Exhibit 10.12
FORM OF EU/UK RISK RETENTION AGREEMENT
[___], 20[_]
Re: EU/UK
Risk Retention Agreement / Series [_]-[_]
Ladies and Gentlemen:
1. Reference is hereby made to that certain Indenture,
dated as of [___], 20[_] (the “Series [_]-[_] Indenture”), between Verizon Master Trust, as trust (the “Trust”), and [___], as indenture trustee and note paying agent. Capitalized terms used but not otherwise defined in this letter
agreement (this “Agreement”) have the meanings set forth in (or by reference in) the Indenture.
For the purposes of this Agreement, the term:
(a) “EU Affected Investors” means “institutional
investors” (as such term is defined for purposes of the EU Securitization Regulation) and any consolidated affiliate, wherever established or located, of an entity regulated under Regulation (EU) No 575/2013, as amended (the “CRR”), to the
extent that Article 5 of the EU Securitization Regulation applies to investments by such consolidated affiliate by virtue of the CRR;
(b) “EU Securitization Regulation” means Regulation
(EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017, as amended, and as supplemented by any applicable regulatory technical standards or implementing technical standards from time to time (including any technical
standards applicable pursuant to transitional provisions);
(c) “EU Securitization Regulation Rules” means (i)
the EU Securitization Regulation, (ii) to the extent informing the interpretation of the EU Securitization Regulation, any official guidance published in relation thereto by the European Banking Authority, the European Central Bank, the European
Securities and Markets Authority, the European Commission or the European Council (or in each case any predecessor or replacement organisation) or any other relevant competent authority (for the purposes of the EU Securitization Regulation) in the
European Union and (iii) any implementing laws or regulations in force in any Member State of the European Union or the European Economic Area;
(d) “EUWA”
means the European Union (Withdrawal) Act 2018, as amended;
(e) “Noteholder” means the Person in whose name a Note is registered on
the Note Register;
(f) “Notes” or “Note” means, collectively or individually, as the
context may require, [the Class A-1[a] Notes[, the Class A-1b Notes], the Class A-2 Notes, the Class A-3 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes] of Series [_]-[_];
(g) “UK
Affected Investors” means “institutional investors” (as such term is defined for purposes of the UK Securitization Regulation) and any consolidated affiliate, wherever established or located, of an entity regulated under Regulation (EU) No
575/2013, as it forms part of UK domestic law by virtue of the EUWA (as amended, the “UK CRR”), to the extent that Article 5 of the UK Securitization Regulation applies to investments by such consolidated affiliate by virtue of the UK CRR;
(h) “UK Securitization Regulation” means Regulation
(EU) 2017/2402 (as applicable on December 31, 2020) as it forms part of the domestic law of the United Kingdom pursuant to the EUWA, as amended from time to time; and
(i) “UK Securitization Regulation Rules” means (i)
the UK Securitization Regulation and (ii) to the extent informing the interpretation of the UK Securitization Regulation, (A) any relevant regulatory and/or implementing technical standards made or developed by the Financial Conduct Authority and
the Prudential Regulation Authority in relation thereto, (B) any relevant regulatory and/or implementing technical standards that may be applicable in relation thereto pursuant to any transitional arrangements made pursuant to the UK Securitization
Regulation, and, in each case, any official guidance published in relation thereto by the Financial Conduct Authority or the Prudential Regulation Authority (or their successors), and (C) any other implementing laws or regulations in force in the
United Kingdom relating to the UK Securitization Regulation,
2. This
Agreement is being executed by each Originator for the benefit of the Trust and the Indenture Trustee (on behalf of each Noteholder that is an EU Affected Investor or a UK Affected Investor) and each such Person’s successors and assigns.
