Exhibit 10.14
EXECUTION COPY
CREDIT AND SECURITY AGREEMENT
By and Among
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
as Lender
LONG BEACH ACCEPTANCE RECEIVABLES CORP.,
as Borrower
and
LONG BEACH ACCEPTANCE CORP.,
as Guarantor
---------------------------
Dated as of August 12, 1999
---------------------------
TABLE OF CONTENTS
PAGE
----
1. Definitions..................................................2
2. The Loan.....................................................9
2.1. Agreement to Lend............................................9
2.2. [Reserved]...................................................9
2.3. Promissory Note..............................................9
2.4. Interest....................................................10
2.5. Repayment of the Loan.......................................10
2.6. Optional Prepayments........................................10
2.7. Payment Procedures..........................................10
2.8. Indemnity...................................................11
2.9. Illegality; Substituted Interest Rate.......................11
2.10. Limited Recourse............................................12
3. Grant of Security Interest; Eligible Collateral.............12
3.1. Valid Security Interest.....................................12
3.2. Further Assurances..........................................13
3.3. Data Reporting..............................................13
3.4. Powers......................................................13
3.5. No Duty on the Part of Lender...............................14
3.6. Performance by Lender of Borrower's Obligations.............14
3.7. Limitation on Duties Regarding Preservation of Collateral...14
3.8. Powers Coupled with an Interest.............................14
3.9. Termination.................................................14
3.10. Segregation of Funds........................................15
3.11. The Spread Account..........................................15
3.12. Advance Rate Maintenance; Release of Excess Collateral......15
3.13. Valuation Model.............................................16
3.14. Exhibit G...................................................16
4. Representations and Warranties..............................17
4.1. Organization................................................17
4.2. Power and Authority.........................................17
4.3. Authorization of Borrowing..................................17
4.4. Agreement Binding...........................................17
4.5. Compliance with Law.........................................17
4.6. Consents....................................................18
4.7. Litigation..................................................18
4.8. Financial Statements........................................18
4.9. Other Obligations...........................................18
4.10. Regulation G................................................18
4.11. Investment Company Act......................................18
4.12. Chief Executive Office......................................19
4.13. Collateral Security.........................................19
4.14. Ownership of Properties.....................................19
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4.15. Full Disclosure.............................................19
4.16. ERISA.......................................................19
4.17. Basic Documents.............................................20
5. Affirmative Covenants.......................................20
5.1. Notice......................................................20
5.2. Taxes.......................................................21
5.3. Separate Existence: No Commingling..........................21
5.4. Financing Statements........................................21
5.5. Books and Records; Other Information........................21
5.6. Payment of Fees and Expenses................................22
5.7. Continuity of Business and Compliance With Agreement........22
5.8. Financial Statements and Access to Records..................22
5.9. Financial Condition.........................................22
5.10. Litigation Matters..........................................22
5.11. Fulfillment of Obligations..................................23
5.12. Notice of Change of Chief Executive Office..................23
5.13. Compliance with Laws, etc...................................23
5.14. Year 2000 Compliance........................................23
6. Negative Covenants..........................................23
6.1. Adverse Transactions........................................24
6.2. Guaranties..................................................24
6.3. Corporate Documents.........................................24
6.4. Investments; Dividends......................................24
6.5. Loans; Capital Structure; Affiliates........................24
6.6. Liens.......................................................25
6.7. VSI Policies................................................25
6.8. Custodian...................................................25
7. Conditions Precedent........................................26
7.1. Conditions Precedent to Agreement...........................26
8. Events of Default...........................................27
8.1. Events of Default...........................................27
8.2. Remedies of Default.........................................30
9. Miscellaneous...............................................31
9.1. Payment of Expenses, Indemnity, etc.........................31
9.2. Set-off.....................................................33
9.3. Amendments..................................................33
9.4. Waiver; Cumulative Rights...................................33
9.5. Nonpetition Covenant........................................33
9.6. Non-affiliation.............................................34
9.7. Binding Effect..............................................34
9.8. Survival....................................................34
9.9. GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY................34
9.10. Notice......................................................35
9.11. Severability................................................36
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9.12. Counterparts................................................36
9.13. Merger or Consolidation.....................................36
9.14. Subsequent Actions..........................................36
9.15. Assignability...............................................37
9.16. Certain Reimbursements......................................37
EXHIBIT A - Promissory Note..................................................A-1
EXHIBIT B - Form of LBAC Guaranty............................................B-1
EXHIBIT C - Form of AMC Guaranty.............................................C-1
EXHIBIT D - [Reserved].......................................................D-1
EXHIBIT E - Form of Opinion of Counsel.......................................E-1
EXHIBIT F - [Reserved].......................................................F-1
EXHIBIT G - Other Residual Financing Agreements..............................G-1
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CREDIT AND SECURITY AGREEMENT
CREDIT AND SECURITY AGREEMENT, dated as of August 12, 1999 (as amended,
supplemented or otherwise modified from time to time, this "AGREEMENT"), by and
among (i) GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
(the "LENDER"), (ii) LONG BEACH ACCEPTANCE RECEIVABLES CORP., a Delaware
corporation (the "BORROWER"), and (iii) LONG BEACH ACCEPTANCE CORP., a Delaware
corporation (the "GUARANTOR").
R E C I T A L S
- - - - - - - -
WHEREAS, Borrower is a direct wholly-owned subsidiary of LBAC, which is
in the business of originating and acquiring Receivables (as defined herein);
and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Guarantor and Borrower are entering into a securitization transaction
(the "SECURITIZATION TRANSACTION") providing for, among other things, (a) one of
Lender's affiliates to purchase certain securities issued thereunder and (b)
Borrower to retain the Certificate (as defined herein) issued thereunder; and
WHEREAS, in order to induce Lender to enter into this Agreement,
Guarantor is willing to provide the Guarantee (as defined herein) and Ameriquest
Mortgage Company, a Delaware corporation ("AMC") is willing to provide the AMC
Guarantee (as defined herein); and
WHEREAS, Lender is willing to provide Borrower with a secured loan in
order to induce Borrower and Guarantor to enter into the Securitization
Transaction and in consideration of the Guarantee, the AMC Guarantee, the pledge
of the Collateral (as defined herein) and on the terms and conditions set forth
herein and in the Guarantee and the AMC Guarantee; and
WHEREAS, Borrower and Guarantor have entered into and may from time to
time enter into Other Residual Financing Agreements (as defined herein) with
Lender; and
WHEREAS, Borrower, Guarantor and Lender have agreed to secure the Other
RF Obligations (as defined herein) with the Collateral pledged hereunder (in
addition to the collateral pledged under the Other Residual Financing
Agreements).
NOW THEREFORE in consideration of the premises and mutual agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. Definitions. When used herein, the following terms shall have the
meanings set forth below:
"ADDITIONAL COLLATERAL RELEASE CONDITION" means, as of any date of
determination, if the Cumulative Actual Advance Rate for such date does not
exceed 75%.
"ADVANCE RATE" means, as of any Calculation Date, the percentage
equivalent of a fraction, the numerator of which shall equal the aggregate
unpaid principal balance of the Loan, and the denominator of which shall equal
the Present Value of the Collateral, in each case measured as of such
Calculation Date. The Advance Rate shall be determined in accordance with
Section 3.12(a) (and (x) for the calculation of the Advance Rate provided in
Section 6.4, also as provided in such Section and (y) for the calculation of the
Advance Rate provided in Section 9.16 (a) and (b), also as provided in such
subsections).
"AMC" has the meaning assigned thereto in the recitals hereto.
"AMC GROUP" has the meaning assigned thereto in Section 3.13(b).
"AMC GUARANTEE" means the guarantee in the form attached hereto as
EXHIBIT C provided by AMC as an inducement to Lender to provide Borrower with
the Loan, as amended, supplemented or otherwise modified from time to time.
"AVERAGE DEFAULT RATE" means, as of any Calculation Date, the lesser of
(i) the arithmetic average of the Default Rates for the most recent three months
as reported in the related Servicer's Certificates and (ii) the arithmetic
average of the Default Rates for the most recent six months as reported in the
related Servicer's Certificates.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time.
"BORROWER" has the meaning assigned thereto in the heading hereto.
"CALCULATION DATE" has the meaning assigned thereto in Section 3.12(a).
"CERTIFICATE" means the security evidenced by the trust certificate
issued pursuant to the Trust Agreement.
"CLOSING DATE" means August 12, 1999.
"CODE" means the Uniform Commercial Code as from time to time in effect
in the State of
New York.
"COLLATERAL" has the meaning assigned thereto in Section 3.1 hereof.
"COMMONLY CONTROLLED ENTITY" means, as to any Person, an entity,
whether or not incorporated, which is under common control with such Person
within the meaning of Section
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4001 of ERISA or is part of a group which includes such Person and which is
treated as a single employer under Section 414 of the Internal Revenue Code of
1986, as amended from time to time.
"CUMULATIVE ACTUAL ADVANCE RATE" means, as of any date, the percentage
equivalent of a fraction, (a) the numerator of which shall equal the sum of (i)
the aggregate unpaid principal balance of the Loan hereunder on such date and
(ii) the aggregate outstanding principal balance of all loans under each Other
Residual Financing Agreement as of such date and (b) the denominator of which
shall equal the sum of (i) the Present Value of the Collateral hereunder
(determined as of the most recent date calculated in accordance with Section
3.12(a)) and (ii) the aggregate present value of all collateral securing
Borrower's obligations to Lender under and as determined in each Other Residual
Financing Agreement (determined as of the most recent date specified in each
such Other Residual Financing Agreement; PROVIDED that, for purposes of this
definition, with respect to the determination of the present value of collateral
under any Other Residual Financing Agreement during the first six months of its
effectiveness, such determination shall be deemed to equal the initial
determination of the present value of the collateral under and as determined in
such Other Residual Financing Agreement in connection with the initial borrowing
thereunder.
"DEFAULT" means any condition, act or event, which, with notice or
lapse of time or both, would constitute an Event of Default.
"DEFAULT RATE" means, with respect to any Collection Period, the
product of (i) twelve and (ii) a fraction, expressed as a percentage, (a) the
numerator of which is the sum of (1) the aggregate of the Principal Balances of
all Receivables that became Defaulted Receivables during such Collection Period
and (2) the aggregate of the Principal Balances (as of the related repurchase
date) of all Receivables that became Purchased Receivables during such
Collection Period that were 30 days or more delinquent (calculated based on a
360-day year consisting of twelve 30-day months) with respect to more than 5% of
a Scheduled Payment at the time of such repurchase and (b) the denominator of
which is equal to the arithmetic average of the Pool Balance as of the end of
such Collection Period and the Pool Balance as of the end of the immediately
preceding Collection Period.
"DISCOUNT RATE" means 15% per annum.
"ELIGIBLE SECURITIES" means (i) the Certificate, (ii) direct
obligations of, and obligations fully guaranteed as to the full and timely
payment by, the United States of America or any agency thereof, in each case
having a maturity not to exceed the maturity of the Loan and (iii) and such
other securities as are acceptable to Lender in its sole discretion.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" has the meaning assigned thereto in Section 8.1
hereof.
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"GOVERNMENTAL AUTHORITY" means any nation, government, or State, or any
political subdivision thereof, or any court, stock exchange, entity or agency
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEE" means the guarantee in the form attached hereto as EXHIBIT
B provided by Guarantor as an inducement to Lender to provide Borrower with the
Loan, as amended, supplemented or otherwise modified from time to time.
"GUARANTOR" has the meaning assigned thereto in the heading hereto.
"INTEREST Rate DETERMINATION DATE" means, with respect to the first
Remittance Date, the Closing Date, and with respect to each subsequent
Remittance Date, the day which is two (2) LIBOR Business Days prior to the
immediately preceding Remittance Date.
"LENDER" has the meaning assigned thereto in the heading hereto.
"LIBOR" means, with respect to the interest payment to be made on each
Remittance Date, the rate of interest per annum (rounded upwards, if necessary,
to the nearest 1/100th of 1%) for U.S. Dollar deposits with a duration of one
(1) month at or about 11:00 a.m. (London time) on the Interest Rate
Determination Date corresponding to such Remittance Date on Telerate Page 3750,
or if such page ceases to display such information, then such other page as may
replace it on that service for the purpose of display of such information (the
"TELERATE RATE"). If the Telerate Rate cannot be determined, then LIBOR shall
mean, with respect to the interest payment to be made on such Remittance Date,
the arithmetic mean of the rates of interest (rounded upwards, if necessary, to
the nearest 1/100th of 1%) offered to two prime banks in the London interbank
market (selected by Lender) of U.S. Dollar deposits with a duration of one (1)
month at or about 11:00 a.m. (London time) on the Interest Rate Determination
Date corresponding to such Remittance Date.
"LIBOR BUSINESS DAY" means a Business Day on which trading in U.S.
Dollars is conducted by and between banks in the London interbank market.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"LOAN" has the meaning assigned thereto in Section 2.1 hereof.
"MAINTENANCE ADVANCE RATE" means, as of any Calculation Date, the rate
which is 5% in excess of the Target Advance Rate with respect to such date.
"MARGIN" means 2.50% per annum.
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"MATURITY DATE" means the date which occurs 364 days after the date
hereof, or, if such date is not a Business Day, the next preceding Business Day;
PROVIDED that if, prior to such date, the Indenture is terminated pursuant to
Section 4.1 thereof or the Certificateholder exercises its option to redeem the
Notes issued pursuant to the Indenture as provided in Section 10.1 of the
Indenture, the Maturity Date shall be the date of such termination or purchase,
as the case may be; and PROVIDED, FURTHER, that the Maturity Date may be
extended upon the written consent of Lender, Borrower and Guarantor, and
thereafter the Maturity Date shall be the Maturity Date as so extended.
"MONTHLY RECOVERY RATE" means, with respect to any Collection Period, a
fraction, the numerator of which shall equal the sum of all Liquidation Proceeds
and Recoveries for such Collection Period, and the denominator of which shall
equal the sum of the principal balances of all Receivables which were actually
liquidated during such Collection Period, in each case as reported in the
related Servicer's Certificate.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"97-1 AGREEMENT" has the meaning assigned thereto in clause (i) of the
definition of Other Residual Financing Agreements.
"97-2 AGREEMENT" has the meaning assigned thereto in clause (ii) of the
definition of Other Residual Financing Agreements.
"98-1 AGREEMENT" has the meaning assigned thereto in clause (iii) of
the definition of Other Residual Financing Agreements.
"98-2 AGREEMENT" has the meaning assigned thereto in clause (iv) of the
definition of Other Residual Financing Agreements.
"OBLIGATIONS" mean (i) the unpaid principal of and premiums, if any,
and interest (including interest accruing at the then applicable rate provided
in this Agreement after the maturity of the Loan and interest accruing at the
then applicable rate provided in this Agreement after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like
proceedings, relating to Borrower or Guarantor whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) on the
Loan, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise and (ii) all other obligations and
liabilities of every nature of Borrower or Guarantor from time to time owing to
Lender, in each case whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), to the extent such obligations and liabilities
arise under, out of, or in connection with, this Agreement or the Guarantee or
under any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, premium, if any,
interest, fees, indemnities, costs,
5
expenses or otherwise (including all fees and disbursements of counsel to
Lender) that are required to be paid by Borrower or Guarantor pursuant to the
terms of this Agreement or the Guarantee.
"OMNIBUS AMENDMENT AGREEMENT" means the Omnibus Amendment Agreement
dated as of March 31, 1999 among Borrower, as borrower, Guarantor, as guarantor,
and Lender, as lender.
"OTHER RESIDUAL FINANCING AGREEMENTS" means, collectively, (i) the
Credit and Security Agreement dated as of March 31, 1997 by and among the
Lender, as lender, Borrower, as borrower, and Guarantor, as guarantor, as
amended pursuant to Amendment No. 1 thereto dated as of January 30, 1998, as
further amended by the Omnibus Amendment Agreement dated as of March 31, 1999,
and as otherwise may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof (as so amended, the "97-1 AGREEMENT"), (ii)
the
Credit and Security Agreement dated as of August 29, 1997 by and among the
Lender, as lender, Borrower, as borrower, and Guarantor, as guarantor, as
amended pursuant to Amendment No. 1 thereto, dated as of January 30, 1998, as
further amended by the Omnibus Amendment Agreement dated as of March 31, 1999,
and as otherwise may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof (as so amended, the "97-2 AGREEMENT"), (iii)
the
Credit and Security Agreement dated as of January 30, 1998 by and among the
Lender, as lender, Borrower, as borrower, and Guarantor, as guarantor, as
amended pursuant to the Omnibus Amendment Agreement dated as of March 31, 1999,
and as otherwise may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof (as so amended, the "98-1 AGREEMENT"), (iv)
the
Credit and Security Agreement dated as of November 25, 1998 by and among the
Lender, as lender, Borrower, as borrower, and Guarantor, as guarantor, as
amended pursuant to the Omnibus Amendment Agreement dated as of March 31, 1999,
and as otherwise may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof (as so amended, the "98-2 AGREEMENT"), and
(v) each other
credit and security agreement or other similar agreement among
the Lender and Borrower secured by one or more certificates, excess cash flow
certificates or other residual interests in securitizations identified on
EXHIBIT G hereto (as such EXHIBIT G may be amended or supplemented from time to
time in accordance with Section 3.14 hereof), as each such other agreement may
be amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
"OTHER RF AMENDMENTS" means, collectively, the Omnibus Amendment
Agreement and Amendments No. 1 to the
credit and security agreements referred to
in clauses (i) and (ii) of the definition of Other RF Agreements.
