[EXECUTION COPY]
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AUTO LOAN WAREHOUSE
CREDIT AND SECURITY AGREEMENT
Between
PRINCETON CAPITAL CREDIT CORPORATION,
as Lender,
and
WESTERN FIDELITY FUNDING INC.,
as Borrower
Dated as of August 12, 1996
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS .............................................................. 1
SECTION 1.1 Defined Terms ....................................... 1
SECTION 1.2 Number .............................................. 7
SECTION 1.3 Terms Defined in UCC ................................ 7
SECTION 1.4 Accounting Terms .................................... 7
ARTICLE II
LOANS TO THE BORROWER .................................................... 7
SECTION 2.1. Loans .............................................. 7
SECTION 2.2. Procedure for Borrowing ............................ 8
SECTION 2.3. Delivery and Use of Borrowed Funds ................. 9
SECTION 2.4. Maturity of Principal .............................. 9
SECTION 2.5. Accrual of Interest ................................ 9
SECTION 2.6. Application of Collections and Take-Out Receipts. 9
SECTION 2.7. Statement of Account ............................... 11
SECTION 2.8. Additional Payments ................................ 11
SECTION 2.9. Method and Manner of Payment ....................... 11
SECTION 2.10. Application of Payments ........................... 11
SECTION 2.11. Maximum Interest Rate ............................. 11
SECTION 2.12. No Deduction ...................................... 12
SECTION 2.13. Computation of Interest and Fees .................. 12
ARTICLE III
COLLATERAL ............................................................... 12
SECTION 3.1. Security for Loans ................................. 12
SECTION 3.2. Perfection of Security Interest .................... 14
SECTION 3.3. Grant of Lien Not to Alter the Borrower's Loans .... 14
SECTION 3.4. Defense of Lender's Interests ...................... 14
SECTION 3.5. Set-Off ............................................ 14
SECTION 3.6. Post-Closing Documentation ......................... 15
SECTION 3.7. Collateral Agents .................................. 15
SECTION 3.8. Power of Attorney .................................. 15
SECTION 3.9. Exculpation of Liability ........................... 16
ARTICLE IV
ADMINISTRATION AND SERVICING OF AUTO LOANS ............................... 16
ARTICLE V
COLLECTION, RESERVE AND LOCKBOX ACCOUNTS ................................. 16
SECTION 5.1 Establishment and Maintenance of Collection Account . 16
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SECTION 5.2 Required Deposits to the Collection Account ......... 17
SECTION 5.3 Rights of Withdrawal from the Collection Account .... 17
SECTION 5.4 Establishment and Maintenance of Reserve Account .... 18
SECTION 5.5 Application of Funds in the Reserve Account ......... 18
SECTION 5.6 Establishment and Maintenance of Cash Account ....... 18
SECTION 5.7 Application of Funds in the Cash Account ............ 18
SECTION 5.8 Establishment of Lockbox Accounts ................... 18
SECTION 5.9 Misapplication of Funds ............................. 19
ARTICLE VI
TAKE-OUT PROCEDURE ....................................................... 19
SECTION 6.1 Loans Due Upon Take-Out ............................. 19
SECTION 6.2 Instructions to the Lender .......................... 19
SECTION 6.3 Delivery of Documents to Take-Out Investor .......... 20
SECTION 6.4 Substitution of Take-Out Investors .................. 20
SECTION 6.5 Take-Out Fee ........................................ 20
SECTION 6.6 Take-Out Status Report .............................. 20
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BORROWER ............................... 21
SECTION 7.1 Representations and Warranties Concerning Borrower .. 21
SECTION 7.2 Representations and Warranties Concerning Collateral 23
SECTION 7.3 Survival of Representations and Warranties .......... 25
ARTICLE VIII
CERTAIN COVENANTS OF THE BORROWER ........................................ 26
SECTION 8.1 Maintenance of Office ............................... 26
SECTION 8.2 Existence ........................................... 26
SECTION 8.3 General Maintenance of Business, Etc. ............... 26
SECTION 8.4 Financial Statements and Reports .................... 27
SECTION 8.5 Inspection .......................................... 27
SECTION 8.6 Books and Records ................................... 28
SECTION 8.7 Transfers of Assets ................................. 28
SECTION 8.8 Fidelity Bond ....................................... 28
SECTION 8.9 Preservation of Collateral .......................... 28
SECTION 8.10 Compliance with Law, etc ........................... 28
SECTION 8.11 Indemnification .................................... 29
SECTION 8.12 Net Worth .......................................... 29
SECTION 8.13 Payment of Taxes and Claims ........................ 29
SECTION 8.14 Insurance .......................................... 29
SECTION 8.15 Borrower to Pay Expenses ........................... 29
SECTION 8.16 Further Assurances ................................. 29
SECTION 8.17 Other Agreements and Parties ....................... 29
SECTION 8.18 Defaults on Collateral ............................. 30
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SECTION 8.19 No Disposition of Collateral ....................... 30
SECTION 8.20 Payment of Fees .................................... 30
SECTION 8.21 Violations ......................................... 30
SECTION 8.22 Payment of Indebtedness ............................ 30
SECTION 8.23 Exercise of Rights ................................. 30
SECTION 8.24 Negative Covenants ................................. 30
ARTICLE IX
CONDITIONS PRECEDENT ..................................................... 31
SECTION 9.1. Conditions to Initial .............................. 31
SECTION 9.2. Conditions to Each Loan ............................ 32
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES ........................................... 34
SECTION 10. 1 Events of Default ................................. 34
SECTION 10.2 Loans Due Upon Event of Default .................... 36
SECTION 10.3 Rights and Remedies ................................ 36
SECTION 10.4 Realization Upon Collateral ........................ 37
SECTION 10.5 Cure of Defaults ................................... 37
SECTION 10.6 Application of Proceeds of Sale of Collateral....... 37
SECTION 10.7 Lender May Purchase Collateral ..................... 38
SECTION 10.8 No Loans After Event of Default .................... 38
SECTION 10.9 Consents............................................ 38
SECTION 10.10 Lender's Retention of Property .................... 39
SECTION 10.11 Remedies Not Exclusive; No Waiver of Remedies...... 39
SECTION 10.12 Waiver by Borrower ................................ 39
SECTION 10.13 Lender's Discretion ............................... 40
SECTION 10.14 Set-Off ........................................... 40
SECTION 10.15 Delay ............................................. 40
ARTICLE XI
BANKRUPTCY PROVISIONS ................................................... 40
SECTION 11.1 Waiver of Automatic or Supplemental Stay ........... 40
SECTION 11.2 Acknowledgment of the Borrower ..................... 40
ARTICLE XII
NOTES .................................................................... 41
SECTION 12.1 Exchange, Consolidation, Transfer and Assignment
of Notes .......................................... 41
SECTION 12.2 Mutilated, Lost or Destroyed Notes ................. 41
SECTION 12.3 Validity of Replacement Notes ...................... 42
ARTICLE XIII
MISCELLANEOUS ............................................................ 42
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SECTION 13.1 Term ............................................... 42
SECTION 13.2 Termination ........................................ 42
SECTION 13.3 Entire Understanding ............................... 43
SECTION 13.4 Liability of Lender ................................ 43
SECTION 13.5 No Third Party Rights .............................. 43
SECTION 13.6 Expenses ........................................... 43
SECTION 13.7 Notices ............................................ 43
SECTION 13.8 Counterparts ....................................... 44
SECTION 13.9 Severability ....................................... 44
SECTION 13.10 Successors and Assigns ............................ 44
SECTION 13.11 Governing Law ..................................... 44
SECTION 13.12 Waiver of Jury Trial; Jurisdiction ................ 44
SECTION 13.13 Injunctive Relief ................................. 45
SECTION 13.14 Headings Not to Affect Interpretation ............. 45
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AUTO LOAN WAREHOUSE CREDIT AND SECURITY AGREEMENT
THIS AUTO LOAN WAREHOUSE CREDIT AND SECURITY AGREEMENT (this "Agreement"),
dated as of August 12, 1996, is hereby executed by and between PRINCETON CAPITAL
CREDIT CORPORATION, a corporation organized under the laws of Delaware (the
"Lender"), and WESTERN FIDELITY FUNDING INC., a corporation organized under the
laws of Colorado (the "Borrower").
PRELIMINARY STATEMENT
The defined terms used in this Agreement shall have the respective meanings
specified in Article 1.
The Borrower has deemed it necessary to borrow money from the Lender in
connection with the Borrower's automobile, sport utility vehicle and light truck
loan business, and the Lender has agreed to make loans to the Borrower, subject
to all of the terms and conditions of this Agreement. The Borrower is duly
authorized under all applicable provisions of law, its Certificate of
Incorporation and By-Laws to borrow from the Lender upon the terms specified
herein and to execute and deliver this Agreement and the other instruments
referred to herein and to perform all obligations imposed upon the Borrower in
connection with the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Lender and the Borrower hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1. 1 Defined Terms. As used in this Agreement, the following terms
have the following respective meanings:
Agreement: This Auto Loan Warehouse Credit and Security Agreement, as
amended, supplemented or renewed from time to time.
Amount Financed: With respect to an Auto Loan, the aggregate amount
borrowed by the Obligor under such Auto Loan toward the purchase price of the
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
Application Fee: As shown on Exhibit D hereto.
Assignment: An assignment from the Borrower to the Lender of the Lien
Certificate for an Auto Loan, substantially in the form of Exhibit F hereto.
Auto Loan: A fixed-rate, fully-amortizing simple interest installment loan
pledged as Collateral and arising from the sale of a new or used automobiles,
sport utility vehicles or light duty trucks which includes, without limitation,
(i) all security interests or Liens and property subject thereto from time to
time purporting to secure payment by the Obligor thereunder, (ii) all
guarantees, indemnities and warranties, insurance policies, Lien Certificates
and other agreements or arrangements of any character from time to time
supporting or securing payment of such loan, (iii) all collections and records
with respect to the foregoing and (iv) all proceeds of any of the foregoing.
Borrower: Western Fidelity Funding Inc., in its capacity as borrower under
this Agreement.
Borrower's Underwriting Guidelines: The underwriting guidelines used by the
Borrower in the origination of the Auto Loans, a copy of which has been
delivered to the Lender on the date of this Agreement.
Business Day: Any day other than a Saturday, Sunday, legal holiday or other
day on which commercial banks in New Jersey are authorized or obligated by law,
executive order or governmental decree to be closed.
Cash Account: As defined in Section 5.6 hereof.
Closing Date: With respect to any Loan, the date on which such Loan is to
be funded by the Lender.
Collateral: As defined in Section 3.1 hereof.
Collateral Agent: Each entity selected and approved by the Lender, in its
sole discretion, serving as collateral agent under a Custodial Agreement.
Collection Account: As defined in Section 5.1 hereof.
Collection Records: All manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the Auto
Loans.
Custodial Agreement: Each agreement, between the Lender, the Borrower and
the Collateral Agent named therein, providing for the custody of any portion or
all of the Collateral.
Dealer: A seller of new or used automobiles, sport utility vehicles or
light trucks that originated one or more of the Auto Loans for the Borrower and
has executed a dealer agreement with the Borrower substantially in the form of
Exhibit C hereto.
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Default Rate: The "Interest Rate" as defined herein plus 6%.
Defaulted Auto Loan: An Auto Loan that by its terms (i) has three or more
payments due, without regard to any applicable grace period, (ii) has its first
and second payments due without regard to any applicable grace period or (iii)
an event of default occurs under any Auto Loan.
Delinquent Auto Loan: An Auto Loan that by its terms has two or more
payments due without regard to any applicable grace period.
Disbursement Summary: Each statement, substantially in the form of Exhibit
B hereto, signed by the Lender and countersigned by the Borrower, that serves as
a receipt for the delivery of net funds from a Loan to the Borrower or its
designees.
Disposition: Any sale or other transfer of an Auto Loan by the Borrower
whether pursuant to a Take-Out Agreement or otherwise.
Eligible Account: Either (i) a segregated trust account that is maintained
with the corporate trust department of a depository institution acceptable to
the Lender or (ii) a segregated direct deposit account maintained with a
depository institution or trust company acceptable to the Lender.
Eligible Auto Loan: Any Auto Loan that (i) has been originated by the
Borrower in accordance with the Borrower's Underwriting Guidelines, (ii)
satisfies all of the representations and warranties contained in Section 7.2
hereof, (iii) is subject to a Take-Out Commitment from an Eligible Take-Out
Investor which will result in a transfer of such Auto Loan within 90 days of the
Closing Date for the Loan that such Auto Loan is pledged to secure; provided,
however, that, during the Start-Up Period, such transfer may occur within such
longer time period as the Lender may agree to in writing, (iv) has not been
pledged to secure any other Loan, (v) is not a Defaulted Auto Loan, (vi) unless
waived by the Lender, is not a Delinquent Auto Loan and (vii) does not exceed
the Maximum Auto Loan Amount.
Eligible Take-Out Investor: A Take-out Investor that has been approved by
the Lender in its sole discretion.
Event of Default: Any event described in Section 10.1 hereof.
Financed Vehicle: A new or used automobile, sport utility vehicle or light
truck, together with all accessories thereto, securing or purporting to secure
an Obligor's indebtedness under an Auto Loan, together with any Insurance
Policies relating thereto.
Funding Amount: With respect to each Auto Loan, that secures a Loan, the
amount to be advanced to the Borrower by the Lender which shall equal the least
of (i) 98 % of the Amount Financed, as reduced for any payments of principal
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collected prior to the applicable Closing date, (ii) the Take-Out Price for such
Auto Loan, (iii) the amount on Exhibit G and (iv) the amount of funds advanced
by the Borrower with respect to such Auto Loan plus an amount approved in
writing by the Lender.
Funding and Fee Schedule: The schedule attached hereto as Exhibit D, if
any.
Funding Fee: As shown on Exhibit D hereto.
General Intangibles: All of the Borrower's general intangibles, whether now
owned or hereafter acquired, including all choses in action, causes of action,
inventions, designs, patents, patent applications, quality control procedures,
trademarks, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, computer programs, all claims under guaranties,
security interests or other security held by or granted to the Borrower to
secure payment of any of the Collateral, all rights of indemnification and all
other intangible property of every kind and nature.
Insurance Policy: With respect to an Auto Loan, any insurance policy
benefiting the holder of the Auto Loan providing loss or physical damage, credit
life, credit disability, theft, mechanical breakdown or similar coverage with
respect to the Financed Vehicle or the Obligor.
Interest Rate: As shown on Exhibit D hereto.
Lender: Princeton Capital Credit Corporation, as lender under this
Agreement, or any successor or assignee.
