Exhibit 4.3
LOAN AGREEMENT
BY AND BETWEEN
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
AS LENDER
AND
E-LOAN, INC.
AS BORROWER
DATED AS OF
JUNE 14, 2002
TABLE OF CONTENTS
SECTION 1. CERTAIN DEFINITIONS AND TERMS................................1
SECTION 2. REVOLVING CREDIT FACILITY...................................12
SECTION 3. CONDITIONS PRECEDENT........................................15
SECTION 4. REPRESENTATIONS AND WARRANTIES..............................16
SECTION 5. COVENANTS...................................................20
SECTION 6. EVENTS OF DEFAULT...........................................27
SECTION 7. RIGHTS AND REMEDIES.........................................29
SECTION 8. MISCELLANEOUS...............................................30
SCHEDULES
SCHEDULE 3.1* CLOSING DOCUMENTS AND CONDITIONS
SCHEDULE 4.4* PRIOR NAMES AND TRADE NAMES OF BORROWER
SCHEDULE 4.8* PENDING LITIGATION INVOLVING BORROWER OR GUARANTOR
SCHEDULE 4.11* EMPLOYEE BENEFIT PLANS
SCHEDULE 4.13* PERMITTED LIENS
SCHEDULE 4.16* SUBSIDIARIES AND AFFILIATES
SCHEDULE 4.17* OWNERSHIP
SCHEDULE 5.2(h)* TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES
SCHEDULE 5.2(r)* BUSINESS LOCATIONS
EXHIBITS
EXHIBIT A REVOLVING CREDIT NOTE
EXHIBIT B* FINANCIAL REPORT CERTIFICATE
EXHIBIT C* LIST OF CONTRACT PURCHASE AGREEMENTS
EXHIBIT D* FORM OF DEALER AGREEMENT
EXHIBIT E* FORM OF E-FUND AGREEMENT
EXHIBIT F* FORM OF NOTE AND SECURITY AGREEMENT
EXHIBIT G* BORROWER'S GENERAL UNDERWRITING CRITERIA
EXHIBIT H* FORM OF ADVANCE REQUEST
*Schedules and Exhibits have been omitted as non-material and will be provided
in accordance with Item 601 of Regulation S-K.
LOAN AGREEMENT
THIS LOAN AGREEMENT ("Agreement") is entered into as of June 14, 2002,
by and between E-LOAN, INC., a Delaware corporation ("Borrower") and XXXXXXX
XXXXX MORTGAGE CAPITAL INC., a Delaware corporation, with its principal office
at 4 World Financial Center, Xxx Xxxx, XX 00000 (together with its successors
and assigns, "Lender").
R E C I T A L S
A. Borrower is engaged in the business of originating and selling
Contracts (as hereinafter defined) to finance the purchase of Vehicles.
B.Borrower desires to borrow funds from Lender to finance the funding
of such Contracts, which borrowings are to be secured by the Contracts.
C.Based upon the foregoing and subject to the terms and conditions
hereinafter set forth, Lender is willing to make loans to Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
AGREEMENT
SECTION 1..CERTAIN DEFINITIONS AND TERMS
As used herein, the following terms shall have the meanings herein
indicated:
1.1. ACH means the Automated Clearinghouse of the Federal Reserve.
1.2. ACH ACCOUNT means the segregated ACH account in the name of the
Borrower at Bank One (account: E-LOAN, Inc.) having account number 636101545
(ABA: 000000000) for the purpose of disbursing the principal amount of each
Contract to the related Dealer for the related Financed Vehicle via ACH when a
check is not used.
1.3. ADVANCE REQUEST has the meaning set forth in Section 2.2.
1.4. AFFILIATE means any Person who (i) would be an "affiliate" of
Borrower within the meaning of the regulations promulgated pursuant to the
Securities Act of 1933, as such regulations and Act are amended and in effect on
the date in question, if such Person were subject to such Act and regulations,
or (ii) owns any legal or beneficial interest of twenty-five percent (25%) or
more in such Person, (iii) is a director or officer of Borrower, or (iv) is a
relative of any of the Persons described in clause (iii).
1.5. AGGREGATE BORROWING BASE means, on any date of calculation, the
aggregate Borrowing Base for all Eligible Contracts on such day.
1
1.6. AGREEMENT means this Loan Agreement, including any Schedules and
Exhibits hereto, as the same may be in effect from time to time after giving
effect to any amendments, supplements, increases, extensions, and renewals in
accordance with the terms hereof.
1.7. AMOUNT FINANCED means, with respect to a Contract and the related
Receivable, the aggregate principal amount of credit extended to the related
Obligor in connection with the purchase (or financing or refinancing of the
purchase) of the related Financed Vehicle including, without limitation, any
taxes, insurance and related costs financed in connection therewith, as set out
in the related Receivable File.
1.8. BORROWING BASE means, at any date of determination, (i) with
respect to each Subprime Contract which is an Eligible Contract, an amount equal
to 92%, and (ii) with respect to each Prime Contract which is an Eligible
Contract, an amount equal to 97%; in each case, of the aggregate amount of the
principal balance outstanding under such Contract as calculated by Borrower's
accounting systems and as agreed to by Lender. The Borrowing Base value of each
Eligible Contract shall amortize monthly by the reduction in principal balance
of such Eligible Contract calculated on the basis of a simple interest
amortization.
1.9. BORROWING BASE REPORT means a certificate containing such
information as Lender may request concerning the amount or calculation of the
Aggregate Borrowing Base.