"OTHER RF EVENT OF DEFAULT" means the occurrence of any Event of
Default under and as defined in any Other Residual Financing Agreement (after
giving effect to any grace or cure period applicable thereto).
6
"OTHER RF OBLIGATIONS" means all obligations and liabilities of every
nature of Borrower or Guarantor from time to time owing to Lender, in each case
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), to
the extent such obligations and liabilities arise under, out of, or in
connection with, any Other Residual Financing Agreement, any guarantees related
thereto or any other document made, delivered or given in connection therewith,
in each case whether on account of principal, premium, if any, interest, fees,
indemnities, costs, expenses or otherwise (including all fees and disbursements
of counsel to Lender).
"PERSON" means an individual, partnership, limited liability company,
corporation, business trust, joint venture or other entity of whatever nature.
"PLAN" means any Person that is (i) an "employee benefit plan" (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Section 4975 of the Code or (iii) any entity whose underlying assets
include assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"PLEDGED SECURITIES" means Eligible Securities pledged and held as
Collateral hereunder pursuant to Section 3.1.
"PREPAYMENT RATE" means, as of any Calculation Date, the cumulative ABS
rate (calculated according to the Uniform Practices for the Clearance and
Settlement of Mortgage-Backed Securities and Other Related Securities of the
Public Securities Association) for the most recent three months, calculated
using the Principal Balance, APR, original term to maturity and remaining term
to maturity of the Receivables as reported in the related Servicer's
Certificates.
"PRESENT VALUE OF THE COLLATERAL" means, as of any Calculation Date, in
the case of the Certificate, the then current present value thereof, determined
based upon the Valuation Rates (as modified by the Valuation Model) and
calculated in accordance with Section 3.12(a), and in all other cases, the then
current market value of the Collateral.
"PRIME RATE" means the prime rate (or if a range is given, the average
prime rates) listed under "Money Rates" in THE WALL STREET JOURNAL for such date
or, if THE WALL STREET JOURNAL is not published on such date, then in THE WALL
STREET JOURNAL most recently published.
"PROCEEDS" means all "proceeds" as defined in Section 9-306(1) of the
Uniform Commercial Code as in effect in the State of
New York and, in any event,
in connection with the Collateral shall include without limitation, all
collections, distributions or other income from the Pledged Securities.
"PROMISSORY NOTE" has the meaning assigned thereto in Section 2.3(a)
hereof.
7
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of August
1, 1999, between LBAC and Borrower, as amended, supplemented or otherwise
modified from time to time.
"RECOURSE PROPERTY" has the meaning assigned thereto in Section 2.10.
"RECOVERY RATE" means, as of any Calculation Date, the arithmetic
average of the Monthly Recovery Rates for the most recent three months.
"REMITTANCE DATE" means the 19th day of each month or, if such day is
not a Business Day, the immediately succeeding Business Day, commencing
September 20, 1999.
"REQUIREMENT OF LAW" means, as to any Person, any law, statute, rule,
treaty, regulation, or determination of an arbitrator, court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its properties or to which any such Person or any of its properties
may be bound or affected.
"RESPONSIBLE OFFICER" means the president, chief executive officer,
chief financial officer, any executive vice president, secretary, vice
president-finance, comptroller or treasurer of Borrower, Guarantor or AMC, as
applicable.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of August 1, 1999, among the Trust, as issuer, LBAC, as originator of
the receivables and servicer, Borrower, as transferor, and The Chase Manhattan
Bank, as indenture trustee, back-up servicer, custodian and trust collateral
agent, as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SECURITIZATION TRANSACTION" has the meaning assigned thereto in the
recitals hereto.
"SECURITY AGREEMENT" means the Security Agreement dated as of August
12, 1999 made by Long Beach Acceptance Corp., as Pledgor, in favor of Greenwich
Capital Financial Products, Inc., as Pledgee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"SERIES SUPPLEMENT" has the meaning assigned thereto in the Spread
Account Agreement.
"SPREAD ACCOUNT AGREEMENT" means the Master Spread Account Agreement
dated as of August 1, 1999, among Borrower, the Certificate Insurer, the
Indenture Trustee and the Collateral Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"TARGET ADVANCE RATE" means, as of any Calculation Date, 60%.
"TRUST" has the meaning assigned thereto in the Trust Agreement.
8
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement dated
as of August 1, 1999, between Borrower, as transferor, and Wilmingtron Trust
Company, as owner trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"VALUATION MODEL" means a proprietary cash flow valuation model in
computer spread sheet form to be used by Lender in calculating the Present Value
of the Collateral and making related calculations on each Calculation Date.
"VALUATION RATES" means, collectively, the Prepayment Rate, the Average
Default Rate, the Recovery Rate and the Discount Rate.
"VSI POLICY" has the meaning assigned thereto in Annex A to the Sale
and Servicing Agreement, without giving effect to the proviso of such
definition.
"WAREHOUSE LENDING AGREEMENT" means the Warehouse Lending Agreement
dated as of January 30, 1998 between Long Beach Acceptance Corp., as Borrower,
and Greenwich Capital Financial Products, Inc., as Lender, as amended by the
Renewal and Amendment Agreement dated as of January 29, 1999, and as otherwise
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"WAREHOUSE OBLIGATIONS" means the Obligations (as defined in the
Warehouse Lending Agreement) under the Warehouse Lending Agreement.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in Annex A to the Sale and Servicing Agreement.
2. The Loan.
2.1. AGREEMENT TO LEND. Subject to the terms and conditions of this
Agreement, Lender agrees to lend to Borrower on the Closing Date, an aggregate
principal amount of $5,049,482 (FIVE MILLION FORTY-NINE THOUSAND FOUR HUNDRED
EIGHTY-TWO DOLLARS) (the "LOAN"). The proceeds of the Loan shall be used by
Borrower to (a) make the initial deposits required to be made to the Spread
Account pursuant to the Spread Account Agreement and to the Class B Reserve
Account pursuant to the Sale and Servicing Agreement, and (b) prepay a portion
of the Other RF Obligations described in clause (ii) of the definition of "Other
Residual Financing Agreements" herein, as applicable.
2.2. [Reserved]
2.3. PROMISSORY NOTE. (a) Borrower's obligation to repay the Loan
extended pursuant hereto and interest thereon shall be evidenced by a single
promissory note of Borrower payable to the order of Lender, substantially in the
form of EXHIBIT A hereto (as amended, supplemented or otherwise modified from
time to time, the "PROMISSORY NOTE").
9
(b) The date and amount of the Loan by Lender and the date and amount
of each payment of principal made by Borrower shall be evidenced by entries made
by Lender in its books and records kept by it in the normal course of its
business. Borrower agrees and acknowledges that such books and records of Lender
documenting actual amounts received from Borrower shall constitute PRIMA FACIE
evidence of Borrower's indebtedness outstanding hereunder.
2.4. INTEREST. (a) Borrower agrees to pay to Lender interest on the
unpaid principal amount of the Loan from and including the date the Loan is
extended to but not including the date on which the Loan is paid in full.
Interest shall accrue on an adjustable basis at a rate per annum equal to LIBOR
plus the Margin. LIBOR with respect to the interest payment to be made on each
Remittance Date shall be equal to LIBOR as determined on the related Interest
Rate Determination Date. Accrued interest shall be payable in arrears on each
Remittance Date, and on the date of repayment in full of the Loan.
(b) If Borrower shall fail to pay when due (whether at stated maturity,
by acceleration or otherwise) any principal, interest or other Obligation due
and owing to Lender under this Agreement or the Promissory Note, and such
failure to pay shall constitute an Event of Default, Borrower shall pay to
Lender on demand such principal, interest or other Obligation together with
interest on such principal, interest (to the extent permitted by applicable law)
or other Obligation in default from and including the date such payment became
due until payment thereof in full (after as well as before judgment) at a rate
per annum equal to LIBOR plus five (5) percent per annum.
(c) If, by the terms of this Agreement or the Promissory Note, Borrower
at any time is required or obligated to pay interest at a rate in excess of the
maximum rate permitted by applicable law, the rate of interest shall be deemed
to be immediately reduced to such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments made in reduction of the principal amount due
hereunder and under the Promissory Note.
(d) All interest payable hereunder shall be computed based on actual
number of days elapsed in a year of 360 days.
2.5. REPAYMENT OF THE LOAN. Subject to Section 8, (a) the outstanding
balance of the Loan shall be repaid in full on the Maturity Date, together with
accrued but unpaid interest thereon and (b) pursuant to the agreement described
in Section 2.7(b), Borrower shall cause the Trust Collateral Agent to remit
directly to Lender all distributions payable under the Sale and Servicing
Agreement and the Spread Account Agreement to the Certificateholder until such
time as the Loan and all other Obligations of Borrower to Lender hereunder are
paid in full.
2.6. OPTIONAL PREPAYMENTS. Borrower may at any time and from time to
time upon two (2) Business Days' prior written notice to Lender prepay any Loan
in whole or in part, without premium, together with accrued interest to the date
of such prepayment on the amount prepaid. Any amounts prepaid by Borrower
hereunder may not be reborrowed.
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2.7. PAYMENT PROCEDURES. (a) Borrower agrees and acknowledges that
Borrower will, immediately upon an Event of Default or an Other RF Event of
Default (i) re-register any securities (other than the Certificate) delivered as
Collateral hereunder into Lender's name and (ii) subject to Section 3.7 of the
Trust Agreement, upon the request of Lender, re-register the Certificate in the
name of a Bankruptcy Remote Entity designated by Lender.
(b) On or prior to the Closing Date, Borrower will provide Trust
Collateral Agent under the Sale and Servicing Agreement with a notice providing
for, among other things, all remittances on the Certificate to be paid to Lender
to the full extent of Borrower's Obligations to Lender hereunder and Borrower's
Other RF Obligations to Lender under the Other Residual Financing Agreements,
which notice to Trust Collateral Agent will be irrevocable for so long as any of
the Obligations or Other RF Obligations remain outstanding (unless otherwise
consented to in writing by Lender). All amounts received in respect of the
Certificate or other Collateral will be applied first to satisfy the Obligations
and then to satisfy the Other RF Obligations. Any amounts received by Lender in
excess of the Obligations and Other RF Obligations due and owing to Lender shall
be remitted by Lender to Borrower.
(c) All payments to Lender hereunder or under the Promissory Note shall
be made in immediately available funds, and free and clear of and without
deduction for any taxes, levies, duties, charges, counterclaims, set-offs, fees
or withholdings of any nature hereafter imposed, assessed or collected, not
later than the due date for such payment through the Federal Reserve Fedwire
System for credit to the account of Lender (Account No. 140095961 at Chase
Manhattan Bank, ABA No. 000000000, or such other account or accounts as Lender
shall specify to Borrower in writing no later than one Business Day prior to the
related due date).
(d) Any payments made hereunder shall be applied first against costs
and expenses due hereunder pursuant to Section 9.1; then against default
interest, if any; then against interest due on the Loan; and thereafter against
the unpaid principal of the Loan.
2.8. INDEMNITY. Borrower agrees to indemnify Lender and to hold it
harmless from any cost, loss or expense which Lender may sustain or incur as a
consequence of any acceleration of the maturity of any Loan by Lender in
accordance with the terms of this Agreement, including, but not limited to, any
cost, loss or expense arising in liquidating the Loan and from interest or fees
payable by Lender to lenders of funds obtained by it in order to maintain the
Loan hereunder. In the event Borrower is required to make any payment pursuant
to this Section 2.8, Lender shall provide to Borrower in writing the basis upon
which such charges were calculated in reasonable detail.
2.9. ILLEGALITY; SUBSTITUTED INTEREST RATE Notwithstanding any other
provisions herein, (a) if any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for Lender to make
or maintain the Loan at LIBOR as contemplated by this Agreement, or (b) in the
event that Lender shall have determined (which determination shall be conclusive
and binding upon Borrower) that by reason of circumstances affecting the LIBOR
interbank market either adequate and reasonable means do not exist for
ascertaining LIBOR, (x)
11
the obligation of Lender to make or maintain the Loan at LIBOR shall forthwith
be suspended and Lender shall promptly notify Borrower thereof (by telephone
confirmed in writing) and (y) the Loan shall, from and including the next
Remittance Date, or at such earlier date as may be required by law, until
payment in full thereof, bear interest at the rate per annum equal to the
greater of the Prime Rate and the rate of interest (including the Margin) in
effect on the date immediately preceding the date any event described in clause
(a) or (b) occurred (calculated on the basis of the actual number of days
elapsed in a year of 360 days). If any such conversion of LIBOR to the Prime
Rate is made on a day which is not a Remittance Date, Borrower shall pay to
Lender such amounts, if any, as may be required to compensate Lender for any
cost, loss or expense which Lender may incur as a consequence of such conversion
on a day which is not a Remittance Date, including any interest or fees payable
by Lender to lenders of funds obtained by it in order to maintain the Loan. If
subsequent to such suspension of the obligation of Lender to make or maintain
the Loan at LIBOR it becomes lawful for Lender to make or maintain the Loan at
LIBOR, or the circumstances described in clause (b) above no longer exist,
Lender shall so notify Borrower and the LIBOR-based rate on the Loan shall be
reinstated effective as of the date it becomes lawful for Lender to make or
maintain the Loan at LIBOR, or the circumstances described in clause (b) above
no longer exist.
2.10. LIMITED RECOURSE. The Obligations of Borrower hereunder shall be
limited in recourse to the property and assets of Borrower which Borrower
pledges on the date hereof, or may hereinafter from time to time pledge, as
Collateral pursuant to the terms of this Agreement (the "RECOURSE PROPERTY"). To
the extent that the Recourse Property is insufficient to satisfy the Obligations
of Borrower hereunder, Lender shall have no claim against Borrower or any
property or assets of Borrower that are not on the date hereof or have not been,
as of the applicable date, so pledged. Notwithstanding the foregoing, however,
the Obligations of the Guarantor hereunder and under the Guarantee shall be
fully recourse to Guarantor and all property and assets of Guarantor, whether
now owned or hereinafter acquired, and Guarantor shall remain liable for all
Obligations of Borrower hereunder pursuant to the terms of the Guarantee.
3. Grant of Security Interest; Eligible Collateral.
3.1. VALID SECURITY INTEREST. As security for the prompt and complete
payment when due (whether at the Maturity Date, by acceleration or otherwise) of
the Obligations, Other RF Obligations and Warehouse Obligations, Borrower hereby
pledges, assigns and transfers to Lender and its successors, endorsees,
transferees and assigns and hereby grants to Lender and its successors,
endorsees, transferees and assigns a continuing, first priority security
interest in all of Borrower's right, title and interest in the following
property, whether now owned by Borrower or hereafter acquired and whether now
existing or hereafter coming into existence (all being collectively referred to
as "COLLATERAL"):
(a) the Certificate delivered to and held by Lender or its designee or
agent and all rights to receive payments payable under the Sale and Servicing
Agreement to the Certificateholder pursuant to the terms and provisions of the
Sale and Servicing Agreement and the Spread Account Agreement;
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(b) any other cash, Eligible Securities, or other property acceptable
to Lender in its sole discretion and transferred or otherwise delivered to
Lender or its agent from time to time and designated by Borrower as Collateral
hereunder; and
(c) all Proceeds of any of the foregoing, including, in any event, all
causes of action, claims and warranties now or hereafter held by Borrower or its
designee or agent in respect of any of the foregoing, all shares, securities,
moneys (including cash) or property representing a current dividend or
distribution on any of the Pledged Securities or resulting from a split-up,
revision, reclassification, or other like change of any of the Pledged
Securities or otherwise received in exchange therefor, all current income and
distributions with respect to any of the foregoing and, to the extent related to
any of the foregoing, all books, correspondence, files, records and other papers
necessary to protect Lender's security interest hereunder.
3.2. FURTHER ASSURANCES. At any time and from time to time, upon the
written request of Lender and at the sole expense of Borrower, Borrower will
promptly and duly execute and deliver such further instruments and documents and
take any and all such further action required by Lender in order to ensure
Lender has a valid, first priority, perfected security interest in the
Collateral and for the purpose of preserving the full benefits of this Agreement
and of the rights and powers herein granted, including, without limitation,
filing any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby,
assigning or endorsing Collateral in blank or to Lender or its designee and
delivering Collateral to Lender or Lender's Custodian. Borrower also hereby
authorizes Lender to file any such financing or continuation statement in
respect of the Collateral without the signature of Borrower to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
3.3. DATA REPORTING. Borrower and Guarantor will deliver or cause to be
delivered to Lender: (a) copies of all reports, statements and certificates
required to be delivered by Borrower or Guarantor to Lender or any other party
pursuant to the Basic Documents; and prompt notice of: (i) any material adverse
developments with respect to pending or future litigation involving Borrower or
Guarantor, if any, upon obtaining knowledge thereof; (ii) any other developments
which might materially and adversely affect the financial condition of Borrower
or Guarantor, upon obtaining knowledge thereof; (iii) the acceleration of any
debt obligation or the termination of any credit facility of Borrower or
Guarantor, if any, and (iv) the amount and maturity of any debt assumed after
the date hereof, if any, by Borrower or Guarantor.
3.4. POWERS. (a) Borrower hereby irrevocably constitutes and appoints
Lender and any officer or agent of Lender with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of Borrower and in the name
13
of Borrower or in its own name, from time to time in Lender's discretion, for
the purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be reasonably necessary to accomplish the purposes of this Agreement.
