EXHIBIT 10.2
[GE CAPITAL LETTERHEAD]
August 5th, 1998
VIA FACSIMILE
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
Eagle Finance Corp.
▇▇▇▇ ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇▇:
Eagle Finance Corp. ("Eagle") and General Electric Capital Corporation
("GE Capital") entered into those certain Asset Purchase Agreements dated
September 27, 1994 and June 25, 1996 (the "Asset Purchase Agreement"), and
that certain Amended and Restated Servicing Agreement, dated as of June 25,
1996 (the "Servicing Agreement") pursuant to which GE Capital agreed to (i)
purchase from time to time portfolios of motor vehicle retail installment
contracts (the "Contracts") from Eagle, and (ii) permit Eagle to service such
Contracts, all pursuant to the terms and conditions set forth in the Asset
Purchase Agreements and the Servicing Agreement and all modifications or
amendments thereof, including without limitation, the Letter Agreement dated
January 29, 1997 (dated incorrectly, actually January 29, 1998)
(collectively, the "Agreements"). Any capitalized terms used herein without
definition shall have the meaning given to such terms in the Agreements.
Section 11.0 of the Servicing Agreement requires, for Purchased
Contracts and for the contracts serviced by Servicer in total, that (i) Eagle
maintain a Rolling Average Delinquency measurement of no greater than 10%;
and (ii) Eagle maintain a Monthly Delinquency no greater than 10% for any
three consecutive months. For the Purchased Contracts, Rolling Average
Delinquency measurement for the months of January, February, March, April and
May was 10.29%, 10.58%, 10.61%, 10.49% and 10.05%, respectively. For the
contracts serviced by Eagle in total, Rolling Average Delinquency measurement
for the months of January, February, March, April and May was 10.61%, 11.17%,
11.65%, 12.00% and 12.05%, respectively. These covenant violations would,
absent GE Capital's agreement to the contrary, constitute defaults under the
Agreements.
Eagle has requested that GE Capital waive all current and past
defaults arising under the Agreements. In consideration for and pursuant to
the terms set forth in this letter agreement, GE Capital agrees and hereby
does waive all current and past defaults (including those described above)
arising under the Agreements for the period through and including August 15,
1998. If Eagle provides GE Capital with a copy of an accepted letter of
intent in form as shown in Exhibit A or such other form and substance
acceptable to GE Capital in its discretion and as having the effect of
resolving, in a timely manner, and in GE Capital's discretion, the financial
problems that Eagle is currently experiencing, than GE Capital shall shall
waive any existing defaults through and including November 15, 1998, on which
date GE Capital shall reset covenants in its reasonable discretion.
In consideration for the accommodations granted herein, the parties agree as
follows:
(1) Eagle acknowledges the covenant violations set forth herein and
GE Capital's right to immediately terminate servicing in accordance with the
terms of the Servicing Agreement.
(2) From the date hereof through November 15, 1998 ("Waiver
Period") only, the following performance and financial covenants shall
replace the portfolio performance and financial covenants of Sections 9.0(e),
9.0(f), 9.0(g), 11.0 (b), 11.0(c), and 11.0(d) of the Amended And Restated
Servicing Agreement: (a) Servicer's Debt Ratio exceeds 8:1; (b) Servicer's
Minimum Tangible Net Worth is less than Eight Million Dollars ($8,000,000);
(c) Servicer's fiscal 1998 year-to-date losses exceed Six Million Dollars
($6,000,000); (d) the Purchase Contracts in total as a group have a Rolling
Average Delinquency greater than eleven percent (11%) or a Rolling Average
Charge-Off greater than two percent (2%); or (e) the motor vehicle
installment contracts serviced by Servicer in total as a separate group have
a Rolling Average Delinquency greater than thirteen percent (13%) or a
Rolling Average Charge-Off greater than two percent (2%). Except as
expressly waived or replaced by this Agreement, all terms, conditions and
obligations set forth in the Amended And Restated Servicing Agreement shall
remain and be in full force and effect and any breach of such terms,
conditions or obligations shall constitute Events of Default hereunder. For
the purposes of calculating year-to-date losses in clause (c) above, the
following, as further defined in Exhibit "C" shall be excluded: (i)
Settlement Costs; (ii) Lease Termination Expenses; (iii) expenses related to
the termination of employees; and (iv) Asset Write-Downs.
(3) Effective immediately, Eagle shall provide the monthly reports,
including reporting for Purchased Contracts, by the tenth calendar day of the
following month and shall provide reporting related to the Eagle serviced,
owned and securitized portfolios by the twenty-fifth (25th) calendar day of
the following month.