Lien: Any security interest, lien, charge, pledge, preference, equity or
encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
Lien Certificate: With respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
registrar of titles (or comparable agency or office) of the applicable state to
a secured party which indicates that the lien of the secured party on the
Financed Vehicle is recorded on the original certificate of title. In any
jurisdiction in which the original certificate of title is required to be given
to the Obligor, the term "Lien Certificate" shall mean only a certificate or
notification issued to a secured party.
Loan: Each loan made by the Lender to the Borrower pursuant to this
Agreement, all of which, in the aggregate, may be evidenced by one or more
Notes.
Loan Funding Request: Shall have the meaning set forth in Section 2.2(a)
hereof.
Lockbox Account: As defined in Section 5.6 hereof.
Maturity Date: With respect to a Note, the date set forth on such Note as
the date on which it is due and payable.
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Maximum Auto Loan Amount: $25,000 or such other amount as may be approved
in writing by the Lender.
Maximum Credit Line: $5,000,000.
Monthly Records: All records and data maintained by the Borrower with
respect to the Auto Loans, including the following with respect to each Auto
Loan: the account number; the identity of the originating Dealer; Obligor name;
Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount, if any, of
Force-Placed Insurance payable monthly; amount of the scheduled payment; and
past due late charges, if any.
Note: Any note issued by the Borrower to the Lender evidencing all or a
portion of the Loan made pursuant to the terms of this Agreement and
substantially in the form of Exhibit A hereto, including any Note that has been
issued in substitution, exchange or replacement of any Note previously issued by
the Borrower to the Lender pursuant to the terms hereof.
Obligor: The purchaser or the co-purchasers of the Financed Vehicle and any
other Person or Persons who are primarily or secondarily obligated to make
payments under an Auto Loan.
Pending Event of Default: An event that, with the giving of notice or
passage of time or both, would constitute an Event of Default.
Permitted Liens: Shall mean (i) Liens created under this Agreement and (ii)
Liens securing taxes, assessments, governmental charges or levies not yet due.
Person: Any individual, corporation, partnership, joint venture,
association, joint stock company, trust, estate, unincorporated organization or
government (or agency or subdivision thereof).
Proceeds: Shall have the meaning assigned such term under the UCC of the
State of New Jersey, and of each other jurisdiction whose law governs the grant
or perfection of the Collateral Agent's interest in the particular proceeds of
the Collateral and shall also include (to the extent not already included): (i)
any and all proceeds of any insurance, indemnity, warranty, guaranty or letter
of credit payable to the Borrower from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or rights to
amounts payable to the Borrower from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any governmental body, authority, bureau or agency (or
any person acting under color of governmental authority),(iii) any and all other
amounts, products, offspring, rents or profits from time to time paid or payable
under or in connection with the Collateral and (iv) all additions to or
substitutions or replacements for any of the Collateral.
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Program Documents: This Agreement, each Auto Loan, each Lien Certificate,
each Assignment, each Servicing Agreement, each Custodial Agreement and all UCC
financing statements and any other agreement, document, instrument, power of
attorney, certificate and application related to the transactions contemplated
by this Agreement.
Renewal Date: Any date on which this Agreement is renewed pursuant to
Section 13.1 hereof.
Renewal Fee: As shown on Exhibit D hereto.
Reserve Account: As defined in Section 5.4 hereof.
Reserve Account Deficiency Amount: As of any date the amount, if any, by
which the Reserve Account Required Balance exceeds the amount on deposit in the
Reserve Account as of such date.
Reserve Account Excess Amount: As of any date, the amount, if any, held in
the Reserve Account in excess of the Reserve Account Required Balance after
giving effect to any withdrawals from the Reserve Account pursuant to Section
5.3 on such date.
Reserve Account Required Balance: As of any date the greater of (i) $10,000
and (ii) 2.00% of the aggregate amount of all Loans made from the date hereof
(until such amount equals 2.00% of the Maximum Credit Line).
Security Interest: The assignments and pledges to the Under, or a
Collateral Agent on its behalf, of, and the continuing security interest of the
Lender in, the Collateral intended to be effected by the terms of this Agreement
or any other Program Documents.
Each entity selected and approved by the Under, in its sole discretion,
Serving as servicer under a Servicing Agreement or Western Fidelity Funding
Inc., in its capacity as servicer, under the terms of this Agreement.
Servicing Agreement: Each agreement, between the Lender, the Borrower and
the servicer named therein, providing for the servicing of any portion or all of
the Collateral.
Start-Up Period: The period, if any, designated as such on the Start-Up
Period Volume Projection Schedule and beginning on the date hereof.
Start-Up Period Volume Projection Schedule: The schedule attached hereto as
Exhibit E, if any.
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Take-Out Agreement: An agreement, in form and substance satisfactory to the
Lender, from a Take-Out Investor to purchase one or more Auto Loans pledged to
the Lender as security for any Note.
Take-Out Commitment: With respect to an Auto Loan, the agreement by a
Take-Out Investor pursuant to a Take-Out Agreement to purchase or otherwise fund
and acquire such Auto Loan on a date and at a price specified in such Take-Out
Agreement.
Take-Out Fee: As shown on Exhibit D hereto.
Take-Out Investor: Any corporation, institution or agency that regularly
purchases Auto Loans and is approved by the Lender to issue a Take-Out
Agreement.
Take-Out Price: With respect to an Auto Loan, the amount of funds to be
advanced by the Take-Out Investor pursuant to the Take-Out Agreement relating to
such Auto Loan.
UCC: The Uniform Commercial Code, as in effect in the relevant
jurisdiction.
Vendor Single Interest Insurance Policy: A blanket insurance policy
obtained by the Borrower and acceptable to the Lender covering all of the Auto
Loans and naming the Lender as an additional loss payee.
SECTION 1.2 Number. Each reference to a term defined herein is intended to
include the plural as well as the singular number.
SECTION 1.3 Terms Defined in UCC. The terms "Inventory," "Goods,"
"Accounts," "Contract Rights," "Charter," "General Intangibles" and "Documents"
have the respective meanings ascribed in the UCC.
SECTION 1.4 Accounting Terms. As used in this Agreement or any certificate,
report or Program Document made or delivered pursuant to this Agreement,
accounting terms not defined in this agreement shall have the meanings given to
them under generally accepted accounting principals in the United States in
effect from time to time.
ARTICLE II
LOANS TO THE BORROWER
SECTION 2.1. Loans. Subject to the terms and conditions set forth in this
Agreement, the Lender will make Loans to the Borrower in aggregate amounts
outstanding at any time equal to the Maximum Credit Line. The Loans shall be
evidenced by this Agreement and the Notes.
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Each Loan to be made on a Closing Date will be made in an amount equal to
the sum of the Funded Amounts for the Auto Loans being pledged as Collateral
pursuant to the related Loan Funding Request.
SECTION 2.2. Procedure for Borrowing.
(a) Notice. The Borrower shall give the Lender written notice, or
electronic notice acceptable to the Lender (the "Loan Funding Request"), of the
proposed Loan not less than one Business Day prior to the proposed Closing Date.
The Loan Funding Request shall specify the following: (i) the loan numbers of
the Auto Loans to secure such Loan; (ii) the note date for each such Auto Loan;
(iii) the original and current principal balance of such Auto Loans; (iv) the
interest rate on such Auto Loans; (v) the amount of each Auto Loan that the
Borrower funded; (vi) the maturity date of such Auto Loans; (vii) the
anticipated Funded Amount for each Auto Loan; (viii) the amount of the Loan
requested; (ix) the identity of the Take-Out Investor for each Auto Loan; (x)
the proposed Maturity Date for the Loan which shall be the date of the last
Take-Out Commitment relating to the Auto Loans securing that Loan; provided,
however, that no Maturity Date shall be more than 90 days from the Closing Date
for a Loan except during the Start-Up Period; and (xi) wire instructions for
distribution of the Loan proceeds. Simultaneously with the delivery of a Loan
Funding Request, the Borrower shall also deliver to the Lender all documents
relating to each Auto Loan as the Lender may reasonably require. The Loan
Funding Request shall also specify the manner and anticipated delivery date to
the Lender, or a Collateral Agent acting on behalf of the Lender, of the
documents relating to such Auto Loans required by the Lender.
(b) Disbursement Summary. Upon receipt of the Loan Funding Request and
review and verification of the information contained in such Loan Funding
Request, the Lender shall prepare the Disbursement Summary. The Disbursement
Summary shall set forth the following: (i) the amount of the Loan; (ii) the
Funded Amount for each Auto Loan being pledged to secure such Loan; (iii) the
fees and other amounts to be deducted from the proceeds of such Loan; (iv) the
net Loan proceeds; and (v) the parties to whom the Borrower has directed the
Lender to deliver such net Loan proceeds. The Disbursement Summary shall he
delivered to the Borrower on or before the Closing Date, by facsimile or
electronic delivery methods. Upon receipt, the Borrower shall, by
countersignature, acknowledge its agreement with the computations and amounts
set forth in the Disbursement Summary. The Borrower shall promptly return the
countersigned Disbursement Summary to the Lender by facsimile.
(c) Satisfaction of Conditions Precedent. Prior to the disbursement of any
Loan proceeds, the Borrower shall have satisfied all of the conditions precedent
set forth in Article IX hereof and shall have complied with all other terms and
conditions of this Agreement.
(d) Disbursement of Funds. If the requirements set forth above have been
satisfied, on each Closing Date, the Lender will make a Loan to the Borrower in
the amount specified in the Disbursement Summary for such Loan.
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(e) Notes. The Lender, in its sole discretion, shall determine which Auto
Loans will serve as security for a Loan and whether a new Note will be issued on
a Closing Date. Each Loan, or all Loans in the aggregate, as the case may be,
shall be evidenced by a Note executed on behalf of the Borrower.
SECTION 2.3. Delivery and Use of Borrowed Funds. Upon the making of a Loan
pursuant to Section 2.2, the lender, at the request of the Borrower contained in
the Loan Funding Request and verified in the Disbursement Summary, shall deliver
funds representing the amount of such Loan (net of any fees or other moneys owed
to the Lender by the Borrower on such Closing Date) to the Borrower by wire
transfer. The proceeds of any Loan shall be used by the Borrower solely (a) to
disburse funds to the applicable Dealer in connection with the origination of
each Auto Loan that secures the related Note, (b) to reimburse the Borrower for
funds previously disbursed in connection with the origination of an Auto Loan
securing such Loan or (c) with respect to proceeds in excess of amounts required
to satisfy clauses (a) or (b) hereof, for general corporate purposes of the
Borrower.
SECTION 2.4. Maturity of Principal. Each Loan shall be payable (a) on
demand or (b) automatically without notice, presentment, demand or protest to
the Borrower upon the earliest of (i) the Maturity Date set forth in the
Disbursement Summary for such Loan, (ii) the occurrence of an Event of Default
hereunder, (iii) the termination of this Agreement, (iv) the termination,
expiration, lapse, rescission or cancellation of the Take-Out Agreement relating
to any Auto Loan securing such Note unless another Take-Out Agreement is secured
by the Borrower or (v) the Auto Loan securing such Loan becomes a Defaulted Auto
Loan.
SECTION 2.5. Accrual of Interest. The Borrower agrees to pay interest from
the applicable Closing Date on each Note through the date of payment thereof at
the Interest Rate. Interest on each Note is due and payable on the first day of
each month. The Interest Rate is a "floating rate" and any change in such
floating rate shall be effective immediately without notice to the Borrower,
which such notice the Borrower hereby waives. Notwithstanding anything herein to
the contrary, if any Note remains unpaid after its maturity or acceleration, or
if an Event of Default shall occur, interest shall accrue from such date at a
rate equal to the Default Rate.
SECTION 2.6. Application of Collections and Take-Out Receipts. The Borrower
hereby acknowledges that all collections on the Auto Loans less servicing
expense and all proceeds of the Disposition of an Auto Loan to a Take-Out
Investor will be paid to the Lender and will be applied to reduce the
outstanding amount of any Note and to pay any other fees and expenses due
hereunder. If no Event of Default has occurred, such collections and proceeds
shall be applied as follows:
(a) On the Business Day following receipt by the Lender, collections
on each Auto Loan shall be applied in the following order:
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(i) to pay principal of the Loan that the books and records of
the Lender indicate is secured by the Auto Loan to which such
collections relate until the outstanding principal balance thereof is
reduced to zero;
(ii) to pay all accrued and unpaid interest due on all Loans, pro
rata;
(iii) to deposit into the Reserve Account the Reserve Account
Deficiency Amount, if any on such date;
(iv) to pay all fees due and amounts owing hereunder; and
(v) to deposit into the Cash Account all remaining funds.
(b) On the Business Day following receipt by the Lender, proceeds of
the Disposition of an Auto Loan to a Take-Out Investor shall be applied in
the following order:
(i) to pay principal of the Loan that the books and records of
the Lender indicate is secured by the Auto Loan to which such proceeds
relate until the outstanding principal balance thereof is reduced to
zero;
(ii) to pay all accrued and unpaid interest due on the Loan
secured by the Auto Loan to which such proceeds relate;
(iii) to pay the Take-Out Fee for such Auto Loan;
(iv) if more than one Loan is outstanding, to pay all accrued and
unpaid interest due on all Loans, other than the Loan to which payment
made pursuant to clause (ii) above, pro rata;
(v) to deposit into the Reserve Account the Reserve Account
Deficiency Amount, if any on such date;
(vi) to pay all other fees due and amounts owing hereunder; and
(vii) to make distributions to the Borrower,
(c) If, in connection with a Disposition, items (i) through (vi) of
clause (b) above have been paid in full, then the Lender shall release and
pay to the Borrower all amounts on deposit in the Cash Account that relate
to the Auto Loan transferred pursuant to such Disposition.
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(d) If proceeds of a Disposition are insufficient to pay in full items
(i) through (vi) of clause (b) above, then the Lender may withdraw funds
from either the Reserve Account or the Cash Account to make up the
shortfall.
SECTION 2.7. Statement of Account. The Lender shall maintain loan records
for the Borrower in which shall be recorded the date and amount of each Loan
made by the Lender and the date and amount of each payment in respect thereof;
provided, however, that the failure by the Lender to record the date and amount
of any Loan shall not adversely affect the Lender. For each month, the Lender
shall send to the Borrower a statement showing the accounting for the Loans
made, payments made or credited in respect thereof, and other transactions
between the Lender and the Borrower, during such month. The monthly statements
shall be deemed correct and binding upon the Borrower in the absence of manifest
error and shall constitute an account stated between the Lender and the Borrower
unless the Lender receives a written statement of the Borrower's specific
exceptions thereto within 30 days after such statement is received by the
Borrower. The records of the Lender shall be prima facie evidence of the amounts
of Loans and other charges thereto and of payments applicable thereto.
