Lenders in connection with any such enforcement, amendment, workout or
restructuring of this Agreement or any other document delivered hereunder.
ARTICLE IX
THE AGENTS
SECTION 9.01. Authorization and Action. Each Lender hereby
appoints and authorizes its related Administrative Agent and the Program Agent
to take such action as agent
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on its behalf and to exercise such powers under this Agreement as are delegated
to such Administrative Agent or the Program Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. Except to the extent
provided in Section 9.07, the provisions of this Article IX are solely for the
benefit of the Administrative Agents, the Program Agent and the Lenders, and the
Borrower shall not have any rights as a third-party beneficiary or otherwise
under any of the provisions hereof. In performing their functions and duties
hereunder, the Administrative Agents shall act solely as the agent for the
respective Conduit Lenders and the Committed Lenders in the related Lender Group
and do not assume nor shall be deemed to have assumed any obligation or
relationship of trust or agency with or for the other Lenders, the Borrower, the
Servicer, any Originator, any Affiliate thereof or any of their respective
successors and assigns. Each Administrative Agent and each Lender authorizes the
Program Agent to file each of the UCC financing or continuation statements (and
amendments thereto and assignments or terminations thereof).
SECTION 9.02. Agents' Reliance, Etc. Neither the Program Agent
nor any Administrative Agent nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or omitted to be taken
by it or such Administrative Agent or the Program Agent under or in connection
with this Agreement, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, (i) each of the
Program Agent and the Administrative Agents: (a) may consult with legal counsel
(including counsel for the Borrower, the Servicer or any other Affiliate of
HDCC), independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement; (c) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower, the Servicer or any
other Affiliate of HDCC or to inspect the property (including the books and
records) of the Borrower, the Servicer or any other Affiliate of HDCC; (d) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto, or for the perfection,
priority, condition, value or sufficiency of any collateral pledged in
connection herewith; and (e) shall incur no liability under or in respect of
this Agreement by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by facsimile)
believed by it to be genuine and signed or sent by the proper party or parties,
(ii) the Program Agent may rely without further inquiry on the statements made
to it by an Administrative Agent on behalf of its Lender Group, and (iii) the
Program Agent shall not have any obligation to take any action to enforce, or
incur any costs or expenses in connection with the enforcement of, any of the
Facility Documents or to collect any amounts due thereunder unless the Program
Agent is indemnified to its satisfaction and been provided assurances
satisfactory to it that it shall reimbursed for any and all such costs and
expenses.
SECTION 9.03. Agents and Affiliates. Each Administrative Agent
and the Program Agent and their respective Affiliates may engage in any kind of
business with the Borrower, HDCC or any Obligor, any of their respective
Affiliates and any Person who may do business with or own securities of the
Borrower, HDCC or any Obligor or any of their respective Affiliates, all as if
such Persons were not Administrative Agents and/or Program Agent and without any
duty to account therefor to any Lender.
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SECTION 9.04. Lender's Loan Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Program Agent, any
Administrative Agent, any of their respective Affiliates or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own evaluation and decision to enter into this Agreement and, if it so
determines, to make Loans hereunder. Each Lender also acknowledges that it will,
independently and without reliance upon the Program Agent, any Administrative
Agent, any of their respective Affiliates, or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own decisions in taking or not taking action under this
Agreement.
SECTION 9.05. Delegation of Duties. The Program Agent and each
Administrative Agent may each 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. Neither the Program
Agent nor any Administrative Agent shall be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable
care.
SECTION 9.06. Indemnification. Each Administrative Agent
severally agrees to indemnify the Program Agent (to the extent not reimbursed by
the Borrower, the Servicer, HDCC), ratably according to the Pro Rata Share of
its Lender Group, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Program Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Program Agent under this
Agreement; provided that (i) no Administrative Agent shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting or arising from the
Program Agent's gross negligence or willful misconduct and (ii) no
Administrative Agent shall be liable for any amount in respect of any compromise
or settlement of any of the foregoing unless such compromise or settlement is
approved by the Administrative Agents. Without limitation of the generality of
the foregoing, each Administrative Agent agrees to reimburse the Program Agent,
ratably according to the Pro Rata Share of its Lender Group, promptly upon
demand, for any reasonable out-of-pocket expenses (including reasonable counsel
fees) incurred by the Program Agent in connection with the administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement; provided that no Administrative Agent
shall be responsible for the costs and expenses of the Program Agent in
defending itself against any claim alleging the gross negligence or willful
misconduct of the Program Agent to the extent such gross negligence or willful
misconduct is determined by a court of competent jurisdiction in a final and
non-appealable decision.
SECTION 9.07. Successor Agents. The Program Agent and each
Administrative Agent may, upon five (5) days' notice to the Borrower, each
Lender and each other party hereto, resign as Program Agent or Administrative
Agent, as applicable. If any such party shall resign as Program Agent or
Administrative Agent under this Agreement, then, in the case of the
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Program Agent, the Committed Lenders and in the case of any Administrative
Agent, its related Conduit Lenders, during such five-day period shall appoint a
successor agent, whereupon such successor agent shall succeed to the rights,
powers and duties of the Program Agent or applicable Administrative Agent and
references herein to the Program Agent or such Administrative Agent shall mean
such successor agent, effective upon its appointment; and such former Program
Agent's or Administrative Agent's rights, powers and duties in such capacity
shall be terminated, without any other or further act or deed on the part of
such former Program Agent or Administrative Agent or any of the parties to this
Agreement. After any retiring Program Agent's or Administrative Agent's
resignation hereunder as such agent, the provisions of Article VIII, this
Article IX and Section 10.09 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Program Agent or a Administrative
Agent under this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Amendments, Etc.
