(a) Flexible Settlement Program. Program Manager may make available to eligible Sellers an optional settlement program (the “Flexible Settlement Program”) with respect to Loan Proceeds payable to Seller under Section 5(c) of the Agreement in connection with Loans made by Lender through the Program. Under the Flexible Settlement Program, Seller may voluntarily elect to receive Loan Proceeds otherwise payable by Lender to Seller on a date later than the date on which such amount would otherwise be payable under the Agreement and, in consideration for such election, may become eligible for the Flexible Settlement Benefit described below.
Capitalized terms used in this Addendum and not otherwise defined have the meanings given to them in the Agreement. For purposes of this Addendum, “Agreement” means the Seller Purchase Financing Participation Agreement between Program Manager and Seller, as amended from time to time, including the Seller Program Agreement Compliance Addendum and the Operating Instructions referred to therein; and “Loan Proceeds” means the amount of each Loan funding due to Seller under Section 5(c) of the Agreement, net of the Transaction Fee payable under Section 7(b) of the Agreement and any other amount deducted under Section 5(d) of the Agreement. For the avoidance of doubt, “Program Manager,” “Lender,” “Seller,” “Loan,” “Loan Agreement,” “Loan Documents,” “Borrower,” “Applicant,” “Goods or Services,” “Transaction Fee,” “Seller Account,” “Business Day,” and “Reserve Account” have the meanings given in the Agreement.
The Flexible Settlement Program applies solely to Loans made by Lender through the Program and does not apply to any transaction originated through any financial institution other than Lender, any retail installment sales contract purchased by Program Manager or any of its Affiliates, any split-funding or other payment arrangement with a person other than Seller, or any other financing product offered, originated, purchased, serviced or administered by Program Manager or any of its Affiliates.
(b) Receipt, Disbursement and Ownership of Loan Proceeds. Participation in the Flexible Settlement Program affects only the timing of when Seller receives Loan Proceeds from Lender and does not affect when the Loan is made or funded by Lender. Seller’s participation in the Flexible Settlement Program does not alter the regulatory characterization of any Loan as a loan originated and funded by Lender, does not affect Lender’s ownership of, or its bearing of the credit risk for, any Loan as provided in Section 3(b) of the Agreement, does not modify the terms of any Loan, and does not create any new obligation of, or confer any new right upon, the Borrower. The Flexible Settlement Program is solely an arrangement between Seller and Program Manager with respect to the timing of when Seller receives Loan Proceeds from Lender and has no effect on the rights, obligations, or remedies of the Borrower under the Loan or under any applicable federal or state law.
Each Loan will be originated and funded by Lender in accordance with Sections 3 and 5 of the Agreement and the Loan Documents, regardless of whether Seller elects to participate in the Flexible Settlement Program. Lender will defer payment of the Loan Proceeds to Seller until Seller requests payment in accordance with this Addendum, and no deferred Loan Proceeds will be credited to any account in the name of, or for the benefit of, Seller. Each Loan is fully disbursed for all purposes, including accrual of interest under the Loan Agreement, on the date it is funded by Lender, regardless of Seller’s election. Seller's election to defer receipt of the Loan Proceeds does not affect the funding date, the date interest begins to accrue under the Loan Agreement, the annual percentage rate, finance charge, amount financed or payment schedule disclosed to the Borrower in the Loan Documents, or any other term of any Loan.
Participation in the Flexible Settlement Program does not affect Lender’s ownership of any Loan, Lender’s bearing of the credit risk for any Loan, Program Manager’s purchase of any participation interest in any Loan, the terms of any agreement between Lender and Program Manager, Program Manager’s servicing of any Loan, or Program Manager’s sole right to receive payments on Loans on behalf of Lender under Section 11 of the Agreement.