SECTION 2.8. Additional Payments. Any reasonable sums expended by the
Lender due to the Borrower's failure to perform or comply with its obligations
under this Agreement may be charged to the Borrower's account as a Loan and
added to an outstanding Note.
SECTION 2.9. Method and Manner of Payment. The Borrower agrees that all
payments of principal of and interest on any Loan shall be made by or on behalf
of the Borrower by wire transfer to the Lender at the following wire address:
CoreStates/New Jersey National Bank, Philadelphia, Pennsylvania, ABA #000000000,
Account No. 00000000. All payments of principal, interest and other amounts
payable hereunder, or under any of the other Program Documents shall be made to
the Lender not later than 1:00 P.M. (New Jersey time) on the due date therefor
in lawful money of the United States of America in Federal or other funds
immediately available to the Lender. The Lender shall have the right to
effectuate payment on any and all Loans due and owing hereunder by increasing
the outstanding amount of any Note.
SECTION 2.10. Application of Payments. The Lender shall have the continuing
and exclusive right to apply or reverse and reapply any and all Proceeds of
Collateral to any portion of the Loans. To the extend that the Borrower makes a
payment or the Lender receives any payment or Proceeds of the Collateral for the
Borrower's benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver, custodian or any other party under any
bankruptcy law, common law or equitable cause, then, to such extent, the Loans
or part thereof intended to be satisfied shall be revived and continue as if
such payment or proceeds had not been received by the Lender.
SECTION 2. 11. Maximum Interest Rate. No provision of this Agreement or of
any Note shall require the payment of or permit the collection of interest in
excess of the maximum permitted by law. If any rate of interest required hereby
or by any Note shall be found to be in excess of the maximum rate permitted by
11
law, neither the Borrower nor its successors or assigns shall be obligated to
pay such interest in excess of the maximum permitted by law, and the right to
demand the payment of any such excess shall be and hereby is waived and this
Section 9.6 shall control any provision of this Agreement or any Note which is
inconsistent herewith.
SECTION 2.12. No Deduction. Borrower shall pay principal, interest, and all
other amounts payable hereunder, or under any related agreement, without any
deduction whatsoever, including, but not limited to, any deduction for any
set-off or counterclaim.
SECTION 2.13. Computation of Interest and Fees. Interest and fees under
this Agreement shall be computed on the basis of a year of 360 days and for the
actual number of days elapsed. If any payment becomes due and payable on a day
other than a Business Day, then such due date shall be extended to the next
Business Day.
ARTICLE III
COLLATERAL
SECTION 3. 1. Security for Loans. As security for the prompt, complete and
unconditional payment and performance of all obligations of the Borrower in
respect of the Loans, the Borrower hereby pledges, assigns, transfers and
delivers to the Lender, or, if so directed by the Lender, to a Collateral Agent
for the benefit of the Lender, and grants to the Lender, a continuing first lien
on, and first and prior Security Interest in, all of the Borrower's estate,
right, title and interest in, to and under the following, whether now owned or
at any time hereafter acquired, whether now existing or hereafter acquired, and
whether the same is now contemplated, anticipated or foreseeable, and wherever
located (collectively, the "Collateral"):
(a)each Auto Loan delivered to the Lender, or a Collateral Agent on
behalf of the Lender, and all other Auto Loans at any time in the
possession of the Lender, or, if so directed by the Lender, to a Collateral
Agent on behalf of the Lender, or otherwise subject to, or intended or
purported to be subject to, the Security Interest, including without
limitation, all rights to payments thereunder;
(b) each Financed Vehicle and all other property, now or hereafter
acquired, securing or evidenced by, each Auto Loan including, without
limitation, the Lien Certificate relating to each Financed Vehicle and the
Assignment thereof, any Insurance Policies and Proceeds thereof with
respect to any Financed Vehicle or Auto Loan, the Proceeds of any
repossession and liquidation of a Financed Vehicle, rights under judgments
with respect to defaulted Obligors, right to deficiency judgments with
respect to defaulted Obligors and rights under any service contracts with
respect to any Financed Vehicle;
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(c) all right, title and interest of the Borrower where permitted
under each Take-Out Agreement, including, without limitation, the right to
execute and deliver in the name of the Borrower, as agent or attorney, an
appropriate instrument transferring any Auto Loan pursuant to the
provisions thereof and to take such action upon the occurrence of an Event
of Default hereunder as shall be permitted by this Agreement and any such
Take-Out Agreement or by law; and to do any and all other things which the
Borrower is or may be entitled to do thereunder, including, without
limitation, the commencement, conduct and consummation of any
administrative, legal or equitable proceedings;
(d) all bank and trust accounts relating to any of the Collateral
(including, without limitation, the Reserve Account, the Cash Account, all
Lockbox Accounts and the Collection Account) and all moneys, checks,
instruments, documents, securities, investments, deposits and other credits
(whether or not permitted by the Program Documents) credited to the
Collection Account, or otherwise held by the Borrower, a Servicer or a
Collateral Agent;
(e) all causes of action, claims, demands and rights which the
Borrower now has or hereafter may have, in law or in equity, against any
party in connection with each Auto Loan, including claims for negligence
and fraud;
(f) all General Intangibles that relate to the Collateral;
(g) all of the Borrower's Monthly Records, ledger sheets, ledger
cards, files, correspondence, records, books of account, business papers,
computers, computer software (owned by the Borrower or in which it has an
interest), tapes, disks and documents relating to any item of Collateral or
otherwise necessary or helpful in the collection thereof or the realization
thereupon, whether held by the Borrower or a Servicer, on behalf of the
Borrower; and
(h) all Proceeds of any of the foregoing.
The Borrower shall xxxx its books and records as may be necessary or appropriate
to evidence, protect and perfect Lender's security interest and shall cause its
financial statements to reflect such security interest.
The Borrower agrees that the Security Interest shall at all times be valid
and perfected and enforceable against the Borrower and all third parties, in
accordance with the terms hereof, as security for the obligations and that the
Collateral shall not at any time be subject to any Lien that is prior to, on a
parity with or junior to the Security Interest. All rights of the Lender and all
liens and Security Interests granted hereunder, shall be absolute, unconditional
and irrevocable unless and until released pursuant to the Program Documents,
irrespective of any condition or circumstance whatsoever.
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SECTION 3.2. Perfection of Security Interest. The Borrower shall take all
action that may be necessary or desirable, or that Lender may request, so as at
all time to maintain the validity, perfection, enforceability and priority of
the Lender's Security Interest in the Collateral or to enable the Lender to
protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to (a) immediately discharging all Liens that are not
Permitted Liens, (b) delivering to the Lender, endorsed or accompanied by such
instruments of assignment as the Under may specify, and stamping or marking, in
such manner as the Lender may specify, any and all chattel paper, instruments,
letters of credits and advice thereof and documents evidencing or forming a part
of the Collateral, (c) entering into lockbox and other custodial arrangements
satisfactory to the Lender, and (d) executing and delivering financing
statements, instruments of pledge, notices and assignments, in each case in form
and substance satisfactory to the Lender, relating to the creation, validity,
perfection, maintenance or continuation of the Lender's Security Interest under
the UCC or other applicable law. With respect to each Lien Certificate relating
to an Auto Loan, the Borrower shall deliver to the Lender, or a Collateral Agent
on behalf of the Lender, an assignment of such Lien Certificate, in blank, in
recordable form. All charges, expenses and fees that the Lender may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be
charged to the Borrower's account and added to the obligations, or at the
Lender's option, shall be paid to the Lender immediately upon demand.
SECTION 3.3. Grant of Lien Not to Alter the Borrower's Loans . The grant of
the Security Interest to the Lender pursuant to Section 3. 1 hereof shall not:
(a) relieve the Borrower from the performance of any term, covenant, condition
or agreement on the Borrower's part to be performed or observed under or in
connection with the Collateral, (b) impose any obligation on the Lender or any
Collateral Agent to perform or observe any such term, covenant, condition or
agreement on the Borrower's part to be so performed or observed, or (c) impose
any liability on the Lender or any Collateral Agent for any act or omission on
the part of the Borrower, or any Person acting as agent for or on behalf of the
Borrower, relative to or for any breach of any representation or warranty on the
part of the Borrower in connection with the Collateral.
SECTION 3.4. Defense of Lender's Interests. Until (a) payment and
performance in full of all of obligations of the Borrower and (b) termination of
this Agreement, the Lender's interests in the Collateral hereby granted to the
Lender shall continue in full force and effect. During such period the Borrower
shall not, without the Lender's prior written consent, pledge, sell (except
Dispositions permitted under Article VI hereof), assign, transfer, create or
suffer to exist a security interest in, Lien, claim or charge upon or encumber
or allow or suffer to be encumbered in any way, any part of the Collateral. The
Borrower shall defend the Lender's interests in the Collateral against any and
all persons whatsoever. In addition, with respect to all Collateral, the Lender
shall be entitled to all of the rights and remedies set forth herein and further
provided by the UCC or other applicable law.
SECTION 3.5. Set-Off. The Lender is hereby authorized by the Borrower, at
any time and from time to time, without prior notice, during any Event of
Default or Pending Event of Default, to set off against, and to appropriate and
apply to the payment of, the Loans (whether matured or unmatured, fixed or
14
contingent or liquidated or unliquidated) any and all liabilities owing by the
Lender or any of its affiliates to the Borrower. The Lender shall give notice to
the Borrower of any such set-off, but the failure to give such notice shall not
affect the validity of such set-off or its application, nor result in any
liability of the Lender to the Borrower or any other Person.
SECTION 3.6. Post-Closing Documentation. Immediately after each Closing
Date, the Borrower shall deliver, or cause to be delivered to the Lender, or, if
so directed by the Lender, a Collateral Agent, all documents requested by the
Lender.
SECTION 3.7. Collateral Agents. The Borrower hereby acknowledges that all
right, title and interest in and to the Collateral are being assigned by the
Borrower to one or more Collateral Agents, which may include affiliates of the
Lender, for the benefit of the Lender, its successors and assigns, and any
holder or assignee of a Note, pursuant to the terms of the applicable Custodial
Agreement pursuant to which each Collateral Agent holds Collateral.
SECTION 3.8. Power of Attorney. Borrower does hereby irrevocably appoint
the Lender and any of its respective officers, employees or agents as its true
and lawful attorney-in-fact, with full power of substitution, and hereby
authorizes and empowers each of such Persons or entities, acting singly, in the
name of and on behalf of the Borrower, to take the following actions from time
to time in accordance with and subject to the terms of this Agreement:
(a) upon the occurrence of an Event of Default, collect any and all
amounts or portions thereof due under any Auto Loans including, without
limitation, endorsing the name of the Borrower on checks and other
instruments representing payments or collections with respect to such Auto
Loans and on such instruments and documents as may be necessary to
effectuate foreclosure, repossession or other conversions of ownership of
any vehicle financed with any such Auto Loan and enforcing such Auto Loan;
(b) execute and deliver any and all instruments and take any and all
further action in the name of and on behalf of Borrower as may be necessary
or desirable, in the determination of the Lender, to accomplish any and all
of the foregoing; and
(c) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as Lender may reasonably determine to be necessary or appropriate,
including without limitation, such documents or instruments as may be
necessary to change the notation of the Borrower's Lien on any Lien
Certificate or any Financed Vehicle financed under a Auto Loan to a
notation indicating that Lender or any assignee thereof is the lienholder
with respect to such Financed Vehicle.
The Lender is hereby empowered to do any and all lawful acts and Borrower
hereby ratifies and confirms any and all lawful acts that the Under shall do
pursuant to and in conformity with this power of attorney. This power of
attorney is coupled with an interest and is irrevocable. The Borrower executes
15
this power of attorney with the intent to be legally bound hereby, and with the
intent that the execution shall have the full dignity afforded by the
accompanying witnessing and notarization.
SECTION 3.9. Exculpation of Liability. Nothing in this Agreement shall be
construed to constitute the Lender as the Borrower's agent for any purpose
whatsoever, nor shall the Lender be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof, except for
shortages, discrepancies, damages, losses, and destructions that are determined
by a final judgment of a court having jurisdiction over the Lender to be solely
the result of the Lender's gross negligence, wilful misconduct or knowing
violations of law. The Lender does not, whether by anything herein or in any
assignment or other-wise, assume any of the Borrower's obligations under any
contract or agreement assigned to the Lender, and the Lender shall not be
responsible in any way for the performance by the Borrower of any of the terms
and conditions thereof.
ARTICLE IV
ADMINISTRATION AND SERVICING OF AUTO LOANS
To provide for the proper servicing and administration of the Collateral,
either:
(a) the Borrower shall act as Servicer of the Auto Loans and shall
employ the same procedures and exercise the same standard of care that it
customarily employs and exercises in servicing and administering Auto Loans
for its own account or the account of others; or
(b) the Borrower and the Lender will execute and deliver one or more
Servicing Agreements pursuant to which one or more Servicers shall service
the Collateral for the benefit of the Under, its successors and assigns,
and any holder or assignee of a Note. In such case, all servicing of the
Collateral shall be done in accordance with the terms of the applicable
Servicing Agreement.
The Borrower shall be responsible for paying all fees and expenses of any
Servicer that services the Auto Loans. The Lender shall have no liability to any
Servicer for fees or expenses.
ARTICLE V
COLLECTION, RESERVE AND LOCKBOX ACCOUNTS
SECTION 5.1 Establishment and Maintenance of Collection Account.
Concurrently with the execution and delivery of this Agreement, the Lender shall
establish at CoreStates/New Jersey National Bank, Philadelphia, Pennsylvania, a
segregated account entitled "Princeton Capital Credit Corporation, Western
16
Fidelity Collection Account" (the "Collection Account"). The Collection Account
shall be maintained as an Eligible Account. The Lender shall have sole control
over the Collection Account and Borrower shall have no right of withdrawal from
the Collection Account.
SECTION 5.2 Required Deposits to the Collection Account.
(a) The Borrower shall cause the following amounts to be paid to the
Lender, or the Collateral Agent on behalf of the Lender, for deposit to the
Collection Account:
(i) all amounts representing collections in respect of Auto Loans
(including without limitation payments in respect of the purchase
price of Auto Loans purchased by the related Take-Out Investor in
accordance with the applicable Take-Out Agreement) through deposit
into the Collection Account or by direct payment into the Lockbox
Account held in the Lender's or the Collateral Agent's, as applicable,
name;
(ii) all amounts representing insurance proceeds;
(iii) all amounts representing repossession proceeds; and
(iv) all Proceeds of any of the foregoing.