(b) Borrower also authorizes Lender, from time to time if an Event of
Default or Other RF Event of Default shall have occurred and be continuing, to
execute and/or file and record, in connection with any sale provided for herein,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.
3.5. NO DUTY ON THE PART OF LENDER. The powers conferred on Lender and
hereunder are solely to protect Lender's interests in the Collateral and shall
not impose any duty upon Lender to exercise any such powers. Lender shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees, affiliates, agents or successors shall be responsible to Borrower for
any act or failure to act hereunder, except for their gross negligence or
willful misconduct.
3.6. PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If Borrower fails
to perform or comply with any of its agreements contained herein and Lender, as
provided for by the terms of this Agreement, shall perform or comply, or
otherwise cause performance or compliance, with such agreements, the reasonable
expenses of Lender incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum equal to the default rate
applicable to the Loan as set forth in this Agreement, shall be payable by
Borrower to Lender on demand, and Borrower's obligations to make such payments
shall constitute Obligations secured hereby.
3.7. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as Lender deals
with similar property for its own account. Neither Lender nor any of its
directors, officers, employees, affiliates or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of Borrower or any other Person.
3.8. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are powers coupled with an
interest and are irrevocable until the termination of the security interest
created by this Agreement in accordance with Section 3.9 hereof.
3.9. TERMINATION. The security interest created by this Agreement shall
not be released until the payment in full of the Obligations and Other RF
Obligations shall have occurred; PROVIDED that if any payment, or any part
thereof, of any of the Obligations or Other RF Obligations is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of Borrower or Guarantor, or
14
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or a trustee or similar officer for, Borrower or Guarantor or any
substantial part of its property, or otherwise, this Agreement, all rights
hereunder and the Liens created hereby shall continue to be effective, or be
reinstated, as though such payments had not been made.
3.10. SEGREGATION OF FUNDS. All payments which are received by Borrower
or Guarantor in connection with the Collateral contrary to any provision of this
Agreement, the Guarantee or the Basic Documents shall be held by Borrower or
Guarantor, as the case may be, in trust for Lender, segregated from all other
funds of Borrower or Guarantor, as the case may be, and shall forthwith upon
receipt by Borrower or Guarantor, as the case may be, be turned over to Lender
in the exact form received by Borrower or Guarantor, respectively (duly endorsed
by Borrower or Guarantor to Lender, if required), to be applied to the
Obligations and Other RF Obligations.
3.11. THE SPREAD ACCOUNT. Lender acknowledges that pursuant to the
Spread Account Agreement, Borrower, as holder of the Certificate, has pledged
and created a security interest in certain funds and property in the account
designated in the Spread Account Agreement as the "Series 1999-1 Spread
Account." Lender acknowledges that the pledge and grant of the security interest
created herein in no way impairs or affects Borrower's pledge of such funds and
property.
3.12. ADVANCE RATE MAINTENANCE; RELEASE OF EXCESS COLLATERAL. (a)
Lender shall determine the Present Value of the Collateral and the Advance Rate
monthly within five Business Days following each Remittance Date based upon the
Valuation Rates as modified by the Valuation Model (each such date of
determination, a "CALCULATION DATE").
(b) After the first Calculation Date on which the Advance Rate exceeds
the Maintenance Advance Rate, in the event that as of any Calculation Date
(after such first Calculation Date) the Advance Rate exceeds the Maintenance
Advance Rate, (i) Borrower shall, within one Business Day of such Calculation
Date, pay down the Loan or pledge additional Collateral (and comply with the
provisions of Section 8.2(b)(ii) in respect thereof) in the amount necessary to
cause the Advance Rate not to exceed the Maintenance Advance Rate and (ii) until
such time as the Advance Rate equals or is less than the Maintenance Advance
Rate, all funds received by Borrower in respect of and Proceeds of all
Collateral shall be remitted by Borrower to Lender and applied in the manner set
forth in Section 2.7(c).
(c) After the first Calculation Date on which the Advance Rate exceeds
the Maintenance Advance Rate, in the event that at the determination of the
Advance Rate as contemplated in Section 3.12(a) (after such first Calculation
Date) the Advance Rate is less than the Target Advance Rate by an amount such
that, after giving effect to a release of a Pledged Security (such released
security, a "DESIGNATED SECURITY") as Collateral hereunder, the Advance Rate
would continue to be less than the Target Advance Rate, Borrower may request
(subject to the conditions set forth in the next sentence) that Lender release
such Designated Security to Borrower. So long as no Event of Default or Other RF
Event of Default has occurred and is
15
continuing and so long as the Additional Collateral Release Condition is
satisfied, Lender will release and deliver such Designated Security to Borrower
within five (5) Business Days following such request, unless Lender reasonably
determines that, after giving effect to such release, the Advance Rate would no
longer continue to be less than the Target Advance Rate.
3.13. VALUATION MODEL. Lender hereby agrees to provide to Borrower a
copy of its Valuation Model on or before the Closing Date. In connection with
Lender's provision of the Valuation Model to Borrower, Borrower, Guarantor and
Lender each expressly acknowledge and agree as follows:
(a) Lender shall be entitled, in the case of any manifest error or
manifest inaccuracy contained in the Valuation Model, to revise or modify the
Valuation Model to correct any such error or inaccuracy and shall, as soon as
reasonably practicable, provide to Borrower a copy of such Valuation Model as so
revised or modified. Following the provision of such revised or modified
Valuation Model to Borrower, all calculations of the Present Value of the
Collateral and all related calculations shall be made on all subsequent
Calculation Dates in accordance with such Valuation Model as so revised or
modified.
(b) Borrower and Guarantor hereby acknowledge and agree that the
Valuation Model is proprietary to Lender, and that the Valuation Model shall not
be used by Borrower or Guarantor, or any of their respective affiliates,
subsidiaries, directors, officers, agents or employees, as applicable
(collectively, the "AMC GROUP"), for any purpose other than determining the
Present Value of the Collateral and making relating calculations in connection
therewith, and shall at all times be maintained by each member of the AMC Group
as confidential.
(c) Borrower and Guarantor further acknowledge and agree that Lender is
furnishing the Valuation Model to Borrower solely as an accommodation in
connection with the transactions contemplated by this Agreement. Lender makes no
representation or warranty (whether express or implied, oral or written) as to
the accuracy or completeness, or fitness for a particular use, of the Valuation
Model, and assumes no responsibility whatsoever to any member of the AMC Group
in connection with any use of such Valuation Model and, consequently, no member
of the AMC Group is relying upon Lender or the Valuation Model in such regard.
(d) In consideration of Lender's providing the Valuation Model to
Borrower, for which Lender is not receiving any compensation, each member of the
AMC Group hereby unconditionally and irrevocably releases and discharges Lender
and its respective affiliates, directors, officers, agents, employees and
representatives from, and agrees to indemnify, hold harmless and reimburse any
such party or parties with respect to, any and all actions, liabilities, losses,
damages or claims of any kind or nature whatsoever (including, without
limitation, reasonable attorney's fees and expenses), as incurred, that may be
imposed on or incurred by or asserted against any such party or parties in any
way relating to or arising out of Lender's release of such Valuation Model to
Borrower.
16
3.14. EXHIBIT G. Exhibit G hereto may be amended or supplemented from
time to time by (i) written notice from Lender to Borrower of any such amendment
or supplement or (ii) delivery by Lender to Borrower of a copy of Exhibit G as
so amended or supplemented; PROVIDED that such amendment or supplement relates
to one or more
credit and security agreements or other similar agreements
between Lender and Guarantor. In addition, if Lender delivers changes to Exhibit
G to any Other Residual Financing Agreement as provided therein, Exhibit G
hereto shall automatically and without further action be amended by such
changes; PROVIDED that such change relates to one or more credit and security
agreements or other similar agreements between Lender and Guarantor. For all
purposes of the Warehouse Lending Agreement and the Security Agreement, EXHIBIT
G hereto will be deemed to be designated as "SCHEDULE G."
4. Representations and Warranties.
Each of Borrower and Guarantor hereby represents and warrants to Lender
as of the date of this Agreement and on an ongoing basis on each date that any
Loan is outstanding hereunder as follows:
4.1. ORGANIZATION. It is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and is duly
qualified to do business in each jurisdiction in which the failure to be so
qualified could reasonably be expected to have a material adverse effect on its
financial condition, operations, business or prospects.
4.2. POWER AND AUTHORITY. It has all requisite corporate power and has
all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being conducted
(except as could not reasonably be expected to have a material adverse effect on
its financial condition, operations, business or prospects), and to execute and
deliver and perform its obligations under this Agreement, including the pledge
and delivery of Collateral hereunder, and, in the case of Borrower, the
Promissory Note, and, in the case of Guarantor, the Guarantee.
4.3. AUTHORIZATION OF BORROWING. All appropriate and necessary action
has been taken by it to authorize the execution and delivery of this Agreement
and, in the case of Borrower, the Promissory Note, and, in the case of
Guarantor, the Guarantee, and to authorize the performance and observance of the
terms hereof and thereof.
4.4. AGREEMENT BINDING. This Agreement constitutes, and the Promissory
Note and Guarantee, when executed and delivered for value will be duly executed
and delivered and will constitute, a legal, valid and binding obligation of
Borrower and Guarantor, as applicable, enforceable in accordance with their
respective terms, except as enforceability may be limited by laws governing
insolvency or creditors' rights generally and general equity principles. The
execution, delivery and performance of this Agreement, the Promissory Note and
the Guarantee does not and will not violate any provision of law, regulation,
order or other governmental directive, or conflict with, constitute a default
under, or result in the breach of any provision of any material agreement,
ordinance, decree, bond, indenture, order or judgment to which Borrower or
Guarantor is a party or by which it is bound.
17
4.5. COMPLIANCE WITH LAW. It is conducting its business and operations
in compliance with all applicable laws, regulations, ordinances and directives
of governmental authorities, except to the extent that any noncompliance could
not reasonably be expected to have a material adverse effect on its financial
condition, operation, business or prospects. It has filed all tax returns
required to be filed and has paid all taxes due in respect of the ownership of
its assets or the conduct of its operations except (a) to the extent that the
payment of such taxes is being contested in good faith by it in appropriate
proceedings and adequate reserves have been provided for the payment thereof, or
(b) with respect to such returns and/or taxes which are not material in either
nature or amount such that any failure to file such returns or pay such taxes
would not materially and adversely affect its financial condition, operations,
business or prospects.
4.6. CONSENTS. All licenses, consents and approvals required from and
all registrations and filings required to be made with any governmental or other
public body or authority for the making and performance by Borrower of this
Agreement and the Promissory Note and by Guarantor of this Agreement and the
Guarantee have been obtained and are in effect, except as could not reasonably
be expected to have a material adverse effect on its financial condition,
operations, business or prospects or on its ability to perform the Obligations.
4.7. LITIGATION. There is no action, suit or proceeding at law or in
equity by or before any court, governmental agency or authority or arbitral
tribunal now pending or, to the best of its knowledge, threatened against or
affecting it which, if determined adversely, may reasonably be expected to have
a material adverse effect on its business, operations or financial condition.
4.8. FINANCIAL STATEMENTS. The unaudited balance sheets of Guarantor as
at June 30, 1999 and the related statements of income for the fiscal periods
ended on such date, heretofore furnished to Lender, are complete and correct in
all material respects and fairly present the financial condition of Guarantor as
at said date (subject to normal year-end audit adjustments), all in accordance
with U.S. generally accepted accounting principles applied on a consistent
basis. On said dates, Guarantor had no material contingent liabilities,
liabilities for taxes, unusual or anticipated losses from any unfavorable
commitments, except as referred to or reflected in said balance sheets as at
said dates. Since June 30, 1999 there has been no material adverse change in the
operations, condition (financial or otherwise), business or prospects of
Guarantor from that set forth in said financial statements as at said date.
4.9. OTHER OBLIGATIONS. It is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Basic Documents or in any agreement or instrument to which it is a party or by
which it is bound the result of which could reasonably be expected to have a
material adverse effect on its business, operations or financial condition.
4.10. REGULATION G. No proceeds of any Loan will be used, directly or
indirectly, by Borrower for the purpose of purchasing or carrying any Margin
Stock (as defined in Regulation G of the Board of Governors of the Federal
Reserve System) or for the purpose of reducing or
18
retiring any indebtedness which was originally incurred to purchase or carry
Margin Stock or for any other purpose which might cause any Loan to be a
"purpose credit" within the meaning of Regulation G.
4.11. INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
4.12. CHIEF EXECUTIVE OFFICE. The chief executive office of Borrower is
located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
4.13. COLLATERAL SECURITY. (a) Except for the Liens granted to Lender
pursuant to this Agreement and Liens referred to in Section 3.11, Borrower owns
and will own each item which it pledges on the date hereof or may hereinafter
pledge as Collateral, free and clear of any and all Liens. No security
agreement, financing statement or other public notice similar in effect with
respect to all or any part of the Collateral is or will be on file or of record
in any public office, except such as have been or may hereinafter be filed in
favor of Lender pursuant to this Agreement, and except in connection with the
security interest referred to in Section 3.11.
(b) This Agreement is effective to create, as collateral security for
the Obligations and the Other RF Obligations, valid and enforceable Liens on the
Collateral in favor of Lender.
(c) Upon filing of the financing statement(s) delivered to Lender by
Borrower on the Closing Date with the Secretary of State of the State of New
Jersey (which financing statement(s) is in proper form for filing in such
jurisdiction) and the delivery to, and continuing possession by, Lender or its
nominee of the Pledged Securities, the Liens created pursuant to this Agreement
will constitute a first priority perfected security interest in the Collateral
in favor of Lender (except to the extent the Collateral may be deemed to
represent funds on deposit in the Spread Account as referred to in Section
3.11), which Liens will be prior to all other Liens of all other Persons and
which Liens are enforceable as such as against all other Persons.
4.14. OWNERSHIP OF PROPERTIES. Borrower has good and marketable
title to any and all of its properties and assets free and clear of Liens,
except as contemplated by this Agreement and the Basic Documents, and except
for Liens as may have been or may be created on property other than the
Collateral in connection with past or future securitizations of receivables.
4.15. FULL DISCLOSURE. No representation or warranty made by or on
behalf of Borrower or Guarantor contained in this Agreement or the Guarantee and
no written information or information in any certificate, financial statement or
report furnished or to be furnished by or on behalf of Borrower or Guarantor
hereunder or thereunder or in connection with the transactions contemplated
hereby or thereby contains or will contain an untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make the
statements herein or therein contained, in light of the circumstances in which
made, not misleading.
19
4.16. ERISA. Set forth on Schedule 4.16 hereto is a list of all Plans,
if any, maintained by Borrower or Guarantor or any of their respective
subsidiaries (as applicable). Except as may be set forth on such schedule,
neither Borrower nor Guarantor nor any of their respective subsidiaries (as
applicable) maintains any Plans, and each of Borrower and Guarantor agrees to
notify Lender in advance of forming any Plans. Neither Borrower nor Guarantor
nor any Commonly Controlled Entity has any obligations or liabilities with
respect to any employee pension benefit plans or Multiemployer Plans, nor have
any such Persons had any obligations or liabilities with respect to any such
Plans during the five-year period prior to the date this representation is made
or deemed made. Each of Borrower and Guarantor will give notice if at any time
it or any Commonly Controlled Entity has any obligations or liabilities with
respect to any employee pension benefit plan or Multiemployer Plan. All Plans
maintained by Borrower or Guarantor or any Commonly Controlled Entity are in
substantial compliance with all applicable laws (including ERISA). Neither
Borrower nor Guarantor is an employer under any Multiemployer Plan.
4.17. BASIC DOCUMENTS. Each of the representations and warranties made
by it in the Basic Documents to which it is a party is true and correct;
PROVIDED that this representation shall not be deemed to have been breached if
(i) Borrower or Guarantor, as the case may be, shall have breached a
representation or warranty contained in any Basic Document but such party shall
have cured such breach within the applicable cure period, if any, set forth in
the applicable Basic Document or (ii) Guarantor shall have breached any
representation set forth in Section 3.2(b) of the Purchase Agreement, so long as
(x) Guarantor complies with its obligations under Section 6.2 of the Purchase
Agreement with respect to such breach or (y) AMC complies with its obligations
under the AMC Guarantee in connection with Guarantor's obligations under Section
6.2 of the Purchase Agreement with respect to such breach.
5. Affirmative Covenants.
Each of Borrower and Guarantor (where indicated) hereby covenants to
Lender that, until the payment in full and final performance of all of
Borrower's and Guarantor's obligations to Lender under this Agreement, the
Promissory Note and the Guarantee, it shall perform the following obligations:
5.1. NOTICE. (a) Each of Borrower and Guarantor shall promptly give
notice to Lender and the Certificate Insurer of the occurrence of (i) any
Default, Event of Default or Other RF Event of Default, specifying the event and
the action which Borrower proposes to take with respect thereto, (ii) any event
or occurrence which will or could reasonably be expected to adversely affect the
collectibility of any of the Receivables or the ability of Guarantor to service
such Receivables or the ability of Borrower or Guarantor to perform its
respective obligations under any related documents or (iii) any other event or
occurrence which individually or in the aggregate could reasonably be expected
to materially and adversely affect Borrower's or Guarantor's financial
condition, operations, business or prospects. Each of Borrower and Guarantor
agrees to provide contemporaneously to AMC a copy of any notice provided to
Lender pursuant to the preceding sentence; PROVIDED that failure of Borrower or
Guarantor to
20
deliver such notice to AMC shall not in any way affect (i) the obligations or
liabilities of AMC under the AMC Guarantee, (ii) any rights of Lender with
respect to AMC or (iii) any other provisions or any interpretation of this
Agreement, the Guarantee, the AMC Guarantee or any document related thereto.