Consistent with Section 3(b) of the Agreement, Seller has a contractual right under the Agreement and this Addendum to receive Loan Proceeds from Lender but has no ownership or other interest in any Loan, any participation interest in any Loan, any payment made by a Borrower, or any proceeds of any of the foregoing, and Section 13(b)(v) of the Agreement continues to apply. Seller’s right to receive any Flexible Settlement Amount is solely a general unsecured contractual claim against Lender and does not constitute a retained, residual or beneficial interest, security interest, lien, priority right or other proprietary interest in any Loan, any participation interest in any Loan, or any Borrower payment.
(c) Election to Delay Receipt of Loan Proceeds. Notwithstanding the timing on which Loan Proceeds would otherwise be paid to Seller under Section 5(c) of the Agreement, Seller may elect to receive the Loan Proceeds on a later date selected by Seller.
Any portion of the Loan Proceeds for which Seller has elected to receive payment on a later date is referred to as the “Flexible Settlement Amount.”
Program Manager will administer Seller’s requests for receipt of Flexible Settlement Amounts. Seller may request receipt of all or any portion of its Flexible Settlement Amount at any time through the method made available by Program Manager. The date on which an amount is received in accordance with such request is the “Settlement Date.”
Seller is not required to maintain any Flexible Settlement Amount for a minimum period and may request to receive the Flexible Settlement Amount at any time, subject only to Program Manager’s ordinary processing procedures and any reasonable processing period disclosed to Seller.
Seller's election to participate in the Flexible Settlement Program constitutes Seller's agreement that Lender may defer payment of the Flexible Settlement Amount until Seller requests settlement in accordance with the Flexible Settlement Program.
(d) Flexible Settlement Benefit. In consideration for Seller's voluntary election to accept later receipt of a Flexible Settlement Amount, Seller may earn a contractual fee credit (the “Flexible Settlement Benefit”).
The Flexible Settlement Benefit will be calculated by reference to (i) the applicable Flexible Settlement Amount, (ii) the period during which receipt of that amount is delayed, and (iii) the applicable Flexible Settlement Rate.
The “Flexible Settlement Rate” means the rate established by Program Manager and disclosed in writing to Seller before Seller’s election to participate in the Flexible Settlement Program takes effect. Program Manager may express the Flexible Settlement Rate on an annualized basis solely as a calculation methodology for determining the amount of the Flexible Settlement Benefit.The Flexible Settlement Rate is not an interest rate payable on a deposit or account, and the Flexible Settlement Benefit does not constitute interest, investment income or a return on funds deposited or invested with Program Manager or Lender. The Flexible Settlement Benefit is provided by Program Manager for its own account and from its own resources, and not on behalf of Lender; no portion of it is paid, funded or reimbursed by Lender or charged to any Borrower. Seller acknowledges that the Flexible Settlement Program is a commercial settlement arrangement between Program Manager and Seller.
The Flexible Settlement Program, including the Flexible Settlement Benefit, does not constitute the offer or sale of a security under applicable federal or state securities law. Seller is not making an investment of money in any common enterprise by participating in the Flexible Settlement Program, and the Flexible Settlement Benefit is a fee credit determined by formula that does not depend on the managerial or entrepreneurial efforts of Program Manager, Lender or any other person.
The Flexible Settlement Benefit and the Flexible Settlement Rate arise solely from the arrangement between Program Manager and Seller described in this Addendum. Neither the Flexible Settlement Benefit, the Flexible Settlement Rate, nor Seller’s participation in the Flexible Settlement Program is reflected in, or affects, any disclosure made to the Borrower, including any disclosure in the Loan Documents under the Truth in Lending Act and Regulation Z, or any term of a Loan, and no cost of the Flexible Settlement Program will be charged or passed through to any Borrower, consistent with Sections 2(a)(vii) and 2(b)(iii) of the Agreement.
(e) Daily Accrual and Monthly Statements. The Flexible Settlement Benefit will accrue on a daily basis with respect to the Flexible Settlement Amount then subject to delayed receipt. Program Manager will calculate the Flexible Settlement Benefit attributable to each applicable daily period based on the Flexible Settlement Rate and the Flexible Settlement Amount eligible for the benefit during such period.