(b) The Lender or the Collateral Agent, as applicable, is hereby
irrevocably authorized and empowered, as the Borrower's attorney-in-fact,
to endorse any check or any other instrument or security presented for
deposit in the Collection Account requiring the endorsement of the
Borrower.
(c) Notwithstanding the foregoing provisions of this Section 5.2 if at
any time the Borrower, or any Person on behalf of the Borrower, receives
any proceeds or payments required to be deposited in the Collection
Account, all such amounts shall be held by the Borrower or such other
person as the agent of, and in trust for, the L4ender and shall, forthwith
upon receipt by the Borrower, or such other Person, be turned over to the
Lender, or the Collateral Agent, on behalf of the Lender, for deposit into
the Collection Account, as the case may be, in the same form as received by
the Borrower or such other Person (and, if received in the form of a check,
instrument or security requiring endorsement, duly endorsed on behalf of
the Borrower or such other Person to the order of the Collateral Agent).
(d) The Borrower shall cause all amounts remitted to the Lender or the
Collateral Agent for deposit pursuant to Section 5.2(a) to be identified to
permit the proper allocation of such amounts; any amounts not so identified
shall be applied at the direction of the Lender.
SECTION 5.3 Rights of Withdrawal from the Collection Account . In
furtherance of the Security Interest provided in this Agreement, the Lender
shall have the sole right of withdrawal from the Collection Account to apply
amounts on deposit therein in accordance with Section 2.6 hereof.
17
SECTION 5.4 Establishment and Maintenance of Reserve Account . Concurrently
with the execution and delivery of this Agreement, the Borrower shall establish
at CoreStates/New Jersey National Bank, Philadelphia, Pennsylvania, for the
benefit of the Lender, a segregated account entitled "Western Fidelity Reserve
Account, for the benefit of Princeton Capital Credit Corporation, as Secured
Party" (the "Reserve Account"). Upon its establishment and at all times
thereafter, the Reserve Account shall contain not less than the Reserve Account
Required Minimum. The Reserve Account shall be maintained as an Eligible
Account. The Lender shall have the exclusive right to make withdrawals pursuant
to Section 5.5 from the Reserve Account until this Agreement has been terminated
and no Note issued pursuant hereto is outstanding.
SECTION 5.5 Application of Funds in the Reserve Account. The Lender has the
sole right to withdraw funds from the Reserve Account, on any date, to the
extent the Lender deems such withdrawals necessary to pay the principal of or
accrued and unpaid interest on any Loan that has come due or to pay any
outstanding fees or other expenses payable hereunder. All funds withdrawn from
the Reserve Account shall be deposited by the Lender into the Collection Account
and applied to make the payments specified in Section 2.6 hereof.
SECTION 5.6 Establishment and Maintenance of Cash Account. Concurrently
with the execution and delivery of this Agreement, the Borrower shall establish
at CoreStates/New Jersey National Bank, Philadelphia, Pennsylvania, for the
benefit of the Lender, a segregated account entitled "Western Fidelity Cash
Account, for the benefit of Princeton Capital Credit Corporation, as Secured
Party" (the "Cash Account"). The Cash Account shall be maintained as an Eligible
Account. The Lender shall have the exclusive right to make withdrawals from the
Cash Account until this Agreement has been terminated and no Note issued
pursuant hereto is outstanding.
SECTION 5.7 Application of Funds in the Cash Account. The Lender has the
sole right to withdraw funds from the Cash Account, on any date, to the extent
the Lender deems such withdrawals necessary to pay the principal of or accrued
and unpaid interest on any Uan that has come due or to pay any outstanding fees
or other expenses payable hereunder. All funds withdrawn from the Cash Account
shall be deposited by the Lender into the Collection Account and applied to make
the payments specified in Section 2.6 hereof.
SECTION 5.8 Establishment of Lockbox Accounts. All Proceeds of Auto Loans
shall, at the direction of the Lender, be deposited by the Borrower into one or
more segregated lockbox accounts (each, a "Lockbox Account") pursuant to an
arrangement with such bank as may be selected by the Borrower and be acceptable
to the Lender in its sole discretion. Each Lockbox Account shall be an Eligible
Account. The Borrower shall issue to any such bank, an irrevocable letter of
instruction directing such bank to transfer such funds so deposited to the
Lender by wire transfer to the Collection Account. All funds deposited in any
Lockbox Account shall immediately become a part of the Collateral for the
benefit of the Lender and the Borrower shall obtain the agreement by such bank
18
to waive any set-off rights against the fund so deposited. The Lender assumes no
responsibility for any Lockbox Account arrangement, including without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder.
SECTION 5.9 Misapplication of Funds. The Under agrees that any funds
incorrectly paid to it by the Borrower, or any Servicer on behalf of the
Borrower, shall be promptly returned to the Borrower or the Servicer, as
applicable, upon receipt of written notice from the Borrower or the Servicer, as
applicable, that such funds were incorrectly paid to the Lender, or any
Collateral Agent on behalf of the Lender, prior to the Collateral Agent's
transfer of such funds in accordance with applicable Custodial Agreement.
ARTICLE VI
TAKE-OUT PROCEDURE
SECTION 6.1 Loans Due Upon Take-Out. Notwithstanding any provision herein
or in any Note to the contrary, each Loan secured by an Auto Loan shall become
due and payable, without notice or demand, upon the date that such Auto Loan is
required to be sold or transferred to a Take-Out Investor pursuant to a Take-Out
Agreement, regardless whether such sale or transfer actually occurs. If one or
more Auto Loans that secure a Loan would not be sold or otherwise transferred on
the same date that another Auto Loan that secures such Loan is being sold or
otherwise transferred to a Take-Out Investor, such Loan may remain outstanding
until such time as the remaining Auto Loans are sold or transferred; provided
that the principal of the Loan is paid down by an amount equal to the Funding
Amount, plus accrued interest and fees, for any Auto Loan that is sold or
transferred on such date.
SECTION 6.2 Instructions to the Lender. Prior to the date provided for any
sale or transfer of an Auto Loan to a Take-Out Investor pursuant to a Take-Out
Agreement, the Borrower shall deliver to the Lender complete instructions
together with such documents, if any, required to be delivered to the Take-Out
Investor pursuant to the provisions of such Take-Out Agreement which have not
been previously delivered to the Lender and such other documents, including
without limitation, transmittal envelopes and transmittal packages, as the
Lender may require. Such instructions shall be given to the Lender sufficiently
in advance to allow timely delivery by methods the Lender customarily uses for
delivery of documents of that type. Subject to Section 6.3 hereof, upon receipt
of such instructions, the Lender shall forward the appropriate documents to the
Take-Out Investor acquiring such Auto Loan, or its designee. The Lender shall
also provide the Take-Out Investor with written instructions to wire to the
Lender, in immediately available federal funds, an amount equal to the purchase
price or funding amount specified in the Take-Out Commitment for each Auto Loan
being transferred to such Take-Out Investor or its designee. All amounts
received by The Under from a Take-Out Investor with respect to an Auto Loan
shall be applied in accordance with Section 2.6 hereof.
19
SECTION 6.3 Delivery of Documents to Take-Out Investor. If the Lender is
required to deliver any documents relating to an Auto Loan to a Take-Out
Investor prior to the payment to the Lender of the Take-Out Price for such Auto
Loan, then the Borrower must ensure that the Take-Out Investor, or a custodian
acting on behalf of the Take-Out Investor, acts as bailee of the L4ender until
the Take-Out Price is paid and the Auto Loan is removed from the Security
Interest of the Lender. The Take-Out Investor or custodian will evidence that it
is acting as bailee on behalf of the Lender by issuing a trust receipt to the
Lender. Such trust receipt shall properly identify the Auto Loan and related
documents and shall state that such documents are being held for the benefit of
the Lender until the Take-Out Price is paid to the Lender.
SECTION 6.4 Substitution of Take-Out Investors.
(a) Notwithstanding the foregoing, if the Borrower instructs the Lender to
deliver an Auto Loan to a Person other than the Take-Out Investor for the
Take-Orut Agreement relating to such Auto Loan, or the designee of such Take-Out
Investor, then, in addition to providing delivery instructions to the Lender in
accordance with Section 6.2, the Borrower must deliver to the Lender a new
Take-Out Agreement pursuant to which such proposed transferee is the Take-Out
Investor. Such new Take-Out Agreement is hereby deemed pledged by the Borrower
as Collateral for the related Note pursuant to this Agreement. Such pledge will
be effective upon delivery of the Take-Out Agreement to the Lender.
(b) If the Borrower is not in possession of the new Take-Out Agreement at
the time of its request for delivery of an Auto Loan to a Person other than the
original Take-Out Lender, pursuant to Section 6.4(a) then the Borrower shall
certify the following to the Lender in writing:
(i) such new Take-Out Agreement has been executed by a Take-Out
Investor acceptable to the Lender and is the legally valid and binding
obligation of such Take-Out Investor to purchase each Auto Loan subject
thereto; and
(ii) each Auto Loan subject to such Take-Out Agreement complies, in
all material respects, with the requirements of the Take-Out Agreement.
(c) Notwithstanding the substitution of Take-out Investors permitted by
this Section 6.4, the rights assigned and granted to the Lender in the original
Take-Out Agreement and any new Take-Out Agreement shall continue until the
Lender has received the Funding Amount for each related Auto Loan, plus any
accrued interest and fees thereon.
SECTION 6.5 Take-Out Fee. Upon the Disposition of an Auto Loan, the
Borrower shall pay to the Under the Take-Out Fee for such Auto Loan.
SECTION 6.6 Take-Out Status Report. The Borrower shall, on or before the
last day of each month, furnish to the Lender a certificate indicating, in each
case if applicable: (a) the original amount committed to be purchased pursuant
to each Take-Out Agreement; (b) the amount under each Take-Out Agreement that
has been funded; and (e) the amount remaining to be funded under each Take-Out
be funded under each Take-Out Agreement. At such time, the Borrower shall also
deliver an officer's certificate stating that the Borrower is in compliance with
all of the terms of each TakeOut Agreement.
20
be funded under each Take-Out Agreement. At such time, the Borrower shall also
deliver an officer's certificate stating that the Borrower is in compliance with
all of the terms of each TakeOut Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BORROWER
SECTION 7.1 Representations and Warranties Concerning Borrower. The
Borrower hereby represents and warrants to the Lender, as of the date of this
Agreement and any renewal or extension hereof and as of each Closing Date, that:
(a) Organization and Authority. (i) The Borrower is a corporation,
partnership or other business entity duly organized, validly existing and
in good standing under the laws of the state of its formation and (ii) the
Borrower has all requisite power and authority, corporate and/or otherwise,
and all necessary licenses and permits to engage in the transactions
contemplated by this Agreement and any other Program Documents and to
conduct a consumer loan business.
(b) No Proceedings. There are no proceedings pending, or to the
knowledge of the Borrower threatened, against the Borrower or any of its
affiliates in any court or before any governmental authority or arbitration
board or tribunal which involve the possibility of materially and adversely
affecting the business, prospects, profits or condition (financial or
otherwise) of the Borrower or the ability of the Borrower to perform any of
the transactions contemplated by this Agreement. The Borrower is not in
default with respect to any order of any court, governmental authority or
arbitration board or tribunal.
(e) No Conflict. The issuance of each Note by the Borrower and
compliance by the Borrower with all of the provisions of this Agreement,
any other related Program Document to which it is a party, and the other
instruments referred to herein (i) are within the corporate, partnership or
other business entity powers of the Borrower, and (ii) are legal and will
not conflict with or result in any breach in any of the provisions of, or
constitute a default under, or result in the creation of any lien upon the
assets of the Borrower under the provisions of any other agreement, charter
instrument, by-law or other instrument to which the Borrower is a party or
by which it is bound.
(d) No Event of Default. No event has occurred and no condition exists
which, upon the Closing Date for any Loan, would constitute a Pending Event
of Default or an Event of Default under this Agreement.
(e) Taxes. All tax returns required to be filed by the Borrower in any
jurisdiction have been filed, and all taxes, assessments, fees and other
governmental charges upon the Borrower or upon its properties, income or
franchises, which are due and payable have been paid. The Borrower does not
know of any proposed additional tax assessment against it or any basis
therefor.
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(f) Governmental Authorizations. The Borrower (i) is not in violation
of any laws, ordinances, governmental rules or regulations to which either
is subject, which would materially effect their obligations; and/or (ii)
has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the conduct of its business.
(g) No Restrictive Agreements. The Borrower is not a party to any
contract or agreement, or subject to any charter or other corporate
restrictions, which materially and adversely affects its business. The
Borrower is not a party to any contract or agreement which restricts its
right or ability to incur any indebtedness.
(h) Corporate Name. The Borrower has not been known by any other
corporate name in the past five years and does not conduct business under
any other name, nor has the Borrower been the surviving corporation of a
merger or consolidation or acquired all or substantially all of the assets
of any person during the preceding five years.
(i) Solvency. The Borrower is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses
in which it is about to engage, and (a) as of the date of this Agreement,
the fair present saleable value of its assets, calculated on a going
concern basis, is in excess of the amount of its liabilities and (b)
subsequent to the date of this Agreement, the fair saleable value of its
assets (calculated on a going concern basis) will be in excess of the
amount of its liabilities.
(j) Licenses and Permits. The Borrower is in compliance with, and has
procured and is now in possession of, all material licenses or permits
required by any applicable federal, state or local law or regulation for
the operation of its business in each jurisdiction wherein it is now
conducting or proposes to conduct business and where the failure to procure
such licenses or permits would have a material adverse effect on the
business, properties, condition (financial or otherwise) or operations,
present or prospective of Borrower.
(k) Default of Indebtedness. The Borrower is not in default in the
payment of the principal of or interest on any Indebtedness or under any
instrument or agreement under or subject to which any indebtedness has been
issued and no event has occurred under the provisions of any such
instrument or agreement which with or without the lapse of time or the
giving of notice, or both, constitutes or would constitute an event of
default thereunder.
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(1) Investment Company Act. The Borrower is not an "investment
company" registered or required to be registered under the Investment
Company Act of 1940, as amended, nor is it controlled by such a company.
(m) Disclosure. No representation or warranty made by the Borrower in
this Agreement or in any financial statement, report, certificate or any
other document furnished in connection herewith or therewith contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is
no fact known to the Borrower or which reasonably should be known to the
Borrower that the Borrower has not disclosed to the Lender in writing with
respect to the transactions contemplated by this Agreement which materially
and adversely affects the condition (financial or otherwise), results of
operations, business, or assets of the Borrower.
