Exhibit 10.9
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 January 30, 1998
----------------------------
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 2
2. The Loans . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 AGREEMENT TO LEND . . . . . . . . . . . . . . . . . 11
2.2 PROCEDURE FOR TRANCHE B LOANS . . . . . . . . . . . 11
2.3 NOTE . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 INTEREST . . . . . . . . . . . . . . . . . . . . . 12
2.5 REPAYMENT OF THE LOANS . . . . . . . . . . . . . . 13
2.6 OPTIONAL PREPAYMENTS . . . . . . . . . . . . . . . 13
2.7 PAYMENT PROCEDURES . . . . . . . . . . . . . . . . 13
2.8 INDEMNITY . . . . . . . . . . . . . . . . . . . . . 14
2.9 ILLEGALITY; SUBSTITUTED INTEREST RATE, ETC . . . . 14
2.10 LIMITED RECOURSE . . . . . . . . . . . . . . . . . 15
3. Grant of Security Interest; Eligible Collateral . . . . . 15
3.1 VALID SECURITY INTEREST . . . . . . . . . . . . . . 15
3.2 FURTHER ASSURANCES . . . . . . . . . . . . . . . . 16
3.3 DATA REPORTING . . . . . . . . . . . . . . . . . . 17
3.4 NOTICE TO TRUSTEE; POWERS . . . . . . . . . . . . . 17
3.5 NO DUTY ON THE PART OF LENDER . . . . . . . . . . . 17
3.6 PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS . . 17
3.7 LIMITATION ON DUTIES REGARDING PRESERVATION OF
COLLATERAL . . . . . . . . . . . . . . . . . . . . 18
3.8 POWERS COUPLED WITH AN INTEREST . . . . . . . . . . 18
3.9 TERMINATION . . . . . . . . . . . . . . . . . . . . 18
3.10 SEGREGATION OF FUNDS . . . . . . . . . . . . . . . 18
3.11 CERTAIN ACCOUNTS . . . . . . . . . . . . . . . . . 19
3.12 ADVANCE RATE MAINTENANCE; RELEASE OF EXCESS
COLLATERAL . . . . . . . . . . . . . . . . . . . . 19
3.13 VALUATION MODEL . . . . . . . . . . . . . . . . . . 20
3.14 EXHIBIT G . . . . . . . . . . . . . . . . . . . . . 21
4. Representations and Warranties . . . . . . . . . . . . . . 21
4.1 ORGANIZATION. . . . . . . . . . . . . . . . . . . . 21
4.2 POWER AND AUTHORITY . . . . . . . . . . . . . . . . 21
4.3 AUTHORIZATION OF BORROWING. . . . . . . . . . . . . 21
4.4 AGREEMENT BINDING . . . . . . . . . . . . . . . . . 21
4.5 COMPLIANCE WITH LAW . . . . . . . . . . . . . . . . 22
4.6 CONSENTS. . . . . . . . . . . . . . . . . . . . . . 22
4.7 LITIGATION. . . . . . . . . . . . . . . . . . . . . 22
4.8 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . 22
4.9 OTHER OBLIGATIONS . . . . . . . . . . . . . . . . . 23
4.10 REGULATION G. . . . . . . . . . . . . . . . . . . . 23
4.11 INVESTMENT COMPANY ACT. . . . . . . . . . . . . . . 23
4.12 CHIEF EXECUTIVE OFFICE. . . . . . . . . . . . . . . 23
4.13 COLLATERAL SECURITY . . . . . . . . . . . . . . . . 23
4.14 OWNERSHIP OF PROPERTIES . . . . . . . . . . . . . . 24
4.15 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . 24
4.16 ERISA . . . . . . . . . . . . . . . . . . . . . . . 24
4.17 BASIC DOCUMENTS . . . . . . . . . . . . . . . . . . 24
5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 25
5.1 NOTICE . . . . . . . . . . . . . . . . . . . . . . 25
5.2 TAXES . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 SEPARATE EXISTENCE: NO COMMINGLING . . . . . . . . 26
5.4 FINANCING STATEMENTS . . . . . . . . . . . . . . . 26
5.5 BOOKS AND RECORDS; OTHER INFORMATION . . . . . . . 26
5.6 PAYMENT OF FEES AND EXPENSES . . . . . . . . . . . 27
5.7 CONTINUITY OF BUSINESS AND COMPLIANCE WITH
AGREEMENT . . . . . . . . . . . . . . . . . . . . . 27
5.8 FINANCIAL STATEMENTS AND ACCESS TO RECORDS . . . . 27
5.9 FINANCIAL CONDITION . . . . . . . . . . . . . . . . 27
5.10 LITIGATION MATTERS . . . . . . . . . . . . . . . . 27