3. Each
Originator hereby confirms, represents and warrants as of the date of this Agreement and hereby covenants and agrees, that, until the date on which the Note Balance of each Class of Notes has been paid in full and with reference to both the EU
Securitization Regulation Rules and the UK Securitization Regulation Rules, in each case as in effect and applicable on the Closing Date (and, save where indicated below, without taking into account any later amendment, supplement or replacement of
or to the EU Securitization Regulation Rules or the UK Securitization Regulation Rules or any relevant national measures):
(a) The Originators, as originators for purposes of the EU
Securitization Regulation and the UK Securitization Regulation, shall retain, through their ownership of the beneficial interest in Verizon DPPA True-up Trust (the “True-up Trust”), on an ongoing basis a material net economic interest of not
less than 5.0% in the securitization described in the prospectus relating to the Notes dated [___], 20[_], determined in accordance with Article 6 of the EU Securitization Regulation and Article 6 of the UK Securitization Regulation, each as in
effect on the Closing Date, in the form of an originator’s interest of not less than 5.0% of the nominal value of the securitized exposures, as referred to in paragraph (b) of Article 6(3) of the EU Securitization Regulation and paragraph (b) of
Article 6(3) of the UK Securitization Regulation, through the True-up Trust’s holding of Certificates, Class R interests and any retained Credit Extensions issued by the Trust, together giving the True-up Trust the right to receive distributions of
(A) amounts not allocated to any Series and (B) amounts allocated to any Series and remaining after payments to Creditors (other than the True-up Trust) and other persons with respect to that Series, and in
each case ranking pari passu with or subordinated to the credit risk that has been securitized with respect to those exposures (together, the “EU/UK
Retained Interest”).
(b) The Originators shall hold the EU/UK Retained Interest
on a pro rata basis, in proportion to the total nominal values of the Receivables originated by each of them and outstanding from time to time, by means of each Originator’s holding of a beneficial interest
in the True-up Trust, which shall be adjusted from time to time, in proportion to the aggregate nominal values of Receivables originated by such Originator and outstanding from time to time and the performance of those Receivables.
(c) The EU/UK Retained Interest shall be measured as of
the Closing Date, the last day of each Collection Period and each Payment Date. For this purpose, (i) the amount of the EU/UK Retained Interest from time to time shall equal the sum of (A) the excess of the aggregate Principal Balance of all
Eligible Receivables for any Series over the sum of the Adjusted Series Invested Amounts of all Series then outstanding, plus (B) the sum of the Required OC Amounts with respect to all Series, plus (C) the excess of the aggregate nominal values of
the Receivables over the aggregate Principal Balance of all Eligible Receivables for any Series, and (ii) the aggregate nominal values of the Receivables shall be calculated without deduction for or on account of any Receivable having become a
Written-Off Receivable after the Acquisition Date on which it was acquired by the Trust.
(d) Without prejudice to paragraph 3(b), the Originators
shall not, and shall procure that the True-up Trust does not, change the retention option or methodology used to calculate the EU/UK Retained Interest while any of the Notes are outstanding, except to the extent permitted under the EU
Securitization Regulation Rules and the UK Securitization Regulation Rules, in each case as in effect at the time of such change.
(e) The Originators shall not, and shall procure that the
True-up Trust does not, hedge or otherwise mitigate its credit risk under or associated with the EU/UK Retained Interest or sell, transfer or otherwise surrender all or part of the rights, benefits or obligations arising from the EU/UK Retained
Interest, except to the extent permitted under the EU Securitization Regulation Rules and the UK Securitization Regulation Rules, in each case as in effect at the time of such hedging, mitigation, sale, transfer or surrender.
(f) The Originators shall confirm (or shall procure that
Cellco confirms on behalf of itself and each of the other Originators) to the Servicer on a monthly basis, and hereby authorize the Servicer to so confirm in each Monthly Investor Report with respect to Series [_]-[_], that they continue to hold
the EU/UK Retained Interest in accordance with this Agreement.
(g) In
addition, the Originators shall provide (or shall procure that Cellco provides on behalf of itself and each of the other Originators) a confirmation to the Indenture Trustee that they continue to hold the EU/UK Retained Interest in accordance with
this Agreement (i) promptly following the occurrence of an Amortization Event or an Event of Default and (ii) upon request of the Indenture Trustee on behalf of any Noteholder that is an EU Affected Investor or a UK Affected Investor following a
material change in (1) the structural features that can materially impact on the performance of the Notes or (2) the risk characteristics of the Notes or the Receivables.