(a) No waiver of any provision of this Agreement nor consent
to any departure by the Borrower or the Servicer therefrom shall in any event be
effective unless (w) the same shall be in writing, (x) to the extent practical,
the Deal Rating Agency shall have been provided ten (10) days' prior written
notice thereof, (y) to the extent required under the Hedge Agreements, the Hedge
Counterparties shall have consented to such waiver, and (z) such waiver shall
have been signed by the Required Lenders, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
(b) No amendment to this Agreement shall be effective unless
(w) the same shall be in writing, (x) to the extent practical, the Deal Rating
Agency shall have been provided ten (10) days' prior written notice thereof, (y)
to the extent required under the Hedge Agreements, the Hedge Counterparties
shall have consented to such amendment, and (z) except as otherwise specifically
provided herein, such amendment shall have been signed by each of the Borrower,
the Servicer and the Required Lenders; provided, that that no amendment,
modification or waiver shall change a Lender's Commitment, its Lender Group's
Lending Group Limit, its Conduit Lending Limit or its CP Rate without its prior
written consent; and, provided, further, that no amendment, modification or
waiver shall do any of the following without the written consent of all of the
Committed Lenders which are at such time non-defaulting Lenders (unless
otherwise indicated):
(i) extend the Termination Date; provided
that fewer than all of the Committed Lenders may, solely with
respect to themselves, agree in accordance with the terms of
Section 2.02(c) to extend the Termination Date; provided
further that (A) such extension shall not apply to any Lender
that shall not have agreed to such extension and (B) the
condition precedent set forth in Section 2.02(c)(y)(2) may
only be waived with the consent of all Committed Lenders,
including all then non-extending Committed Lenders,
(ii) increase the Aggregate Commitment,
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(iii) extend the date of any payment or
deposit of Collections by the Borrower or the Servicer, or
extend the time of payment of any principal, Interest, Fees or
any other amount due hereunder, or reduce the amount of any
principal, Interest, Fees or other amount due hereunder at any
time,
(iv) release the security interest in or
transfer all or substantially all of the Collateral (other
than as contemplated in Section 2.16 or Section 2.17),
(v) amend or modify Section 2.08,
(vi) amend or modify this Section 10.01, or
(vii) amend or modify any of the following
definitions:
Adjusted Pool Balance
Alternative Rate
Applicable Margin
Base Rate
Borrowing Base
Concentration Limit
Default Applicable Margin
Default Rate
Dynamic Enhancement Percentage
Early Amortization Event
Eligible Contract
Eligible Post-Sale Contract
Event of Termination
Interest
Make-Whole Fee
Minimum Excess Spread Percentage
Minimum Reserve Amount
O/C Floor Amount
Outstanding Eligible Balance
Required Lender
Required O/C Amount
Required O/C Percentage
Required Rate
Servicer Termination Event
Target Principal Amount
Unused Fee
Usage Fee
Yield Supplement Overcollateralization Amount
(c) No amendment to Section 2.18 of this Agreement shall be
effective unless the same shall be in writing and signed by each Administrative
Agent and the Required Lenders.
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SECTION 10.02. Notices, Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including communication by facsimile copy) and shall be personally
delivered or sent by registered mail, return receipt requested, or by courier or
by facsimile or electronic mail, to each party hereto, at its address set forth
on Schedule II hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto (and in the case of any
notice to a Hedge Counterparty hereunder, at the address specified in the
applicable Hedge Agreement). All such notices and communications shall be
effective, upon receipt, or in the case of overnight courier, two (2) days after
being deposited with such courier, or, in the case of notice by facsimile or
electronic mail, when electronic confirmation of receipt is obtained, in each
case addressed as aforesaid. In the event any written notice or other
communication is given by the Borrower or the Servicer solely to the Program
Agent, the Program Agent shall promptly provide a copy of such notice or other
communication to each Administrative Agent.
SECTION 10.03. Assignability.
(a) Any Conduit Lender may assign at any time all or any
portion of its rights and obligations hereunder and interests herein (i) without
the consent of or prior notice to any party hereto, to any one or more of the
Committed Lenders in its Lender Group, any Affiliate of its Administrative
Agent, any Liquidity Provider for such Conduit Lender or any commercial paper
conduit that is administered by the Administrative Agent of its Lender Group or
such Administrative Agent's Affiliate, and (ii) with the consent of the Borrower
(such consent not to be unreasonably withheld, delayed or conditioned), to any
other Person not listed in clause (i) above; provided that the consent of the
Borrower shall not be required if an Event of Termination has occurred and is
continuing.
(b) Any Administrative Agent may, with notice to the Borrower
and the Servicer, and with the consent of the Lenders in its Lender Group,
assign at any time all or any portion of its rights and obligations hereunder
and interests herein to any Lender or to any Affiliate of such Administrative
Agent or any Lender.
(c) Any Committed Lender may, with the consent of the Borrower
(such consent not to be unreasonably withheld, delayed or conditioned) and with
the consent of the Administrative Agent for the Lender Group of which it is a
member, assign at any time all or any portion of its rights and obligations
hereunder and interests herein to any Person; provided, however, that the
consent of the Borrower shall not be required in connection with any assignment
by a Committed Lender (i) if an Event of Termination has occurred and is
continuing or (ii) to any other Lender or any Affiliate of such Committed
Lender.
(d) With respect to any assignment hereunder, the parties to
each such assignment shall execute and deliver to the Program Agent, for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with a processing and recordation fee of $2,500.