(b) Borrower shall provide Lender promptly with copies of all notices
which it is required to deliver to the Trust Collateral Agent, the Owner Trustee
and/or the Indenture Trustee pursuant to the terms of the Sale and Servicing
Agreement, the Trust Agreement and/or the Indenture, as applicable.
5.2. TAXES. Each of Borrower and Guarantor shall pay and discharge all
taxes and governmental charges upon it or against any of its properties or
assets or its income prior to the date after which penalties attach for failure
to pay, except (a) to the extent that Borrower or Guarantor shall be contesting
in good faith in appropriate proceedings its obligation to pay such taxes or
charges, adequate reserves having been set aside for the payment thereof, or (b)
with respect to such taxes and charges which are not material in either nature
or amount such that any failure to pay or discharge them, and any resulting
penalties, either in any one instance or in the aggregate, would not materially
and adversely affect the financial condition, operations, business or prospects
of Borrower or Guarantor, respectively.
5.3. SEPARATE EXISTENCE: NO COMMINGLING. Borrower shall maintain
separate books and records and accounts in order to maintain a separate and
distinct corporate identity from any other entity, including Guarantor and AMC
and any of Borrower's other affiliates. Borrower shall not commingle any of its
funds with the funds of any other such entity.
5.4. FINANCING STATEMENTS. At the request of Lender, each of Borrower
and Guarantor shall execute such financing statements as Lender determines may
be required by law to perfect, maintain and protect the interest of Lender in
the Collateral and in the Proceeds thereof.
5.5. BOOKS AND RECORDS; OTHER INFORMATION. (a) Borrower shall maintain
accurate and complete books and records with respect to the Collateral and
Borrower's business. All accounting books and records shall be maintained in
accordance with generally accepted accounting principles consistently applied.
(b) Only to the extent reasonably necessary to protect Lender's
interest hereunder, each of Borrower and Guarantor shall, and shall (as
applicable) cause each of its respective subsidiaries to, permit any
representative of Lender to visit and inspect any of the properties of Borrower
or Guarantor to examine the books and records of Borrower or Guarantor and to
make copies and take extracts therefrom, and to discuss the business,
operations, properties, condition (financial or otherwise) or prospects of
Borrower or Guarantor and each such subsidiary or any of the Collateral with the
officers and independent public accountants thereof and as often as Lender may
reasonably request, and so long as no Default or Event of Default shall have
occurred and be continuing, all at such reasonable times during normal business
hours upon reasonable notice. In connection with the matters described in this
Section 5.5(b), Lender shall not at any time use or disclose to any Person,
except to any professional adviser who needs to
21
know such information in connection with the transactions contemplated
hereby, or except in connection with any litigation or arbitral proceedings
commenced by or against Lender or any of its affiliates, any information that
may be within or may come to its or their knowledge if such information is of
a type that would generally be expected to be held as confidential; PROVIDED
that the foregoing shall not apply to the extent that such information was
(i) previously known by Lender from sources other than Borrower or Guarantor
or their respective directors, officers or agents, (ii) in the public domain
through no fault of Lender, (iii) lawfully acquired by Lender on a
non-confidential basis from other sources who are not known by Lender to be
bound by a confidentiality agreement with Borrower or Guarantor or (iv)
required to be disclosed by judicial or administrative process or by any
other Requirement of Law.
(c) Each of Borrower and Guarantor shall provide to Lender all
information regarding their respective operations and practices as Lender shall
reasonably request in writing.
5.6. PAYMENT OF FEES AND EXPENSES. Each of Borrower and Guarantor shall
pay to Lender, on demand, any and all fees, costs or expenses which Lender pays
to a bank or other similar institution arising out of or in connection with the
return of payments deposited from Borrower or Guarantor, as applicable, for
collection by Lender.
5.7. CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT. Each of
Borrower and Guarantor shall continue in business in a prudent, reasonable and
lawful manner with all licenses, permits, and qualifications necessary to
perform its respective obligations under this Agreement and the Guarantee,
except where failure to do so could not reasonably be expected to materially and
adversely affect such performance or the enforceability of Lender's security
interest in the Collateral.
5.8. FINANCIAL STATEMENTS AND ACCESS TO RECORDS. Each of Borrower and
Guarantor shall provide Lender with quarterly unaudited financial statements
within sixty (60) days of the end of each of Guarantor's and Borrower's first
three fiscal quarters, and Guarantor will provide Lender with audited annual
financial statements within one hundred twenty (120) days of each of Guarantor's
and Borrower's fiscal year-end audited by a nationally recognized independent
certified public accounting firm. Upon request of Lender, each of Borrower and
Guarantor shall provide Lender with unaudited monthly financial statements. Each
of Borrower and Guarantor shall deliver to Lender with each financial statement
a certificate by each of Borrower's and Guarantor's chief financial officer,
certifying that (i) such financial statements are complete and correct in all
material respects, (ii) Borrower is in compliance with the covenants set forth
in Sections 5 and 6 of this Agreement and (iii) that, except as noted in such
certificate, such chief financial officer has no knowledge of any Default or
Event of Default or of any event that has occurred and is continuing which with
notice or lapse of time or both would become a Default or Event of Default.
5.9. FINANCIAL CONDITION. Guarantor shall maintain on a consolidated
basis a net worth calculated in accordance with GAAP (including advances and
loans from AMC or its affiliates
22
(other than subsidiaries of Guarantor) to Guarantor and subordinated debt
with maturities exceeding three years) of at least $5 million.
5.10. LITIGATION MATTERS. Borrower and/or Guarantor shall notify Lender
in writing, promptly upon its learning thereof, of any litigation, arbitration
or administrative proceeding which may reasonably be expected to materially and
adversely affect the operations, financial condition or business of Borrower or
Guarantor or Borrower's or Guarantor's ability to perform under this Agreement
or involve Lender's security interest in the Collateral or other rights under
this Agreement, the Promissory Note or the Guarantee.
5.11. FULFILLMENT OF OBLIGATIONS. Each of Borrower and Guarantor shall
pay and perform, as and when due, all of its obligations of whatever nature,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with generally
accepted accounting principles with respect thereto have been provided on the
books of Borrower or Guarantor, as the case may be, and except to the extent
that the failure to do so could not individually or in the aggregate reasonably
be expected to materially and adversely affect the financial condition,
operations, business or prospects of Borrower or Guarantor, as the case may be.
5.12. NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE. Borrower will provide
Lender with not less than 30 days prior written notice of any change in the
chief executive office of Borrower to permit Lender to make any additional
filings necessary to continue Lender's perfected security interest in the
Collateral.
5.13. COMPLIANCE WITH LAWS, ETC. Each of Borrower and Guarantor shall,
and shall cause each of its respective subsidiaries (as applicable) to, comply
(i) in all material respects with all Requirements of Law and any change therein
or in the application, administration or interpretation thereof (including,
without limitation any request, directive, guideline or policy, whether or not
having the force of law) by any Governmental Authority charged with the
administration or interpretation thereof; and (ii) with all indentures,
mortgages, deeds of trust, agreements, or other instruments or contractual
obligations to which it is a party, including without limitation, each Basic
Document to which it is a party, or by which it or any of its properties may be
bound or affected, or which may affect the Receivables, if the failure to comply
therewith could, individually or in the aggregate, reasonably be expected to
materially and adversely affect the financial condition, operations, business or
prospects of Borrower or Guarantor, as the case may be.
5.14. YEAR 2000 COMPLIANCE. Guarantor shall demonstrate on or prior to
September 30, 1999, to Lender's satisfaction (which shall be in Lender's sole
discretion), that the Guarantor's computer systems are Year 2000 Compliant.
"Year 2000 Compliant" means generally that neither performance nor functionality
of any computer hardware or software is affected by dates prior to, during, or
after the Year 2000. In particular: (a) no value for current date will cause any
interruption in operation; (b) date based functionality must behave consistently
for dates prior to, during and after the Year 2000; (c) in all interfaces and
data storage, the century in any date must
23
be specified either explicitly or by unambiguous algorithms or interferencing
rules; and (d) Year 2000 must be recognized as a leap year.
6. Negative Covenants.
Each of Borrower and Guarantor (where indicated) hereby covenants to
Lender that, until the payment in full and final performance of all of
Borrower's and Guarantor's respective obligations to Lender under this
Agreement, the Promissory Note and the Guarantee, without Lender's prior written
consent (which shall not be unreasonably withheld), it shall be subject to the
following restrictions:
6.1. ADVERSE TRANSACTIONS. Neither Borrower nor Guarantor shall enter
into any transaction (including without limitation any Series Supplement (as
such term is defined in the Spread Account Agreement)) which adversely affects
the Collateral or Lender's rights under this Agreement, the Promissory Note or
the Guarantee.
6.2. GUARANTIES. Neither Borrower nor Guarantor shall guarantee or
otherwise in any way become liable with respect to the obligations or
liabilities, of any other Person if any such action would constitute a breach of
the covenant contained in Section 5.9 hereof, except (a) for the obligations of
affiliates of Borrower or Guarantor to Lender and (b) by customary endorsement
of instruments or items of payment for deposit to the general account of
Borrower or Guarantor or for delivery to Lender.
6.3. CORPORATE DOCUMENTS. Borrower will not amend or modify any
provision of its Certificate of Incorporation or by-laws without Lender's prior
written consent.
6.4. INVESTMENTS; DIVIDENDS. The covenants set forth in this Section
6.4 shall be effective unless (i) the Advance Rate shall be less than 50%
(provided that until the first Calculation Date on which the Advance Rate
exceeds the Maintenance Advance Rate, the Present Value of the Collateral used
to calculate such Advance Rate shall be the Present Value of the Collateral as
of the close of business on the Closing Date) or (ii) the net worth of AMC
calculated in accordance with generally accepted accounting principles shall be
greater than $75 million (and such covenants shall be reinstated if neither of
the foregoing conditions remains satisfied):
(a) INVESTMENTS. Neither Borrower nor Guarantor shall make any
investment in any Person through the direct or indirect holding of securities or
otherwise, other than in the ordinary course of business or in connection with
the future securitization of receivables.
(b) DIVIDENDS. Guarantor shall not declare or pay any dividends.
6.5. LOANS; CAPITAL STRUCTURE; AFFILIATES. The covenants set forth in
this Section 6.5 shall become effective (i) upon written notice from Lender to
Borrower and Guarantor that Lender has determined a material adverse change as
described in Section 8.1(n) hereof has
24
occurred or (ii) in the event that AMC shall have breached the net worth
covenant set forth in Section 10(g) of the AMC Guarantee:
(a) LOANS. Except for routine and customary salary advances or loans to
employees in connection with relocation expenses consistent with past practice
of AMC and its affiliates, neither Borrower nor Guarantor shall make any
unsecured loans or other advances of money to officers, directors, employees,
stockholders, or affiliates in excess of $50,000 in the aggregate. Other than
the indebtedness under this Agreement and the Promissory Note, neither Borrower
nor Guarantor shall incur any long term or working capital debt (i) if such
action would constitute a breach of the covenant contained in Section 5.9 hereof
or (ii) secured by Collateral.
(b) CHANGES IN CAPITAL STRUCTURE OR BUSINESS OBJECTIVES. Neither
Borrower nor Guarantor shall do any of the following if it will adversely affect
the payment or performance of, or Borrower's and Guarantor's ability to pay
and/or perform, its obligations to Lender with respect to this Agreement, the
Promissory Note and the Guarantee: (i) redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's or Guarantor's stock, except
in connection with employment or similar agreements with officers and directors
of Borrower or Guarantor consistent with past practice, or (ii) make any change
in Borrower's or Guarantor's capital structure, or (iii) make any material
change in any of its business objectives, purposes or operations which could
reasonably be expected to adversely affect the payment or performance of, or
Borrower's and Guarantor's ability to pay and/or perform, its obligations to
Lender with respect to this Agreement, the Promissory Note or the Guarantee.
(c) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor Guarantor shall
enter into, or be a party to, any transaction with any affiliate or stockholder
of Borrower or Guarantor, except, consistent with Borrower's or Guarantor's
practice before entering into this Agreement, in the ordinary course of, and
pursuant to the reasonable requirements of, Borrower's and Guarantor's business
and upon fair and reasonable terms (which Borrower agrees to discuss with Lender
from time to time upon Lender's request) which are not materially less favorable
than would be obtained in a comparable arm's length transaction with a person or
entity not an affiliate or stockholder of Borrower or Guarantor.
6.6. LIENS. (a) Borrower shall not grant or otherwise create any Lien
on any of its properties except to Lender hereunder and to Lender under any
Other Residual Financing Agreement.
(b) Neither Borrower nor Guarantor shall grant or otherwise permit any
Liens on the capital stock of Borrower, except to Financial Security Assurance
Inc. under the Stock Pledge and Collateral Agency Agreement dated as of March 1,
1997 among Guarantor, as pledgor, Financial Security Assurance Inc., as pledgee,
and Chase Bank of Texas, National Association , as collateral agent, as such
agreement may be amended, supplemented or otherwise modified from time to time.
6.7. VSI POLICIES. Borrower has obtained each VSI Policy and as of the
Cutoff Date, one or more of such policies is in full force and effect with
respect to each Receivable. Borrower
25
shall not (a) replace any such VSI Policy with a substitute insurance policy
unless (i) the insurer issuing such replacement policy has a rating by A.M.
Best of "A-" or higher and (ii) such replacement shall not adversely affect
the Collateral or Lender's rights under this Agreement, the Promissory Note
or the Guaranty, and (b) except as provided in clause (a) above, Borrower
will not cancel or otherwise terminate any VSI Policy (or any replacement
insurance policy) unless Lender has given its prior written consent to such
cancellation or termination.
6.8. CUSTODIAN. Guarantor shall not, pursuant to Section 10.8(e) of the
Sale and Servicing Agreement, assume the duties of Custodian without having
obtained the prior written consent of Lender. 7. Conditions Precedent.
7. Conditions Precedent.
7.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of Lender to
extend to Borrower the Loan as described in this Agreement is subject to
satisfaction of the following conditions on or prior to the Closing Date:
(a) The receipt by Lender, concurrently with the signing of this
Agreement and, with respect to paragraph (v) only, together with the financial
statements to be delivered pursuant to this Agreement, in form and substance
satisfactory to Lender, of the following:
(i) Evidence of the authority of the persons executing this Agreement,
the Promissory Note, the Guarantee and the AMC Guarantee and any other documents
contemplated herein and therein, together with specimen signatures of such
persons; and
(ii) A certified copy of Borrower's, Guarantor's and AMC's Certificate
of Incorporation and By-Laws and a good standing certificate from the State of
Delaware and/or of California, as applicable; and
(iii) Certified copies of all necessary resolutions of the Board of
Directors of Borrower, Guarantor and AMC authorizing the execution and delivery
and performance under this Agreement, the Promissory Note, the Guarantee and the
AMC Guarantee, as applicable; and
(iv) The duly executed, original Promissory Note; and
(v) A certificate, as of the date of signing of the Agreement, by the
President, a Vice President or the Treasurer of each of Borrower, Guarantor and
AMC certifying that the representations and warranties contained in Section 4
hereof or in Section 9 of the AMC Guarantee, as the case may be, are true and
correct, that each of Borrower, Guarantor and AMC, as the case may be, is in
compliance with the covenants set forth in Sections 5 and 6 hereof or in Section
10 of the AMC Guarantee, as the case may be, and that no Default, Event of
Default or Other RF Event of Default has occurred and is continuing; and
(vi) The duly executed, original of the Guarantee and the AMC
Guarantee; and
26
(vii) The following opinions of counsel in form and substance
satisfactory to Lender's counsel:
(A) Standard corporate opinions of Borrower,
Guarantor and AMC regarding due authorization, execution,
consents, material litigation and noncontravention
substantially in the form attached hereto as EXHIBIT E;
(B) Enforceability of this Agreement, the Promissory
Note, Guarantee and the AMC Guarantee;
(C) Lien, priority and perfection opinions relating
to the pledge of Collateral pledged on the date hereof by
Borrower to Lender;
(D) Non-consolidation opinions as between Borrower,
Guarantor and AMC; and
(E) Such other opinions as Lender's counsel shall
reasonably request; and
(viii) A notice to the Trust Collateral Agent signed by Borrower to the
effect set forth in Section 2.7(b); and
(ix) Such other documents, certificates or financial or other
information as Lender may reasonably request.
(b) The consummation of the Securitization Transaction.
(c) The Certificate shall have been delivered to Lender or its agent,
together with appropriate instruments of transfer duly endorsed in blank, and
together with a Medallion Guarantee with respect to the signature on the
transfer power accompanying the Certificate delivered to Lender or its agent on
the Closing Date.
(d) Financing statements on Form UCC-1 naming Borrower as "debtor" and
Lender as "secured party" and describing the Collateral as "collateral"
thereunder, shall have been delivered to Lender in proper form for filing in
each jurisdiction in which it is necessary to file to perfect a security
interest therein.
8. Events of Default.
8.1. EVENTS OF DEFAULT. Each of the following events and occurrences
shall constitute an Event of Default under this Agreement if not cured within
three Business Days of their occurrence unless the context of the provision
indicates otherwise (provided that the events described in paragraphs (f), (g),
(h), (i), (j) and (m) shall have no cure period):
27
(a) Payment by or on behalf of Borrower shall fail to be made to Lender
when due of principal or interest on the Loan or of any other Obligation.