1.10. BORROWING DATE has the meaning set forth in Section 2.2.
1.11. BREAKAGE FEE has the meaning set forth in the Credit Agreement.
1.12. BUSINESS DAY means any day other than a Saturday, a Sunday or a
day on which the Federal Reserve Bank of New York, the New York Stock Exchange
or banking institutions in New York (including New York City) or, to the extent
relevant, California are authorized or obligated by law, regulation or executive
order to remain closed.
1.13. CHECKING ACCOUNT means the segregated checking account in the
name of the Borrower at Bank One (account: E-LOAN, Inc.) having account number
634866347 (ABA: 000000000) for the purpose of disbursing the principal amount of
each Contract to the related Dealer for the related Financed Vehicle via check
when ACH is not used.
1.14. CLAIM has the meaning set forth in Section 5.1(e).
1.15. CLOSING DATE means the date of the initial advance hereunder.
1.16. CODE means the Internal Revenue Code of 1986, as amended from
time to time, and all regulations promulgated and rulings issued thereunder.
1.17. COLLATERAL has the meaning set forth in Section IV of the
Security Agreement.
1.18. COLLECTION ACCOUNT means the segregated collection account
subject to the Securities Account Control Agreement in the name of the Borrower
at Bank One (account: E-LOAN, Inc.) having account number 636101560 (ABA:
000000000) for the purpose of depositing the Collections forming part of the
Collateral.
2
1.19. COLLECTION SWEEP INVESTMENT ACCOUNT means the collection sweep
sub-account to the Collection Account subject to the Securities Account Control
Agreement in the name of the Borrower at Bank One for the purpose of investing
amounts on deposit in the Collection Account in Eligible Investments.
1.20. COMMITMENT means the commitment of the Lender to make Revolving
Credit Loans to Borrower pursuant to Section 2.1 hereof in an aggregate
principal amount at any one time outstanding not to exceed Ten Million Dollars
($10,000,000) or such lower amount as may be provided for pursuant to the terms
of this Agreement.
1.21. COMMITMENT PERIOD means the period from and including the Closing
Date to, but not including, the Commitment Termination Date.
1.22. COMMITMENT TERMINATION DATE means the earlier of (i) 365 days
from the date of this Agreement, and (ii) the date on which the Commitment is
otherwise terminated in accordance with the terms of this Agreement.
1.23. CONCENTRATION ACCOUNT means the segregated concentration account
subject to the Securities Account Control Agreement in the name of the Borrower
at Bank One (account: E-LOAN, Inc.) having account number 636101511 (ABA:
000000000) for the purpose of reconciling the receipts and disbursements on the
Contracts.
1.24. CONTRACT means an E-Fund Agreement, Note and Security Agreement
and each other agreement delivered in connection therewith or pursuant thereto
relating to a Vehicle, which was originated by the Borrower and pursuant to
which the related Obligor is required to repay the related Amount Financed in
full during the term of such agreement or contract and which is funded by the
Lender pursuant to this Agreement.
1.25. CONTRACT PURCHASER means a financial institution that has entered into a
Contract Purchase Agreement with Borrower.
1.26. CONTRACT PURCHASE AGREEMENT means a written agreement between
Borrower and a Contract Purchaser whereby the Borrower agrees to sell and the
Contract Purchaser agrees to purchase Contracts which satisfy such Contract
Purchaser's Loan Guidelines. A list of all of the Borrower's Contract Purchase
Agreements is attached hereto as EXHIBIT C.
1.27. CREDIT AGREEMENT means the Credit Agreement, dated as of June 1,
2002, among the Borrower, E-LOAN Auto Fund One, LLC and Xxxxxxx Xxxxx Bank USA,
as the same may be supplemented, amended or otherwise modified from time to time
in accordance with its terms.
1.28. CREDIT DOCUMENT has the meaning set forth in the Credit
Agreement.
1.29. CURRENT FINANCIALS means the Financial Statements of Borrower for
the fiscal year ended December 31, 2001, and the quarter ended March 31, 2002.
1.30. DEALER means a retail seller of Vehicles.
1.31. DEALER AGREEMENT means an agreement between a Dealer and the
Borrower whereby the Borrower agrees to make a direct loan to a consumer for the
purchase of a Vehicle from a Dealer,
3
provided that such Dealer performs certain acts and provides certain
documentation to the Borrower, which agreement is substantially in the form of
Exhibit D hereto.
1.32. DEBT means, at any time, with respect to any Person, without
duplication and, except as provided in item (b) below, without regard to any
interest component thereof (whether actual or imputed) that is not due and
payable, the aggregate of the following amounts, each calculated at such time in
accordance with GAAP, but excluding, for greater certainty, capital stock,
whether or not preferred, which is not referred to in clause (k) below:
(a) money borrowed (including by way of overdraft) or
indebtedness represented by notes payable and drafts accepted
representing extensions of credit;
(b) the face amount of all bankers' acceptances and similar
instruments;
(c) the amount of any indemnity or reimbursement obligations
arising from or relating to letters of credit, letters of guarantee,
legally binding comfort letters, guarantees or security bonds issued on
behalf of such Person;
(d) all obligations (whether or not with respect to the
borrowing of money) that are evidenced by bonds, debentures, notes or
other similar instruments, whether or not any such instruments are
convertible into capital, or that are not so evidenced, but that would
be considered by GAAP to be indebtedness for borrowed money;
(e) all obligations upon which interest charges are customarily
paid by that Person (including purchase money obligations);
(f) principal obligations as lessee under capital leases, all as
determined in accordance with GAAP;
(g) all obligations (contingent or otherwise) under any interest
rate hedge agreements (after deducting the market value at such time of
any collateral or credit support posted or transferred to the
applicable counterparty as security for such obligations);
(h) any deferred purchase price for property or services
purchased (including vendor financing in connection with any
investment, but excluding trade payables and other liabilities incurred
in the ordinary course of business);
(i) any transfer of property or assets which has been made with
recourse to the transferor or any obligation to repurchase any property
or assets or to purchase property or assets regardless of the delivery
or non-delivery thereof;
(j) any amount secured by an Lien;
(k) any obligation to purchase, redeem or otherwise retire or
purchase for cancellation any shares of capital stock in such Person at
the option of the holder thereof, including any obligation to so
purchase, redeem or otherwise retire or purchase for cancellation any
shares of capital stock issuable upon the exchange or conversion of
other shares; and
4
(l) any contingent obligation incurred for the purpose of or
having the effect of providing financial assistance to another entity,
including, any guarantee or indemnity (other than by endorsement of
negotiable instruments for collection or deposit in the ordinary course
of business) in any manner of any part or all of an obligation included
in items (a) through (k) above.