5.11 FULFILLMENT OF OBLIGATIONS . . . . . . . . . . . . 28
5.12 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE . . . . 28
5.13 COMPLIANCE WITH LAWS, ETC . . . . . . . . . . . . . 28
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 28
6.1 ADVERSE TRANSACTIONS . . . . . . . . . . . . . . . 29
6.2 GUARANTIES . . . . . . . . . . . . . . . . . . . . 29
6.3 CORPORATE DOCUMENTS . . . . . . . . . . . . . . . . 29
6.4 INVESTMENTS; DIVIDENDS; LOANS . . . . . . . . . . . 29
6.5 LOANS; CAPITAL STRUCTURE; AFFILIATES . . . . . . . 29
6.6 LIENS . . . . . . . . . . . . . . . . . . . . . . . 30
7. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 30
7.1 CONDITIONS PRECEDENT TO AGREEMENT . . . . . . . . . 30
7.2 CONDITIONS PRECEDENT TO TRANCHE B LOANS . . . . . . 32
8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 33
8.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 33
8.2 REMEDIES OF DEFAULT . . . . . . . . . . . . . . . . 36
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 38
9.1 PAYMENT OF EXPENSES, INDEMNITY, ETC . . . . . . . . 38
9.2 SET-OFF . . . . . . . . . . . . . . . . . . . . . . 40
9.3 AMENDMENTS . . . . . . . . . . . . . . . . . . . . 40
9.4 WAIVER; CUMULATIVE RIGHTS . . . . . . . . . . . . . 40
9.5 NON-PETITION COVENANT . . . . . . . . . . . . . . . 40
9.6 NON-AFFILIATION . . . . ... . . . . . . . . . . . . 40
9.7 BINDING EFFECT . . . . . . . . . . . . . . . . . . 41
9.8 SURVIVAL . . . . . . . . . . . . . . . . . . . . . 41
9.9 GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY . . . 41
9.10 NOTICE . . . . . . . . . . . . . . . . . . . . . . 41
9.11 SEVERABILITY . . . . . . . . . . . . . . . . . . . 43
9.12 COUNTERPARTS . . . . . . . . . . . . . . . . . . . 43
9.13 MERGER OR CONSOLIDATION . . . . . . . . . . . . . . 43
9.14 SUBSEQUENT ACTIONS . . . . . . . . . . . . . . . . 43
9.15 ASSIGNABILITY . . . . . . . . . . . . . . . . . . . 43
9.16 ACKNOWLEDGED REORGANIZATION AND ASSET SALE . . . . 44
EXHIBIT A - [Reserved] . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B - Promissory Note . . . . . . . . . . . . . . . X-0
XXXXXXX X - Xxxx xx XXXX Xxxxxxxx . . . . . . . . . . . . C-1
EXHIBIT D - Form of AMC Guaranty . . . . . . . . . . . . . D-1
EXHIBIT E - Compliance Certificate . . . . . . . . . . . . E-1
EXHIBIT F - Form of Opinion of Counsel . . . . . . . . . . F-1
EXHIBIT G - Other Residual Financing Agreements . . . . . G-1
EXHIBIT - [Reserved] . . . . . . . . . . . . . . . . . . . H-1
CREDIT AND SECURITY AGREEMENT
CREDIT AND SECURITY AGREEMENT, dated as of January 30, 1998 (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 hereinafter
defined); 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 Excess Cash Flow 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.
WHEREAS, Borrower and Guarantor have entered into and may from time to
time enter into Other Residual Financing Agreements (as hereinafter defined)
with Lender;
WHEREAS, Borrower, Guarantor and Lender have agreed to secure the Other
RF Obligations (as hereinafter defined) 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 exceeds 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 Loans, 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 9.17 (a) and (b), also as provided in such
subsections).
"AMC" has the meaning assigned thereto in the recitals hereto.
"AMC GUARANTEE" means the guarantee in the form attached
hereto as Exhibit D provided by AMC as an inducement to Lender to
provide Borrower with the Loan, as amended, supplemented or otherwise
modified from time to time.