(b) Borrower fails to perform or observe any material provision of
Section 6 of this Agreement, or Guarantor fails to perform or observe any
material provision of the Guarantee or AMC fails to perform or observe any
material provision of the AMC Guarantee (such materiality in each case, as
determined by Lender) and such failure to perform or observe continues
unremedied for 30 days following the earlier to occur of (i) a Responsible
Officer having actual knowledge of such failure to perform or observe and (ii)
written notice of such failure to perform or observe from Lender to Borrower,
Guarantor or AMC, as the case may be.
(c) Borrower shall fail to perform or observe any other provision of
this Agreement (other than as referred to in Sections 8.1(a) or 8.1(b)) or the
Promissory Note, or Guarantor shall fail to perform or observe any provision of
the Guarantee (other than as referred to in Sections 8.1(a) or 8.1(b)), or AMC
shall fail to perform or observe any material provision of the AMC Guarantee
(other than as referred to in Sections 8.1(a) or 8.1(b)) within 30 days (or, in
the case of any failure to perform or observe the provisions of Section 5.14, 5
days) following the earlier of (i) a Responsible Officer having actual knowledge
of such failure to perform or observe or (ii) written notice thereof from
Lender; PROVIDED that any such failure to perform or observe Section 5.11 hereof
caused solely by an event described in Section 8.1(d) shall constitute an Event
of Default only as provided in Section 8.1(d).
(d) Borrower, Guarantor or AMC shall fail to pay any money due under
any other agreement, note, indenture or instrument evidencing, securing,
guaranteeing or otherwise relating to indebtedness of Borrower, Guarantor or AMC
for borrowed money, which failure to pay constitutes an event of default under
any such agreement or instrument or constitutes a default thereunder and such
default shall continue beyond the grace period (not to exceed one Business Day),
if any, therein specified and, in connection with such failure, the maturity of
such indebtedness is accelerated; or Borrower, Guarantor or AMC shall default in
the observance or performance of any other covenant or condition in any such
agreement or instrument and such default shall continue beyond the grace period,
if any, therein specified and, in connection with such default, the maturity of
such indebtedness is accelerated; or any other event shall occur or condition
shall exist if the effect of such event or condition is to accelerate the
maturity of such indebtedness; or any such indebtedness shall be declared due
and payable prior to the stated maturity thereof; other than, in each case,
indebtedness with respect to which the failure to pay could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the financial condition, operations, business or prospects of Borrower,
Guarantor or AMC, as the case may be.
(e) Borrower, Guarantor or AMC receives notice, or a Responsible
Officer has knowledge, of a breach by Borrower, Guarantor or AMC of any material
representation, warranty or obligation contained in this Agreement, the
Promissory Note, the Guarantee, the AMC Guarantee, the Basic Documents or in any
other agreement with Lender; PROVIDED that (i) a breach by Borrower, Guarantor
or AMC of a representation or warranty in a Basic Document
28
shall not constitute an Event of Default hereunder if such party shall have
cured such breach within the applicable cure period, if any, set forth in
such Basic Document and (ii) a breach by Guarantor of the representations and
warranties set forth in Section 3.2(b) of the Purchase Agreement shall not
constitute an Event of Default hereunder so long as Guarantor complies with
its obligations under Section 6.2 of the Purchase Agreement with respect to
such breach; PROVIDED, FURTHER, that any such breach of Section 5.11 hereof
caused solely by an event described in Section 8.1(d) shall constitute an
Event of Default only as provided in Section 8.1(d).
(f) The Collateral or any other assets of Borrower, Guarantor or AMC
are attached, seized, levied upon or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian or assignee for
the benefit of Borrower, Guarantor or AMC and the same is not dissolved or
dismissed within sixty (60) days thereafter except, in the case of Guarantor or
AMC, where any such actions or events would not either individually or in the
aggregate materially and adversely affect the financial condition, operations,
business or prospects of Guarantor or AMC, as the case may be; an application is
made by any Person other than Borrower, Guarantor or AMC for the appointment of
a receiver, trustee, or custodian for the Collateral or a material portion of
the assets of Borrower, Guarantor or AMC and the same is not dismissed within
sixty (60) days after the application thereof, or Borrower, Guarantor or AMC
shall have concealed, removed or permitted to be concealed or removed, in the
case of Borrower, any part, and in the case of Guarantor or AMC, any material
portion, of its property with intent to hinder, delay or defraud its creditors
or made or suffered a transfer of any of its property which is fraudulent under
any bankruptcy, fraudulent conveyance or other similar law.
(g) An application is made by Borrower, Guarantor or AMC for the
appointment of a receiver, trustee or custodian for the Collateral or any other
assets of Borrower, Guarantor or AMC; a petition under any section or chapter of
the Bankruptcy Code or federal or state law or regulation shall be filed by
Borrower, Guarantor or AMC, or Borrower, Guarantor or AMC shall make an
assignment for the benefit of its creditors, or any case or proceeding shall be
filed by Borrower, Guarantor or AMC for its dissolution, liquidation, or
termination, by Borrower, Guarantor or AMC, or Borrower, Guarantor or AMC ceases
to conduct its business.
(h) Borrower, Guarantor or AMC is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of its
business affairs, or a petition under any section or chapter of the Bankruptcy
Code or any similar federal or state law or regulation is filed against
Borrower, Guarantor or AMC, or any case or proceeding is filed against Borrower,
Guarantor or AMC, for its dissolution or liquidation, and such injunction,
restraint, petition, case or proceeding is not dismissed within sixty (60) days
after the entry of filing thereof.
(i) A notice of lien, levy or assessment is filed of record with
respect to all or any assets of Borrower, Guarantor or AMC by the United States,
or any department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency and it is not released within sixty (60)
days after the filing and is material to the financial position of the
respective entity, or if any taxes or debts become a lien or encumbrance upon
the Collateral
29
or any other affiliate's assets, and the same is not released within sixty
(60) days after the same becomes a lien or encumbrance, except to the extent
that such taxes or debts are being contested in good faith in appropriate
proceedings, adequate reserves have been set aside for the payment thereof
and notice of such proceedings and of the actions being taken in respect
thereof have been provided to Lender.
(j) Borrower, Guarantor or AMC becomes insolvent or admits in writing
to its inability to pay its debts as they mature.
(k) LBAC shall at any time resign, or be terminated, as a servicer
under any securitization.
(l) Lender shall for any reason cease to have a first priority
perfected security interest in the Collateral free and clear of all Liens, other
than the Liens granted to Lender hereunder; PROVIDED that the Borrower shall
have five days after Borrower obtains actual knowledge of such condition to cure
such condition.
(m) The Guarantee or the AMC Guarantee shall cease to be in full force
and effect or the Guarantor or AMC or an officer or authorized representative
acting on its behalf shall so assert.
(n) Lender, in its good faith judgment, has reasonable cause to believe
that there has been a material adverse change in (i) the Collateral, (ii) in
Lender's rights under this Agreement, the Promissory Note, the Guarantee or the
AMC Guarantee, or (iii) in the business, operations, prospects or condition
(financial or otherwise) of Borrower, Guarantor or AMC (which, in the case of
this clause (iii), has not been cured within three Business Days following
written notice thereof from the Lender); PROVIDED that Lender, in its
good faith judgement, has reasonable cause to believe that as a result of such
event (x) Borrower may be unable to fulfill its obligations hereunder (y)
Guarantor may be unable to fulfill its obligations under the Guarantee or (z)
AMC may be unable to fulfill its obligations under the AMC Guarantee.
(o) Borrower shall enter into a Series Supplement pursuant to the
Spread Account Agreement relating to or otherwise affecting the collateral
securing this Agreement and/or any Other Residual Financing Agreement without
having obtained the prior written consent of Lender.
8.2. REMEDIES OF DEFAULT. (a) If not cured within the cure period, if
any, provided within the relevant provision, then upon the continuance of such
Event of Default Lender may, by notice to Borrower (which notice shall be deemed
given automatically upon occurrence of an Event of Default referred to in
paragraph (f), (g), (h), (i) or (j)), declare immediately due and payable all
principal, interest and other Obligations payable hereunder and under the
Promissory Note by Borrower then due and payable that would otherwise be due
after the date specified in the notice (or the date such notice is deemed
given), whereupon all those amounts shall become immediately due and payable,
all without further diligence, presentment, demand of payment, protest or notice
of any kind, all of which are expressly waived by Borrower. If any Event of
30
Default shall occur and be continuing, Lender may exercise all rights and
remedies of a secured party under the Code, and, to the extent permitted by law,
all other rights and remedies granted to Lender in this Agreement, the Guarantee
and the AMC Guarantee and in any other instrument or agreement securing,
evidencing or relating to the Obligations. Without limiting the generality of
the foregoing, if an Event of Default or Other RF Event of Default shall occur
and be continuing Lender may sell the Collateral in a commercially reasonable
manner as determined by Lender (subject to the limitations set forth in the
Trust Agreement), instituting suit in equity or instituting other appropriate
proceedings, whether for the specific performance of any agreement contained
herein, or for an injunction against a violation of any of the terms hereof, or
in aid of the exercise of any power granted hereby or by law. If Lender opts to
sell or otherwise dispose of the Collateral as one of its remedies upon an Event
of Default or Other RF Event of Default, Borrower (subject to Section 2.10) and
Guarantor shall remain liable for any remaining deficiency upon applying the
proceeds of such sale or other disposition against any and all Obligations and
Other RF Obligations, including, without limitation, the reasonable fees and
disbursements of any attorneys employed by Lender to collect such deficiency.
(b) (i) Without limitation to any of the provisions or remedies
set forth in Section 8.2(a), if any Event of Default shall have occurred and be
continuing, Borrower may, with the consent of Lender in Lender's sole
discretion, (i) make a principal payment on the Loans in such amount as Lender
shall specify or (ii) pledge additional Collateral having such value, as
determined by Lender in its sole discretion, as Lender shall specify. If Lender
consents to Borrower's taking such action as is described in this Section 8.2(b)
upon an Event of Default, Borrower (subject to Section 2.10) and Guarantor shall
remain liable for any remaining deficiency between the amount of the Obligations
and the amount of the principal payment or pledge of additional Collateral made
pursuant hereto, and under no circumstances shall Lender's consent to such
action be construed as a waiver of such deficiency or a modification of the
Obligations.
(ii) In the event that Borrower shall hereinafter pledge
any Collateral in addition to the Collateral pledged to Lender on the date
hereof, Borrower shall, concurrently with such pledge, deliver to Lender an
opinion of counsel in form and substance reasonably satisfactory to Lender
regarding priority, perfection and the absence of Liens in respect of such
Collateral.
(c) Notwithstanding anything in Section 6.5 to the contrary, it is
expressly understood and agreed that Lender shall have sole discretion in
determining whether to enforce the covenants set forth in Section 6.5 or
immediately to pursue the remedies set forth in this Section 8.2 upon the
occurrence of a material adverse change as described in Section 8.1(n). Under no
circumstances shall Lender's decision to enforce the covenants set forth in
Section 6.5 following such a material adverse change be construed as a waiver of
the Event of Default described in Section 8.1(n), or otherwise in any way
modify, limit, delay or impair any rights which Lender would otherwise have
pursuant to this Section 8.2.
31
(d) Lender shall use its reasonable efforts to notify Guarantor and AMC
upon the occurrence of an Event of Default; PROVIDED that the omission so to
notify shall not relieve Guarantor or AMC from any liability which it may have
to Lender (or extend the period of time within which performance is required by
Guarantor or AMC) in connection with such Event of Default or from any of its
respective obligations under the Guarantee or the AMC Guarantee, as the case may
be.
9. Miscellaneous.
9.1. PAYMENT OF EXPENSES, INDEMNITY, ETC. Each of Borrower and
Guarantor jointly and severally agree to:
(i) pay or reimburse Lender on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, modification or supplement to,
or any waiver under, this Agreement or the Guarantee and any other document
prepared in connection therewith, and the consummation and administration of the
transactions contemplated thereby, including without limitation the reasonable
fees and disbursements of counsel to Lender; PROVIDED that, neither the Borrower
nor Guarantor shall be obligated to reimburse Lender for the foregoing costs and
expenses of counsel unless such costs and expenses are incurred in connection
with:
(A) the advice of counsel with respect to (1) the performance
of Borrower or Guarantor and/or any of their respective Affiliates
under this Agreement, the Guarantee or any other document prepared in
connection therewith or (2) (x) the rights of Lender under this
Agreement, the Guarantee or any other document prepared in connection
therewith and (y) Lender's rights relating to the Collateral
(including, without limitation, its security interest therein), in each
case in this clause (2) in connection with any change in the condition
(financial or otherwise), operations, business or prospects of the
Borrower or any of its Affiliates;
(B) any waiver in respect of this Agreement, the Guarantee or
any other document prepared in connection therewith (whether or not
executed or otherwise granted as provided therein);
(C) any amendment, supplement or modification in respect of
this Agreement, the Guarantee or any other document prepared in
connection therewith that is executed by the parties thereto as
required by this Agreement or the Guarantee or any other document
prepared in connection therewith, as the case may be; or
(D) any proposed amendment, supplement or modification in
respect of this Agreement, the Guarantee or any other document prepared
in connection therewith that is not executed by the parties thereto as
32
required by such loan document if Borrower proposed or requested such
amendment, supplement or modification;
(ii) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements of counsel to
Lender, in connection with the occurrence or continuance of a Default or Event
of Default and the enforcement, collection, protection or preservation (whether
through negotiations, legal proceedings or otherwise) of this Agreement or the
Guarantee, the Collateral, any Obligation or any right, remedy, power or
privilege of Lender hereunder or under the Guarantee;
(iii) pay and hold Lender harmless from and against any and all present
and future stamp, excise, recording or other similar taxes or fees payable in
connection with the execution, delivery, recording and filing of this Agreement
or the Guarantee and hold Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes or fees; and
(iv) indemnify Lender and its affiliates and each of their respective
directors, officers, employees and agents and hold each of them harmless from
and against, any and all liabilities, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements, including without
limitation the reasonable fees and disbursement of counsel to Lender and such
other parties, incurred by any of them in connection with, arising out of or in
any way relating to any investigation, claim, litigation or other proceeding,
pending or threatened (whether or not any of them is designated a party
thereto), in connection with, arising out of or in any way related to this
Agreement or the Guarantee or any of the transactions contemplated herein or
therein or any use of the proceeds of the Loan by Borrower; PROVIDED that Lender
shall not be entitled to any indemnification for any of the foregoing resulting
from its gross negligence or willful misconduct.
If and to the extent that the indemnity obligations of Borrower under this
Section 9.1 may be unenforceable for any reason, Borrower hereby agree to make
the maximum contribution to the payment and satisfaction of each of such
indemnity obligations which is permissible under applicable law.
9.2. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder Lender is hereby authorized at any
time and from time to time, without notice to Borrower, Guarantor or to any
other person or entity, any such notice being hereby expressly waived, to
set-off against any obligation owing by Lender or any affiliate of Lender to
Borrower or Guarantor, or against any funds or other property of Borrower or
Guarantor held by or otherwise in the possession of Lender or any affiliate of
Lender, the obligations and liabilities of Borrower to Lender under this
Agreement or of Guarantor to Lender under its respective Guarantee, irrespective
of whether or not Lender shall have made any demand hereunder or under the
Guarantee.
33
9.3. AMENDMENTS. No provision of this Agreement may be amended,
supplemented, modified or waived unless the same shall be in writing signed by
Lender, Borrower and Guarantor and, solely in the case of amendments,
supplements, modifications or waivers to Sections 2.10 and 9.5 hereof, without
the prior written consent of the Certificate Insurer thereto.
9.4. WAIVER; CUMULATIVE RIGHTS. No failure on the part of Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or the Promissory Note shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement, the Promissory Note or the
Guarantee preclude any other or further exercise thereof or the exercise of any
other right, power, or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
9.5. NONPETITION COVENANT. Lender shall not, prior to the date which is
one year and one day after the termination of each of the Indenture, the Trust
Agreement and the Spread Account Agreement with respect to Borrower, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against Borrower under any Federal or
State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of Borrower or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of Borrower.
9.6. NON-AFFILIATION. Lender hereby agrees that, so long as it has any
interest in the Certificate hereunder, it shall not become an affiliate of
Borrower.
9.7. BINDING EFFECT. This Agreement shall be binding upon and shall be
enforceable by Borrower, Guarantor and Lender and their respective successors
and permitted assigns.
9.8. SURVIVAL. The provisions of Sections 3.13(b), (c) and (d) and 9.1
shall survive the execution and delivery of this Agreement and the payment in
full of the Obligations, and in the case of Section 9.1, the Other RF
Obligations.
9.9. GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY. (A) THIS AGREEMENT
AND THE PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAW OF THE STATE OF
NEW YORK. EACH PARTY HERETO 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 CITY
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE PROMISSORY NOTE, THE GUARANTEE OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY HERETO IN ANY
OTHER JURISDICTION. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
34
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(B) EACH OF BORROWER, LENDER AND GUARANTOR HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(C) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS PERSONALLY DELIVERED OR TRANSMITTED BY REGISTERED MAIL TO THE
ADDRESS SET FORTH FOR NOTICES IN SECTION 9.10; PROVIDED THAT UPON ANY
SUCH SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY
THEREWITH, SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE
TRANSMISSION. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
9.10. NOTICE. (a) Any notice hereunder shall be in writing and shall be
personally delivered, transmitted by postage prepaid registered airmail, by
facsimile, telegram or cable to the parties as follows:
To Lender: Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Asset-Backed Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
--------------
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Borrower: Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
00
Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to Guarantor and AMC as per clause (b) below.