SECTION 7.2 Representations and Warranties Concerning Collateral. The
Borrower hereby represents and warrants to the Lender, as of the date of this
Agreement and any renewal or extension hereof and as of each Closing Date, that:
(a) Good Title to Collateral. The Borrower has good title to each item
of Collateral, free and clear of all Liens, charges and encumbrances, and
that it has full power, authority and legal right to pledge the Collateral
pursuant to this Agreement.
(b) First Lien on Collateral. The Security Interest is and will remain
a valid and enforceable first lien on each item of Collateral. The Borrower
will not create or permit to be created or to remain, and will promptly
discharge or cause to be discharged without cost to the Lender, any lien,
charge or encumbrance upon the Collateral. If the validity, enforceability
or priority of the Security Interest in the Collateral or any portion
thereof, shall be endangered or attacked, directly or indirectly, the Under
shall be authorized to take, at the expense of the Borrower, all reasonable
necessary and proper action in defense thereof, including the retention of
legal counsel, the prosecution of defense of litigation and the compromise
or discharge of claims.
(c) Auto Loans Secured by Financed Vehicle. Each Auto Loan is secured
by Financed Vehicle.
(d) Conformity to Take-Out Requirements. Each Auto Loan conforms and
will conform in all respects with all requirements of the Take-Out
Commitment and the applicable underwriting criteria of the related Take-Out
Investor. The Borrower can and will comply with the terms and conditions of
the Take-Out Commitment relating to each Auto Loan.
(e) Origination Complied With Applicable Loan. Each Auto Loan arose
from a bona fide loan complying with all applicable laws and regulations,
was made to an Obligor having legal capacity to contract, and is not
subject to any defense, dispute, set- off or counterclaim. This warranty
shall be deemed breached upon the assertion by any Obligor on the Auto Loan
of such a defense, dispute, set-off or counterclaim including a claim that
the transaction which gave rise to the Auto Loan did not comply with any
applicable statute or regulation.
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(f) Disclosures Proper. All disclosures required by any state or
federal or local law or regulation in connection with each Auto Loan have
been duly and properly made and given.
(g) Valid Oblilzations of Oblilzor. Each instrument comprising a
portion of the Collateral represents the valid, binding and enforceable
obligation of the Obligor thereunder and each such Obligor has agreed to
pay the principal, interest and all other amounts due thereunder in
accordance with its terms, without defense, offset or counterclaim.
(h) No Set-Off by Take-Out Investors. There are no claims or right of
set-off against the Borrower by the Take-Out Investor that issued the
Take-Out Agreement or to whom an Auto Loan is to be delivered, that could
result in a net payment for such Auto Loan in an amount insufficient to pay
the Lender's entitlement thereto, including the Funding Amount, all
interest thereon and all fees due to the Lender, whether such claim arises
with respect to such Auto Loan or otherwise.
(i) Origination in Accordance With Underwriting Guidelines. Each Auto
Loan was originated in accordance with the Borrower's Underwriting
Guidelines and was acquired in the ordinary course of Borrower's business.
(j) Adequate Insurance. Each Auto Loan is covered by the Vendor's
Single Interest Insurance Policy and the Lender shall have received
evidence satisfactory to it in its sole discretion that each Financed
Vehicle is insured with respect to loss, theft and physical damage under
policies of insurance in form and substance and issued by insurers
satisfactory to it in its sole discretion.
(k) Delivery of Title and Assignment. Each Auto Loan shall have been
delivered to the Lender, or a Collateral Agent acting on its behalf,
together with any necessary endorsements. The Lien Certificate which shows
the Borrower's security interest in the Financed Vehicle relating to such
Auto Loan (other than a Lien Certificate that under applicable law must
remain with the owner of such Financed Vehicle) and an Assignment of such
Lien Certificate shall have been delivered to the Lender, or if such Lien
Certificate or an application therefor, as required by applicable state
law, has been submitted to the relevant authority for notation thereon of
the Borrower's security interest in such Financed Vehicle, then a copy of
such Lien Certificate or application therefor shall have been delivered to
the Lender together with an Assignment of such Lien Certificate. If the
Borrower has delivered a copy of the Lien Certificate or an application in
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lieu of delivering the actual Lien Certificate, then the Borrower shall
deliver the Lien Certificate to the Lender within 90 days of the date on
which the Borrower acquired the related Auto Loan. Pursuant to each
Assignment, the Borrower has assigned to the Lender all of its right, title
and interest in and to the applicable Auto Loan and related Collateral.
(1) No Counterparts. Each Auto Loan is the sole original counterpart
and no Lien in such Auto Loan may be created through the transfer or
possession of any counterpart other than such original counterpart.
(m) No Delinquency or Default. No Auto Loan is a Delinquent Auto Loan
or a Defaulted Auto Loan, and no default exists under the terms of such
Auto Loan.
(n) Payments to Lockbox. Notice that all payments by the Obligor under
such Auto Loan are to be made to the applicable Lockbox Account shall have
been given to the Obligor and the Lender shall have received evidence,
satisfactory to the Lender, of the giving of such notice.
(o) Length of Loan. The term of each Auto Loan does not exceed 60
months or such other length of time that the Lender may agree to in
writing.
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(p) Binding Loan of Obligor. Each Auto Loan is a binding and valid
obligation of the Obligor, in full force and effect and enforceable in
accordance with its terms.
(q) Genuine. Each Auto Loan is genuine in all respects as it appears
on its face and as represented in the books and records of the Borrower and
all information set forth therein is true and correct.
(r) No Defenses. (i) No default by any party to such Auto Loan
(including the Dealer) exists, (ii) the obligations of the Obligor or
Obligors under such Auto Loan are not subject to any counterclaims, offsets
or defenses and (iii) such Obligor or Obligors have no right of rescission,
cancellation or avoidance, whether by operation of law or otherwise.
(s) Entire Agreement. Each Auto Loan contains the entire agreement of
the parties thereto with respect to the subject matter thereof, has not
been modified or amended in any respect and is free of concessions to or
understandings with the Obligor of any kind not expressed in writing
therein.
(t) No Insolvency. No case under the Bankruptcy Code shall have been
commenced by or against any Obligor under such Auto Loan and be pending.
SECTION 7.3 Survival of Representations and Warranties. Each representation
and warranty of the Borrower contained in Section 7.1 or 7.2 hereof shall be
true and correct on the date hereof and on each Closing Date, and shall be
deemed a continuing representation and warranty at all times during the term of
this Agreement.
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ARTICLE VIII
CERTAIN COVENANTS OF THE BORROWER
The Borrower covenants and agrees that so long as any Loan shall remain
unpaid:
SECTION 8.1 Maintenance of Office. The Borrower will maintain at its office
located at its address shown in Section 13.7 of this Agreement an office where
notices, presentations and demands in respect of this Agreement and any Note may
be given to and made upon it; provided, however, that it may, upon fifteen
Business Days prior written notice to the Lender, move such office to any other
location within the boundaries of the continental United States of America. The
Borrower hereby agrees that it will pay, and will hold the Lender harmless
against liability for, any stamp or other similar tax or governmental charge
imposed in respect of any assignment of a Loan (excluding taxes payable with
respect to profit resulting from any such transfer); and such obligation of the
Borrower shall survive the payment or prepayment of the Loans and the
termination of the Program Documents.
SECTION 8.2 Existence. The Borrower will take and fulfill, or cause to be
taken and fulfilled, all actions and conditions necessary to preserve and keep
in full force and effect its existence, rights and privileges and will not
liquidate or dissolve, and it will take and fulfill, or cause to be taken and
fulfilled, all actions and conditions necessary to qualify, and to preserve and
keep in full force and effect its qualification, to do business in each
jurisdiction in which the conduct of its business or the ownership or leasing of
its properties requires such qualification.
SECTION 8.3 General Maintenance of Business, Etc. The Borrower will:
(a) keep proper books of record and accounts in which entries will be
made of its business transactions in accordance with and to the extent
required by generally accepted accounting principles;
(b) set aside on its books from its earnings for each fiscal year, in
amounts deemed adequate in the reasonable opinion of the Borrower, all
proper accruals and reserves that, in accordance with generally accepted
accounting principles, should be set aside from such earnings in connection
with its business, including reserves for depreciation, obsolescence and/or
amortization and accruals for taxes based on or measured by income or
profits and for all other taxes; and
(c) enforce (or cause a Servicer or a Collateral Agent, as may be
appropriate, to enforce) all of its rights under each of the Program
Documents to which it is a party and each other agreement entered into in
connection with the transactions contemplated hereby.
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SECTION 8.4 Financial Statements and Reports. The Borrower will maintain a
system of accounting established and administered in accordance with generally
accepted accounting principals consistently applied. It being understood that
the form of information requested in this Section 8.4 may be the Borrower's
statements that are filed with the Securities and Exchange Commission and
published as SEC Form 10-KSB, 10-QSB, or annual report, as applicable.
(a) As soon as practicable after the end of each of the Borrower's
fiscal years, and in any event within 90 days thereafter (or such later
time as the Securities and Exchange Commission shall permit for their
filing), the Borrower shall furnish to the Lender, one copy of:
(i) a balance sheet of the Borrower as of the end of such year,
and a statement of earnings and of stockholders' equity and changes in
financial position of the Borrower for such year, in each case
prepared in audited or certified form by a certified public accountant
acceptable to the Lender; and
(ii) a certificate from such certified public accountant stating
that he knows of no condition or event which then constitutes an Event
of Default hereunder, or, if any such condition or event then exists,
specifying the nature and period of existence thereof.
(b) As soon as practicable after the end of each of the Borrower's
quarterly fiscal periods, and in any event within 45 days thereafter (or
such later time as the Securities and Exchange Commission shall permit for
their filing), the Borrower shall furnish to the Lender, one copy of an
unaudited balance sheet and statement of earnings of the Borrower as at the
end of such quarter certified by the Borrower's chief financial officer.
(c) The Borrower shall, with reasonable promptness, furnish to the
Lender such other documents and information with respect to the business,
affairs and condition of the Borrower as from time to time the Lender may
reasonably request.
SECTION 8.5 Inspection. The Borrower will permit, upon reasonable notice to
it, the Lender by its representatives, agents or attorneys: (a) to examine all
books of account, records, reports and other papers of the Borrower relating to
the Collateral and the operation of the Borrower's business, (b) to make copies
and take extracts from any thereof, (c) to discuss the affairs, finances and
accounts of the Borrower with its respective officers and independent certified
public accountants (and by this provision the Borrower hereby authorizes said
accountants to discuss with the Lender the finances and accounts of the
Borrower) and (d) to visit and inspect, at reasonable times during normal
27
business hours, the properties of the Borrower. It is understood and agreed by
the parties hereto that all reasonable expenses in connection with any such
inspection or discussion incurred by the Lender or the Borrower, any officers
and employees thereof and the independent certified public accountants therefor
shall be expenses payable by the Person malting the inspection or discussion.
SECTION 8.6 Books and Records. The Borrower shall, or shall cause any
Servicer acting on behalf of the Borrower to, maintain accounts and records as
to each Auto Loan accurately and in sufficient detail to permit (a) the reader
thereof to know at any time the status of such Auto Loan, including payments and
recoveries made and payments owing (and the nature of each) and (b)
reconciliation between payments or recoveries on (or with respect to) each Auto
Loan and the amounts from time to time deposited in the Collection Account in
respect of such Auto Loan.
SECTION 8.7 Transfers of Assets. If at any time the Borrower proposes to
sell, grant a security interest in, or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other transferee,
the Borrower shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they refer in any manner whatsoever to any Auto Loan,
indicate clearly that such Auto Loan has been pledged as Collateral to the
Lender unless the Loan relating to such Auto Loan has been paid in full or the
Auto Loan has been repurchased by the Borrower.
SECTION 8.8 Fidelity Bond. The Borrower shall maintain fidelity insurance
or fidelity bonds in form, with limits and with companies, satisfactory to the
Lender with respect to any employee or employees of the Borrower designated from
time to time by the Lender, such insurance or bonds to be endorsed to expressly
recognize that the Lender has an interest therein and that same will not be
canceled, terminated or permitted to lapse unless not less than ten days prior
written notice is given to the Lender.
SECTION 8.9 Preservation of Collateral. The Borrower will observe and
perform all provisions to be observed or performed by it, and will cause to be
observed and performed by each other Person all provisions to be performed by
it, contained in this Agreement and in each instrument included in the
Collateral, in accordance with the terms thereof and within the time permitted
thereby, and will maintain, or cause to be maintained, the validity and
effectiveness of each such instrument and the assignment thereof or of rights in
respect thereto to the Lender.
SECTION 8. 10 Compliance with Law, etc. The Borrower will not (a) violate
any laws, ordinances, governments rules or regulations to which it is or may
become subject, or (b) fail to obtain or maintain any patents, trademarks,
service marks, trade names, copyrights, design patents, licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its property or to the conduct of its business except to the extent that any
such violation or failure could not materially and adversely affect the
business, earnings, prospects, properties or condition (financial or other) of
the Borrower.
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SECTION 8. 11 Indemnification. The Borrower agrees to indemnify, and shall
protect and hold the Lender harmless, from and against ail liabilities, losses,
claims, demands, costs, expenses (including attorneys' fees and expenses) and
judgments of any nature arising, or alleged to arise, from or in connection with
(a) any violation, or alleged violation of this Agreement, any other Program
Document or any instrument, contract or agreement included in the Collateral, or
(b) any damage or loss sustained by the Lender in connection with this
Agreement, unless such damage or loss is caused by the gross negligence or
willful misconduct of the Lender. The Borrower will resist and defend any
action, suit or proceeding brought against the Lender by reason of such
occurrence by counsel designated by the lender. The obligation of this Section
8. 11 shall survive any termination of this Agreement.
SECTION 8.12 Net Worth. The Borrower shall maintain a corporate net worth
in excess of $500,000.
SECTION 8.13 Payment of Taxes and Claims, The Borrower will pay and
discharge promptly when due all taxes, assessments and governmental charges and
levies imposed upon it, its income or profits or any of its properties;
provided, however, that the foregoing need not be paid while the same is being
contested in good faith by appropriate proceedings diligently conducted so long
as:
(a) adequate reserves shall have been established in accordance with
generally accepted accounting principles with respect thereto; and
(b) the right of the Borrower to use the particular property shall not
be materially and adversely affected thereby.