"APR" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"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.
"BANKRUPTCY REMOTE ENTITY" has the meaning assigned thereto in
the Pooling and Servicing Agreement.
"BASIC DOCUMENTS" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
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"BORROWER" has the meaning assigned thereto in the heading
hereto.
"BUSINESS DAY" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"CALCULATION DATE" has the meaning assigned thereto in
Section 3.12(a).
"CERTIFICATE INSURER" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
"CLASS B RESERVE ACCOUNT SUBSEQUENT DEPOSIT" has the meaning
assigned thereto in the Pooling and Servicing Agreement.
"CLOSING DATE" means January 30, 1998.
"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.
"COLLECTION PERIOD" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
"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 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
3
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" has the meaning assigned thereto in the Spread
Account Agreement.
"DISCOUNT RATE" means 15% per annum.
"ELIGIBLE SECURITIES" means (i) the Excess Cash Flow
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.
"EXCESS CASH FLOW CERTIFICATE" means the security evidenced by
the Excess Cash Flow Certificate issued pursuant to the Pooling and
Servicing Agreement.
"EXCESS CASH FLOW CERTIFICATEHOLDER" has the meaning assigned
thereto in the Pooling and Servicing Agreement.
"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 C 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.
4
"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 the 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).
"LIQUIDATION PROCEEDS" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
"LOAN" has the meaning assigned thereto in Section 2.1 hereof.
5
"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.
"MATURITY DATE" means the second anniversary of 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 Pooling and
Servicing Agreement is terminated pursuant to Section 10.01 thereof or
the Originator or Servicer exercises its option to purchase the corpus
of the Trust as provided in Section 10.02 of the Pooling and Servicing
Agreement, the Maturity Date shall be the date of such termination or
purchase, as the case may be.
"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.
"NOTE" has the meaning assigned thereto in Section 2.3(a)
hereof.
"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
6
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, 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.
"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, and as otherwise may be amended, supplemented or
otherwise modified from time to time pursuant to the terms thereof,
(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, and as otherwise may be amended, supplemented or
otherwise modified from time to time pursuant to the terms thereof and
(iii) each other
credit and security agreement among the Lender and
Borrower secured by one or more 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, 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 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,
7
fees, indemnities, costs, expenses or otherwise (including all fees and
disbursements of counsel to Lender).
"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).
"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.
"POOLING AND SERVICING AGREEMENT" means the Pooling and
Servicing Agreement, dated as of January 1, 1998, among LBAC, Borrower
and Chase Bank of Texas, National Association (formerly known as Texas
Commerce Bank National Association), as amended, supplemented or
otherwise modified from time to time.
"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 Excess Cash Flow Certificate, the then current
present value thereof, determined based upon the Valuation Rates 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
8
JOURNAL is not published on such date, then in THE WALL STREET JOURNAL
most recently published.
"PRINCIPAL BALANCE" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
"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.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of
January 1, 1998, among LBAC, AMC and Borrower, as amended, supplemented
or otherwise modified from time to time.
"RECEIVABLE" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"RECOURSE PROPERTY" has the meaning assigned thereto in
Section 2.10.
"RECOVERIES" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"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 25th day of each month or, if such
day is not a Business Day, the immediately succeeding Business Day,
commencing February 25, 1998.
"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 or
secretary of Borrower, Guarantor or AMC, as applicable.
"SECURITIZATION TRANSACTION" has the meaning assigned thereto
in the recitals hereto.
"SERVICER'S CERTIFICATE" has the meaning assigned thereto in
the Pooling and Servicing Agreement.
9
"SPREAD ACCOUNT AGREEMENT" means the Master Spread Account
Agreement dated as of January 1, 1998, among Borrower, the Certificate
Insurer, the Trustee and the Collateral Agent (as defined in the
Pooling and Servicing Agreement), as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"SPREAD ACCOUNT SUBSEQUENT DEPOSIT" has the meaning assigned
thereto in the Pooling and Servicing Agreement.
"SUBSEQUENT TRANSFER DATE" has the meaning assigned thereto in
the Pooling and Servicing Agreement.
"TARGET ADVANCE RATE" means, as of any Calculation Date, the
greater of (i) 60% and (ii) the lesser of (x) 112% and (y) the lowest
Advance Rate calculated to the date of such Calculation Date pursuant
to Section 3.12(a) (and for the calculation of the Target Advance Rate
provided in Section 9.17 (a) and (b), also as provided in such
subsections).