If Seller requests receipt of all or a portion of a Flexible Settlement Amount, the Flexible Settlement Benefit will cease to accrue with respect to the amount being settled as of the applicable Settlement Date. Any Flexible Settlement Benefit earned before the applicable Settlement Date will remain available to Seller in accordance with this Section.
Program Manager may display accrued, earned, available or applied Flexible Settlement Benefits in Seller's account or portal for informational and administrative purposes.
At least monthly while Seller has an outstanding Flexible Settlement Amount, Program Manager will provide Seller with a written or electronic statement showing (i) each outstanding Flexible Settlement Amount, (ii) the Flexible Settlement Benefit accrued and available with respect to each such amount, and (iii) any Flexible Settlement Benefit or other credit applied during the applicable statement period.
(f) Application of Flexible Settlement Benefit. Each Flexible Settlement Benefit earned by Seller constitutes a contractual credit in favor of Seller. The credit will accrue and apply on a Loan-by-Loan basis and will be refunded to Seller at the time the Seller elects to receive the Loan Proceeds. If a refund or chargeback is issued under Section 13 of the Agreement with respect to all or a portion of the Loan Proceeds attributable to a Loan, the credit accrued with respect to the refunded portion, or with respect to the entire Loan in the case of a full refund or chargeback, will be removed and will no longer be outstanding.
Unless Program Manager expressly agrees otherwise in writing, a Flexible Settlement Benefit:
1. will not increase the Loan Proceeds or Flexible Settlement Amount;
2. may not be withdrawn, transferred, assigned or redeemed for cash;
3. does not constitute funds owned by Seller and held by Program Manager or Lender;
4. andmay be realized only through its application against Transaction Fees due and owing from Seller to Program Manager under Section 7 of the Agreement with respect to the applicable Loan.
(g) Receipt of Loan Proceeds. Seller may request to receive at any time either (i) all Flexible Settlement Amounts subject to the Flexible Settlement Program or (ii) the Flexible Settlement Amount attributable to one or more individual Loans.
Following Seller's request, Program Manager will instruct Lender to release the applicable Flexible Settlement Amount, and Lender will pay the applicable Flexible Settlement Amount to the Seller Account, in accordance with Section 14 of the Agreement and Program Manager’s settlement processing procedures, which may take up to nine (9) Business Days from the date of Seller's settlement request.
(h) No Deposit or Investment Account. The Flexible Settlement Program is an alternative contractual settlement arrangement under the Agreement. Seller is agreeing to a later date to receive amounts of Loan Proceeds payable by Lender. [Flexible Settlement Amounts are not insured by the Federal Deposit Insurance Corporation or any other governmental or private insurer, and Seller has no claim to deposit insurance with respect to any Flexible Settlement Amount.] Lender is not required to segregate or separately maintain cash or other assets corresponding to any Flexible Settlement Amount. No Flexible Settlement Amount constitutes a Reserve Account under Section 21 of the Agreement.
Seller is not depositing, placing or investing funds with Program Manager or Lender by participating in the Flexible Settlement Program. Each Flexible Settlement Amount represents Lender's deferred obligation to pay Loan Proceeds to Seller under Section 5(c) of the Agreement, which Lender will record as an amount payable to Seller and not as a credit to any deposit account. Neither Program Manager nor Lender maintains, or will establish, any deposit, custodial, escrow or other account in the name of, or for the benefit of, Seller in connection with the Flexible Settlement Program, and Seller has no right to make deposits to, withdraw from, or direct payments from, any account maintained by Program Manager or Lender, other than to request payment of a Flexible Settlement Amount in accordance with Section (g).
The Flexible Settlement Program is not a deposit account, savings account, investment account, custodial account, escrow account or other financial account. No Flexible Settlement Amount is held by Program Manager or Lender in trust or for the benefit of Seller, and Seller does not acquire any ownership interest in any particular funds or assets of Program Manager or Lender, including any funds held in any account maintained at Lender, as a result of participating in the Flexible Settlement Program.