SECTION 8.14 Insurance. The Borrower shall obtain, and keep in place at all
times, the Vendor Single Interest Insurance Policy or shall otherwise satisfy
the lender that the Lender's interest in the Collateral is adequately insured.
If the Borrower fails to obtain such insurance, or to keep the same in force,
the Lender may obtain such insurance and pay the premium therefor for the
Borrower's account, and charge the Borrower's account therefor and such expenses
so paid shall be part of the Loans.
SECTION 8.15 Borrower to Pay Expenses. The Borrower shall pay the fees and
expenses of each Servicer and each Collateral Agent incurred pursuant to each
Servicing Agreement and each Custodial Agreement, respectively.
SECTION 8.16 Further Assurances. The Borrower will promptly execute and
deliver all further instruments and documents and take all further action that
may be necessary in order to give effect to the Security Interest and the
provisions of the Program Documents and any Note.
SECTION 8.17 Other Agreements and Parties. The Borrower will comply with
all terms of the Program Documents to which it is a party. Without the consent
of the Lender, such consent not to be unreasonably withheld, the Borrower will
not (a) except as otherwise expressly set forth herein, agree to any amendment,
supplement or modification to or waiver of the terms of the Program Documents to
29
which it is a party or any document related thereto (b) appoint any Servicer or
Collateral Agent. Without notification to the Lender, the Borrower will not
enter into any agreements other than the Program Documents to which it is a
party.
SECTION 8.18 Defaults on Collateral. The Borrower will give notice to the
Lender of any default by any Person under any instrument included in the
Collateral promptly after the Borrower obtains knowledge of the same. If a
default under any Auto Loan shall occur, the Borrower shall pay to the Lender
the outstanding principal balance the Loan secured thereby, plus accrued
interest thereon and any related fees.
SECTION 8.19 No Disposition of Collateral. The Borrower will not sell,
lease, transfer or otherwise dispose of the Collateral or any portion thereof or
interest therein, except that the Borrower may sell, transfer or otherwise
dispose of any of the foregoing to the extent expressly permitted or required by
a valid Take-Out Commitment.
SECTION 8.20 Payment of Fees. The Borrower will pay to the Lender on demand
all usual and customary fees and expenses which the Lender incurs in connection
with (a) the forwarding of Loan Proceeds and (b) the establishment and
maintenance of any Lockbox Accounts. The Lender may, without making demand,
charge the Borrower, and thus increase the amount owing under this Agreement for
all such fees and expenses.
SECTION 8.21 Violations. The Borrower will promptly notify the Under in
writing of any violation of any law, statute, regulation or ordinance of any
governmental entity, or of any agency thereof, applicable to the Borrower which
may adversely affect the Collateral or the Borrower's business, assets,
operations, condition or prospects (financial or otherwise).
SECTION 8.22 Payment of Indebtedness. The Borrower will pay, discharge or
otherwise satisfy at or before maturity (subject, where applicable, to specified
grace periods and, in the case of the trade payables, to normal payment
practices) all its obligations and liabilities of any nature, unless the Lender
shall have consented thereto.
SECTION 8.23 Exercise of Rights. The Borrower will enforce all of its
rights under the Collateral and pursue all remedies available to it with
diligence and in good faith in connection with the enforcement of any such
rights.
SECTION 8.24 Negative Covenants. Without the consent of the Lender, the
Borrower shall not: (a) merge or consolidate with or into any corporation or
materially alter, amend or change its corporate business; (b) sell, lease,
assign or otherwise dispose of all or substantially of its assets; (e) engage in
any business other than consumer lending; (d) change in any substantial respect
its methods of operating its existing consumer lending business; (e) change in
any material respect its present management; (f) take any action nor permit any
action to be taken by any others, which would release any Person from any of its
covenants or obligations under any instrument included in the Collateral, or
which would result in the amendment, hypothecation, subordination, waiver,
30
termination or discharge or impair the validity or effectiveness, of any such
instrument, or release any security comprising the Collateral, except as
expressly provided herein or therein; and (g) permit any Lien to exist on any
Auto Loan except Lender's Security Interest.
ARTICLE IX
CONDITIONS PRECEDENT
SECTION 9.1. Conditions to Initial Loan. The agreement of the Lender to
make the initial Loan requested to be made on the first Closing Date hereunder
is subject to the satisfaction or waiver by the Under, immediately prior to or
concurrently with the making of such Loan, of the following conditions
precedent:
(a) Note. The Lender shall have received an initial Note duly executed
and delivered by an authorized officer of the Borrower.
(b) Filings Registrations and Recordings. Each document (including,
without limitation, all necessary UCC financing statements) required under
law or reasonably requested by Lender to be filed, registered, recorded or
possessed in order to create, in favor of the Lender, the Security Interest
in the Collateral shall have been properly filed, registered, recorded or
possessed in each jurisdiction in which the filing, registration,
recordation or possession thereof is so required or requested, and the
Lender shall have received an acknowledgment copy, or other evidence
reasonably satisfactory to it, of each such filing, registration,
recordation possession and reasonably satisfactory evidence of the payment
of any necessary fee, tax or expense relating thereto.
(c) Corporate Proceedings of Borrower. The Lender shall have received
a copy of the resolutions in form and substance reasonably satisfactory to
the Lender, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of the Program Documents and (ii) the
granting by the Borrower of the Security Interests in the Collateral in
each case certified by the Secretary or an Assistant Secretary of the
Borrower as of the initial Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified,
revoked or rescinded as of the date of such certificate.
(d) Incumbency Certificates of Borrower. The Lender shall have
received a certificate of the Secretary or any Assistant Secretary of the
Borrower, dated the initial Closing Date, as to the incumbency and
signature of the officers of the Borrower executing this Agreement, any
certificate or other Program Documents to be delivered by it pursuant
hereto, together with evidence of the incumbency of such Secretary or
Assistant Secretary.
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(e) Legal Opinion. The Lender shall have received a legal opinion of
counsel to the Borrower in form and substance reasonably satisfactory to
the Lender (which may be of in-house counsel) which shall cover such
matters incident to the transactions contemplated by this Agreement, the
Notes and other Program Documents as Lender may reasonably require.
(f) Fees. The Lender shall have received the Application Fee.
(g) Borrower's Underwriting Guidelines. The Lender shall have received
a copy of the Borrower's Underwriting Guidelines.
(h) Insurance. The Lender shall have received satisfactory proof of
the insurance policies required to be maintained by the Borrower under
Section 8.14 hereof.
(i) UCC Search Report. The Lender shall have received a copy of search
reports for the Borrower with respect to UCC financing statements and tax
and judgment liens as of a recent date acceptable to the Lender.
(j) Servicing Agreement. Unless the Borrower will be the Servicer, the
Lender shall have received a Servicing Agreement duly executed and
delivered by the Borrower and a Servicer acceptable to the Lender, in its
sole discretion.
(k) Custodial Agreement. The Lender shall have received a Custodial
Agreement duly executed and delivered by the Borrower and a Collateral
Agent acceptable to the Lender, in its sole discretion.
(1) Reserve Account. The Borrower shall have established the Reserve
Account containing at least the Reserve Account Required Balance.
(m) Cash Account. The Borrower shall have established the Cash
Account.
(n) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated hereby shall be satisfactory in form and substance to the
Lender and its counsel.
SECTION 9.2. Conditions to Each Loan. The agreement of the Lender to make
any Loan requested to be made on any Closing Date (including, without
limitation, its initial Loan), is subject to the satisfaction of the following
conditions precedent as of such Closing Date:
(a) Representations and Warranties. Each of the representations and
warranties made by the Borrower in or pursuant to this Agreement, and any
other Program Documents to which it is a party, and each of the
representations and warranties contained in any certificate, insurance
policy, document or financial or other statement furnished at any time
32
under or in connection with this Agreement or any other Program Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. No Event of Default or Pending Event of Default shall
have occurred and be continuing on such date, or would exist after giving
effect to the Loan requested to be made, on such date; provided, however,
that the Lender, in its sole discretion, may continue to make Loans
notwithstanding the existence of an Event of Default or Pending Event of
Default.
(c) Maximum Loans. With regard to the Loan requested to be made, after
giving effect thereto, the aggregate of all Loans outstanding on such
Closing Date shall not exceed the Maximum Credit Line; provided, however,
that the Lender, in its sole discretion, may exceed the Maximum Credit
Line.
(d) Delivery of Collateral. The Lender, or a Collateral Agent on
behalf of the Lender, shall have received all documents relating to the
Auto Loans to serve as Collateral for such Loan as Lender shall reasonably
require.
(e) Funding Fee. The Lender shall have received the Funding Fee for
each Auto Loan to be delivered to the Lender, or a Collateral Agent on
behalf of the Lender, in connection with such Loan. Such Funding Fees may
be deemed by the Lender to be paid by deducting the amount thereof from the
Loan proceeds to be delivered to the Borrower on such Closing Date.
(f) Reserve Account. The Lender shall have received funds in an amount
equal to the Reserve Account Deficiency Amount, if any. Such Reserve
Account Deficiency Amount may be deemed by the Lender to be delivered by
deducting the amount thereof from the Loan proceeds to be delivered to the
Borrower on such Closing Date.
(g) Take-Out Agreement The Lender shall have received satisfactory
evidence that a Take-Out Agreement is in existence for each Auto Loan that
will be pledged to secure such Loan. Each Loan Funding Request delivered by
the Borrower shall constitute a representation and warranty by the Borrower
as of the date of such Loan that the conditions contained in this
subsection shall have been satisfied.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Events of Default. Any of the following occurrences or acts
(whether the same shall occur voluntarily, involuntarily, by operation of law or
otherwise) shall constitute an Event of Default under this Agreement:
(a) if default shall be made in the payment of any interest or
principal of any Loan, when and as the same shall become due and payable or
failure to pay any other liabilities or make any other payment, fee or
charge provided for herein when due;
(b) if any representation, warranty or other statement of the Borrower
set forth in this Agreement, or any representation or warranty of any party
set forth in any Program Document, certificate or other instrument
delivered pursuant to this Agreement, or any instrument included in the
Collateral, shall prove to have been incorrect in any material respect at
the time it was made or at any time such representation warranty or
statement is or was deemed to be effective pursuant to Article VII hereof;
(c) if default shall be made in the due observance or performance of
any other provision of this Agreement or other Program Document to be
observed or performed by the Borrower;
(d) if the Borrower is also a Servicer, an "Event of Default" shall
have occurred under the related Servicing Agreement, if any;
(e) if the Borrower shall default under the provisions of any Take-Out
Agreement and no other Take-Out Agreement is available;
(f) if any instrument included in the Collateral shall be canceled,
terminated, or discharged, or in any way amended or modified to diminish
the value of the Collateral to the Lender in a material way, or shall be
hypothecated, or any portion of the Collateral shall be released except as
expressly provided for herein and therein;
(g) if by order of a court or agency of competent jurisdiction, a
receiver, trustee, custodian or liquidator (or other similar official) of
the Borrower or of the Collateral or any portion thereof shall be appointed
in any proceeding by any federal or state officer or agency, and such order
shall not be vacated or set aside or stayed within 60 days after the entry
thereof (provided, however, that such 60-day waiting period shall not be
permitted if the appointment of such receiver, trustee, custodian,
liquidator or similar official would cause immediate impairment of the
Collateral), or if the Borrower shall consent to such appointment;
34
(h) if the Borrower shall file a petition in bankruptcy or for relief
or for reorganization or for an arrangement pursuant to the Bankruptcy Code
or any similar federal or state law, now or hereafter in effect, or shall
be adjudicated a bankrupt or become insolvent, or shall make an assignment
for the benefit of creditors or shall admit in writing its inability to pay
debts generally as they become due or shall be dissolved or shall suspend
payment of its obligations or shall take any action in furtherance of any
of the foregoing; or if a petition or an answer shall be filed proposing
the adjudication of the Borrower as a bankrupt or its reorganization under
the Bankruptcy Code or any similar federal or state law, now or hereafter
in effect, or consent to the appointment of a custodian, receiver, trustee
or other officer with similar powers for itself or any substantial part of
its property and (i) the Borrower shall consent to the filing thereof, or
(ii) such petition or answer shall be approved by a court of competent
jurisdiction and the order approving the same shall not be vacated or set
aside or stayed within 60 days after the entry thereof; provided, however,
that such 60-day waiting period shall not be permitted if the appointment
of such receiver, trustee, custodian, liquidator or similar official would
cause immediate impairment of the Collateral;
(i) if final judgment for the payment of money shall be rendered
against the Borrower in an amount that, in the reasonable judgment of the
Lender, would impair the Borrower's ability to fulfill its obligation to
the Lender and the Borrower shall not discharge the same or provide for its
discharge in accordance with its terms or procure a stay of execution
thereon within 60 days from the entry date thereof, and shall not within
such 60-day period, or such longer period during which execution on such
judgment shall have been stayed, appeal therefrom or from the order, decree
or process upon or pursuant to which said judgment shall have been granted,
passed or entered and cause the execution thereof to be stayed during such
appeal, and if on appeal such order, decree or process shall be affirmed
and the Borrower shall not discharge such judgment or provide for its
discharge in accordance with its terms within 60 days after the entry of
the order or decree of affirmance;
(j) if the Borrower fails to make any payment due on any indebtedness
or any event shall occur or any condition shall exist in respect of any
indebtedness of the Borrower or under any agreement securing or relating to
such indebtedness, the effect of which is to cause or permit such
indebtedness, or a portion thereof, to become due prior to its stated
maturity or prior to its regular scheduled dates of payment, in an amount
that, in the reasonable judgment of the Lender would impair the Borrower's
ability to fulfill its obligation to the Lender;
(k) if there shall occur, in the reasonable judgment of the Lender, a
material adverse change in the Borrower's financial condition or business;
or
(1) if any Lien created or intended to be created by this Agreement
shall cease to be a valid, fully perfected and enforceable Lien prior to
the rights of all Persons other than the Lender whether or not such Persons
have notice of any such Lien and, if curable, such failure shall continue
unremedied for 30 days after the Borrower obtains knowledge thereof.
35
The Borrower shall give prompt written notice to the Lender of the occurrence of
any Event of Default or of any event or circumstances that constitute a Pending
Event of Default. Failure to provide such notice shall constitute an Event of
Default under subsection (e) above.
SECTION 10.2 Loans Due Upon Event of Default. If an Event of Default has
occurred and shall remain uncured past any cure period provided by Section 10.5,
the Lender may, with or without notice to the Borrower, declare (i) the entire
unpaid principal amount of all of the Loans, (ii) all accrued and unpaid
interest thereon, including any interest accrued at the Default Rate, and (iii)
all other sums required to be paid by the Borrower pursuant to this Agreement or
any other Program Document, to be due and payable, and upon any such declaration
the amounts referred to in clauses (i) through (iii) of this Section 10.2 shall
mature and become due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived.