1.33. DEFAULT means any event which with the passage of time or the
giving of notice or both will be an Event of Default.
1.34. DEFAULT RATE has the meaning set forth in Section 2.7
1.35. DISCOUNTED CONTRACT BALANCE means, with respect to any Contract,
the then current net present value of the remaining payments due under such
Contract, which amount shall be calculated by discounting such remaining
payments monthly at the related interest rate on such Contract.
1.36. E-FUND AGREEMENT means an E-Fund Agreement originated by the
Borrower to an Obligor for the purchase of a Vehicle, substantially in the form
of Exhibit E hereto.
1.37. ELIGIBLE CONTRACT means a Contract payable to Borrower which
meets all of the following requirements at all relevant times, including,
without limitation, at the time of presentation of each Borrowing Base Report:
(A) arises from the financing or refinancing by Borrower in the
ordinary course of Borrower's business of an Obligor's purchase or
refinancing of a Vehicle within thirty (30) days of any date of
determination;
(B) with respect to each Subprime Contract, complies with the
Loan Guidelines of a Contract Purchaser and otherwise should be
purchased by a Contract Purchaser pursuant to a Contract Purchase
Agreement within three (3) Business Days of receipt by Borrower of all
documentation required under the Borrower's Dealer Agreement;
(C) except in the case of a refinancing, is subject to a Dealer
Agreement requiring each Dealer and Eligible Non-Franchise Dealer to
supply documentation as set forth therein; and in the case of a
refinancing, is evidenced by a Note and Security Agreement, power of
attorney for the Borrower and draft endorsed by the prior
lender/lienholder acknowledging the release of its lien on the related
Vehicle;
(D) has not been included in the Aggregate Borrowing Base
calculation for more than ten (10) Business Days;
(E) represents a valid and binding obligation enforceable in
accordance with its terms (except as enforcement of such terms may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by equitable principles
(regardless of whether such enforceability is in a proceeding in equity
or at law)) for the amount outstanding thereof without offset,
counterclaim or defense (whether actual or alleged) and is not subject
to rescission;
(F) complies in all respects with applicable Law, including,
without limitation, usury, truth in lending and credit disclosure laws
and regulations;
5
(G) is secured by a first priority security interest in and lien
on the Financed Vehicle and Lender has been granted a first priority
perfected Lien on such security interest of Borrower and a first
priority perfected Lien on the Contract and the Contract is free and
clear of any liens or claims of any other Person;
(H) the Obligor thereon is not subject to any pending
receivership, insolvency or bankruptcy proceeding and the related
Financed Vehicle has not been repossessed;
(I) the Obligor thereon is not an Affiliate of Borrower;
(J) the Obligor thereunder has a FICO score of at least 500 and
has accepted delivery of and is in possession of the Financed Vehicle
subject of the Contract and such vehicle has not been returned by the
Obligor or repossessed by Borrower;
(K) the first payment thereunder is, or was, due within
forty-five (45) days of the Contract's origination;
(L) all payments thereunder are current;
(M) the terms and provisions thereof have not been amended,
modified or extended;
(N) shall not have been charged-off;
(O) the Obligor has accepted delivery of, and is in possession
of, the related Financed Vehicle and such Vehicle has not been returned
by the Obligor to the related Dealer or Eligible Non-Franchise Dealer;
(P) has been originated in compliance with the Borrower's
General Underwriting Criteria (attached hereto as Exhibit G); and
(Q) complies with other criteria which Lender may establish at
any time and from time to time, within its reasonable discretion.
At the discretion of Lender, a Contract may be deemed an Eligible
Contract pending receipt by Lender of documentation required by Lender to
determine eligibility. Lender reserves the right to determine if a Contract
complies with the foregoing criteria, in its sole discretion. An Eligible
Contract shall become ineligible at any time at which it fails to meet the
foregoing criteria.