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Upon such execution, delivery, acceptance and recording from
and after the effective date specified in such Assignment and Acceptance, (x)
the assignee thereunder shall be a party to this Agreement and, to the extent
that rights and obligations under this Agreement have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (y) the assigning Lender shall, to the extent that rights
and obligations have been assigned by it pursuant to such Assignment and
Acceptance, relinquish such rights and be released from such obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(e) At all times during which any Loan is outstanding, the
Program Agent shall maintain at its address referred to in Section 10.02 of this
Agreement (or such other address of the Program Agent notified by the Program
Agent to the other parties hereto) a register as provided herein (the
"Register"). The Aggregate Principal Balance and any interests therein, and any
Assignments and Acceptances of the Aggregate Principal Balance or any interest
therein delivered to and accepted by the Program Agent, shall be registered in
the Register, and the Register shall serve as a record of ownership that
identifies the owners of the Aggregate Principal Balances and any interests
therein. Notwithstanding any other provision of this Agreement, no transfer of
the Aggregate Principal Balances or any interest therein shall be effective
unless and until such transfer has been recorded in the Register. The entries in
the Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Servicer, the Program Agent, the Administrative
Agents and the Lenders may treat each Person whose name is recorded in the
Register as a Lender, as the case may be, under this Agreement for all purposes
of this Agreement. This Section 10.03(e) shall be construed so that the
Aggregate Principal Balance and any interest therein is maintained at all times
in "registered form" within the meaning of Sections 163(f), 871(h) and 881(c) of
the IRC. Solely for the purposes of this Section 10.03, the Program Agent will
act as an agent of the Borrower. The Register shall be available for inspection
by the Borrower, the Servicer or any Administrative Agent at any reasonable time
and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance, the
Program Agent shall, if such Assignment and Acceptance has been duly completed,
(i) accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Borrower.
(g) Any Lender may, without the consent of the Borrower, sell
participations to one or more banks or other entities (each, a "Participant") in
all or a portion of its rights and obligations hereunder (including the
outstanding Loan); provided, that following the sale of a participation under
this Agreement, (i) the obligations of such Lender shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (iii) the Borrower, the Program Agent, the
Servicer and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which such Lender sells such
a participation shall provide that the Participant shall not have any right to
direct the enforcement of this Agreement or the other Facility Documents or to
approve any amendment, modification or waiver of any provision of this Agreement
or the other Facility Documents; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver that (i) reduces the amount of
principal or Interest that is payable on account of any Loan or delays any
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scheduled date for payment thereof or (ii) reduces any fees payable by the
Borrower to the Program Agent or such Lender's Administrative Agent, as
applicable (to the extent relating to payments to the Participant) or delays any
scheduled date for payment of such fees. The Borrower acknowledges and agrees
that any Lender's source of funds may derive in part from its Participants.
Accordingly, references in Sections 2.11 through 2.15 and the other terms and
provisions of this Agreement and the other Facility Documents to determinations,
reserve and capital adequacy requirements, expenses, increased costs, reduced
receipts and the like as they pertain to the Lenders shall be deemed also to
include those of its Participants; provided, however, that in no event shall the
Borrower be liable to any Participant under Sections 2.11 through 2.15 for an
amount in excess of that which would be payable to the applicable Lender under
such sections at such time.
(h) Neither the Borrower nor the Servicer may assign any of
its rights or obligations hereunder or any interest herein without the prior
written consent of the Program Agent and each Administrative Agent.
(i) Notwithstanding any other provision of this Agreement to
the contrary, any Lender may at any time pledge or grant a security interest in
all or any portion of its rights (including, without limitation, rights to
payment of the principal balance of the Loans made by it and Interest with
respect thereto) hereunder pursuant to repurchase transactions or other
financing transactions as part of such Lender's ordinary course of business,
including to secure obligations of such Lender to a Federal Reserve Bank,
without notice to or consent of the Borrower or the Program Agent; provided that
no such pledge or grant of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or grantee for such
Lender as a party hereto.
SECTION 10.04. Additional Lender Groups. Upon the Borrower's
request with approval of the Syndication Agents, an additional Lender Group may
be added to this Agreement at any time by the execution and delivery of a
Joinder Agreement by the members of such proposed additional Lender Group, the
Borrower, and the Syndication Agents. Upon the effective date of such Joinder
Agreement, (i) each Person specified therein as a "Conduit Lender" shall become
a party hereto as a Conduit Lender, entitled to the rights and subject to the
obligations of a Conduit Lender hereunder, (ii) each Person specified therein as
a "Committed Lender" shall become a party hereto as a Committed Lender, entitled
to the rights and subject to the obligations of a Committed Lender hereunder,
(iii) each Person specified therein as an "Administrative Agent" shall become a
party hereto as an Administrative Agent, entitled to the rights and subject to
the obligations of an Administrative Agent hereunder and (iv) the Aggregate
Commitment shall be increased by an amount equal to the aggregate Commitments of
the Committed Lenders party to such Joinder Agreement.
SECTION 10.05. Consent to Jurisdiction.
(a) Each party hereto hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or Federal court sitting in New
York City in any action or proceeding arising out of or relating to this
Agreement, and each party hereto hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such New
York State court or, to the extent permitted by law, in such Federal court. The
parties hereto hereby irrevocably waive, to the fullest extent they may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. The parties
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hereto agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.
(b) Each party hereto hereby consents to the service of any
and all process in any such action or proceeding by the mailing of copies of
such process to it at its address specified in Section 10.02. Nothing in this
Section 10.05 shall affect the right of any party hereto to serve legal process
in any other manner permitted by law.
SECTION 10.06. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH THIS AGREEMENT OR ANY OTHER FACILITY DOCUMENT.
SECTION 10.07. Right of Setoff. Each Lender is hereby
authorized (in addition to any other rights it may have) at any time after the
occurrence of the Termination Date due to the occurrence of an Event of
Termination, or at any time that any Borrower Obligation hereunder is due and
payable, to set off, appropriate and apply (without presentment, demand, protest
or other notice which are hereby expressly waived) any deposits and any other
indebtedness held or owing by such Lender to, or for the account of, the
Borrower against the amount of the Borrower Obligations owing by the Borrower to
such Lender. Each Lender is hereby authorized (in addition to any other rights
it may have) at any time after the occurrence of either a Servicer Termination
Event or the Termination Date due to the occurrence of an Event of Termination,
or at any time that any payment obligation of the Servicer hereunder is due and
payable, to set off, appropriate and apply (without presentment, demand, protest
or other notice which are hereby expressly waived) any deposits and any other
indebtedness held or owing by such Lender to, or for the account of, the
Servicer against the amount of such obligations owing by the Servicer to such
Lender.