The Flexible Settlement Benefit is a contractual fee credit provided in connection with Seller's election to accept later receipt of Loan Proceeds and is not interest payable on a deposit or account or earnings generated from the investment or use of Seller funds.
The parties acknowledge that the Flexible Settlement Program does not constitute a loan, extension of credit, or lending activity by Seller to Program Manager or Lender, or by Program Manager or Lender to Seller. Seller is not advancing funds to Program Manager or Lender; rather, Seller is voluntarily electing to defer receipt of Loan Proceeds disbursed by Lender. The Flexible Settlement Benefit is a contractual fee credit and is not interest on a loan or forbearance of money within the meaning of any applicable usury or lending statute.
(i) No Effect on Borrower Obligations. Seller's participation in the Flexible Settlement Program affects solely the timing of Seller’s receipt of Loan Proceeds disbursed by Lender and will have no effect on the underlying transaction with the Borrower, the Borrower’s obligations under a Loan, the Borrower’s payment schedule or the amount owed by the Borrower.
Once a Loan has been made by Lender and activated by the Borrower under Section 5(a) of the Agreement, Seller will treat the Borrower’s payment obligation to Seller with respect to the Goods or Services purchased under the Loan as fully satisfied to the extent of the amount financed by the Loan, regardless of whether Seller has elected to delay settlement of any Flexible Settlement Amount.
Seller will not, as a result of any Flexible Settlement Amount:
1. seek or require payment from the Borrower for the applicable Goods or Services;
2. represent or imply that the Borrower has not paid for the applicable Goods or Services;
3. delay, suspend, cancel, condition or refuse to provide Goods or Services that Seller is otherwise obligated to provide;
4. impose any additional fee, charge, penalty or other amount on the Borrower;
5. otherwise treat the Borrower differently or adversely affect the Borrower’s rights with respect to the underlying transaction;
6. orcontact or communicate with the Borrower regarding (i) Seller’s delayed receipt of any Flexible Settlement Amount, (ii) the Flexible Settlement Program, or (iii) Seller’s participation in the Flexible Settlement Program, provided that Seller may refer any Borrower inquiry to Program Manager consistent with Section 2(a)(ix) of the Agreement.
Seller acknowledges that its election to delay settlement is solely an arrangement between Seller and Program Manager and does not create or modify any obligation of the Borrower. Nothing in this Section (i) limits Seller’s rights under Section 13(b)(v) of the Agreement following a chargeback or refund that is unrelated to the Flexible Settlement Program.
Seller shall not represent to any Borrower, Applicant or other person that the Flexible Settlement Program, any Flexible Settlement Amount or any Flexible Settlement Benefit is a deposit, is insured by the Federal Deposit Insurance Corporation, or is a product of, or guaranteed by, Lender, and any written material relating to the Flexible Settlement Program shall be subject to Section 10 of the Agreement. Seller shall not offer any Borrower or Applicant a different price, discount or term for Goods or Services based on Seller’s participation in the Flexible Settlement Program.
(j) Refunds, Repurchases, Chargebacks and Other Amounts Owed. Participation in the Flexible Settlement Program does not limit or otherwise modify any right of Program Manager or Lender under the Agreement with respect to refunds, repurchases, chargebacks, adjustments, Risk Adjustments, reserves, indemnification obligations, ACH debits, setoff, recoupment or any other amounts owed by Seller.
Program Manager may direct Lender to apply or withhold any Flexible Settlement Amount otherwise payable to Seller to satisfy amounts that Program Manager or Lender is entitled to deduct, set off, recoup or otherwise recover from Seller pursuant to the Agreement. Program Manager may apply any Flexible Settlement Benefit available to Seller only against Transaction Fees in accordance with Section (f). Program Manager may also direct Lender to apply or withhold any Flexible Settlement Amount to fund or replenish a Reserve Account in accordance with Section 21 of the Agreement.