To Guarantor: Long Beach Acceptance Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To AMC: Ameriquest Mortgage Company
0000 Xxxx xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Certificate
Insurer: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department; Re: Long Beach Auto
Receivables Trust 1999-1
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; (000) 000-0000
All notices and other communications shall be deemed to have been duly
given on the date of receipt if delivered personally; the date five (5) calendar
days after posting if transmitted by mail; or in the case of a facsimile,
telegram or cable, at the time sent. Any party may change its address for
purposes hereof by notice to the other.
(b) Lender hereby agrees that it will provide to Guarantor and AMC
copies of all notices it provides to Borrower hereunder.
9.11. SEVERABILITY. If any one or more of the provisions contained in
this Agreement or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired.
36
9.12. COUNTERPARTS. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute a full and original
agreement for all purposes.
9.13. MERGER OR CONSOLIDATION. Any Person (i) into which Borrower or
Guarantor may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Borrower or Guarantor is a party or (iii) succeeding to
all or substantially all of the business of Borrower or Guarantor, PROVIDED that
in any of the foregoing cases such Person shall execute an agreement of
assumption to perform every obligation of Borrower or Guarantor, as the case may
be, under this Agreement, and whether or not such assumption agreement is
executed, shall be the successor to Borrower or Guarantor hereunder (without
relieving Borrower or Guarantor of its responsibilities hereunder, if it
survives such merger or consolidation) without the execution or filing of any
document or any further act by any of the parties to this Agreement.
9.14. SUBSEQUENT ACTIONS. Each party shall, upon the written request of
the other party from time to time after execution of this Agreement and without
further consideration, execute such documents or take such action as may be
reasonably necessary to carry out the purpose or intention of this Agreement.
9.15. ASSIGNABILITY. The rights and obligations of the parties under
this Agreement shall not be assigned or otherwise transferred, by sale of
participation interests or otherwise, by any party without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except that this Agreement may be assigned without such prior written consent to
any Person who succeeds Borrower or Guarantor, as the case may be, as provided
in Section 9.13.
9.16. CERTAIN REIMBURSEMENTS. (a) Notwithstanding Section 8 of the
Guarantee or anything herein to the contrary, Borrower may on any Remittance
Date reimburse Guarantor for any payments made under the Guarantee, so long as
(i) all amounts owing to Lender on such Remittance Date have been paid, (ii) no
Default or Event of Default shall have occurred and be continuing and (iii) the
Advance Rate shall be less than the then applicable Target Advance Rate.
(provided that until the first Calculation Date on which the Advance Rate
exceeds the Maintenance Advance Rate, (x) the Present Value of the Collateral
used to calculate such Advance Rate shall be the Present Value of the Collateral
as of the close of business on the Closing Date and (y) the Advance Rate used in
the calculation of the Target Advance Rate shall be based on the Present Value
of the Collateral as of the close of business on the Closing Date).
(b) Notwithstanding Section 8 of the AMC Guarantee or anything herein
to the contrary, Borrower and/or Guarantor may on any Remittance Date reimburse
AMC for any payments made under the Guarantee, so long as (i) all amounts owing
to Lender on such Remittance Date have been paid, (ii) no Default or Event of
Default shall have occurred and be continuing and (iii) the Advance Rate shall
be less than the then applicable Target Advance Rate. (provided that until the
first Calculation Date on which the Advance Rate exceeds the Maintenance Advance
Rate, (x) the Present Value of the Collateral used to calculate such Advance
Rate shall be the Present Value of the Collateral as of the close of business on
the
37
Closing Date and (y) the Advance Rate used in the calculation of the Target
Advance Rate shall be based on the Present Value of the Collateral as of the
close of business on the Closing Date).
[Signature Page Follows]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first written
above.
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By:
----------------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE RECEIVABLES CORP., Borrower
By:
----------------------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP., Guarantor
By:
----------------------------------------------
Name:
Title:
39
SCHEDULE 4.16
PLANS
Borrower: None
Guarantor: None
EXHIBIT A
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
PROMISSORY NOTE
August 12, 1999
Amount: U.S. $5,049,482
FOR VALUE RECEIVED, LONG BEACH ACCEPTANCE RECEIVABLES CORP. (the
"BORROWER") unconditionally promises to pay on the Maturity Date (as defined in
the Agreement referred to below) to the order of Greenwich Capital Financial
Products, Inc. (the "LENDER") in Federal or other immediately available funds in
lawful money of the United States the principal sum of FIVE MILLION FORTY-NINE
THOUSAND FOUR HUNDRED EIGHTY-TWO DOLLARS (U.S. $5,049,482) or, if less, the
aggregate unpaid principal amount of the Loan made by Lender to Borrower
pursuant to the Agreement, and to pay interest thereon from the date hereof
until this Promissory Note is repaid in like money at the rates per annum and in
the manner set forth in the Agreement.
The principal of and interest on this Promissory Note shall be payable
in immediately available funds without set-off or counterclaim, in the manner
set forth in the Agreement.
This Promissory Note is issued pursuant to the terms of a Credit and
Security Agreement dated as of August 12, 1999 among Borrower, Lender and Long
Beach Acceptance Corp., as Guarantor (as amended from time to time, the
"AGREEMENT"), and is subject to the terms thereof and is entitled to the
benefits therein provided.
Upon the occurrence of an Event of Default (as defined in the
Agreement), the principal of and accrued interest on this Promissory Note may be
declared due and payable in the manner and with the effect provided in the
Agreement, without presentment, demand, protest or notice of any kind, each of
which is hereby expressly waived by Borrower.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF
NEW YORK.
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By:
---------------------------------------
Name:
Title:
A-1
EXHIBIT B
August 12, 1999
[FORM OF LBAC GUARANTEE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Guarantee by Long Beach Acceptance Corp. of Credit
and Security Agreement Dated as of August 12, 1999
--------------------------------------------------
Ladies and Gentlemen:
1. For value received and in accordance with the terms of the Credit
and Security Agreement, dated as of AUGUST 12, 1999 (the "AGREEMENT"), among
Greenwich Capital Financial Products, Inc., as Lender ("LENDER"), Long Beach
Acceptance Receivables Corp., as Borrower ("BORROWER"), and Long Beach
Acceptance Corp., as Guarantor (the "GUARANTOR"), Guarantor hereby
unconditionally and irrevocably guarantees to Lender, or any successor in
interest of Lender, the due, punctual and complete payment and performance by
Borrower when and as due, whether at the stated maturity, by acceleration, upon
one or more dates set for repayment or prepayment or otherwise of the
Obligations. Lender may make demands under this Guarantee for such amounts and
performance from time to time. Guarantor hereby represents that its obligations
hereunder do and shall rank PARI PASSU with all unsecured and unsubordinated
indebtedness of Guarantor, as applicable. Terms used and not defined herein
shall have the meanings assigned in the Agreement.
2. Payments and performance required under this Guarantee shall be
payable and performed whenever any amount or performance guaranteed hereunder
has not been promptly made to Lender in accordance with the Agreement. When
pursuing its rights and remedies hereunder against Guarantor, Lender may, but
shall be under no obligation to, pursue the rights, remedies, powers and
privileges as it may have against Borrower or any other Person or against any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto. Any failure by Lender to pursue the other rights, remedies,
powers or privileges or to collect any payments from Borrower or any other
Person or to realize upon any collateral security or guarantee or to exercise
any right of offset, or any release of Borrower or any other Person or of any
the collateral security, guarantee or right of offset, shall not relieve
Guarantor of any liability hereunder, and shall not impair or affect the rights,
remedies, powers or privileges, whether express, implied or available as a
matter of law, of Lender against Guarantor.
3. Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against Guarantor, and without notice to or
further assent by Guarantor, any
B-1
demand for payment of any of the Obligations made by Lender may be rescinded
by Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by
Lender, and the Guarantee or the Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented
or terminated in accordance with the terms thereof, in whole or in part, as
Lender may deem advisable from time to time, and any collateral security,
guarantee or right of offset at any time held by Lender for the payment of
the Obligations may be sold, exchanged, waived, surrendered or released.
Lender shall have no obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the Obligations or for the
guarantee set forth herein or any property subject thereto. When making any
demand hereunder against Guarantor, Lender may, but shall be under no
obligation to, make a similar demand on Borrower or any other guarantor
(including, without limitation, any other Guarantor), and any release of
Borrower or the other guarantor (including, without limitation, any other
Guarantor), shall not relieve any of its obligations or liabilities
hereunder, and shall not impair or affect the rights, remedies, powers and
privileges, express or implied, or as a matter of law, of Lender against
Guarantor.
4. Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by Lender upon the guarantee of Guarantor set forth herein or
acceptance of the guarantee of Guarantor set forth herein; the Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee of Guarantor set forth herein; and all dealings between Borrower or
Guarantor, on the one hand, and Lender, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee of Guarantor set forth herein. Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment and
all other notices of any kind to or upon Borrower or Guarantor with respect to
the Obligations. The guarantee of Guarantor set forth herein shall be construed
as a guarantee of payment, and not of collection.
5. The guarantee set forth herein shall remain in full force and effect
and be binding in accordance with and to the extent of its terms upon Guarantor
and its successors and permitted assigns, and shall inure to the benefit of
Lender, and its respective successors, endorsees, transferees and assigns, until
all the Obligations and the obligations of Guarantor under the guarantee shall
have been satisfied by payment in full.
6. The guarantee set forth herein shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
Lender for any reason whatsoever, including, without limitation, upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Guarantor
or Borrower or upon or as a result of the appointment of a receiver,
B-2
intervenor or conservator of, or trustee or similar officer for, Borrower or
Guarantor or any substantial part of its property, or otherwise, all as
though the payments had not been made.
7. All payments due hereunder shall be paid in immediately available
funds after demand no later than 1:00 P.M. on the second Business Day following
the date of such demand. Demand shall be made in writing to Guarantor's office
located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, or such other
address in the United States which may be designated by Guarantor by written
notice delivered to Lender.
8. To the full extent permitted by law, Guarantor hereby waives all
rights of subrogation, contribution, reimbursement, indemnity or otherwise,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the Bankruptcy Code) or otherwise by reason of any
payment or performance by Guarantor pursuant to the provisions of this
Guarantee. Without limitation to the foregoing, notwithstanding any payment or
payments made by Guarantor hereunder or any setoff or application of funds of
Guarantor by Lender, Guarantor shall not be entitled to be subrogated to any of
the rights of Lender against Borrower or any collateral security or guarantee or
right of offset held by Lender for the payment of the Obligations, nor shall
Guarantor seek or be entitled to seek any contribution or reimbursement from
Borrower in respect of payments made by Guarantor hereunder, until all amounts
owing to Lender by Borrower and Guarantor on account of the Obligations are paid
in full. If any amount shall be paid to Guarantor on account of the subrogation
rights at any time when all of the Obligations shall not have been paid in full,
the amount shall be held by Guarantor in trust for Lender, segregated from other
funds of Guarantor, and shall forthwith upon receipt by Guarantor, be turned
over to Lender in the exact form received by Guarantor (duly endorsed by
Guarantor to Lender, if required), to be applied against the Obligations,
whether matured or unmatured, at the time and in the order as Lender may
determine. Notwithstanding the foregoing, Guarantor may request reimbursement
from Borrower to the extent permitted pursuant to Section 9.16(a) of the
Agreement.
9. As further security for this Guarantee, Guarantor hereby grants a
first priority security interest in and transfers and assigns to Lender (a) any
and all interest, if any, it may now or hereafter have in the Collateral until
it has been sold or otherwise disposed of by Lender, and (b) all claims and
demands, presently existing or hereafter accrued thereon, and any and all
collateral or security Guarantor now has or may hereafter have or acquire
against Borrower with respect to the Collateral or any of them with full right
on the part of Lender in its own name or in the name of Guarantor to collect and
enforce such claims by legal action, proof of debt in bankruptcy or other
liquidation proceedings, and to vote in any proceedings for the arrangement of
debts at any time proposed, and Guarantor hereby irrevocably appoints Lender as
attorney-in-fact for Guarantor for the purpose of such enforcement and for the
purpose of endorsing in the name of Guarantor any Collateral for the payment of
money.
10. In the event that any representation or warranty made by Borrower
or by Guarantor in the Agreement or any Basic Document to which it is a party
shall be false or misleading in any material respect, there shall be immediately
due from Guarantor to Lender the
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loss, out-of-pocket cost, damage or out-of-pocket expense incurred by Lender
by reason of such representation or warranty being false or misleading in any
material respect.
11. In the event that Lender for any reason whatsoever shall deem it
necessary to enforce this Guarantee or any rights hereunder or otherwise, there
shall be immediately due from Guarantor to Lender, all losses, out-of-pocket
costs, damages, out-of-pocket expenses, claims and liabilities associated with
such enforcement, including but not limited to, reasonable outside attorneys'
fees and out-of-pocket disbursements, together with all reasonable out-of-pocket
costs and out-of-pocket expenses of any related action.
12. Guarantor hereby covenants that it shall not assign this Guarantee
except with the prior written consent of Lender, which consent shall not be
unreasonably withheld.
13. Guarantor represents and warrants to Lender that each of the
representations and warranties made by it in the Agreement is true and correct.
14. The obligations of Guarantor under this Guarantee are irrevocable,
primary, absolute and unconditional and shall be paid or performed strictly in
accordance with this Guarantee under all circumstances irrespective of:
(a) any lack of validity or enforceability of the Agreement, the AMC
Guarantee or any of the Collateral, or any amendment, other modification or
waiver in respect thereof;
(b) any exchange or release of any other obligations hereunder;
(c) the existence of any claim, set-off, defense, reduction, abatement
or other right that Lender or Borrower may have at any time against Borrower,
Guarantor or any other person;
(d) any document presented in connection with this Guarantee proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(e) any payment by Guarantor under this Guarantee against presentation
of a certificate or other document that does not strictly comply with terms of
this Guarantee; and
(f) any other circumstances, other than payment in full, that might
otherwise constitute a defense available to, or discharge of, Borrower in
respect of the Agreement.
15. Neither the failure of Borrower or Lender to perform any covenant
or obligation in favor of Guarantor nor the failure or omission to make a demand
permitted hereunder shall in any way affect or limit Guarantor's obligations
under this Guarantee. If an action or proceeding to enforce this Guarantee is
brought, the beneficiary shall be entitled to recover from Guarantor costs and
expenses reasonably incurred, including without limitation reasonable fees and
expenses of counsel and out-of-pocket costs.
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16. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF
NEW YORK. Communications with respect to this
Guarantee other than requests for payment pursuant to a notice referred to in
the preceding paragraph shall also be addressed to Guarantor at Xxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, specifically referring to this Guarantee.
17. EACH PARTY HERETO HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY
LITIGATION ARISING HEREUNDER AND ALSO WAIVES THE RIGHT IN ANY SUCH LITIGATION,
TO IMPOSE COUNTERCLAIMS OR SET-OFFS OF ANY KIND OR DESCRIPTION UNLESS SUCH
COUNTERCLAIM OR SET-OFF IS COMPULSORY OR MANDATORY IN NATURE UNDER THE
NEW YORK
CIVIL PRACTICE LAW AND RULES. EACH PARTY HERETO FURTHER 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 CITY
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUCH PROCEEDING PERSONALLY DELIVERED OR TRANSMITTED BY
REGISTERED MAIL TO THE ADDRESS SET FORTH ABOVE; PROVIDED THAT UPON ANY SUCH
SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH,
SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
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Any notice hereunder shall be in writing and shall be personally
delivered, transmitted by postage prepaid registered mail, by facsimile,
telegram or cable to the parties at the address for notices set forth in the
Agreement. All notices and other communications shall be deemed to have been
duly given on the date of receipt if delivered personally; the date five (5)
calendar days after posting if transmitted by mail; or in the case of a
facsimile, telegram or cable, at the time sent. Either party may change its
address for purposes hereof by notice to the other.
LONG BEACH ACCEPTANCE CORP., Guarantor
By:
-----------------------------------
Name:
Title:
AGREED AND ACCEPTED:
-------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By:
-----------------------------------
Name:
Title:
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EXHIBIT C
AUGUST 12, 1999
[FORM OF AMC GUARANTEE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Guarantee by Ameriquest Mortgage Company of Long Beach Acceptance
Corp. Guarantee Dated as of August 12, 1999
--------------------------------------------
Ladies and Gentlemen:
1. For value received and in accordance with the terms of (i) the
Credit and Security Agreement, dated as of August 12, 1999 (the "AGREEMENT"),
among Greenwich Capital Financial Products, Inc., as Lender ("LENDER"), Long
Beach Acceptance Receivables Corp., as Borrower ("BORROWER") and Long Beach
Acceptance Corp., as Guarantor ("LBAC"), and (ii) the Guarantee dated August 12,
1999 made by LBAC in favor of Lender (the "LBAC GUARANTEE"), Ameriquest Mortgage
Company, a Delaware corporation ("AMC"), hereby unconditionally and irrevocably
guarantees to Lender, or any successor in interest of Lender, the due, punctual
and complete payment and performance by LBAC when and as due, whether at the
stated maturity, by acceleration, upon one or more dates set for repayment or
prepayment or otherwise, of the LBAC Obligations. For purposes of this
guarantee, "LBAC OBLIGATIONS" shall mean any and all Obligations of LBAC to
Lender under the Agreement and the LBAC Guarantee. Lender may make demands under
this guarantee for such amounts and performance from time to time. AMC hereby
represents that its obligations hereunder do and shall rank PARI PASSU with all
unsecured and unsubordinated indebtedness of AMC, as applicable. Terms used and
not defined herein shall have the meanings assigned in the Agreement.