SECTION 10.08. Ratable Payments. If any Lender, whether by
setoff or otherwise, has payment made to it with respect to any Borrower
Obligations or obligation of the Servicer in a greater proportion than that
received by any other Lender entitled to receive a ratable share of such amount,
such Lender agrees, promptly upon demand, to purchase for cash without recourse
or warranty a portion of such Borrower Obligations or Servicer obligation held
by the other Lenders so that after such purchase each Lender will hold its
ratable proportion of such Borrower Obligations or Servicer obligations, as
applicable; provided, that if all or any portion of such excess amount is
thereafter recovered from such Lender, such purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest.
SECTION 10.09. Limitation of Liability.
(a) Except with respect to any claim arising out of the
willful misconduct or gross negligence of any Lender, any Administrative Agent,
the Program Agent or their respective Affiliates, directors, officers,
employees, attorneys or agents (each a "Lender Party"),
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no claim may be made by any Transaction Party or any other Person against any
Lender Party for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement or
any other Facility Document, or any act, omission or event occurring in
connection herewith or therewith; and each of the Borrower and the Servicer
hereby waives, releases, and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(b) Notwithstanding anything to the contrary contained herein,
the obligations of the Conduit Lenders under this Agreement are solely the
corporate obligations of each such Conduit Lender and shall be payable only at
such time as funds are actually received by, or are available to, such Conduit
Lender in excess of funds necessary to pay in full all outstanding Promissory
Notes issued by such Conduit Lender and, to the extent funds are not available
to pay such obligations, the claims relating thereto shall not constitute a
claim against such Conduit Lender until such funds for such purpose thereafter
become available. Each party hereto agrees that the payment of any claim (as
defined in Section 101 of Title 11 of the Bankruptcy Code) of any such party
shall be subordinated to the payment in full of all Promissory Notes.
(c) No recourse under any obligation, covenant or agreement of
any Conduit Lender contained in this Agreement shall be had against any
incorporator, stockholder, officer, director, member, manager, employee or agent
of such Conduit Lender or any of its Affiliates (solely by virtue of such
capacity) 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 this Agreement is solely a corporate obligation of such Conduit
Lender, and that no personal liability whatever shall attach to or be incurred
by any incorporator, stockholder, officer, director, member, manager, employee
or agent of any Conduit Lender or any of its Affiliates (solely by virtue of
such capacity) or any of them under or by reason of any of the obligations,
covenants or agreements of such Conduit Lender contained in this Agreement, or
implied therefrom, and that any and all personal liability for breaches by any
Conduit Lender of any of such obligations, covenants or agreements, either at
common law or at equity, or by statute, rule or regulation, of every such
incorporator, stockholder, officer, director, member, manager, employee or agent
is hereby expressly waived as a condition of and in consideration for the
execution of this Agreement; provided that the foregoing shall not relieve any
such Person from any liability it might otherwise have as a result of fraudulent
actions taken or fraudulent omissions made by them.
SECTION 10.10. Taxes. The Borrower shall pay any and all
stamp, sales, transfer and other taxes (including income and franchise taxes)
and fees (including, without limitation, UCC filing fees and any penalties
associated with the late payment of any UCC filing fees) payable or determined
to be payable in connection with the execution, delivery, filing and recording
of this Agreement or the other agreements and documents to be delivered
hereunder (including any UCC financing statements) and agrees to indemnify the
Program Agent, the Administrative Agents, the Lenders and the Liquidity
Providers against any liabilities with respect to or resulting from any delay by
the Borrower in paying or omission to pay such taxes and fees.
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SECTION 10.11. No Proceedings. The Borrower, the Servicer,
each Lender, each Administrative Agent and the Program Agent each hereby agrees
that it will not institute against any Conduit Lender any proceeding of the type
referred to in Section 7.01(e) so long as any Promissory Notes of such Conduit
Lender shall be outstanding or there shall not have elapsed one year plus one
day since the last day on which any such Promissory Notes shall have been
outstanding.
SECTION 10.12. Confidentiality.
(a) By accepting delivery of this Agreement, the Borrower
agrees not to disclose to any person or entity the contents of any Monthly
Report, except (i) to the other parties to this Agreement, (ii) to any Hedge
Counterparty, (iii) to its and its Affiliates' officers, directors, employees,
agents, accountants, legal counsel and other representatives (collectively, the
"Borrower Representatives") who have a need to know for the purpose of assisting
in the negotiation, completion and performance of this Agreement, and who agree
(or are deemed to agree) to be bound by the provisions of this section
applicable to the Borrower, (iii) in connection with any legal or regulatory
action or proceeding relating to this Agreement or the transactions contemplated
hereby or the exercise of any remedies hereunder, (iv) to the extent required by
applicable law, regulation, subpoena or other legal process, (v) to the extent
requested by any governmental or regulatory authority having jurisdiction over
the Borrower, any Originator or any Borrower Representative, and (vi) to any
Rating Agencies. The Borrower will be responsible for any failure of any
Borrower Representative to comply with the provisions of this clause (a).