4. Each of the Originators further represents and warrants
to each of the Depositor, the Trust and the Indenture Trustee (on behalf of each Noteholder that is an EU Affected Investor or a UK Affected Investor) as follows, as of the date of this Agreement:
(a) it is validly existing and in good standing under the
laws of its jurisdiction of organisation and has full power and authority to own its properties and conduct its business as presently owned or conducted, and to execute, deliver and perform its obligations under this Agreement;
(b) its execution, delivery, and performance of this
Agreement have been duly authorized by all necessary action on its part; and
(c) this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, receivership, conservatorship or other similar laws affecting
creditors’ rights generally and, if applicable, the rights of creditors from time to time in effect or by general principles of equity.
5. No amendment, waiver, supplement or other modification
of this Agreement shall in any event be effective unless the same shall be in writing and signed by (a) Cellco on behalf of itself and each of the other Originators, (b) the Depositor, (c) the Administrator on behalf of the Trust and (d) either (1)
without the consent of the Indenture Trustee if the Trust or the Administrator delivers an Officer’s Certificate to the Indenture Trustee stating that the Trust or the Administrator, as applicable, reasonably believes that the amendment will not
result in the Originators’ holding of the EU/UK Retained Interest ceasing to comply with the EU Securitization Regulation Rules and the UK Securitization Regulation Rules, in each case as in effect as of the date of such Officer’s Certificate or
otherwise have a material adverse effect on the Noteholders that are either EU Affected Investors or UK Affected Investors or (2) notwithstanding any conflicting provision of the Indenture, if the interests of the Noteholders that are either EU
Affected Investors or UK Affected Investors are materially and adversely affected by such amendment, with the consent of the Indenture Trustee, acting at the written direction of all Noteholders that are EU Affected Investors or UK Affected
Investors. This Agreement shall be binding upon each of the Originators and shall inure to the benefit of the Depositor, the Administrator on behalf of the Trust, the Indenture Trustee (on behalf of each Noteholder that is an EU Affected Investor
or a UK Affected Investor) and each such Person’s successors and assigns. None of the Originators shall assign any of its obligations under this Agreement (other than to an Affiliate that becomes a successor to all the assets and liabilities of
such Originator) without the prior written consent of the Indenture Trustee; provided that such consent shall not be required if the Trust or the Administrator delivers an Officer’s Certificate to the Indenture Trustee stating that the Trust or the
Administrator, as applicable, reasonably believes that such assignment will not have a material adverse effect on the Noteholders.
6. Each
Originator agrees that, before the date that is two (2) years and one (1) day (or, if longer, any applicable preference period) after the payment in full of (a) all securities issued or loans entered into by the Depositor or by a trust for which
the Depositor was a depositor or (b) the Credit Extensions, it will not start or pursue against, or join any other Person in starting or pursuing against, (i) the Depositor or (ii) the Trust, respectively, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under any bankruptcy or similar Law.
7. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE
PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF
LAW PROVISIONS THEREOF).
8. EACH
PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT:
(A) IT HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF, OR RELATING TO, THIS AGREEMENT.
EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH PROCEEDING AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(B) TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
9. Any Affiliate of the Originators or other person who
from time to time becomes an Originator under the Originator Receivables Transfer Agreement may become a party to this Agreement upon the delivery to the Administrator, on behalf of the Trust, of an originator joinder agreement substantially in the
form of Exhibit A hereto (an “Originator Joinder Agreement”). Upon receipt by the Administrator, on behalf of the Trust, of such a duly executed and delivered Originator Joinder Agreement, such Originator shall become party to, and
have the obligations of an Originator under, this Agreement.
10. This Agreement shall become effective as of the date
hereof. This Agreement may be executed in multiple counterparts. Each counterpart will be an original and all counterparts will together be one document. Delivery of an executed counterpart of a signature page to this Agreement by facsimile,
email or other electronic means shall be effective as delivery of a manually executed counterpart of this Agreement.
11. Each party agrees that
this Agreement may be electronically signed, and that any electronic signatures appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability, and admissibility.
12. This Agreement has been signed on behalf of the Trust by Wilmington Trust,
National Association not in its individual capacity but solely in its capacity as Owner Trustee of the Trust. In no event will Wilmington Trust, National Association in its individual capacity or as a beneficial owner of the Trust be liable for
any agreements or other obligations of the Trust under this Agreement. For all purposes under this Agreement, the Owner Trustee is subject to, and entitled to the benefits of, the Trust Agreement.