1.38. ELIGIBLE INVESTMENTS means any of the following (a) negotiable
instruments or securities represented by instruments in bearer or registered or
in book-entry form which evidence (i) obligations fully guaranteed by the United
States; (ii) time deposits in, or bankers acceptances issued by, any depository
institution or trust company incorporated under the laws of the United States or
any state thereof and subject to supervision and examination by Federal or state
banking or depository institution authorities; PROVIDED, HOWEVER, that at the
time of investment or contractual commitment to invest therein, the certificates
of deposit or short-term deposits, if any, or long-term unsecured debt
obligations (other than such obligation whose rating is based on collateral or
on the credit of a Person other than such institution or trust company) of such
depository institution or trust company has a credit rating from Moody's and S&P
of at least "P-1" and "A-1+", respectively, in the case of the certificates of
deposit or short-term deposits, or a rating not lower than one of the two
highest investment categories granted by
6
Moody's and by S&P; (iii) certificates of deposit having, at the time of
investment or contractual commitment to invest therein, a rating from Moody's
and S&P of at least "P-1" and "A-1+", respectively; or (iv) investments in money
market funds rated in the highest investment category or otherwise approved in
writing by the applicable Rating Agencies; (b) demand deposits in any depository
institution or trust company referred to in (a)(ii) above; (c) commercial paper
(having original or remaining maturities of no more than 31 days) having, at the
time of investment or contractual commitment to invest therein, a credit rating
from Moody's and S&P of at least "P-1" and "A-1+", respectively; (d) Eurodollar
time deposits having a credit rating from Moody's and S&P of at least "P-1" and
"A-1+", respectively; and (e) repurchase agreements involving any of the
Eligible Investments described in clauses (a)(i), (a)(iii) and (d) hereof, so
long as the other party to the repurchase agreement has at the time of
investment therein, a rating from Moody's and S&P of at least "P-1" and "A-1+",
respectively.
1.39. ELIGIBLE NON-FRANCHISE DEALER has the meaning set forth in the
Credit Agreement.
1.40. ERISA means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated and rulings issued thereunder.
1.41. ERISA AFFILIATE means any Person who for purposes of Title IV of
ERISA is a member of Borrower's control group, or who is under common control
with Borrower, within the meaning of Section 414 of the Code and the regulations
promulgated and rulings issued thereunder.
1.42. EVENT OF DEFAULT has the meaning set forth in Section 6 of this
Agreement and in any other Loan Documents.
1.43. FINANCED VEHICLE means, in respect of a Contract and the related
Receivable, the Vehicle, together with all accessions thereto, securing the
related Obligor's indebtedness in connection with such Contract and the related
Receivable.
1.44. FINANCIAL REPORT CERTIFICATE means a certificate containing such
certifications, statements, calculations, explanations, and conclusions as
Lender may require concerning compliance with the Loan Documents in form and
substance satisfactory to Lender, which is in the form of Exhibit B hereto.
1.45. FINANCIAL STATEMENTS means balance sheets, profit and loss
statements, and statements of cash flows prepared in comparative form with
respect to the corresponding period of the preceding fiscal year and prepared in
accordance with GAAP.
1.46. GAAP means all applicable generally accepted accounting
principles of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board which
are applicable as of the date of the Current Financials.
1.47. GOVERNMENTAL AUTHORITY means any nation or government, any state,
county, or city and any political subdivision of any of the foregoing and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
1.48. LNDEMNIFIED PARTY has the meaning set forth in Section 5.1(e).
1.49. INDEMNITY MATTERS has the meaning set forth in Section 5.1(e).
7
1.50. INTEREST PERIOD means, initially, the period beginning on the
Closing Date and ending on the last day of the calendar month in which the
Closing Date occurs, and thereafter, each calendar month; PROVIDED that the
final Interest Period shall mean the period beginning on the first day of the
calendar month in which the Commitment Termination Date occurs and ending on the
Commitment Termination Date.
1.51. LAW means all applicable statutes, laws, ordinances, regulations,
orders, writs, injunctions or decrees of any Governmental Authority.
1.52. LIBOR means, with respect to each Interest Period or other
specified time period determined by the Lender, the London interbank offered
rate for deposits in U.S. dollars having a maturity of one month commencing on
the first day of such Interest Period or other specified time period determined
by the Lender, as such rate appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on the applicable LIBOR Determination Date. If such rate does not
appear on Telerate Page 3750, the rate for that day will be determined on the
basis of the rates at which deposits in U. S. Dollars, for such period and in a
principal amount of not less than $1,000,000, are offered at approximately 11:00
a.m. (London time) on such LIBOR Determination Date to prime banks in the London
Interbank market by the Reference Banks. The Lender will request the principal
London office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
the rate for that day will be the arithmetic mean of the rates quoted by major
banks in New York City, selected by the Lender, at approximately 11:00 a.m. (New
York City) time on such LIBOR Determination Date for loans in U.S. Dollars, for
such period and in a principal amount of not less than $1,000,000, to leading
European banks; PROVIDED that if the banks selected as aforesaid are not quoting
as mentioned in this sentence, LIBOR in effect for the applicable Interest
Period or other specified time period determined by the Lender will be the LIBOR
in effect for the previous Interest Period or other specified time period
determined by the Lender; and PROVIDED FURTHER that if LIBOR in effect for the
previous Interest Period or other specified time period determined by the Lender
does not adequately and fairly reflect the cost to the Lender of funding its
Commitment, LIBOR in effect for the applicable Interest Period or other
specified time period determined by the Lender shall instead be the cost of
funds to the Lender of funding its Commitment. "Telerate Page 3750" means the
display page so designated on the Dow Xxxxx Telerate Service (or such other page
as may replace that page on that service for the purpose of displaying
comparable rates or prices). "Reference Bank" means a leading bank: (a) engaged
in transactions in eurodollar deposits in the international eurocurrency market,
(b) not controlling, controlled by or under common control with the Borrower and
(c) having an established place of business in London.
1.53. LIBOR DETERMINATION DATE means, with respect to any Interest
Period, the second London business day before the commencement of such Interest
Period. For this purpose, a "London business day" means any day on which
dealings in U.S. dollars are carried on in the London interbank market.