(b) The Program Agent, the Administrative Agents and the
Lenders will not disclose to any person or entity the confidential or
proprietary information of the Borrower or any Originator furnished to the
Program Agent, the Administrative Agents and the Lenders in connection with this
Agreement or any other Facility Document (the "Borrower Information"), except
(i) to their respective Affiliates' officers, directors, employees, agents,
accountants, legal counsel and other representatives (collectively, the "Lender
Representatives") who have a need to know the Borrower Information for the
purpose of assisting in the negotiation, completion and performance of this
Agreement and who agree to be bound by the provisions in this section applicable
to the Program Agent, the Administrative Agents and the Lenders, (ii) to each
other, (iii) to any prospective or actual assignee or participant of any of them
who agree to be bound by the provisions of this section, (iv) to the extent
required by applicable law, regulation, subpoena or other legal process, (v) to
the extent requested by any governmental or regulatory authority having
jurisdiction over the Program Agent, the Administrative Agents, the Lenders or
any Lender Representative, (vi) to the Rating Agencies, (vii) to any actual or
potential subordinated investor in any Conduit Lender that has signed a
confidentiality agreement containing restrictions on disclosure substantially
similar to this Section 10.12(b) or (vii) to liquidity providers, credit
enhancers, dealers and investors in respect of Promissory Notes of any Conduit
Lender in accordance with the customary practices of such Lender for disclosures
to credit enhancers, dealers or investors, as the case may be or any entity
organized for purposes of purchasing or making loans secured by financial assets
for which any Administrative Agent acts as program agent and who agree to be
bound by the provisions of this section. The Program Agent, the Administrative
Agents and each Lender, as the case may be, will be responsible for any failure
of any related Lender Representative to comply with the provisions of this
clause (b).
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Without limiting the generality of the foregoing, the Program Agent, each
Administrative Agent and each Lender shall observe any applicable law
prohibiting the disclosure of information regarding Obligors and shall require
of each Person to whom disclosure is made pursuant to this Section 10.12(b) to
observe any such applicable laws.
(c) Notwithstanding any other provision herein, the Borrower
(and its employees, representatives or other agents) may disclose to any and all
persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of this Agreement and all materials of any kind (including opinions or
other tax analyses) that are provided to such party relating to such U.S. tax
treatment and U.S. tax structure, other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
SECTION 10.13. No Waiver; Remedies. No failure on the part of
the Program Agent, any Administrative Agent, any Lender or any Liquidity
Provider to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 10.14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
SECTION 10.15. Execution in Counterparts. This Agreement may
be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which when taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this Agreement.
SECTION 10.16. Integration; Binding Effect; Survival of
Termination. This Agreement and the other Facility Documents executed by the
parties hereto on the date hereof contain the final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. 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 the
Final Collection Date; provided, however, that the provisions of Sections 2.12,
2.13, 2.14 and Article VIII, and the provisions of Sections 10.05, 10.06, 10.08,
10.09, 10.10, 10.11, 10.12, 10.13, 10.14, 10.15 and this Section 10.16 shall
survive any termination of this Agreement.
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SECTION 10.17. Headings. The captions and headings of this
Agreement and in any Exhibit or Schedule hereto are for convenience of reference
only and shall not affect the interpretation hereof or thereof.
SECTION 10.18. Existing Credit Agreement. The parties to the
Existing Credit Agreement agree that, immediately upon the execution of this
Agreement, (i) the Existing Credit Agreement shall terminate without any
additional action of any type or kind being required on the part of any Person,
(ii) all principal, interest, fees and other "Borrower Obligations" thereunder
shall automatically thereupon become and be immediately due and payable, and
(iii) all rights, privileges, benefits and obligations of the parties arising
thereunder (other than the payment of any "Borrower Obligations" due under
clause (i) above) shall terminate, except with respect to the provisions (and
the obligations arising thereunder) of the Existing Credit Agreement that
survive termination of the Existing Credit Agreement in accordance with the
terms thereof. The Borrower shall, out of the proceeds of the initial Advance
made under this Agreement repay in full such outstanding "Borrower Obligations"
under the Existing Credit Agreement. To give effect to the termination of the
Existing Credit Agreement in accordance with this Section 10.18, the parties to
the Existing Credit Agreement waive any requirement that any prior notice be
provided under the Existing Credit Agreement, or that a prepayment occur on a
settlement date thereunder.
SECTION 10.19. Third Party Beneficiaries. Each Hedge
Counterparty shall be a third party beneficiary to this Agreement solely for
purposes of Sections 2.08, 2.16 and 10.02, and shall be entitled to the rights
and benefits thereunder.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.,
as Borrower
By: /s/______________________________________
Name:
Title:
HARLEY-DAVIDSON CREDIT CORP.,
as Servicer
By: /s/______________________________________
Name:
Title:
Signature Page to
Loan and Servicing Agreement
JPMorgan Chase Bank, N.A. JPMORGAN CHASE BANK, N.A.,
Lender Group as Program Agent, as an Administrative Agent
and as a Committed Lender
By: /s/______________________________________
Name:
Title:
CHARIOT FUNDING LLC,
as a Conduit Lender
By: JPMorgan Chase Bank, N.A., its
Attorney-in-Fact
By:/s/________________________________________
Name:
Title:
Signature Page to
Loan and Servicing Agreement
Citigroup North America, Inc. CITICORP NORTH AMERICA, INC.,
Lender Group as an Administrative Agent
By:/s/________________________________________
Name:
Title:
CIESCO, LLC,
as a Conduit Lender
By: Citicorp North America, Inc., its
as Attorney-in-Fact
By: /s/______________________________________
Name:
Title:
CITIBANK, N.A.,
as a Committed Lender
By: /s/______________________________________
Name:
Title:
Signature Page to
Loan and Servicing Agreement
Deutsche Bank AG, New York DEUTSCHE BANK AG, NEW YORK BRANCH,
Branch Lender Group as an Administrative Agent and as a Committed
Lender
By:/s/________________________________________
Name:
Title:
By:/s/________________________________________
Name:
Title:
SEDONA CAPITAL FUNDING CORP., LLC,
as a Conduit Lender
By: /s/______________________________________
Name:
Title:
Signature Page to
Loan and Servicing Agreement
The Royal Bank of Scotland plc THE ROYAL BANK OF SCOTLAND PLC,
Lender Group as an Administrative Agent and as a Committed
Lender
By: RBS Securities Inc., as agent
By:/s/_____________________________________
Name:
Title:
AMSTERDAM FUNDING CORPORATION,
as a Conduit Lender
By: /s/____________________________________
Name:
Title:
Signature Page to
Loan and Servicing Agreement
EXHIBIT A
FORM OF BORROWING NOTICE
________ ___, 20___
JPMorgan Chase Bank, N.A. Citicorp North America, Inc.