2. Payments and performance required under this guarantee shall be
payable and performed whenever any amount or performance guaranteed hereunder
has not been promptly made to Lender in accordance with the Agreement and the
LBAC Guarantee. When pursuing its rights and remedies hereunder against AMC,
Lender may, but shall be under no obligation to, pursue the rights, remedies,
powers and privileges as it may have against Borrower, LBAC or any other Person
or against any collateral security or guarantee for the LBAC Obligations or any
right of offset with respect thereto. Any failure by Lender to pursue the other
rights, remedies, powers or privileges or to collect any payments from Borrower,
LBAC or any other Person or to realize upon any collateral security or guarantee
or to exercise any right of offset, or any release of Borrower, LBAC or any
other Person or of any of the collateral security, guarantee or right of
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offset, shall not relieve AMC of any liability hereunder, and shall not
impair or affect the rights, remedies, powers or privileges, whether express,
implied or available as a matter of law, of Lender against AMC.
3. AMC shall remain obligated hereunder notwithstanding that, without
any reservation of rights against AMC, and without notice to or further assent
by AMC, any demand for payment of any of the LBAC Obligations made by Lender may
be rescinded by Lender, and any of the LBAC Obligations continued, and the LBAC
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
Lender, and the LBAC Guarantee or the Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated in accordance with the terms thereof, in whole or in part, as Lender
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by Lender for the payment of the LBAC
Obligations may be sold, exchanged, waived, surrendered or released. Lender
shall have no obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the LBAC Obligations or for the guarantee set
forth herein or any property subject thereto. When making any demand hereunder
against AMC, Lender may, but shall be under no obligation to, make a similar
demand on Borrower, LBAC or any other guarantor and any release of Borrower,
LBAC or any other guarantor shall not relieve any of its obligations or
liabilities hereunder, and shall not impair or affect the rights, remedies,
powers and privileges, express or implied, or as a matter of law, of Lender
against AMC.
4. AMC waives any and all notice of the creation, renewal, extension or
accrual of any of the LBAC Obligations and notice of or proof of reliance by
Lender upon the guarantee of AMC set forth herein or acceptance of the guarantee
of AMC set forth herein; the LBAC Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee of AMC set forth
herein; and all dealings between LBAC or AMC, on the one hand, and Lender, on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon the guarantee of AMC set forth herein. AMC waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment and all other notices of any kind to or upon LBAC or AMC with respect
to the LBAC Obligations. The guarantee of AMC set forth herein shall be
construed as a guarantee of payment, and not of collection.
5. The guarantee set forth herein shall remain in full force and effect
and be binding in accordance with and to the extent of its terms upon AMC and
its successors and permitted assigns, and shall inure to the benefit of Lender,
and its respective successors, endorsees, transferees and assigns, until all the
LBAC Obligations and the obligations of AMC under this guarantee shall have been
satisfied by payment in full. Notwithstanding Section 2.10 of the Agreement, the
obligations of AMC under this guarantee shall be fully recourse to AMC and all
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property and assets of AMC whether now owned or hereinafter acquired, and AMC
shall remain liable for all of the LBAC Obligations pursuant to the terms of
this guarantee.
6. The guarantee set forth herein shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the LBAC Obligations is rescinded or must otherwise be restored or
returned by Lender for any reason whatsoever, including, without limitation,
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
LBAC or AMC or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, LBAC or AMC or any
substantial party of its property, or otherwise, all as though the payments had
not been made.
7. All payments due hereunder shall be paid in immediately available
funds after demand no later than 1:00 P.M. on the second Business Day following
the date of such demand. Demand shall be made in writing to AMC's office located
at 0000 Xxxx xxx Xxxxxxx Xxxx, Xxxxxx, XX 00000, Attention: General Counsel or
such other address in the United States which may be designated by AMC by
written notice delivered to Lender.
8. To the full extent permitted by law, AMC hereby waives all rights of
subrogation, contribution, reimbursement, indemnity or otherwise, whether
arising by contract or operation of law (including, without limitation, any such
right arising under the Bankruptcy Code) or otherwise by reason of any payment
or performance by AMC pursuant to the provisions of this guarantee. Without
limitation to the foregoing, notwithstanding any payment or payments made by AMC
hereunder or any setoff or application of funds of AMC by Lender, AMC shall not
be entitled to be subrogated to any of the rights of Lender against or any
collateral security or guarantee or right of offset held by Lender for the
payment of the LBAC Obligations, nor shall AMC seek or be entitled to seek any
contribution or reimbursement from LBAC in respect of payments made by AMC
hereunder, until all amounts owing to Lender by LBAC on account of the LBAC
Obligations are paid in full. If any amount shall be paid to AMC on account of
the subrogation rights at any time when all of the LBAC Obligations shall not
have been paid in full, the amount shall be held by AMC in trust for Lender,
segregated from other funds of AMC, and shall forthwith upon receipt by AMC, be
turned over to Lender in the exact form received by AMC (duly endorsed by AMC to
Lender, if required), to be applied against the LBAC Obligations, whether
matured or unmatured, at the time and in the order as Lender may determine.
Notwithstanding the foregoing, AMC may request reimbursement from Borrower or
Guarantor to the extent permitted pursuant to Section 9.16(b) of the Agreement.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AMC
EXPRESSLY WAIVES ANY AND ALL BENEFITS UNDER CALIFORNIA CIVIL CODE SECTIONS 2809,
2810, 2819, 2845, 2849, 2850, AND 2855, CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 580A, 580B, 580D, AND 726, AND ANY OTHER SURETYSHIP OR SIMILAR LAW OR
DEFENSE NOW OR HEREAFTER IN EFFECT.
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9. AMC hereby represents and warrants to Lender as of the date of this
guarantee and on an ongoing basis on each date that the LBAC Obligations are
outstanding as follows:
(a) ORGANIZATION. It is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and is duly
qualified to do business in each jurisdiction in which the failure to be so
qualified could reasonably be expected to have a material adverse effect on its
financial condition, operations, business or prospects.
(b) POWER AND AUTHORITY. It has all requisite corporate power and has
all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being conducted and
to execute and deliver and perform its obligations under this guarantee, except
as could not reasonably be expected to have a material adverse effect on its
financial condition, operations, business or prospects.
(c) AUTHORIZATION OF GUARANTEE. All appropriate and necessary action
has been taken by it to authorize the execution and delivery of this guarantee
and the performance and observance of the terms hereof.
(d) GUARANTEE BINDING. This guarantee has been duly executed and
delivered and constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms, except as enforceability may be limited by laws
governing insolvency or creditors' rights generally and general equity
principles. The execution, delivery and performance of this guarantee does not
and will not violate any provision of law, regulation, order or other
governmental directive, or conflict with, constitute a default under, or result
in the breach of any provision of any material agreement, ordinance, decree,
bond, indenture, order or judgment to which it is a party or by which it is
bound.
(e) COMPLIANCE WITH LAW. It is conducting its business and operations
in compliance with all applicable laws, regulations, ordinances and directives
of governmental authorities, except to the extent that any noncompliance could
not reasonably be expected to have a material adverse effect on its financial
condition, operation, business or prospects. It has filed all tax returns
required to be filed and has paid all taxes due in respect of the ownership of
its assets or the conduct of its operations except (a) to the extent that the
payment of such taxes is being contested in good faith by it in appropriate
proceedings and adequate reserves have been provided for the payment thereof, or
(b) with respect to such returns and/or taxes which are not material in either
nature or amount such that any failure to file such returns or pay such taxes
would not materially and adversely affect its financial condition, operations,
business or prospects.
(f) CONSENTS. All licenses, consents and approvals required from and
all registrations and filings required to be made with any governmental or other
public body or authority for the making and performance by it of this guarantee
have been obtained and are in effect, except as could not reasonably be expected
to have a material adverse effect on its
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financial condition, operations, business or prospects or on its ability to
perform the obligations hereunder.
(g) LITIGATION. There is no action, suit or proceeding at law or in
equity by or before any court, governmental agency or authority or arbitral
tribunal now pending or, to the best of its knowledge, threatened against or
affecting it which, if determined adversely, may reasonably be expected to have
a material adverse effect on its business, operations or financial condition.
(h) FINANCIAL STATEMENTS. The unaudited balance sheets of AMC as at
March 31, 1999, and the related statements of income for the fiscal periods
ended on such date, heretofore furnished to Lender, are complete and correct in
all material respects and fairly present the financial condition of AMC as at
said date (subject to normal year-end audit adjustments and tax planning
adjustments), all in accordance with U.S. generally accepted accounting
principles applied on a consistent basis. On said date, AMC had no material
contingent liabilities, liabilities for taxes, unusual or anticipated losses
from any unfavorable commitments, except as referred to or reflected in said
balance sheets as at said date. Since March 31, 1999, there has been no material
adverse change in the operations, condition (financial or otherwise), business
or prospects of AMC from that set forth in said financial statements as at said
date.
(i) OTHER OBLIGATIONS. It is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Basic Documents or in any agreement or instrument to which it is a party or by
which it is bound the result of which could reasonably be expected to have a
material adverse effect on its business, operations or financial condition.
(j) INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(k) FULL DISCLOSURE. No representation or warranty made by or on behalf
of AMC contained in this guarantee and no written information or information in
any certificate, financial statement or report furnished or to be furnished by
or on behalf of AMC hereunder or in connection with the transactions
contemplated hereby contains or will contain an untrue statement of a material
fact, or, omits or will omit to state any material fact necessary to make the
statements herein or therein contained, in light of the circumstances in which
made, not misleading.
(l) ERISA. Set forth on Schedule 9(l) hereto is a list of all Plans, if
any, maintained by AMC or any of its subsidiaries. Except as may be set forth on
such schedule, neither AMC nor any of its subsidiaries maintains any Plans, and
AMC agrees to notify Lender in advance of forming any Plans. Neither AMC nor any
Commonly Controlled Entity has any obligations or liabilities with respect to
any employee pension benefit plans or Multiemployer
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Plans, nor have any such Persons had any obligations or liabilities with
respect to any such Plans during the five-year period prior to the date this
representation is made or deemed made. AMC will give notice if at any time it
or any Commonly Controlled Entity has any obligations or liabilities with
respect to any employee pension benefit plan or Multiemployer Plan. All Plans
maintained by AMC or any Commonly Controlled Entity are in substantial
compliance with all applicable laws (including ERISA). AMC is not an employer
under any Multiemployer Plan.
(m) BASIC DOCUMENTS. Each of the representations and warranties made by
it in (i) the AMC Guarantee, dated as of August 1, 1999, made by AMC in favor of
Financial Security Assurance Inc. and The Chase Manhattan Bank and (ii) the
Guarantee, dated as of August 1, 1999, made by AMC in favor of Greenwich Capital
Markets, Inc., relating to the Note Purchase Agreement, dated August 12, 1999,
among Borrower, Guarantor and Lender, is true and correct; PROVIDED that this
representation shall not be deemed to have been breached if AMC shall have
breached a representation or warranty in either such document but shall have
cured such breach within the applicable cure period, if any, set forth therein.
10. AMC hereby covenants as follows:
(a) NOTICE. It shall promptly give notice to Lender of the
occurrence of (i) any Event of Default relating to it under the Agreement or
event which with the giving of notice or the passing of time or both would
constitute such an Event of Default relating to it, specifying the event and the
action which it proposes to take with respect thereto, (ii) any event or
occurrence known to it which will or could reasonably be expected to adversely
affect the collectibility of the Receivables or the ability of LBAC to service
such Receivables or the ability of AMC to perform its obligations under any
related documents or (iii) any other event or occurrence which individually or
in the aggregate could reasonably be expected to materially and adversely affect
AMC's financial condition, operations, business or prospects.
(b) TAXES. AMC shall pay and discharge all taxes and governmental
charges upon it or against any of its properties or assets or its income prior
to the date after which penalties attach for failure to pay, except (i) to the
extent that AMC shall be contesting in good faith in appropriate proceedings its
obligation to pay such taxes or charges, adequate reserves having been set aside
for the payment thereof, or (ii) with respect to such taxes and charges which
are not material in either nature or amount such that any failure to pay or
discharge them, and any resulting penalties, either in any one instance or in
the aggregate, would not materially and adversely affect the financial
condition, operations, business or prospects of AMC.
(c) BOOKS AND RECORDS; OTHER INFORMATION. (i) AMC shall maintain
accurate and complete books and records with respect to its business. All
accounting books and records shall be maintained in accordance with generally
accepted accounting principles consistently applied.
(ii) Only to the extent reasonably necessary to protect Lender's
interest hereunder, AMC shall, and shall cause each of its respective
subsidiaries to, permit any
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representative of Lender to visit and inspect any of the properties of AMC to
examine the books and records of AMC and to make copies and take extracts
therefrom, and to discuss the business, operations, properties, condition
(financial or otherwise) or prospects of AMC and each such subsidiary with
the officers and independent public accountants thereof and as often as
Lender may reasonably request, and so long as no default hereunder shall have
occurred and be continuing, all at such reasonable times during normal
business hours upon reasonable notice. AMC shall provide to Lender all
information regarding its respective operations and practices as Lender shall
reasonably request in writing. In connection with the matters described in
this Section 10(c), Lender shall not at any time use or disclose to any
Person, except to any professional adviser who needs to know such information
in connection with the transactions contemplated hereby, or except in
connection with any litigation or arbitral proceedings commenced by or
against Lender or any of its affiliates, any information that may be within
or may come to its or their knowledge if such information is of a type that
would generally be expected to be held as confidential; PROVIDED that the
foregoing shall not apply to the extent that such information was (i)
previously known by Lender from sources other than AMC or its directors,
officers or agents, (ii) in the public domain through no fault of Lender,
(iii) lawfully acquired by Lender on a non-confidential basis from other
sources who are not known by Lender to be bound by a confidentiality
agreement with AMC or (iv) required to be disclosed by judicial or
administrative process or by any other Requirement of Law.
(d) PAYMENT OF FEES AND EXPENSES. AMC shall pay to Lender, on demand,
any and all fees, costs or expenses which Lender pays to a bank or other similar
institution arising out of or in connection with the return of payments by AMC
deposited for collection by Lender.
(e) CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT. AMC shall
continue in business in a prudent, reasonable and lawful manner with all
licenses, permits, and qualifications necessary to perform its obligations under
this guarantee, except where failure to do so could not reasonably be expected
to materially and adversely affect such performance.
(f) FINANCIAL STATEMENTS AND ACCESS TO RECORDS. AMC shall provide
Lender with quarterly unaudited financial statements within sixty (60) days of
the end of AMC's first three fiscal quarters, and will provide Lender with
audited annual financial statements within one hundred twenty (120) days of
AMC's fiscal year-end audited by a nationally recognized independent certified
public accounting firm. Upon request of Lender, AMC shall provide Lender with
unaudited monthly financial statements. AMC shall deliver to Lender with each
financial statement a certificate by AMC's chief financial officer, certifying
that such financial statements are complete and correct in all material respects
and that, except as noted in such certificate, such chief financial officer has
no knowledge of any default by it hereunder or any event which with the giving
of notice or the passing of time or both would constitute such a default.
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(g) FINANCIAL CONDITION. AMC shall maintain a net worth of at least 95%
of the net worth AMC is required to maintain pursuant to the credit documents
AMC has entered into with its primary warehouse lender (which on the date hereof
is Chase Bank of Texas, National Association) (net worth, in each case, being
calculated in accordance with such credit documents); PROVIDED that, if such
credit documents are terminated and AMC does not have a primary warehouse
lender, the reference to such credit documents will be deemed to be to such
credit documents as in effect immediately prior to such termination. AMC shall
maintain a debt-to-equity ratio of no more than 105% of the debt-to-equity ratio
AMC is required to maintain pursuant to the credit documents AMC has entered
into with its primary warehouse lender (which on the date hereof is Chase Bank
of Texas, National Association) (debt-to-equity, in each case, being calculated
in accordance with such credit documents); PROVIDED that, if such credit
documents are terminated and AMC does not have a primary warehouse lender, the
reference to credit documents AMC has entered into with its primary warehouse
lender will be deemed to be to such credit documents as in effect immediately
prior to such termination.
(h) LITIGATION MATTERS. AMC shall notify Lender in writing, promptly
upon its learning thereof, of any litigation, arbitration or administrative
proceeding which may reasonably be expected to materially and adversely affect
the operations, financial condition or business of AMC or AMC's ability to
perform under this guarantee or other rights under this guarantee.
(i) FULFILLMENT OF OBLIGATIONS. AMC shall pay and perform, as and when
due, all of its obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with generally accepted accounting
principles with respect thereto have been provided on the books of AMC, and
except to the extent that the failure to do so could not individually or in the
aggregate reasonably be expected to materially and adversely affect the
financial condition, operations, business or prospects of AMC.
(j) COMPLIANCE WITH LAWS, ETC. AMC shall, and shall cause each of its
respective subsidiaries to, comply (i) in all material respects with all
Requirements of Law and any change therein or in the application, administration
or interpretation thereof (including, without limitation any request, directive,
guideline or policy, whether or not having the force of law) by any Governmental
Authority charged with the administration or interpretation thereof; and (ii)
with all indentures, mortgages, deeds of trust, agreements, or other instruments
or contractual obligations to which it is a party, including without limitation,
each Basic Document to which it is a party, or by which it or any of its
properties may be bound or affected, or which may affect the Receivables, if the
failure to comply therewith could, individually or in the aggregate, reasonably
be expected to materially and adversely affect the financial condition,
operations, business or prospects of AMC.