1.54. LIEN means any mortgage, debenture, pledge, lien, charge,
assignment by way of security, hypothecation or security interest granted or
permitted by a Person or arising by operation of law, in respect of any Person's
property or assets, or any consignment or capital lease of property by such
Person as consignee or lessee or any other security agreement, trust or
arrangement, having the effect of security for the payment or performance of any
debt, liability or obligation.
1.55. LITIGATION means any proceeding, claim, lawsuit or investigation
conducted or threatened by or before any Governmental Authority.
8
1.56. LOAN DOCUMENT(S) means this Agreement, the Revolving Credit Note,
the Security Documents, the Warrant, and any other agreements, notes,
guaranties, certificates, instruments or other documents delivered pursuant to
or therewith as the same may be amended, modified, supplemented, extended or
restated from time to time in accordance with their respective terms.
1.57. LOAN GUIDELINES means the loan guidelines issued to Borrower by a
Contract Purchaser pursuant to which Borrower enters into or purchases and sells
Eligible Contracts.
1.58. MATERIAL ADVERSE CHANGE means, in respect of any Person, any
change having a Material Adverse Effect on the business, assets, liabilities,
operations, results of operations, condition (financial or other), of such
Person, or the ability of such Person to carry on its business or a significant
part of its business, or which would reasonably be expected to result in, or has
resulted in, a Material Adverse Effect on the ability of such Person to perform
its obligations under the Loan Documents to which it is a party.
1.59. MATERIAL ADVERSE EFFECT means, with respect to the Borrower, a
material adverse effect on (i) the financial condition or operations of the
Borrower or the ability of the Borrower to perform its obligations under any
Loan Document, (ii) the legality, validity or enforceability of any Loan
Document, (iii) the Secured Party's security interest in the Collateral
generally or in any Contracts or other Collateral such that the aggregate
Discounted Contract Balance of all the affected Contracts plus the face value of
all other affected Collateral exceeds an aggregate amount of $250,000, or (iv)
the collectibility of the Contracts generally or of any Material Portion of the
Contracts.
1.60. MATERIAL ASSETS means any asset which has a book or appraised
value of or is sold for consideration of $50,000 or more.
1.61. MATERIAL PORTION means the aggregate Discounted Contract Balance
of all affected Contracts plus the face value of all other affected Collateral
exceeds an aggregate amount of $250,000.
1.62. MAXIMUM RATE means the maximum rate or amount of interest which
Lender is allowed to contract for, charge, take, reserve or receive under
applicable Law.
1.63. MOODY'S means Xxxxx'x Investors Service, Inc. and any successor
thereto.
1.64. MULTIEMPLOYER PLAN means a multiemployer plan as defined in
Sections 3(37) or 4001(a)(3) of ERISA or Section 414 of the Code.
1.65. NOTE AND SECURITY AGREEMENT means a Note and Security Agreement
originated by the Borrower to an Obligor for the refinancing or purchase of a
Vehicle, substantially in the form of Exhibit F hereto.
1.66. OBLIGATIONS means (i) the obligation of Borrower for the due and
punctual payment of the principal of and interest on the Revolving Credit Note
when due, whether at maturity, by acceleration, by notice of voluntary
prepayment or otherwise, (ii) all other obligations and all out-of-pocket
expenses and indemnities now or hereafter existing of Borrower to Lender under
this Agreement and all other Loan Documents, (iii) all out-of-pocket costs and
expenses, now or hereafter existing, that may be incurred by Lender in
connection with the administration (as set forth in Section 5.1(i)) and
enforcement of the Loan Documents or the realization on the security provided
for by the Loan Documents, (iv) the obligations of each of the pledgors,
debtors, grantors, mortgagors, guarantors or
9
other Person obligated to Lender under the Security Documents and (v) all
obligations of Borrower under Section 5.1(e).
1.67. OBLIGOR means, with respect to a Contract and the related
Receivable, the consumer and any other Person who owes payments under such
Contract and the related Receivable in respect of the purchase or refinancing of
a Financed Vehicle or such Contract and the related Receivable.
1.68. OFFICER means any of the Chairman of the Board, the President,
the Vice Chairman of the Board, an Executive Vice President, any Vice President,
a Treasurer, Assistant Treasurer, Secretary or Assistant Secretary of the
Borrower.
1.69. ORGANIZATION DOCUMENTS means, with respect to any corporation or
company, its articles of incorporation, organization, formation or other similar
document and its by-laws, operating agreement or other similar document, all as
amended, supplemented and otherwise modified from time to time.
1.70. PERMITTED LIENS has the meaning set forth in Section 4.13.
1.71. PERSON means any individual, corporation, limited liability
company, estate, partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
1.72. PLAN means any employee pension benefit plan as defined in
Section 3(2) of ERISA that is covered by Title IV of ERISA (including a
Multiemployer Plan) or subject to the minimum funding standards of Section 412
of the Code which is or has been maintained for the employees of Borrower or any
ERISA Affiliate.
1.73. PRIME CONTRACT means any Contract with an Obligor who has a FICO
score at the time of origination of such Contract equal to or greater than 640.
1.74. RATING AGENCIES means, Xxxxx'x and S&P.
1.75. RECEIVABLE means, any Contract owned by the Borrower, and in
respect of any such Contract, all amounts payable by the related Obligor,
including, without limitation, all rights to payments on account of principal
and interest together with all payment obligations thereunder and all moneys
received thereon and the security interest in the related Financed Vehicle.