Any breach by Seller of Section (i) of this Addendum shall constitute a breach of the Agreement and shall entitle Program Manager, in addition to any other remedies available under the Agreement or at law or in equity, to (i) immediately suspend Seller from the Flexible Settlement Program without prior notice and (ii) terminate Seller’s participation in the Flexible Settlement Program upon written notice. Program Manager may, upon reasonable prior notice to Seller, audit Seller’s compliance with this Addendum, including by reviewing Seller’s policies, procedures, marketing materials, and records. Seller shall cooperate with any such audit and provide access to relevant materials within ten (10) Business Days of Program Manager’s request.
(k) Regulatory Contingency. If any governmental authority or regulatory agency asserts or indicates that the Flexible Settlement Program may constitute deposit-taking activity, lending activity by Program Manager or any of its Affiliates, the transmission of money, or the offer or sale of a security, or that any aspect of the Flexible Settlement Program requires a license, registration, or authorization not then held by Program Manager, or if Lender directs Program Manager to modify, suspend, or discontinue the Flexible Settlement Program, Program Manager may, in its sole discretion, (i) modify the terms of the Flexible Settlement Program to the extent necessary to address such assertion or direction, (ii) suspend the Flexible Settlement Program pending resolution, or (iii) discontinue the Flexible Settlement Program entirely. Program Manager shall provide Seller with prompt written notice of any such action and shall cause Lender to pay all outstanding Flexible Settlement Amounts in accordance with Section (o) of this Addendum.
Each party shall promptly notify the other party in writing of any investigation, inquiry, or enforcement action by any federal or state regulatory authority relating to the Flexible Settlement Program or any related practice, to the extent permitted by applicable law, and Program Manager may share any such notice with Lender. The parties shall cooperate in good faith in responding to any such matter.
(l) Program Eligibility and Changes. Program Manager may establish eligibility requirements and other reasonable conditions for participation in the Flexible Settlement Program. Program Manager may also establish or modify the Flexible Settlement Rate, calculation methodology, maximum period for which a Flexible Settlement Benefit may accrue, processing periods, expiration periods applicable to unused Flexible Settlement Benefits, and other terms of the Flexible Settlement Program on a prospective basis in accordance with Section 8 of the Agreement; provided that Program Manager will provide Seller at least thirty (30) days’ prior written notice of any material change to those terms.
The Flexible Settlement Rate and other material economic terms applicable to Seller's participation will be disclosed to Seller in writing before Seller’s election to participate in the Flexible Settlement Program takes effect
.Program Manager may suspend, modify or discontinue the Flexible Settlement Program on a prospective basis upon at least thirty (30) days’ prior written notice to Seller. Unless otherwise disclosed to Seller, any such suspension, modification or discontinuation will not eliminate a Flexible Settlement Benefit already earned by Seller before the effective date of such action.
(m) Optional Participation. Participation in the Flexible Settlement Program is entirely optional. Seller may continue to receive Loan Proceeds according to the timing provided in Section 5(c) of the Agreement without participating in the Flexible Settlement Program.Seller's decision not to participate, or to request settlement of any Flexible Settlement Amount, will not affect Seller's eligibility to participate in the Program.
(n) Nonpayment Risk. By electing to delay receipt of a Flexible Settlement Amount, Seller bears the risk that Lender may be unable to pay such amount when Seller requests settlement.
Each Flexible Settlement Amount is solely a general unsecured contractual obligation of Lender to pay Loan Proceeds to Seller. Seller does not obtain any security interest, lien, priority right or other proprietary interest in any funds or assets of Lender or Program Manager. Lender is not required to segregate or separately maintain funds or assets corresponding to any Flexible Settlement Amount and may use its cash and other assets in the ordinary course of its business.