(k) NO ASSIGNMENT. Except in connection with an assignment to any
successor that complies with Section 15 hereof, AMC shall not assign this
guarantee, except with the prior written consent of Lender, which consent shall
not be unreasonably withheld.
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(l) VALUATION MODEL. AMC expressly accepts and acknowledges, and agrees
to comply with and be bound by, the provisions of Section 3.13 of the Agreement.
11. The obligations of AMC under this guarantee are irrevocable,
primary, absolute and unconditional and shall be paid or performed strictly in
accordance with this guarantee under all circumstances irrespective of:
(a) any lack of validity or enforceability of the Agreement, the LBAC
Guarantee or of any of the Collateral, or any amendment, other modification or
waiver in respect thereof;
(b) any exchange or release of any other obligations hereunder;
(c) the existence of any claim, set-off, defense, reduction, abatement
or other right that Lender, Borrower or LBAC may have at any time against any of
Borrower, LBAC, AMC or any other person;
(d) any document presented in connection with the Agreement, the LBAC
Guarantee or this guarantee proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(e) any payment by AMC under this guarantee against presentation of a
certificate or other document that does not strictly comply with terms of this
guarantee; and
(f) any other circumstances, other than payment in full, that might
otherwise constitute a defense available to, or discharge of, Lender, Borrower
or LBAC in respect of the Agreement or the LBAC Guarantee.
12. Neither the failure of Borrower, Lender or LBAC to perform any
covenant or obligation in favor of AMC nor the failure or omission to make a
demand permitted hereunder shall in any way affect or limit AMC's obligations
under this guarantee.
13. AMC agrees to:
(i) pay or reimburse Lender on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
modification or supplement to, or any waiver under, this guarantee, the
LBAC Guarantee and any other document prepared in connection therewith,
and the consummation and administration of the transactions
contemplated thereby, including without limitation the reasonable fees
and disbursements of counsel to Lender;
(ii) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements of
counsel to Lender, in
C-9
connection with the occurrence or continuance of a default under
this guarantee and the LBAC Guarantee and the enforcement,
collection, protection or preservation (whether through
negotiations, legal proceedings or otherwise) of this guarantee,
any LBAC Obligation or any right, remedy, power or privilege of
Lender hereunder or under the LBAC Guarantee;
(iii) pay and hold Lender harmless from and against any and all present
and future stamp, excise, recording or other similar taxes or fees
payable in connection with the execution, delivery, recording and
filing of this guarantee or the LBAC Guarantee and hold Lender harmless
from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes or fees; and
(iv) indemnify Lender and its affiliates and each of their respective
directors, officers, employees and agents and hold each of them
harmless from and against, any and all liabilities, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements, including without limitation the reasonable fees and
disbursements of counsel to Lender and such other parties, incurred by
any of them in connection with, arising out of or in any way relating
to any investigation, claim, litigation or other proceeding, pending or
threatened (whether or not any of them is designated a party thereto),
in connection with, arising out of or in any way related to this
guarantee or the LBAC Guarantee or any of the transactions contemplated
herein or therein; PROVIDED that Lender shall not be entitled to any
indemnification for any of the foregoing resulting from its gross
negligence or willful misconduct.
If and to the extent that the indemnity obligations of AMC under this Section 13
may be unenforceable for any reason, AMC hereby agrees to make the maximum
contribution to the payment and satisfaction of each of such indemnity
obligations which is permissible under applicable law.
14. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, during the continuance of
any default under this guarantee or the LBAC Guarantee Lender is hereby
authorized at any time and from time to time, without notice to AMC or to any
other person or entity, any such notice being hereby expressly waived, to
set-off against any obligation owing by Lender or any affiliate of Lender to
LBAC or AMC, or against any funds or other property of LBAC or AMC held by or
otherwise in the possession of Lender or any affiliate of Lender, the LBAC
Obligations and the obligations and liabilities of AMC to Lender hereunder,
irrespective of whether or not Lender shall have made any demand hereunder or
under the LBAC Guarantee.
15. Any Person (i) into which AMC may be merged or consolidated, (ii)
resulting from any merger or consolidation to which AMC is a party or (iii)
succeeding to all or
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substantially all of the business of AMC shall execute an agreement of
assumption to perform every obligation of AMC under this guarantee, and
whether or not such assumption agreement is executed, shall be the successor
to AMC hereunder (without relieving AMC of its responsibilities hereunder, if
it survives such merger or consolidation) without the execution or filing of
any document or any further act by any of the parties to this guarantee.
16. Each party shall, from time to time after execution of this
guarantee and without further consideration, execute such documents or take such
action as may be reasonably necessary to carry out the purpose or intention of
this guarantee.
17. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. Communications with respect to this
guarantee other than requests for payment pursuant to a notice referred to in
the preceding paragraph shall also be addressed to AMC at 0000 Xxxx xxx Xxxxxxx
Xxxx, Xxxxxx, XX 00000, Attention: General Counsel, specifically referring to
this guarantee.
18. EACH PARTY HERETO HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY
LITIGATION ARISING HEREUNDER AND ALSO WAIVES THE RIGHT IN ANY SUCH LITIGATION,
TO IMPOSE COUNTERCLAIMS OR SET-OFFS OF ANY KIND OR DESCRIPTION UNLESS SUCH
COUNTERCLAIM OR SET-OFF IS COMPULSORY OR MANDATORY IN NATURE UNDER THE NEW YORK
CIVIL PRACTICE LAW AND RULES. EACH PARTY HERETO FURTHER 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 CITY
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUCH PROCEEDING PERSONALLY DELIVERED OR TRANSMITTED BY
REGISTERED MAIL TO THE ADDRESS SET FORTH ABOVE; PROVIDED THAT UPON ANY SUCH
SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH,
SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
C-11
Any notice hereunder shall be in writing and shall be personally
delivered, transmitted by postage prepaid registered airmail, by facsimile,
telegram or cable to the parties at the address for notices set forth in the
Agreement. All notices and other communications shall be deemed to have been
duly given on the date of receipt if delivered personally; the date five (5)
calendar days after posting if transmitted by mail; or in the case of a
facsimile, telegram or cable, at the time sent. Either party may change its
address for purposes hereof by notice to the other.
AMERIQUEST MORTGAGE COMPANY
By:
-----------------------------------
Name:
Title:
AGREED AND ACCEPTED:
-------------------
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By:
-----------------------------------
Name:
Title:
C-12
SCHEDULE 9(l)
PLANS
Ameriquest Mortgage Company 401(k) Plan
PPO/HMO Health Plan
Dental Plan
Vision Service Plan
Short and Long Term Disability Plan
Company Paid Life & AD&D
Dependent Care Reimbursement Plan
Health Care Spending Account
EXHIBIT D
[Reserved]
D-1
EXHIBIT E
[FORM OF OPINION OF COUNSEL TO THE
BORROWER AND EACH GUARANTOR]*
August 12, 1999
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Credit and Security Agreement, dated as of August 12, 1999, by
and among Greenwich Capital Financial Products, Inc., as Lender,
Long Beach Acceptance Receivables Corp., as Borrower and Long
Beach Acceptance Corp., as Guarantor
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Long Beach Acceptance Receivables
Corp., a Delaware corporation (the "BORROWER"), Long Beach Acceptance Corp., a
Delaware corporation ("LBAC") and Ameriquest Mortgage Company, a Delaware
corporation ("AMC") in connection with the preparation, execution and delivery
of:
(a) the Credit and Security Agreement, dated as of August 12, 1999 (the
"CREDIT AND SECURITY AGREEMENT"), by and among Greenwich Capital
Financial Products, Inc. (the "LENDER"), Borrower and LBAC, as
Guarantor;
(b) the Promissory Note (as defined in the Credit and Security
Agreement);
(c) the Guarantee, dated August 12, 1999 (the "LBAC GUARANTEE"), made
by LBAC in favor of Lender; and
(d) the Guarantee, dated August 12, 1999 (the "AMC GUARANTEE"), made by
AMC in favor of Lender.
(the documents referred to in clauses (a) through (d), collectively, the
"DELIVERED DOCUMENTS").
--------------
* May be incorporated into such other opinions delivered by counsel to Borrower
and each Guarantor in connection with the Securitization Transaction.
E-1
This opinion is being furnished to Lender at the request of Borrower,
LBAC and AMC.
In rendering the opinions set forth herein, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Delivered Documents, (ii) the articles of incorporation
and by-laws of each of Borrower, LBAC and AMC, each as in effect on the date
hereof, (iii) resolutions of the boards of directors of each of Borrower, LBAC
and AMC relating to each of the Delivered Documents adopted on or prior to the
date hereof, and (iv) such certificates of public officials and such other
certificates, documents, records, and statements of officers and other
representatives of Borrower, LBAC and AMC and public officials as we have deemed
appropriate or necessary as the basis for the opinions set forth below. As to
certain facts material to the opinions expressed herein, we have relied upon,
and assumed the accuracy of, (i) the representations and warranties contained in
the Delivered Documents, and (ii) the certificates and other documents, records
and statements referred to in the immediately preceding sentence. We have
assumed the genuineness of all signatures (other than those of Borrower, LBAC
and AMC), the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. We have also assumed the due
execution and delivery, pursuant to due authorization, by Lender of the Credit
and Security Agreement.
We are admitted to the bar in the State of New York and we express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York, the State of Delaware and the Federal securities laws of the United
States.
Based upon the foregoing, and subject to the qualifications
and exceptions stated herein, we are of the opinion that:
1. Each of Borrower, LBAC and AMC (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (b) has the corporate power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification, except, with respect to the preceding clause (c),
to the extent that the failure to be so qualified and in good standing would
not, in the aggregate, reasonably be expected to have a material adverse effect
on the business, operations, property or condition (financial or otherwise) or
prospects of Borrower, LBAC or AMC (a "MATERIAL ADVERSE EFFECT").
2. Borrower has the corporate power and authority to execute, deliver
and perform each of the Credit and Security Agreement and the Promissory Note,
to borrow under the Credit and Security Agreement and the Promissory Note, and
to grant liens pursuant to the Credit and Security Agreement, and has taken all
necessary corporate action to authorize such borrowing, the granting of such
liens on the terms and subject to the conditions of the Credit and Security
Agreement, and the execution, delivery and performance of each of the Credit and
Security
E-2
Agreement and the Promissory Note. LBAC has the corporate power and authority
to execute, deliver and perform each of the Credit and Security Agreement and
the LBAC Guarantee, and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Credit and Security Agreement
and the LBAC Guarantee. AMC has the corporate power and authority to execute,
deliver and perform the AMC Guarantee, and has taken all necessary corporate
action to authorize the execution, delivery and performance of the AMC
Guarantee.
3. No consent or authorization of, filing with or other act by or in
respect of any governmental authority of or within the State of New York, the
State of California or the State of Delaware is required in connection with the
borrowing under the Credit and Security Agreement and the Promissory Note or
with the execution, delivery, performance, validity or enforceability of the
Delivered Documents, except for consents, authorizations and filings which have
been obtained or made, as the case may be, and are in full force and effect.
4. Each of the Credit and Security Agreement and the Promissory Note
has been duly executed and delivered on behalf of Borrower and constitutes a
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors and (ii) the application
of general principles of equity (regardless of whether enforceability is
considered in proceedings at law or in equity). Each of the Credit and Security
Agreement and the LBAC Guarantee has been duly executed and delivered on behalf
of LBAC and constitutes a legal, valid and binding obligation of LBAC,
enforceable against each LBAC in accordance with its terms, subject to the
effect of (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or transfer or other similar laws relating to or affecting the rights
of creditors and (ii) the application of general principles of equity
(regardless of whether enforceability is considered in proceedings at law or in
equity). The AMC Guarantee has been duly executed and delivered on behalf of AMC
and constitutes a legal, valid and binding obligation of AMC, enforceable
against AMC in accordance with its terms, subject to the effect of (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
transfer or other similar laws relating to or affecting the rights of creditors
and (ii) the application of general principles of equity (regardless of whether
enforceability is considered in proceedings at law or in equity).
5. The execution, delivery and performance by each of Borrower, LBAC
and AMC of the Delivered Documents to which it is a party, the borrowing by
Borrower under the Credit and Security Agreement and the use of the proceeds
thereof, and the granting of liens by Borrower pursuant to the Credit and
Security Agreement, will not violate any Requirement of Law of the State of New
York, the State of California or in respect of the General Corporation Law of
the State of Delaware or Regulation G of the Board of Governors of the Federal
Reserve System, or, to the best of our knowledge, any of the material terms or
provisions of, or constitute a default under, any indenture, mortgage, loan
agreement, deed of trust or any other material agreement or instrument to which
Borrower, LBAC or AMC is a party or by which Borrower, LBAC or AMC is bound
(collectively, the "SPECIFIED AGREEMENTS"), and will not result in, or require,
the creation or imposition of any lien on any of either of their respective
properties or
E-3
revenues pursuant to any such Requirement of Law or Specified Agreement
(other than the liens created by the Credit and Security Agreement in favor
of Lender). As used herein "REQUIREMENT OF LAW" means the governing documents
of Borrower, LBAC or AMC, or any law, treaty, rule or regulation or
determination of an arbitrator or a court or other governmental authority, in
each case applicable to or binding upon, Borrower, LBAC or AMC or any of
their respective properties or to which Borrower, LBAC or AMC or any of their
respective properties is subject.
6. No litigation or proceeding of or before any arbitrator or
governmental authority is pending or, to the best of our knowledge, threatened
by or against Borrower, LBAC, AMC or any of their respective subsidiaries or
against any of their respective properties or revenues (a) with respect to any
of the Delivered Documents or any of the transactions contemplated thereby, or
(b) which would reasonably be expected to have a Material Adverse Effect.
7. Borrower is not (a) an "investment company", or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended or (b) a "holding company" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
8. The provisions of the Credit and Security Agreement are effective to
create, in favor of Lender, a legal, valid and enforceable security interest in
all right, title and interest of Borrower in the "Collateral" described therein.
9. Upon (i) delivery to Lender of the Pledged Securities, together with
a bond power for each Pledged Security endorsed in blank by a duly authorized
officer of Borrower, and (ii) the filing of financing statements in the form of
Annex A in the offices in the jurisdictions as listed on Schedule 1 hereto, the
security interests created under the Credit and Security Agreement will
constitute fully perfected first priority security interests in all right, title
and interest of Borrower in the "Collateral" described therein which can be
perfected by filing a financing statement under Article 9 of the Uniform
Commercial Code as in effect in the State of New York.
10. The issuance of the Promissory Note, the LBAC Guarantee and the AMC
Guarantee to Lender pursuant to the Credit and Security Agreement are not
transactions requiring the registration of the Promissory Note, the LBAC
Guarantee or the AMC Guarantee under the Securities Act of 1933, as amended.
* * *
E-4
This opinion is rendered only to Lender is solely for its benefit in
connection with the above transactions and may not be relied upon by Lender
for any other purpose, relied upon by any other person, firm or corporation
for any purpose without our prior written consent.
Very truly yours,
E-5
EXHIBIT F
[Reserved]
F-1
EXHIBIT G
Credit and Security Agreement dated as of March 31, 1997 by and among Greenwich
Capital Financial Products, Inc., as lender, Long Beach Acceptance Receivables
Corp., as borrower, and Long Beach Acceptance Corp., as guarantor, as amended by
Amendment No. 1 thereto dated as of January 30, 1998, as further amended by the
Omnibus Amendment Agreement dated as of March 31, 1999, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
Credit and Security Agreement dated as of August 29, 1997 by and among Greenwich
Capital Financial Products, Inc., as lender, Long Beach Acceptance Receivables
Corp., as borrower, and Long Beach Acceptance Corp., as guarantor, as amended by
Amendment No. 1 thereto dated as of January 30, 1998, as further amended by the
Omnibus Amendment Agreement dated as of March 31, 1999, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
Credit and Security Agreement dated as of January 30, 1998 by and among
Greenwich Capital Financial Products, Inc., as lender, Long Beach Acceptance
Receivables Corp., as borrower, and Long Beach Acceptance Corp., as guarantor,
as amended by the Omnibus Amendment Agreement dated as of March 31, 1999, and as
otherwise may be amended, supplemented or otherwise modified from time to time
pursuant to the terms thereof.
Credit and Security Agreement dated as of November 25, 1998 by and among
Greenwich Capital Financial Products, Inc., as lender, Long Beach Acceptance
Receivables Corp., as borrower, and Long Beach Acceptance Corp., as guarantor,
as amended by the Omnibus Amendment Agreement dated as of March 31, 1999, and as
otherwise may be amended, supplemented or otherwise modified from time to time
pursuant to the terms thereof.
Warehouse Lending Agreement dated as of January 30, 1998 between Long Beach
Acceptance Corp., as Borrower, and Greenwich Capital Financial Products, Inc.,
as Lender, as renewed and amended by the Renewal and Amendment Agreement dated
as of January 29, 1999, and as otherwise may be amended, supplemented or
otherwise modified from time to time pursuant to the terms thereof.
Security Agreement dated as of January 30, 1998 made by Long Beach Acceptance
Corp., as Pledgor, in favor of Greenwich Capital Financial Products, Inc., as
Pledgee, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof.
G-1