(4) On or before August 15, 1998, Eagle shall provide GE Capital
with a copy of an accepted letter of intent in form as shown in Exhibit "A"
or such other form and substance acceptable to GE Capital and as having the
effect of resolving, in a timely manner, and in GE Capital's judgment, the
financial problems that ▇▇▇▇▇ is currently experiencing.
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(5) The Reserve Accounts established for each of the Asset Purchase
Agreements shall be combined into and maintained as one account (the "Reserve
Account"). Eagle shall not permit the Reserve Account to be less than: (i)
twelve and eight-nine one hundredths percent (12.89%) of Borrower's
Outstanding Principal Balance of the aggregate Purchased Contracts (under all
Assets Purchase Agreements) effective with the ordinary course July, 1998
settlement; (ii) thirteen and one quarter percent (13.25%) of Borrower's
Outstanding Principal Balance of the aggregate Purchased Contracts (under all
Assets Purchase Agreements) effective with the ordinary course August, 1998
settlement; (iii) thirteen and six-tenths percent (13.6%) of Borrower's
Outstanding Principal Balance of the aggregate Purchased Contracts (under all
Assets Purchase Agreements) effective with the ordinary course September,
1998 settlement; and (iv) the greater of fourteen percent (14%) of Borrower's
Outstanding Principal Balance of the aggregate Purchase Contracts (under all
Assets Purchase Agreements), or one hundred ten percent (110%) of the Rolling
Average Delinquency of aggregate Purchased Contracts, effective with the
ordinary course October, 1998 settlement. With respect aggregate Purchased
Contracts (under all Asset Purchased Agreements combined), in no event shall
the Reserve Account be less than one hundred twenty-five thousand dollars
($125,000) or one hundred percent (100%) of the Borrower's Outstanding
Principal Balance of the Purchased Contracts, whichever is less.
(6) If GE Capital terminates the Servicing Agreement and transfers
servicing from Servicer within sixty (60) days of the Waiver Period, then GE
Capital shall, on the date in which GE Capital assumes servicing of the
Purchased Contracts, provide to Eagle a one-time reserve refund in an amount
equal to the lesser of (i) the amount by which the Reserve Account exceeds
thirteen and three-tenths percent (13.3%) of, or (ii) seven tenths of one
percent (0.7%) of the then ▇▇▇▇▇▇▇▇'s Outstanding Principal Balance of
Purchased Contracts as of the last day of the calendar month in which
Servicer concluded servicing Purchased Contracts.
(7) Section 12.13 of Amended and Restated Servicing Agreement is
hereby amended to read as follows: "Repurchase. At Servicer's election and
upon not less than five (5) days prior written notice to Company, Servicer
can repurchase from Company Purchased Contracts that pertain to the aggregate
Purchased Contracts (under all Asset Purchase Agreements) in the event that
the total Borrower's Outstanding Principal Balance for such aggregate
Purchased Contracts (under all Asset Purchase Agreements combined) is equal
to or less than One Million Dollars ($1,000,000)."
(8) Eagle will either (i) provide to GE Capital original contracts
for, or (ii) repurchase, the accounts shown in Exhibit "B" within thirty (30)
days of this Agreement.
(9) Eagle, for itself and its subsidiaries, affiliates,
shareholders, agents, successors and assigns, hereby waives and affirmatively
agrees not to allege or otherwise pursue any or all defenses, affirmative
defenses, claims, counterclaims, causes of action; or set offs of any kind
whatsoever that it may have against GE Capital arising from or in any way
related to the Agreements, Eagle's right to service the Contracts under the
Agreements or GE Capital's
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administration of or conduct under the Agreements which have occurred on or
before the date of this Agreement.
In the event that ▇▇▇▇▇ has not agreed to a satisfactory letter of
intent as described in paragraph numbered 4 above by 8/15/98, then GE Capital
shall be entitled to terminate the Servicing Agreement in accordance to the
terms thereof and ▇▇▇▇▇ agrees to cooperate with GECC as described under
Section 11.2 of the Servicing Agreement.
Except as expressly provided in this waiver, all terms and conditions
of the Agreement shall continue in full force and effect. This waiver shall
be effective only in the specific instance, for the specific provisions, and
for the specific period for which it has been given.
If not accepted by Eagle, this waiver offer will expire at 10:00 am
CST on Wednesday, August 5th, 1998. If Eagle chooses to accept this waiver,
a signed copy should be sent to GE Capital via facsimile (847-277-5976),
with an original to follow via overnight mail.
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This waiver may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
Very truly yours,
General Electric Capital Corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8/5/98
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Title: Account Executive
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Acknowledged, accepted and agreed:
EAGLE FINANCE CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 8/5/98
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Title: President
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