SECTION 10.3 Rights and Remedies. If an Event of Default shall occur and
shall remain uncured past any cure period provided by Section 10.5, the Lender
may exercise any right, power or remedy permitted to it by law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or agreement contained in the Program Documents or in any Note
evidencing one or more Loans or for an injunction against a violation of any of
the terms of the Program Documents or such Loan or in aid of any exercise of any
power granted to the Lender in the Program Documents or in such Loan, or may
proceed to enforce payment of such Loan or to enforce any other legal or
equitable right of the Lender. No remedy herein conferred upon the Lender is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law, in equity, by statute or otherwise. No course of
dealing on the part of the Lender or any delay or failure on the part of the
Lender to exercise any right or power, shall operate as a waiver of such right
or power or otherwise prejudice the rights, powers and remedies of the Lender.
No failure to insist upon strict compliance with any covenant, term, condition
or other provision of the Program Documents or any Note shall constitute a
waiver by the Lender of any such covenant, term, condition or other provision or
of any default or Event of Default in connection therewith. To the extent
effective under applicable law, the Borrower hereby agrees to waive, and does
hereby absolutely and irrevocably waive and relinquish, the benefit and
advantage of any stay, extension or redemption laws now existing or that may
hereafter exist that, but for this provision, might be applicable to any sale
made under any judgment, order or decree of any court, or otherwise, based on
the Loans or on any claim for interest in respect of the Loans. If an Event of
Default shall occur, and be continuing, the Borrower will pay to the Lender, to
the extent not prohibited by applicable law and not paid in accordance with this
Agreement, such further amount as shall be sufficient to cover the reasonable
costs and expenses of collection and of the taking of remedial actions and the
maintenance of enforcement proceedings, including, without imitation, reasonable
attorneys' fees and disbursements,
36
SECTION 10.4 Realization Upon Collateral. If an Event of Default hereunder
shall have occurred and shall remain uncured past any cure period provided by
Section 10.5, the Lender, or its agents, may do any or all of the following:
(a) sell, or cause the applicable Collateral Agent to sell, to the
extent not prohibited by law, in a commercially reasonable manner, the
Collateral and all right, title, interest, claim and demand therein, and
right of redemption thereof, at one or more public or private sales, as an
entirety or otherwise, and at such time and place and upon such terms as
the Lender may fix and specify in the notice of sale to be given to the
Borrower, or as may be required by law;
(b) take any action which is appropriate to enforce the rights and
remedies of the Lender under any instrument included in the Collateral, to
the extent not prohibited thereby or by law;
(c) take all other steps to protect and enforce the rights and
remedies of the Lender whether by proceedings (for the specific performance
of any provision of the Notes or this Agreement or any other Program
Document, or in aid of the exercise of any right or remedy herein granted,
or for any foreclosure hereunder or for the enforcement of any other
appropriate legal or equitable remedy) or otherwise as the Lender shall
deem most effectual to protect and enforce the same; or
(d) exercise all of the rights of a secured party under the UCC.
SECTION 10.5 Cure of Defaults. Notwithstanding anything herein to the
contrary, (a) the Lender shall allow the Borrower three Business Days during
which to cure any Pending Event of Default or Event of Default and (b) nothing
in this Article X shall prohibit the Borrower and the Lender from agreeing to a
reasonable period of time (in addition to the three Business Days provided by
subsection (a) hereof) to cure any Pending Event of Default or Event of Default;
provided, however, that the Lender may exercise any or all of its rights at any
time if, in its reasonable judgment, the further delay in such exercise would
impair its rights, diminish the value of the Collateral or affect the priority
of the Security Interest in the Collateral.
SECTION 10.6 Application of Proceeds of Sale of Collateral. The proceeds of
any sale made under or by virtue of this Article X together with any other sums
which then may be held by the Lender under this Agreement as part of the
Collateral or the Proceeds thereof, whether under the provisions of this Article
X or otherwise, shall be applied by the Lender as follows:
First: To the payment of the costs and expenses of any such sale, and
of any proceeding related to such sale, and of all expenses, liabilities
and advances made or incurred by the Lender under this Agreement
(including, without limitation, the reasonable compensation and expenses
and disbursements of its attorney and of such agents, representatives and
experts not regularly in the employ of the Lender as it shall employ in
37
connection with the exercise and performance of its powers and duties
hereunder), together with interest at the Default Rate, on all advances
made by the Lender to protect the Collateral or enforce its rights
hereunder or under any Note;
Second: To the payment of all amounts then owed under the Notes for
principal and interest and if such proceeds shall be insufficient to pay
amounts in full, then first, to interest due on all Notes then outstanding
and second, to reduce the principal of all Notes then outstanding, pro
rata, in accordance with the outstanding principal balance thereof;
Third: To the payment of any other sums required to be paid by the
Borrower to the Lender pursuant to any provision of this Agreement or the
Notes or any other Program Document; and
Fourth: To the payment of the surplus, if any, to the Borrower or such
other Person or Persons legally entitled thereto.
SECTION 10.7 Lender May Purchase Collateral. Upon any sale made under or by
virtue of this Article X to the extent permitted by applicable law, the Lender
or an independent agent, on its behalf, may bid for and acquire the Collateral
or any part thereof and in lieu of paying cash therefor may make settlement for
the purchase price by crediting upon the indebtedness of the Borrower secured by
this Agreement the net proceeds of sale, after deducting therefrom the expenses
of the sale and the costs of the proceedings and any other sums which the
Borrower is authorized to deduct under this Agreement. The Person making such
sale shall accept such settlement without requiring the production of any Note
and without such production there shall be deemed credited thereon the pro rata
share of the net proceeds of sale. The Lender or such independent agent, upon so
acquiring the Collateral or any portion thereof, shall be entitled to hold,
manage, sell or otherwise deal in and with the same in any manner not prohibited
by applicable law.
SECTION 10.8 No Loans After Event of Default. Upon the occurrence and
continuance of any Pending Event of Default or any Event of Default, the Lender
shall no longer be obligated to make additional Loans hereunder.
SECTION 10.9 Consents. If an Event of Default hereunder shall have occurred
and be continuing, then immediately upon the commencement of any proceedings by
the L4ender to obtain judgment for the principal of or interest on any Note and
other sums required to be paid by the Borrower pursuant to any provision of this
Agreement, or of any other nature in aid of the enforcement of the Notes or of
this Agreement, the Borrower will, to the extent that it lawfully may: (a)
consent to the issuance and service of process in the manner specified in
Section 13.7 for notices and other communications; lb) consent to the entry of
the judgment for the lawful costs, expenses, and compensation of the Lender and
of its agents or attorneys in any action in which the Lender obtains a judgment
for principal, interest and/or other sums, and for such other relief as the
Lender may be entitled to hereunder; and (c) if required by the Lender, consent
to the appointment of a receiver or receivers of the Collateral and the Proceeds
thereof. If an Event of Default hereunder shall have occurred and be continuing,
38
or upon the filing of a proceeding to foreclose this Agreement or to enforce the
specific performance hereof or in aid thereof or upon the commencement of any
other proceeding to enforce any right or remedy of the Lender, the Lender shall
be entitled as a matter of right, if the Lender shall so elect, without the
giving of notice to any other party and without regard to the adequacy or
inadequacy of the security of the Collateral, forthwith, either before or after
declaring the entire unpaid principal of the Notes and the interest accrued and
unpaid thereon to be due and payable, to the appointment of such a receiver or
receivers.
SECTION 10.10 Lender's Retention of Property. Notwithstanding the
appointment of any receiver, trustee or liquidator (or other similar official)
of the Borrower, or of any of the property of the Borrower, or of the Collateral
or any portion thereof, the Lender, or the applicable Collateral Agent on behalf
of the Lender, shall be entitled to obtain and/or retain possession and control
of all property now or hereafter pledged to or held by the Lender, or the
Collateral Agent on behalf of the Lender, under or pursuant to the provisions of
this Agreement.
SECTION 10.11 Remedies Not Exclusive; No Waiver of Remedies. No right or
remedy herein conferred upon or reserved to the Lender is intended to be
exclusive of any other right or remedy, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy given
hereunder, or now or hereafter legally existing, upon the occurrence of an Event
of Default hereunder. The failure of the Lender to insist at any time upon the
strict observance or performance of any of the provisions of this Agreement or
any other Program Document, or to exercise any right or remedy provided for in
this Agreement or any other Program Document, shall not impair any such right or
remedy nor be construed as a waiver or relinquishment thereof. Every right and
remedy given by this Agreement or any other Program Document to the Lender may
be exercised from time to time and as often as may be deemed expedient by the
Lender.
SECTION 10.12 Waiver by Borrower. The Borrower hereby waives notice of
nonpayment of any of the Loans, demand, presentment, protest and notice thereof
with respect to any and all instruments, notice of acceptance hereof, notice of
Loans or advances made, credit extended, Collateral received or delivered, or
any other action taken in reliance hereon, and all other demands and notices of
any description, except such as are expressly provided for herein, or in any
Note or in the Program Documents. To the extent that it lawfully may, upon the
occurrence of an Event of Default, the Borrower agrees that it will not at any
time insist upon, or plead, or in any manner whatever claim or take any benefit
or advantage of any applicable present or future stay, extension or moratorium
law, which may affect observance or performance of the provisions of this
Agreement, any Notes or any other Program Document; nor after any such sales or
sales, claim or exercise any right, under any applicable present or future law
or otherwise, to redeem the Collateral or any portion thereof so sold; and the
Borrower, to the extent that it lawfully may, expressly waives all benefit or
advantage of any such laws and covenants not to hinder, delay or impede the
39
exercise of any right or remedy permitted to be exercised by Under, but to
suffer and permit the exercise of every such right or remedy as though no such
law or laws were in effect. The Borrower for itself and all who may claim under
it, waives, to the extent that it lawfully may, all right to have the Collateral
marshalled upon any sale.
SECTION 10.13 Lender's Discretion. The Lender shall have the right in its
sole discretion to determine which rights, Liens, Security Interests or remedies
the Lender may at any time pursue, relinquish, subordinate, or modify or to take
any other action with respect thereto and such determination will not in any way
modify or affect any of the Lender's rights hereunder.
SECTION 10.14 Set-Off. In addition to any other rights which the Lender may
have under applicable law, upon the occurrence of any Event of Default
hereunder, the Lender shall have a right to apply any of the Borrower's property
held by the Lender or by any of its affiliates to reduce the Loans.
SECTION 10.15 Delay. No delay or omission on the Lender's part in
exercising any right, remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.
ARTICLE XI
BANKRUPTCY PROVISIONS
SECTION 11.1 Waiver of Automatic or Supplemental Stay. In the event of the
filing of any voluntary or involuntary petition under the U.S. Bankruptcy Code
by or against the Borrower (other than an involuntary petition filed by or
joined in by the Lender), the Borrower shall not assert, or request any other
party to assert, that the automatic stay under _362 of the Bankruptcy Code shall
operate or be interpreted to stay, interdict, condition, reduce or inhibit the
ability of the Lender to enforce any rights it has by virtue of this Agreement
or any Program Document. The waivers contained in this paragraph are a material
inducement to the Lender's willingness to enter into this Agreement and the
Borrower acknowledges and agrees that no ground exists for equitable relief
which would bar, delay or impede the exercise by the Lender of any of the
Lender's rights and remedies against the Borrower.
SECTION 11.2 Acknowledgment of the Borrower. If the Borrower's property
or any portion thereof or any interest therein becomes property of any
bankruptcy estate or subject to any state or federal insolvency proceeding, then
the Lender shall immediately become entitled, in addition to all other relief to
which the Lender may be entitled under this Agreement, to obtain an order from
the Bankruptcy Court or other appropriate court granting immediate relief from
the automatic stay pursuant to _362 of the Bankruptcy Code so to permit the
Lender to pursue its rights and remedies against the Borrower as provided under
40
this Agreement, under any Program Document and all other rights and remedies of
the Lender at law and in equity under applicable state law. In connection with
such an order, the Borrower shall not contend or allege in any pleading or
petition filed in any court proceeding that the Lender does not have sufficient
grounds for relief from the automatic stay. Any bankruptcy petition or other
action taken by the Borrower to stay, condition, or inhibit the I-ender from
exercising its remedies are hereby admitted by the Borrower to be in bad faith
and the Borrower further admits that the Lender would have just cause for relief
from the automatic stay in order to take such actions authorized under state
law.
ARTICLE XII
NOTES
SECTION 12.1 Exchange, Consolidation, Transfer and Assignment of Notes.
(a) The Lender may exchange one or more outstanding Notes for one or more
replacement Notes which have the same outstanding principal balance, terms and
payment characteristics, in the aggregate if applicable, as old Notes. Such
exchange shall be effected by presentation of the old Notes to the Borrower
together with written exchange instructions from the Lender. In connection with
any such exchange, the Under may request that a new Note be issued in the name
of an assignee or transferee of the Lender. All such new Notes shall be
substantially in the form of Exhibit A hereto. Each new Note (i) shall be dated
and shall bear interest from the date to which interest has been paid on the
Note or Notes that it replaces or (ii) if no interest has been paid on the Note
or Notes that it replaces, shall be dated the same as the Note or Notes that it
replaces. The substitution, replacement, consolidation or exchange of any Note
shall not be intended to be, and shall not be construed as, a novation of the
obligations of the Borrower evidenced by the Note.
(b) The Borrower hereby acknowledges that (i) the Notes will be fully
negotiable and (ii) the Lender may endorse or assign any of the Notes, from time
to time, without the consent of the Borrower. If a Note is transferred or
assigned by the Under, the Under will provide written payment instructions to
the Borrower.
(c) The Borrower shall be entitled to rely upon the written exchange,
transfer or payment instructions delivered by the Under. The Borrower will incur
no additional liability by acting in accordance with such written instructions.
SECTION 12.2 Mutilated, Lost or Destroyed Notes. If any Note shall become
mutilated or be destroyed, or lost or stolen, upon request of the Lender, the
Borrower shall execute and deliver to the Lender a new Note of the same tenor
and dated as of the same date as such old Note in the same original principal
amount and bearing interest at the same rate. In no event shall the Borrower's
liability be increased thereby.
SECTION 12.3 Validity of Replacement Notes. Each new Note issued in
exchange or replacement for any old Note pursuant to Sections 12.1 or 12.2
hereof shall be a valid obligation of the Borrower evidencing the same debt as
such old Note and shall be entitled to the benefits and security of this
Agreement to the same extent as such old Note.