1.76. REVOLVING CREDIT LOANS has the meaning set forth in Section 2.l.
1.77. REVOLVING CREDIT NOTE has the meaning set forth in Section 2.3.
1.78. REVOLVING RATE has the meaning set forth in Section 2.5.
1.79. RIGHT means, with respect to any Person, any rights, remedies,
powers, privileges and/or benefits of such Person whether at law or in equity.
1.80. S&P means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and any successor thereto.
10
1.81. SECURITIES ACCOUNT CONTROL AGREEMENT means the Securities Account
Control Agreement, dated as of June 14, 2002, among the Borrower, the Secured
Party and Bank One, NA, as securities intermediary, as the same may be
supplemented, amended or otherwise modified from time to time in accordance with
its terms.
1.82. SECURITIZATION means the issuance and sale of asset-backed
securities secured directly or indirectly by all or any portion of the
Collateral pledged to the Lender pursuant to the Auto Fund Security Agreement
and the other Credit Documents.
1.83. SECURITY AGREEMENT means that certain security agreement by and
between Borrower and the Lender in form and content acceptable to Lender and
Borrower as the same may be amended, supplemented, or otherwise modified from
time to time in accordance with its terms.
1.84. SECURITY DOCUMENTS means (i) the Security Agreement and (ii) all
other documents, certificates and instruments from time to time securing or
guaranteeing the Obligations, in each case as the same may be amended, modified,
restated, supplemented, renewed, extended, substituted for or replaced from time
to time in accordance with their respective terms.
1.85. SECURITY INTEREST means the security interest granted and the
pledge and assignment made under Section III of the Security Agreement.
1.86. SUBSIDIARY means, with respect to any Person, any other Person of
which at least a majority of the securities or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries of such Person.
1.87. SUBPRIME CONTRACT means any Contract with an Obligor who has a
FICO score at the time of origination of such Contract from and including 500 to
and including 639. For the avoidance of doubt, the term "Subprime Contract" as
used herein shall not include any Contract with an Obligor who has a FICO score
of below 500.
1.88. TANGIBLE NET WORTH means, with respect to the Borrower, total
assets minus all indebtedness, obligations or liabilities of the Borrower
(excluding indebtedness, obligations or liabilities which are subordinated to
the Obligations,) all determined in accordance with GAAP; PROVIDED, HOWEVER, for
purposes of any computation of Tangible Net Worth, "assets" shall not include
(i) goodwill (whether representing the excess of cost over book value of assets
acquired or otherwise), (ii) patents, trademarks, trade names, copyrights, and
franchises, (iii) Debt owed by any Affiliate of the Borrower, and (iv) all other
similar assets which would be classified as intangible assets under GAAP.
1.89. TAXES means all taxes, assessments, fees, levies, imposts,
duties, deductions, withholdings, or other charges of any nature whatsoever from
time to time or at any time imposed by any Law or Governmental Authority.
1.90. UCC means the Uniform Commercial Code as in effect in the
relevant jurisdiction, as amended from time to time.
11
1.91. UNUSED LINE FEE has the meaning set forth in Section 2.14.
1.92. VEHICLE means a new or used passenger automobile, sport utility
vehicle, light-duty truck, van or minivan which has been purchased or financed
by an Obligor pursuant to the provisions of a Contract.
1.93. WARRANT means the Stock Purchase Warrant to purchase 800,000
shares of common stock of the Borrower issued in favor of Xxxxxxx Xxxxx Mortgage
Capital Inc.
SECTION 2. REVOLVING CREDIT FACILITY.
2.1. REVOLVING CREDIT COMMITMENT. Subject to and in reliance upon the
terms, conditions, representations and warranties contained in this Agreement,
Lender agrees to make revolving credit loans to Borrower in one or more advances
(the "Revolving Credit Loans") so long as the aggregate of the Revolving Credit
Loans outstanding never exceeds the lesser of (a) an amount equal to the
Aggregate Borrowing Base or (b) the Commitment. Lender shall have no obligation
to make any Revolving Credit Loan on a non-Business Day or on or after the
Commitment Termination Date; PROVIDED that Borrower's Obligations and Lender's
Rights under the Loan Documents shall continue in full force and effect until
the Obligations are paid and performed in full. During the Commitment Period,
Borrower may borrow, repay and reborrow the Revolving Credit Loans in whole or
part, all in accordance with terms and conditions of this Agreement.
2.2. BORROWING PROCEDURE; DISBURSEMENT. Subject to the prior
satisfaction of all conditions precedent stipulated in Section 3 of this
Agreement, each Revolving Credit Loan shall be made on Borrower's notice (by
facsimile or an electronic format acceptable to the Lender) (the "Advance
Request") to Lender requesting an advance in a minimum amount of Five Hundred
Thousand Dollars ($500,000) on a certain date (the "Borrowing Date") together
with a Borrowing Base Report. Each Advance Request shall be in substantially the
form attached hereto as Exhibit H, which form shall, at a minimum, include the
draft number, obligor name, FICO score, amount, note rate, term, monthly
payment, Contract Purchaser, loan number and funding date for each draft being
funded, and a statement that, as of the date of such Advance Request, all of the
representations and warranties contained in the Loan Documents are true and
correct, and must be received by Lender no later than 1:00 PM, Eastern Time, on
the Business Day of the Borrowing Date.
2.3. REVOLVING CREDIT NOTE. All Revolving Credit Loans shall be
evidenced by one (1) promissory note executed by Borrower, substantially in the
form of Exhibit A attached hereto (the "Revolving Credit Note"), payable to the
order of Lender, representing the obligation of Borrower to pay the aggregate
unpaid principal amount of all Revolving Credit Loans made by Lender, together
with interest thereon as prescribed by this Agreement.