13. The Indenture Trustee is a third party beneficiary of this Agreement solely
for the purpose of obtaining the benefit of the representations, warranties and covenants contained herein and under no circumstances shall it be deemed to have undertaken any obligations hereunder. For the avoidance of doubt, in no event shall the
Indenture Trustee have any responsibility to monitor compliance with or be charged with knowledge of any of the EU Securitization Regulation Rules or the UK Securitization Regulation Rules, nor shall it be liable to any Noteholder or any party
whatsoever for any violation of any of the EU Securitization Regulation Rules or the UK Securitization Regulation Rules or any similar provisions now or hereafter in effect or for any breach of any term of this Agreement.
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Please acknowledge your acceptance of this Agreement by signing and returning the duplicate copy of this Agreement.
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Very truly yours,
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VERIZON MASTER TRUST
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By:
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WILMINGTON TRUST, NATIONAL
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ASSOCIATION, not in its individual
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capacity but solely as Owner Trustee
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By:
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Name:
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Title:
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VERIZON ABS II LLC,
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as Depositor
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By:
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Name:
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Title:
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THE ORIGINATORS:
[TO BE INSERTED]
By:
[Insert Schedule of Officer Role for Each Originator Entity]
EXHIBIT A
FORM OF ORIGINATOR JOINDER AGREEMENT
THIS ORIGINATOR JOINDER AGREEMENT, dated as of [_____________], 20[___] (this “Agreement”) is among:
(i) [________________] (the “Additional Originator”);
(ii) VERIZON ABS II LLC (the “Depositor”); and
(iii) VERIZON MASTER TRUST, as trust (the “Trust”).
BACKGROUND:
A. The
various Originators from time to time party thereto and Verizon ABS II LLC, as Depositor, are parties to that certain Originator Receivables Transfer Agreement, dated as of May 25, 2021, as amended (the “Originator Receivables Transfer Agreement”).
B. The various Originators from time to time party
thereto, the Depositor and the Trust are parties to that certain EU/UK Risk Retention Agreement, dated as of [___], 20[_] (the “EU/UK Risk Retention Agreement”).
C. The Additional Originator desires to become a party to
the EU/UK Risk Retention Agreement.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
1. Definitions. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned thereto in, or by reference in, the EU/UK Risk Retention Agreement.
2. Joinder. The Additional Originator hereby agrees that it shall be
bound by all of the terms, conditions and provisions of, and shall be deemed to be a party to (as if it were an original signatory to), the EU/UK Risk Retention Agreement, as an Originator. From and after the later of the date hereof and the date
that the Additional Originator has complied with all of the requirements of Section 6.11 of the Originator Receivables Transfer Agreement, the Additional Originator shall be a party to the EU/UK Risk Retention Agreement, as an Originator, for all
purposes thereof. The Additional Originator hereby acknowledges that it has received a copy of the EU/UK Risk Retention Agreement.
3. GOVERNING
LAW. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS
LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF).
4. WAIVER OF TRIAL BY
JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY MATTER ARISING THEREUNDER
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.
5. Miscellaneous. This Agreement shall be binding upon, and shall inure
to the benefit of, each of the parties hereto and their respective successors and permitted assigns. Each of the parties hereto hereby agrees that no party hereto shall be deemed to be the drafter of this Agreement. This Agreement may be executed
by different parties on any number of counterparts, each of which constitute an original and all of which, taken together, constitute one and the same agreement.
6. Electronic
Signatures. Each party agrees that this Agreement may be electronically signed, and that any electronic signatures appearing on this Agreement are the same as handwritten signatures for the purposes of validity, enforceability, and
admissibility.
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IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by its duly authorized officer as of the date and year first above written.
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[NAME OF ADDITIONAL ORIGINATOR]
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By:
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Name:
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Title:
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VERIZON MASTER TRUST
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By:
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Name:
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Title:
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VERIZON ABS II LLC,
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as Depositor
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By:
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Name:
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Title:
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