Chase Tower, 13th Floor 750 Washington Blvd., 8th Floor
10 S. Dearborn, Suite IL1-0079 Stamford, CT 06901
Chicago, IL 60670 Attention: Global Securitization
Attention: Asset-Backed Securities Facsimile No.: (203) 975-6462
Facsimile No.: (312) 732-1844
E-mail: abs.treasury.dept@jpmorgan.com
Citicorp North America, Inc. Deutsche Bank AG, New York Branch
388 Greenwich St., 19th Floor 60 Wall Street
New York, NY 10013 New York, New York 10005
Attention: Global Securitized Products Attention: Mary Conners
Facsimile No.: (212) 816-6270 Facsimile No.: (212)797-5150
Email: abs.conduits@db.com
The Royal Bank of Scotland plc The Royal Bank of Scotland plc
c/o ABN AMRO Bank N.V. c/o ABN AMRO Bank N.V.
600 Steamboat Road 540 West Madison Street, 27th Floor
Greenwich, CT 06830 Chicago, Illinois 60661
Attention: Liz Rogers Attention: Agent
Facsimile No.: (203) 618-2149 Facsimile No.: (312) 338-0140
Email: conduitops@rbs.com Email: conduitops@rbs.com
conduit.operations@rbs.com conduit.operations@rbs.com
Ladies and Gentlemen:
Reference is hereby made to the Loan and Security Agreement, dated as
of April 30, 2009 among Harley-Davidson Warehouse Funding Corp., (the
"Borrower"), the Conduit Lenders from time to time party thereto, the Committed
Lenders from time to time party thereto, the Administrative Agents from time to
time party thereto, JPMorgan Chase Bank, N.A. ("JPMorgan"), as Program Agent and
JPMorgan and Citicorp North America, Inc., as Syndication Agents (as amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Loan Agreement.
1. Borrowing Notice. This letter constitutes a Borrowing
Notice issued pursuant to Section 2.02 of the Loan Agreement, and in connection
therewith the Borrower provides the following information:
(a) The Borrower hereby requests to borrow from the Lenders on a pro
rata basis an aggregate principal amount of $ _____________ (the
"Requested Advance") in Loans on the following date:
_____________ (the "Borrowing Date").
(b) The Contracts that are the subject of this Borrowing Notice are
identified on Schedule I attached hereto.
(c) The Cutoff Date for the Requested Advance is _____________.
(d) The Tranche Period for the Requested Advance is _____________.
(e) The Rate Type for this Requested Advance is the [Adjusted LIBO
Rate] [Base Rate] [CP Rate].
(f) The Hedging Rate prevailing under each Hedge Agreement for the
Loans comprising this Advance is ----------------.
2. Representations and Warranties. The Borrower hereby
certifies that the following statements are true on the date hereof, and will be
true on the Borrowing Date before (except with respect to clauses (f) and (g)
below) and after giving effect to the Requested Advance:
(a) As of the Cutoff Date, each of the Contracts listed on Schedule I
attached hereto is an Eligible Contract.
(b) No event has occurred or would result from the extension of the
Requested Advance which constitutes an Event of Termination, an
Early Amortization Event, a Servicer Termination Event, an
Incipient Event of Termination or an event that but for notice or
lapse of time or both would constitute an Early Amortization
Event.
(c) After giving effect to the Requested Advance, (i) the Aggregate
Principal Balance as of the Borrowing Date is less than or equal
to the lesser of (A) the Aggregate Commitment or (B) the
Borrowing Base, and (ii) the Overconcentration Amount is equal to
zero, as evidenced in the Borrowing Base Certificate attached
hereto as Schedule II.
(d) The representations and warranties contained in Article IV of the
Loan Agreement are correct in all material respects on and as of
the Borrowing Date as though made on such date (except (i) for
those representations and warranties which were made only as of a
specific date which such representations and warranties shall be
true and correct in all material respects on and as of the date
made and (ii) for the representations and warranties made in
Section 4.02(i)(i) of the Loan Agreement).
(e) [Each of the conditions precedent set forth in Sections 3.02 and
3.03 of the Receivables Sale Agreement have been met or waived to
the satisfaction of the Administrative Agents.](1)
(f) After giving effect to the Requested Advance, the amount held in
the Reserve Account will not be less than the Minimum Reserve
Amount.
(g) The Borrower has procured Eligible Hedge Agreements with Eligible
Hedge Counterparties in an amount not less than the Aggregate
Principal Balance after giving affect to the Requested Advance.
[Remainder of Page Left Intentionally Blank]
- --------------------
1 Include clause (e) if, at the time the Requested Advance is made, the
Borrower purchases Contract Assets under the Receivables Sale Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Borrowing
Notice to be executed by its duly authorized officer as of the date first above
written.
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP., as
Borrower
By: /s/__________________________
Name:
Title:
SCHEDULE I
TO
BORROWING NOTICE
LIST OF CONTRACTS
[Attached]
SCHEDULE II
TO
BORROWING NOTICE
BORROWING BASE CERTIFICATE
[Attached]
EXHIBIT B-1
FORM OF RATED NOTE
Attached
FORM OF RATED NOTE
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.
RATED NOTE
$[______] [______], 2009
Harley-Davidson Warehouse Funding Corp., a Nevada corporation
(the "Borrower"), HEREBY PROMISES TO PAY TO THE ORDER OF [_________] (the
"Lender") the principal sum of [_________] DOLLARS ($[______]) or, if less, the
unpaid Principal Balance of its portion of the Loans funded or maintained by the
Lender to or for the benefit of the Borrower under the below-described Loan and
Servicing Agreement. The Borrower promises to pay interest on the unpaid
Principal Balance of such Loans for each day outstanding until such Principal
Balance is paid in full, at such interest rates, and payable at such times, as
are specified in the Loan and Servicing Agreement.