2.4. MANNER OF PAYMENTS. All payments made by Borrower to Lender
hereunder on account of principal, interest or otherwise shall be received by
Lender on each related due date not later than 3:00 PM, Eastern Time, in
Lender's account with Bankers Trust Company (account number 000-00-000, ABA No.
000-000-000, Re: MLMCI Matched, Attn: Xxxxx Xxxxxxxxx) or at such other place as
Lender shall direct, in immediately available United States funds. Any payments
made by Borrower to Lender by mail shall not be effective until received by
Lender as set forth in this Section 2.4. If any payment by Borrower under this
Agreement or the Revolving Credit Note is to be made on a day which is not a
Business Day, such payment shall be made on the next succeeding Business Day and
such extension of
12
time will in such case be included in computing interest in connection with such
payment. All payments shall be made by Borrower to Lender without offset or
other reduction.
2.5. INTEREST. The Revolving Credit Loans shall bear interest from day
to day at a rate (the "Revolving Rate") per annum which shall, from day to day,
be (A) with respect to all outstanding Revolving Credit Loans made with respect
to Subprime Contracts then comprising part of the Aggregate Borrowing Base, the
lesser of (i) the Maximum Rate and (ii) LIBOR then in effect plus two percent
(2%), and (B) with respect to all outstanding Revolving Credit Loans made with
respect to Prime Contracts then comprising part of the Aggregate Borrowing Base,
the lesser of (i) the Maximum Rate and (ii) LIBOR then in effect plus one
percent (1%).
Accrued and unpaid interest on the Revolving Credit Loans for each
month (or any shorter period) shall be payable monthly in arrears no later than
the second (2nd) calendar day of the immediately succeeding month, or if such
day is not a Business Day, on the immediately succeeding Business Day,
commencing on the first such date to occur after the date of this Agreement and
continuing regularly and monthly thereafter until the Obligations evidenced by
the Revolving Credit Note are paid in full; and, interest shall also be paid on
the Commitment Termination Date (whether at stated maturity, by acceleration or
otherwise) and, after the Commitment Termination Date, on demand.
2.6. COMPUTATION OF INTEREST.
(A) Interest on the Revolving Credit Note shall be calculated on
the basis of actual days elapsed, and computed on a year consisting of 360 days,
subject to the provisions of Section 8.16 below. Further, for the purpose of
computing interest, all items of payment in immediately available funds received
by Lender shall be applied by Lender against the Obligations on the Business Day
such payment is received, and (subject to final payment of all drafts and other
items) any other items of payment received by Lender shall be applied by Lender
against the Obligations on the second Business Day after receipt. The
determination of when a payment is received by Lender will be made in accordance
with Section 2.4. Each determination of an interest rate by Lender pursuant to
any provision of this Agreement shall be presumptively conclusive and binding on
Borrower in the absence of manifest error, subject, however, to the provisions
of Section 8.16 below.
(B) Notwithstanding anything to the contrary in the Revolving
Credit Note or herein contained, in the event that the Revolving Rate should
ever exceed the Maximum Rate, thereby causing the interest accruing on any of
the indebtedness evidenced by the Revolving Credit Note to be limited to such
Maximum Rate, then any subsequent reduction in LIBOR shall not reduce the rate
of interest charged hereunder below the Maximum Rate until the total amount of
interest accrued on such indebtedness equals the amount of interest which would
have accrued on such indebtedness if the Revolving Rate had been in effect at
all times in the period during which the rate charged thereon was limited to the
Maximum Rate.
2.7. DEFAULT RATE. At Lender's option and to the extent permitted by
applicable Law and this Agreement, all past due Obligations shall bear interest
from maturity (whether at stated maturity, by acceleration or otherwise) at the
Revolving Rate then in effect plus two percent (2%) ("Default Rate") (PROVIDED,
HOWEVER, the Default Rate shall never exceed the Maximum Rate) until paid,
regardless of whether such payment is made before or after entry of a judgment.
2.8. PRINCIPAL PAYMENTS. Any unpaid principal balance of the Revolving
Credit Note and any accrued and unpaid interest shall be due and payable on the
Commitment Termination Date.
13
2.9. MANDATORY PAYMENT OF REVOLVING CREDIT LOANS. Borrower shall
establish the Collection Account with a financial institution acceptable to
Lender and shall deposit or cause to be deposited into the Collection Account
all proceeds from the sale of Contracts to Contract Purchasers or otherwise,
received by Borrower on a daily basis, which funds shall be applied by Lender on
a daily basis to the Obligations of Borrower hereunder in the order and manner
as Lender deems appropriate. Borrower shall also establish the Concentration
Account, the Collection Sweep Investment Account, the ACH Account and the
Checking Account with a financial institution acceptable to Lender. Each of the
Collection Account, the Concentration Account and the Collection Sweep
Investment Account shall be subject to the Securities Account Control Agreement;
and funds deposited in each such account shall be deemed to be the property of
Lender and Borrower shall have no right to make withdrawals from such account or
otherwise have access to funds deposited into such accounts without the prior
consent of the Lender.
If, at any time during the Commitment Period, (i) the unpaid principal
balance of the Revolving Credit Note shall exceed the lesser of (a) the
Aggregate Borrowing Base, and (b) the Commitment, then Borrower shall
immediately repay, without premium or penalty, the Revolving Credit Loans in an
amount equal to such excess, along with accrued unpaid interest on the amount so
repaid to the date of such repayment.