"TRUST" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"TRUSTEE" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"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.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling 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 $6,500,000 (SIX MILLION FIVE HUNDRED THOUSAND
DOLLARS) (the "Loan"). The proceeds of the Loan shall be used by Borrower to
make the initial deposits required to be made to the Spread Account (as
defined in the Pooling and Servicing Agreement), the Class B Reserve Account
(as defined in the Pooling and Servicing Agreement) and the Capitalized
Interest Account (as defined in the Pooling and Servicing Agreement)
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pursuant to the Spread Account Agreement and the Pooling and Servicing
Agreement, as applicable.
2.2 [Reserved]
2.3 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 B hereto (as amended, supplemented or otherwise modified from time to
time, the "Note")
(b) The date and amount of each 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 each 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 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 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 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 Note.
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(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 the last sentence of Section 2.7 (a), Borrower shall
cause the Trustee to remit directly to Lender all distributions payable under
the Pooling and Servicing Agreement and the Spread Account Agreement to the
Excess Cash Flow 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.
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 Excess Cash Flow
Certificate) delivered as Collateral hereunder into Lender's name and (ii)
subject to Section 5.5(d) of the Pooling and Servicing Agreement, upon the
request of Lender, re-register the Excess Cash Flow Certificate in the name of a
Bankruptcy Remote Entity designated by Lender.
(b) On or prior to the Closing Date, Borrower will provide Trustee
under the Pooling and Servicing Agreement with a notice providing for, among
other things, all remittances on the Excess Cash Flow 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 Trustee 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
Excess Cash Flow 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 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
12
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).
(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, ETC. 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) 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,
13
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 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 and the Other RF 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 Excess Cash Flow Certificate delivered to and
held by Lender or its designee or agent and all rights to
receive payments payable under the Pooling and Servicing
Agreement to the Excess Cash Flow Certificateholder pursuant
to the terms and provisions of the Pooling and Servicing
Agreement and the Spread Account Agreement;
(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
14
(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.
15
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 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.
16
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 the 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 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 CERTAIN ACCOUNTS. Lender acknowledges that pursuant to the
Pooling and Servicing Agreement and the Spread Account Agreement, Borrower, as
holder of the Excess Cash Flow Certificate, has pledged and created a security
interest in certain funds and property in accounts designated as the "Class B
Reserve Account", the "Capitalized Interest Account" and the "Spread Account" in
the Pooling and Servicing Agreement and the Spread Account Agreement, as
applicable. 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 (each such date of determination, a
"Calculation Date").
17
(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 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.
18
(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.
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, unless otherwise
specified by Lender in writing, 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
further that, Borrower may (unless such amendment or supplement is otherwise
consented to by Borrower in writing), no later than one (1) Business Day after
receipt of any such notice, object in writing to such amendment or supplement in
which case such amendment or supplement shall not be effective until consented
to in writing by Borrower.
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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 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 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 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 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.
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
20
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 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 November 30, 1997, 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 November 30, 1997 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
21
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 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, the Class B Reserve Account or
the Capitalized Interest 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.
22
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.
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 the
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
23
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 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 Borrower 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 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 Trustee pursuant to the terms of
the Pooling and Servicing Agreement.
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.
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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 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.
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(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 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 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 (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
26
Collateral or other rights under this Agreement, the 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.
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 Note and the Guarantee, without Lender's prior written consent
(which shall not be unreasonably withheld), it shall be subject to the following
restrictions:
27
6.1 ADVERSE TRANSACTIONS. Neither Borrower nor Guarantor shall
enter into any transaction which adversely affects the Collateral or Lender's
rights under this Agreement, the 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 as of the Closing Date and shall remain effective
until (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 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) 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
28
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 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
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 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 not 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 (formerly known as
Texas Commerce Bank National Association), as collateral agent, as such
agreement may be amended, supplemented or otherwise modified from time to time.