All payments of principal and interest by the Borrower
hereunder shall be made in immediately available funds for the benefit of the
Lender at the designated office of its Administrative Agent under the Loan and
Servicing Agreement and on the dates set forth in the Loan and Servicing
Agreement. If not paid in full as of any earlier date, the Principal Balance of
the Loan and all accrued and unpaid Interest thereon shall be due and payable in
full on the Termination Date.
The Lender, or its Administrative Agent on its behalf, shall,
and is hereby authorized to, record in accordance with its usual practice, the
date and amount of the Loan and the date and amount of each principal payment
hereunder on the schedule annexed hereto and any such recordation shall
constitute prima facie evidence of the accuracy of the amount so recorded;
provided, that the failure of the Lender or its Administrative Agent to make
such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower hereunder or under the Loan and Servicing Agreement
to the Lender.
This Note is issued pursuant to, and is entitled to the
benefits of, that certain Loan and Servicing Agreement, dated as of April 30,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the "Loan and Servicing Agreement"), among the Borrower, Harley-Davidson
Credit Corp., as Servicer, the Conduit Lenders from time to time party thereto,
the Committed Lenders from time to time party thereto, the Administrative Agents
from time to time party thereto, JPMorgan Chase Bank, N.A. ("JPMorgan"), as
Program Agent and JPMorgan and Citicorp North America, Inc., as Syndication
Agents, to which reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Loan and Servicing Agreement. In the event of any
conflict between the provisions contained in this Note and the provisions of the
Loan and Servicing Agreement, the provisions of the Loan and Servicing Agreement
shall control. This Note is secured by the Collateral as more particularly
described in the Loan and Servicing Agreement.
The Borrower hereby waives presentment, demand, protest and
notice of any kind. No failure to exercise, and no delay in exercising, any
rights hereunder on the part of the holder hereof shall operate as a waiver of
such rights.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York, United States.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Borrower has caused this instrument to
be duly executed as of the date first written above.
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.
By:________________________________
Name:
Title:
ANNEX
Schedule of Repayments
- ------------------------------------------------------------ ---------------------------------------------------------
Date of Advance/Repayment Amount
- ------------------------------------------------------------ ---------------------------------------------------------
(Initial Principal Balance) $_________________
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
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$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
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$-----------------
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$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
EXHIBIT B-2
FORM OF UNRATED NOTE
Attached
FORM OF UNRATED NOTE
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.
UNRATED NOTE
$[______] [_______], 2009
Harley-Davidson Warehouse Funding Corp., a Nevada corporation
(the "Borrower"), HEREBY PROMISES TO PAY TO THE ORDER OF [_________] (the
"Lender") the principal sum of [_________] DOLLARS ($[______]) or, if less, the
unpaid Principal Balance of its portion of the Loans funded or maintained by the
Lender to or for the benefit of the Borrower under the below-described Loan and
Servicing Agreement. The Borrower promises to pay interest on the unpaid
Principal Balance of such Loans for each day outstanding until such Principal
Balance is paid in full, at such interest rates, and payable at such times, as
are specified in the Loan and Servicing Agreement.
All payments of principal and interest by the Borrower
hereunder shall be made in immediately available funds for the benefit of the
Lender at the designated office of its Administrative Agent under the Loan and
Servicing Agreement and on the dates set forth in the Loan and Servicing
Agreement. If not paid in full as of any earlier date, the Principal Balance of
the Loan and all accrued and unpaid Interest thereon shall be due and payable in
full on the Termination Date.
The Lender, or its Administrative Agent on its behalf, shall,
and is hereby authorized to, record in accordance with its usual practice, the
date and amount of the Loan and the date and amount of each principal payment
hereunder on the schedule annexed hereto and any such recordation shall
constitute prima facie evidence of the accuracy of the amount so recorded;
provided, that the failure of the Lender or its Administrative Agent to make
such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower hereunder or under the Loan and Servicing Agreement
to the Lender.
This Note is issued pursuant to, and is entitled to the
benefits of, that certain Loan and Servicing Agreement, dated as of April 30,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the "Loan and Servicing Agreement"), among the Borrower, Harley-Davidson
Credit Corp., as Servicer, the Conduit Lenders from time to time party thereto,
the Committed Lenders from time to time party thereto, the Administrative Agents
from time to time party thereto, JPMorgan Chase Bank, N.A. ("JPMorgan"), as
Program Agent and JPMorgan and Citicorp North America, Inc., as Syndication
Agents, to which reference is hereby made for a statement of the terms and
conditions governing this Note, including the terms and conditions under which
this Note may be prepaid or its maturity date accelerated. Capitalized terms
used herein and not otherwise defined herein are used with the meanings
attributed to them in the Loan and Servicing Agreement. In the event of any
conflict between the provisions contained in this Note and the provisions of the
Loan and Servicing Agreement, the provisions of the Loan and Servicing Agreement
shall control. This Note is secured by the Collateral as more particularly
described in the Loan and Servicing Agreement.
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising, any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York, United States.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the Borrower has caused this instrument to
be duly executed as of the date first written above.
HARLEY-DAVIDSON WAREHOUSE FUNDING CORP.
By:/s/________________________________
Name:
Title:
ANNEX
Schedule of Repayments
- ------------------------------------------------------------ ---------------------------------------------------------
Date of Advance/Repayment Amount
- ------------------------------------------------------------ ---------------------------------------------------------
(Initial Principal Balance) $_________________
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
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$-----------------
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$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
$-----------------
- ------------------------------------------------------------ ---------------------------------------------------------
EXHIBIT C
FORM OF MONTHLY REPORT
Attached
EXHIBIT D
JURISDICTION OF ORGANIZATION; PLACES OF BUSINESS AND LOCATIONS OF RECORDS
- ----------------------------------------------------- --------------------------------------------------
Jurisdiction of Organization o Nevada
- ----------------------------------------------------- --------------------------------------------------
Chief Executive Office/Principal Place of Business o Chicago, Illinois
- ----------------------------------------------------- --------------------------------------------------
Location(s) of Records o Reno, Nevada
- ----------------------------------------------------- --------------------------------------------------
Organizational Number o E0739522008-6
- ----------------------------------------------------- --------------------------------------------------
Federal Employer's Identification Number o 26-3823071
- ----------------------------------------------------- --------------------------------------------------
Other Names o None
- ----------------------------------------------------- --------------------------------------------------
SCHEDULE I
LENDER GROUPS
JPMorgan Chase Bank N.A. Lender Group
Administrative Agent: JPMorgan Chase Bank, N.A.