Seller acknowledges that Lender may become unable to satisfy its payment obligations. Lender makes no representation or warranty regarding its financial condition or its ability to pay any Flexible Settlement Amount when due. Program Manager does not guarantee Lender’s payment and makes no representation or warranty regarding Lender’s financial condition or its ability to pay any Flexible Settlement Amount when due. If Lender becomes insolvent, is placed into receivership or conservatorship, or is otherwise unable to pay a Flexible Settlement Amount when due, Seller may be treated as a general unsecured creditor of Lender, whose claim may be subordinate to the claims of depositors, and may lose some or all of the applicable Flexible Settlement Amount and any associated Flexible Settlement Benefit.
Seller acknowledges that it has been advised to consult with its own legal and financial advisors before electing to participate in the Flexible Settlement Program.
Seller voluntarily accepts this risk when electing to delay settlement and may request settlement of its Flexible Settlement Amount in accordance with this Addendum.
(o) Termination and Wind-Down. Either Program Manager or Seller may terminate its participation in the Flexible Settlement Program upon written notice to the other party. Termination will be effective on the date stated in the notice or, if no date is stated, upon receipt of the notice.
As of the effective date of termination, Seller may not elect to delay receipt of any additional Loan Proceeds under the Flexible Settlement Program. Program Manager shall cause Lender to settle all outstanding Flexible Settlement Amounts within thirty (30) Business Days after the effective date, and any Flexible Settlement Benefits accrued through the effective date will be applied at that settlement in accordance with Section (f).
Any Flexible Settlement Benefit accrued or earned before the effective date of termination will survive termination and remain available for application in accordance with this Addendum. Termination of participation will not terminate the Agreement or affect Lender’s ownership of any Loan or participation interest in any Loan, or any Borrower obligation. Sections (b), (d), (f), (h), (i), (j), (k), (n), (o), and (p) of this Addendum, and any accrued rights and obligations hereunder, shall survive the termination or expiration of Seller’s participation in the Flexible Settlement Program and the termination or expiration of the Agreement.Seller may not assign or transfer its rights or obligations under this Addendum, or its participation in the Flexible Settlement Program, without Program Manager’s prior written consent. Program Manager may assign its rights and obligations under this Addendum in accordance with Section 22(a) of the Agreement, including in connection with any assignment of the Agreement or any sale, transfer, or other disposition of all or substantially all of Program Manager’s assets or business, and any such assignee shall assume Program Manager’s obligations under this Addendum, including the obligation to settle outstanding Flexible Settlement Amounts.
(p) Miscellaneous. This Addendum, together with the Agreement, constitutes the entire agreement between Program Manager and Seller with respect to the Flexible Settlement Program and supersedes all prior or contemporaneous agreements, understandings and communications relating to that subject matter. Except as expressly modified by this Addendum, the Agreement remains in full force and effect. Program Manager enters into this Addendum on its own behalf and, with respect to Lender’s obligations under Sections (b), (c), (g), (n) and (o) of this Addendum, as authorized agent for Lender. Lender shall be a third-party beneficiary of Seller’s obligations under Sections (b), (h), (i), (j), and (n) of this Addendum, consistent with Sections 22(b) and 28 of the Agreement. Sections 25 (Indemnification; Related Matters), 29 (Governing Law; Severability) and 38 (Jurisdiction and Venue) of the Agreement apply to this Addendum.
If any provision of this Addendum is held to be invalid, illegal or unenforceable, that provision will be enforced to the maximum extent permitted by law and the remaining provisions will remain in full force and effect.
This Addendum is incorporated into and forms part of the Agreement. The parties’ execution of this Addendum or Seller’s written or electronic election to participate in the Flexible Settlement Program through a method made available by Program Manager (including acceptance through an electronic platform, portal, or click-through mechanism) constitutes acceptance of this Addendum. No separate signature is required unless the Agreement or applicable law requires one, in which case this Addendum will be effective upon execution by authorized representatives of Program Manager and Seller.