29
7. CONDITIONS PRECEDENT.
7.1 CONDITIONS PRECEDENT TO AGREEMENT. The obligation of Lender to
extend to Borrower the Loan as described in this Agreement are 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 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
Note, the Guarantee and the AMC Guarantee, as applicable; and
(iv) The duly executed, original 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
(vii) The following opinions of counsel in form and
substance satisfactory to Lender's counsel:
30
(A) Standard corporate opinions of Borrower, Guarantor
and AMC regarding due authorization, execution,
consents, material litigation and noncontravention;
(B) Enforceability of this Agreement, the 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;
(viii) The Other RF Amendments;
(ix) A notice to Trustee signed by Borrower, Lender and
the Trustee to the effect set forth in Section 2.7(b); and
(x) Such other documents, certificates or financial or
other information as Lender may reasonably request.
(b) The consummation of the Securitization Transaction.
(c) The Excess Cash Flow 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 Excess Cash Flow Certificate delivered to
Lender 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.
7.2 [Reserved]
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
31
(provided that the events described in paragraphs (f), (g), (h), (i), (j) and
(m) shall have no cure period):
(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 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 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
32
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 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 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
33
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 (GO) 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 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) (i) LBAC shall at any time resign, or be terminated, as a
servicer under any securitization; or (ii) LBAC shall at any time
receive notice that it will not be renewed as
34
servicer under any securitization and such notice is not revoked within
three (3) Business Days.
(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 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.
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 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 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
35
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 Pooling and Servicing 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
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 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.
36
(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
37
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 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
38
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.
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 Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement, the 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 Pooling and
Servicing 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 Excess Cash Flow Certificate hereunder, it shall not become
an affiliate of Borrower.
39
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 the 9.1, the Other RF
Obligations.
9.9 GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY. (A) THIS
AGREEMENT AND THE 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 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 OF 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.
(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:
40
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
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 LBAC: 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 Acceptance
Corp.
1998-1 [___]% Asset Backed
Certificates, Class A
1998-1 [___]% Asset Backed
41
Certificates, Class B
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.
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
42
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 ACKNOWLEDGED REORGANIZATION AND ASSET SALE. Lender
acknowledges that on May 2, 1997, a reorganization of AMC became effective
whereby the wholesale lending division and loan sale operations of AMC (formerly
known as Long Beach Mortgage Company) were transferred to a separate company,
Long Beach Financial Corporation ("LBFC"). All of the outstanding common stock
of LBFC was sold by AMC pursuant to a registered public offering (SEC No.
333-22013). Notwithstanding anything to the contrary stated elsewhere in this
Agreement or in any other document delivered in connection with this Agreement,
Lender agrees that references to the "financial condition" of AMC, and the
covenants and representations of AMC made herein or therein (other than the
representations set forth in Section 9(h) of the AMC Guarantee), shall be deemed
to exclude all of the assets so transferred and sold along with any expenses
incurred, distributions made and agreements executed in connection therewith.
9.17 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 lowest Advance Rate
used in the calculation of the Target Advance Rate (as provided in the
definition of 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
43
be the Present Value of the Collateral as of the close of business on the
Closing Date and (y) the lowest Advance Rate used in the calculation of the
Target Advance Rate (as provided in the definition of 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]
44
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: /s/ Xxxxx X. Xxxx
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
LONG BEACH ACCEPTANCE RECEIVABLES CORP., Borrower
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Executive Vice President
LONG BEACH ACCEPTANCE CORP., Guarantor
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx:
Title: Executive Vice President
SCHEDULE 4.16
PLANS
Borrower: None
Guarantor: None
46
EXHIBIT A
[Reserved]
EXHIBIT B
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
PROMISSORY NOTE
January 30, 1998
Amount: U.S. $6,500,000
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 SIX MILLION FIVE HUNDRED
THOUSAND DOLLARS (U.S. $6,500,000) 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 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 Note shall be payable in
immediately available funds without set-off or counterclaim, in the manner set
forth in the Agreement.
This Note is issued pursuant to the terms of a
Credit and Security
Agreement dated as of January 30, 1998 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 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 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:
B-1
EXHIBIT C
January 30, 1998
[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 January 30, 1998
-------------------------------------------------------
Ladies and Gentlemen:
1. For value received and in accordance with the terms of the
Credit and Security Agreement, dated as of January 30, 1998 (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,
C-1
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 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
C-2
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,
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
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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
9.17(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 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 of 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.
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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
either of 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 of 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 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.
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 D
January 30, 1998
[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 January 30, 1998
Ladies and Gentlemen:
1. For value received and in accordance with the terms of (i) the
Credit and Security Agreement, dated as of January 30, 1998 (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 January
30, 1998 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
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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 the collateral security,
guarantee or right of 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,
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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 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
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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 9.17(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.