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ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Term. This Agreement will terminate on the day that is one
year from the date hereof, unless renewed or terminated prior to such date in
accordance with the terms hereof. Notwithstanding the foregoing, this Agreement
may be extended by the mutual written agreement of the Lender and the Borrower
for successive one-year terms upon the payment by the Borrower to the Lender of
the Renewal Fee.
SECTION 13.2 Termination. The termination of this Agreement shall not
affect any of the Borrower's or the Lender's rights, or any of the Loans having
their inception prior to the effective date of such termination, and the
provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or obligations have been fully
disposed of, concluded or liquidated. The Security Interest, and rights granted
to the Lender hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that the Borrower's account may from time to time be
temporarily in a zero or credit position, until all of the obligations of the
Borrower have been paid or per-formed in full after the termination of this
Agreement or the Borrower has furnished the Lender with an indemnification
satisfactory to the Lender with respect thereto. Accordingly, the Borrower
waives any rights which it may have under Section 9-404(l) of the UCC to demand
the filing of termination statement with respect to the Collateral, and the
Lender shall not be required to send such termination statements to the
Borrower, or to file them with any filing office, unless and until this
Agreement shall have been terminated and in accordance with its terms and all
Loans paid in full. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all Loans are
repaid in full.
SECTION 13.3 Entire Understanding. This Agreement and the documents
executed concurrently herewith contain the entire understanding between the
Borrower and the Lender and supersedes all prior agreements and understandings,
if any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no
force and effect unless in writing, signed by the Borrower's and the Lender's
respective officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, canceled or
terminated orally or by any course of dealing, or in any manner other than by an
agreement in writing, signed by the party to be charged.
SECTION 13.4 Liability of Lender. The Borrower agrees that the Lender shall
not be liable for taking any action or refraining from taking any action
hereunder or for negligence, it being agreed that the Lender shall be liable to
the Borrower only for gross negligence or willful misconduct and that, as a
42
condition to the execution of this Agreement, the Borrower has and hereby does
waive any liability of the Lender except in the case of gross negligence or
willful misconduct.
SECTION 13.5 No Third Party Rights. Nothing in this Agreement expressed or
implied is intended or shall be construed to give any Person other than the
Lender and the Borrower any legal or equitable right, remedy or claim under or
in respect of the Notes, this Agreement or the Collateral or any provision
therein or herein contained, and such provisions are and shall be held to be for
the sole and exclusive benefit of the Lender and the Borrower.
SECTION 13.6 Expenses. All fees, costs and expenses including, without
limitation reasonable attorneys' fees and other out-of-pocket fees, cost and
expenses, incurred (a) by the Lender in all efforts made to enforce payment of
any Loan or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder and at @ related agreements,
documents and instruments, or (e) in connection with the instituting,
maintaining, preserving, enforcing and foreclosing of or on the Lender's
Security Interest in any of the Collateral, whether through judicial proceedings
or otherwise, or (d) in defending or prosecuting any actions or proceedings
arising out of or relating to the Lender's transactions with the Borrower, or
(e) upon the occurrence of an Event of Default, in obtaining any advice given to
the Lender with respect to its rights and obligations under this Agreement and
all related agreements, may be charged to the Borrower's account and shall be
part of the Loans.
SECTION 13.7 Notices. Unless otherwise expressly provided herein, all
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand, or when
deposited in the mail, postage prepaid, or in the case of telegraphic notice
when delivered to the telegraph company, or, in the case of facsimile notice,
when sent, confirmation received, addressed as follows, or to such other
addresses as may be hereafter notified by the respective parties hereto:
(a) The Borrower:
Western Fidelity Funding Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
43
(b) The Lender:
Princeton Capital Credit Corporation
00 Xxxxxxxxxx Xxxx
Xxxxxxxxx Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
SECTION 13.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and such counterparts
shall together constitute but one and the same Agreement. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart signed by the party against which enforcement if this
Agreement is sought.
SECTION 13.9 Severability. In case any one or more of the provisions
contained in this Agreement, any Note or any other Program Document or an
application thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein and therein and any other application thereof shall not in any way be
affected or impaired thereby.
SECTION 13.10 Successors and Assigns. All of the provisions herein
contained shall be binding upon and inure to the benefit of the respective
successors and assigns of the Lender and the Borrower, including any holders or
assignees of any Note, to the same extent as if each successor and assign were
in each case named as a party to this Agreement; provided, however, that the
Borrower has no right to assign or transfer any of its rights or obligations
under this Agreement unless the Lender shall have given its written consent
thereto.
SECTION 13. It Governing Law. THE LAW OF THE STATE OF NEW JERSEY SHALL
GOVERN THE RESPECTIVE RIGHTS AND DUTIES OF THE LENDER AND THE BORROWER WITH
RESPECT TO THIS AGREEMENT, EACH NOTE AND THE TRANSACTIONS BETWEEN THE LENDER AND
THE BORROWER CONTEMPLATED BY THIS AGREEMENT, AND THIS AGREEMENT AND EACH NOTE
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW JERSEY WITHOUT REFERENCE TO THE PRINCIPLES OF CONFLICTS OF LAW,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 13.12 Waiver of Jury Trial: Jurisdiction. THE BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
TO A JURY TRIAL IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY. In any action or
proceeding arising out of or relating to this Agreement or any Note, the
Borrower hereby accepts, for itself and its property, the nonexclusive
jurisdiction of the state and federal courts of the State of New Jersey, and
agrees that effective service of process may be made on the Borrower by mailing
same, in the manner set forth in Section 13.7 to the Borrower's address set
forth above.
44
SECTION 13.13 lnjunctive Relief. The Borrower recognizes that, if the
Borrower fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy at law may prove to be inadequate
relief to the Lender; therefore, the Lender, if the Lender so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
SECTION 13.14 Headings Not to Affect Interpretation. The headings to the
various Articles and Sections of this Agreement have been inserted for
convenient reference only and shall not modify, define, limit or expand the
express provisions of this Agreement.
45
IN WITNESS WHEREOF, the parties have caused this Auto Loan Warehouse
Agreement to be signed in their respective corporate names and attested by their
respective duly authorized officers on the date first written above.
WESTERN FIDELITY FUNDING INC.,
as Borrower
By: /s/ Xxxx Xxxxxx
--------------------------------
Its: President
Attest: /s/ Xxxxx Xxxxxxx
---------------------------
Its: Secretary
PRINCETON CAPITAL CREDIT
CORPORATION, as Lender
By: /s/ Xxx Xxxxxx
--------------------------------
Its: Managing Director
Attest:
-----------------------------
Its:
--------------------------------
46
STATE OF COLORADO )
)
COUNTY OF JEFFERSON )
On 8/12/96 before me personally came Xxxx Xxxxxx, to me known, who, being
by me duly sworn, did depose and say that he or she is President of WESTERN
FIDELITY FUNDING INC. which executed the foregoing instrument; that he knows the
seal of said corporation that the seal affixed to said instrument is such
corporate seal and that he signed his name and affixed said seal thereto by
order of the Board of Directors of said corporation.
/s/
---------------------------------------
(Notary Public)
My commission expires: 05/07/00
STATE OF COLORADO )
)
COUNTY OF JEFFERSON )
On 8/12/96, before me personally came Xxxxx Xxxxxxx, to me known, who,
being by me duly sworn, did depose and say that he or she is Secretary of
WESTERN FIDELITY FUNDING INC. which executed the foregoing instrument; that he
knows the seal of said corporation that the seal affixed to said instrument is
such corporate seal and that he signed his name and affixed said seal thereto by
order of the Board of Directors of said corporation.
/s/
---------------------------------------
(Notary Public)
My commission expires: 05/07/00
STATE OF COLORADO )
)
COUNTY OF JEFFERSON )
On 8/12/96 , before me personally came Xxx Xxxxxx, to me known, who, being
by me duly sworn, did depose and say that he or she is Managing Director of
PRINCETON CAPITAL CREDIT CORPORATION executed the foregoing instrument; that he
knows the seal of said corporation that the seal affixed to said instrument is
such corporate seal and that he signed his name and affixed said seal thereto by
order of the Board of Directors of said corporation.
/s/
---------------------------------------
(Notary Public)
My commission expires: 05/07/00
STATE OF )
---------------
)
COUNTY OF )
---------------
On -------------------- before me personally came ------------------------
to me known, who, being by me duly sworn, did depose and say that he or she is
--------------- of PRINCETON CAPITAL CREDIT CORPORATION executed the foregoing
instrument; that he knows the seal of said corporation that the seal affixed to
said instrument is such corporate seal and that he signed his name and affixed
said seal thereto by order of the Board of Directors of said corporation.
/s/
---------------------------------------
(Notary Public)
My commission expires:
-------------------------
EXHIBIT A
---------
FORM OF NOTE
WESTERN FIDELITY FUNDING INC.
REVOLVING CREDIT NOTE
August 12, 1996
FOR VALUE RECEIVED, WESTERN FUNDING INC. (the "Borrower") hereby promises
to pay to the order of PRINCETON CAPITAL CREDIT CORPORATION (the "Lender") the
principal amount of Five Million Dollars ($5,000,000) or, if less, the principal
amount of the Loans from the Lender outstanding, on the dates and in the amounts
specified in Sections 2.1 and 2.2 of the Warehouse Agreement referred to below,
and to pay interest on such principal amount on the dates and at the rates
specified in Section 3.1 of such Warehouse Agreement. All payments due the
Lender hereunder shall be made to the Lender at the place, in the type of money
and funds and in the manner specified in Sections 2.6 and 2.9 of such Warehouse
Agreement.
The holder hereof is authorized to endorse on the grid attached hereto, or
on a continuation thereof, each Loan of the Lender and each payment, repayment
or conversion with respect thereto.
Presentment, demand, protest, notice of dishonor and notice of intent to
accelerate are hereby waived by the undersigned.
This Revolving Credit Note evidences Loans made under, and is entitled to
the benefits of, the Auto Loan Warehouse Agreement, dated as of August 12, 1996,
between Western Fidelity Funding Inc. and Princeton Capital Credit Corporation
(the "Warehouse Agreement") Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Warehouse
Agreement. Reference is made to such Warehouse Agreement, as so amended, for
provisions relating to the repayment and the acceleration of the maturity
hereof.
THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAW OF THE STATE OF NEW JERSEY (WITHOUT GIVING EFFECT TO ITS
CHOICE OF LAW PRINCIPLES).
WESTERN FIDELITY FUNDING INC.
By:
---------------------------------
Name:
------------------------------
(Corporate Seal) Title:
------------------------------
GRID
REVOLVING CREDIT NOTE
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EXHIBIT B
---------
FORM OF DISBURSEMENT SUMMARY
Originator: client- Note: note-
Dealers: Various Date: date-
FUNDING DISBURSEMENTS
--------------------------------------------------------------------------------
Total Collateral from Exhibit I $collateral-
--------------------------------------------------------------------------------
Principal Amount principal-
0- 1-
2- 3-
4- 5-
6- 7-
8- 9-
10- 11-
12- 13-
14- 15-
16- 17-
18- 19-
--------------------------------------------------------------------------------
Net Amount Held on Behalf of Originator $net-
========================
* PCCC has made every effort to identify all fees and expenses involved with
this transaction but, where appropriate, other fees incurred by PCCC will be
charged and recovered from advances and/or settlement payments as they occur.
Originator Funding Instructions:
-----------------------------------------------
-------------------------------------------------------------------------------
Prepared for PCCC by:
------------------------------ ---------------------
Date
Acknowledged for
Originator/Maker by:
------------------------------ ---------------------
Date
EXHIBIT C
---------
FORM OF DEALER AGREEMENT
EXHIBIT D
---------
FUNDING AND FEE SCHEDULE
Funding Fee: $25
Application Fee: $5,000
Interest Rate: The 'Prime Rate" as published in The Wall Street
Journal plus 3.75%.
Renewal Fee: As of any Renewal Date, a fee equal to $5,000 or such
other amount as the tender and Borrower may determine
by mutual agreement.
Take-Out Fee With respect to an Auto Loan, $25, $50 or $75 if
the Disposition of such Auto Loan occurs 30 or less
days, 31- 60 days, or 61 or more days, respectively,
after the losing Date for the Loan that such Auto Loan
secures.
EXHIBIT E
---------
START-UP PERIOD VOLUME PROJECTION SCHEDULE
The Start-up Period will be a maximum of 9 months from the date of the
Agreement.
The volume projections for the Start-up Period will be as determined by
Borrower.
Borrower
----------------
Lender
------------------
EXHIBIT F
---------
FORM OF ASSIGNMENT OF AUTO LOAN
TO: PRINCETON CAPITAL CREDIT CORPORATION
VIN NUMBER:
-------------------------------
BORROWER NAME:
---------------------------
LOAN NUMBER:
-----------------------------
Pursuant to the Auto Loan Warehouse Credit and Security Agreement (the
"Warehouse Agreement"), dated as of August 12, 1996, between PRINCETON CAPITAL
CREDIT CORPORATION, as lender (the "Assignee"), and WESTERN FIDELITY FUNDING
INC., as borrower (the "Assignor"), for value received the Assignor hereby
transfers and assigns to the Assignee, its successors and assigns, the auto loan
referenced above (the "Auto Loan"), together with all of the Assignor's right,
title and interest in and to the Collateral relating to the Auto Loan, and all
of the Assignor's rights and remedies thereunder and under any guaranty or
endorsement thereof, including the right to collect any and all installments due
and to become due on the Auto Loan and to take, in the Assignor's or the
Assignee's name, any and all proceedings Assignor might otherwise take. All
capitalized terms not defined herein shall have the meanings assigned to them in
the Warehouse Agreement.
The Assignor subordinates to any rights the Assignee may now or hereafter
have against the Obligor any rights the Assignor may now or hereafter have. The
Assignor waives notice of the acceptance hereof.
WESTERN FIDELITY FUNDING INC.,
as Assignor
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
Date:
-------------------------------
EXHIBIT G
---------
FUNDING AMOUNT
Borrower's Purchase price for Auto Loan
Plus
$150
Plus
2% of Auto Loan (unless Reserve Account balance equals 2% of Maximum Credit
Line)
Example:
Auto Loan Amount = $10,000
Borrower's Purchase Price = $ 8,500
plus 150
plus 2% of Loan 200
------
Amount to be funded by Lender $ 8,850
======
Disbursement of Funds:
Proceeds to Borrower $ 8,650
Proceeds to Reserve Account 200
------
Total Disbursed $ 8,850
======