Conduit Lender: Chariot Funding LLC
Conduit Lending Limit: $300,000,000
Committed Lender: JPMorgan Chase Bank, N.A.
Commitment: $300,000,000
Lender Group Limit: $300,000,000
Reference Bank: JPMorgan Chase Bank, N.A.
Citicorp North America, Inc. Lender Group
Administrative Agent: Citicorp North America, Inc.
Conduit Lender: Ciesco, LLC
Conduit Lending Limit: $300,000,000
Committed Lender: Citibank, N.A.
Commitment: $300,000,000
Lender Group Limit: $300,000,000
Reference Bank: Citibank, N.A.
Deutsche Bank AG, New York Branch Lender Group
Administrative Agent: Deutsche Bank AG, New York Branch
Conduit Lender: Sedona Capital Funding Corp., LLC
Conduit Lending Limit: $300,000,000
Committed Lender: Deutsche Bank AG, New York Branch
Commitment: $300,000,000
Lender Group Limit: $300,000,000
Reference Bank: Deutsche Bank AG, New York Branch
The Royal Bank of Scotland plc Lender Group
Administrative Agent: The Royal Bank of Scotland plc
Conduit Lender: Amsterdam Funding Corporation
Conduit Lending Limit: $300,000,000
Committed Lender: The Royal Bank of Scotland plc
Commitment: $300,000,000
Lender Group Limit: $300,000,000
Reference Bank: The Royal Bank of Scotland plc
SCHEDULE II
NOTICE ADDRESSES
JPMorgan Chase Bank, N.A. Chariot Funding LLC
1 Chase Plaza, 13th Floor c/o JPMorgan Chase Bank, N.A.
10 S. Dearborn, Suite IL1-0079 1 Chase Plaza, 13th Floor
Chicago, IL 60670 10 S. Dearborn, Suite IL1-0079
Attention: Asset-Backed Securities Chicago, IL 60670
Telephone: (312) 732-7206 Attention: Asset-Backed Securities
Facsimile No.: (312) 732-1844 Telephone: (312) 732-7206
E-mail: abs.treasury.dept@jpmorgan.com Facsimile No.: (312) 732-1844
E-mail: abs.treasury.dept@jpmorgan.com
Citicorp North America, Inc. Ciesco, LLC
750 Washington Blvd., 8th Floor 750 Washington Blvd., 8th Floor
Stamford, CT 06901 Stamford, CT 06901
Attention: Global Securitization Attention: Global Securitization
Facsimile No.: (203) 975-6462 Facsimile No.: (203) 975-6462
Citibank, N.A.
Global Securitized Products
388 Greenwich Street, 19th Floor
New York, New York 10013
Attention: Steffen Lunde and Thomas Rogers
Facsimile No.: (212) 816-6270
Deutsche Bank AG, New York Branch Sedona Capital Funding Corp., LLC
60 Wall Street c/o Amacar Group, LLC
New York, New York 10005 6525 Morrison Boulevard, Suite 318
Attention: Mary Conners Charlotte, NC 28211
Telephone: (212) 250-4731 Attention: Evelyn Echevarria
Facsimile No.: (212)797-5150 Telephone: (704) 365-1362
Email: abs.conduits@db.com Facsimile No.: (704) 365-0569
Email: abs.conduits@db.com
With copies of Notices to:
Deutsche Bank AG, New York Branch
60 Wall Street
New York, New York 10005
Attention: Mary Conners
Telephone: (212) 250-4731
Facsimile No.: (212)797-5150
Email: abs.conduits@db.com
The Royal Bank of Scotland plc Amsterdam Funding Corporation
c/o ABN AMRO Bank N.V. c/o Global Securitization Services, LLC
540 West Madison Street, 27th Floor 68 South Service Road, Suite 120
Chicago, Illinois 60661 Melville, New York 11747
Attention: Agent Attention: Frank B. Bilotta
Telephone: (312) 338-3491 Telephone: (212) 302-5151
Facsimile No.: (312) 338-0140 Facsimile No.: (212) 302-8767
Email: conduitops@rbs.com &
conduit.operations@rbs.com
With copies of Notices to:
The Royal Bank of Scotland plc
RBS Securities Inc., as agent
c/o ABN AMRO Bank N.V.
540 West Madison Street, 27th Floor
Chicago, Illinois 60661
Attention: Agent
Telephone: (312) 338-3491
Telecopy: (312) 338-0140
Email: conduitops@rbs.com &
conduit.operations@rbs.com
Harley-Davidson Warehouse Funding Corp. Harley-Davidson Credit Corp.
3700 W. Juneau Avenue 3700 W. Juneau Avenue
Milwaukee, WI 53208 Milwaukee, WI 53208
Attention: Perry Glassgow Attention: Perry Glassgow
Telephone: (414) 343-4584 Telephone: (414) 343-4584
Facsimile No.: (414) 343-4990 Facsimile No.: (414) 343-4990
Email: perry.glassgow@harley-davidson.com Email: perry.glassgow@harley-davidson.com
With copies of Notices to:
Harley-Davidson Credit Corp.
222 West Adams Street, 20th Floor
Chicago, IL 60606
Attention: Julia Landes
Telephone: (312) 634-2814
Facsimile No.: (312) 368-9548
Email: julia.landes@hdfsi.com