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
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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 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 November 30, 1997, 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
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commitments, except as referred to or reflected in said balance sheets as at
said date. Since November 30, 1997, 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 contained, in light of the circumstances in which
made, not misleading.
(1) 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 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 Guaranty Agreement, dated as of January 30,
1998, between AMC and the Trustee, and (ii) the Guaranty, dated as of January
30, 1998, among AMC, Borrower and Lender, is true and correct; provided that
this representation shall not be deemed to have been breached if AMC shall have
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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 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
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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 nonconfidential 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 operation, 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
D-9
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.
(1) 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 of 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
D-10
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 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
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
guarantee or the LBAC Guarantee 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.
D-11
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 substantially all of the business of AMC, provided that in
any of the foregoing cases such Person 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
D-12
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.
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:
D-13
EXHIBIT E
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
QUARTERLY COMPLIANCE CERTIFICATE
I, , Treasurer of Long Beach Acceptance Receivables Corp. hereby certify
that the representations and warranties contained in Section 4 of the Credit and
Security Agreement (the "Agreement") dated as of January 30, 1998 among Long
Beach Acceptance Receivables Corp., Long Beach Acceptance Corp. and Greenwich
Capital Financial Products, Inc. are true and correct, that Long Beach
Acceptance Receivables Corp. is in compliance with the covenants set forth in
Sections 5 and 6 of the Agreement and that no Event of Default (as defined in
the Agreement), and no event which with notice or lapse of time or both would
become an Event of Default, has occurred and is continuing.
Dated:
-------------------- ----------------------------------------
Name:
Title: Treasurer
E-1
EXHIBIT F
[FORM OF OPINION OF COUNSEL TO THE
BORROWER AND EACH GUARANTOR]*
January 30, 1998
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: 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
-------------------------------------------------------------
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 January 30,
1998 (the "Credit and Security Agreement"), by and among
Greenwich Capital Financial Products, Inc. (the "Lender"),
Borrower and LBAC, as Guarantor;
(b) the Note (as defined in the Credit and Security Agreement);
(c) the Guarantee, dated January 30, 1998 (the "LBAC Guarantee"),
made by LBAC in favor of Lender; and
(d) the Guarantee, dated January 30, 1998 (the "AMC Guarantee"),
made by AMC in favor of Lender;
(the documents referred to in clauses (a) through (c),
----------------------
* May be incorporated into such other opinions delivered by counsel to
Borrower and each Guarantor in connection with the Securitization Transaction.
F-1
collectively, the "DELIVERED DOCUMENTS").
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
F-2
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 Note, to
borrow under the Credit and Security Agreement and the 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
Agreement and the 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 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 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 of 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 of other similar laws relating to or affecting the rights
of creditors and (ii) the application of
F-3
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 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
F-4
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 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 Note, the LBAC Guarantee or the
AMC Guarantee under the Securities Act of 1933, as amended.
* * *
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,
F-5
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, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
Credit 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, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
G-1
EXHIBIT H
[Reserved]
H-1
EXECUTION COPY
NOTICE PURSUANT TO SECTION 3.14 OF
THE AGREEMENT REFERRED TO BELOW
Reference is made to the Credit and Security Agreement (the
"Agreement"), dated as of January 30, 1998, among Greenwich Capital Financial
Products, Inc., as lender, (the "Lender"), Long Beach Acceptance Receivables
Corp., as borrower (the "Borrower") and long Beach Acceptance Corp. as
guarantor.
Pursuant to Section 3.14 of the Agreement, we hereby deliver to you
this amendment to Exhibit G to the Agreement in the form attached hereto as
Annex A.
For all purposes of the Security Agreement, dated as of January 30,
1998, made by Borrower, as pledgor, in favor of Lender, as pledgee, Exhibit G to
the Agreement shall be deemed to be designated as "Schedule G".
[Signature Page Follows]
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Agreement.
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
-----------------------------------
Name:
Title:
AGREED AND ACCEPTED:
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By:
-----------------------------------
Name:
Title:
LONG BEACH ACCEPTANCE CORP.
By:
-----------------------------------
Name:
Title:
AMERIQUEST MORTGAGE COMPANY
By:
-----------------------------------
Name:
Title:
ANNEX A
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, 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,
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, and as otherwise may be amended, supplemented or otherwise modified
from time to time pursuant to the terms thereof.