2.10. CANCELLATION OF COMMITMENT. The Commitment shall, at the election
of Lender, terminate upon the occurrence and continuance of an Event of Default;
PROVIDED, HOWEVER, that the Commitment shall automatically terminate upon the
occurrence of an Event of Default pursuant to Section 6.4(a) through (f) and
Section 6.4(i) (with respect to Section 6.4(a) through (f) inclusive). Borrower
may terminate the Commitment and this Agreement in its entirety by giving
written notice of such termination to Lender no less than twenty (20) days prior
to the designated termination date, and on the designated termination date, all
of the Obligations shall become due and payable in immediately available funds.
2.11. VOLUNTARY PRINCIPAL PREPAYMENTS. Prior to the Commitment
Termination Date, the Revolving Credit Loans may be prepaid in whole or in part
at any time. Subject to the conditions of this Agreement, amounts so prepaid may
be reborrowed hereunder, and this Agreement shall not be deemed to be terminated
or canceled prior to the expiration or termination of Lender's commitment to
lend hereunder solely because the Obligations may from time to time be paid in
full.
2.12. ORDER OF APPLICATION. At any time, including any time during
which a Default or Event of Default has occurred and is continuing, all payments
and prepayments of the Obligations, including proceeds from the exercise of any
Rights under the Loan Documents shall be applied to the Obligations in the order
and manner as Lender deems appropriate.
2.13. USE OF PROCEEDS. Borrower shall use the proceeds of the Revolving
Credit Loans to finance the working capital needs of Borrower arising in the
ordinary course of business. All loan proceeds shall be used by Borrower only
for legal and proper purposes (duly authorized by its governing body) which are
consistent with all applicable Laws. The foregoing notwithstanding, Borrower
shall not use any proceeds of the Revolving Credit Loans directly or indirectly
to purchase ineligible securities, as defined by applicable regulations of the
Federal Reserve Board, underwritten by any affiliate of Lender during the
underwriting period and for thirty (30) days thereafter.
2.14. UNUSED LINE FEE. Borrower shall pay to Lender an Unused Line Fee
equal to one-half of one percent (0.50%) per annum on the excess, if any, of the
Commitment over the average daily loan
14
balance of the Revolving Loan ("Unused Line Fee"). The Unused Line Fee will be
in addition to the interest charge provided for herein and will be payable
monthly in arrears. The Unused Line Fee will be calculated on the basis of
actual days elapsed, but computed as if each year consisted of three hundred and
sixty (360) days.
2.15. WARRANT. In further consideration of the Lender's Commitment
hereunder, on the Closing Date, the Borrower shall deliver an original executed
copy, in form and substance satisfactory to the Lender, of the Warrant.
SECTION 3. CONDITIONS PRECEDENT.
3.1. INITIAL LOANS. Lender will not be obligated to make the initial
Revolving Credit Loan unless it has received all of the items described on
Schedule 3.1 in form and substance satisfactory to Lender and its legal counsel
and unless Borrower has complied with all the conditions and terms described on
Schedule 3.1 to the satisfaction of Lender and its legal counsel.
3.2. EACH LOAN. In addition, Lender will not be obligated to make any
Revolving Credit Loan unless:
(A) Lender has received an Advance Request with respect to such
proposed Revolving Credit Loan together with the information and documentation
required by Section 5.3(c) of this Agreement and each statement or certification
made by Borrower in the Advance Request shall be true and correct in all
material respects on the Borrowing Date;
(B) At the time of each Revolving Credit Loan (i) the
representations and warranties made in the Loan Documents shall be true and
correct as of such date, (ii) the Borrower shall be in compliance with all of
its covenants under the Loan Documents and (iii) neither any change in the
financial condition or prospect of Borrower which could have a Material Adverse
Effect nor any Default or Event of Default shall have occurred and shall be
continuing, or would result from the making of the Revolving Credit Loan;
(C) The making of each Revolving Credit Loan is permitted by Law;
(D) All conditions related to any Revolving Credit Loan are
satisfactory to Lender and its counsel, and, if requested by Lender, Borrower
shall have delivered to Lender evidence substantiating any of the conditions
contained in this Agreement which are necessary to enable Borrower to qualify
for any Revolving Credit Loan;
(E) [Reserved];
(F) In the reasonable opinion of the Lender, no Material Adverse
Change shall have occurred with respect to the Borrower;
(G) In the reasonable opinion of the Lender, no change in the
Borrower's General Underwriting Criteria, which has a Material Adverse Effect on
the interests of the Lender under any of the Loan Documents, shall have occurred
prior to the date of the applicable Advance Request;
(H) [Reserved];
15
(I) Borrower shall have paid to the Lender any Unused Line Fee
then due pursuant to Section 2.14 hereof;
(J) Borrower shall have delivered to Lender an acknowledgement of
lien or a release and discharge, in form and substance satisfactory to Lender,
from each Person (including, without limitation, (i) a release and discharge
from Bank One, NA ("Bank One") pursuant to the Master Loan and Security
Agreement between Bank One and the Borrower dated as of April 2, 2001, as
amended, (ii) an acknowledgement of lien from AmeriCredit Financial Services,
Inc. ("AmeriCredit") pursuant to an Auto Loan Purchase and Sale Agreement
between AmeriCredit and the Borrower dated as of June 5, 2000, as amended, and
(iii) an acknowledgement of lien from E*TRADE Bank ("E*TRADE") pursuant to a
Flow Purchase and Sale Agreement (Refinance Loans) between E*TRADE and the
Borrower dated as of December 18, 2001, and a Flow Purchase and Sale Agreement
(New Originations) between E*TRADE and the Borrower dated as of January 23,
2002, as amended) with any Lien, except for the Permitted Liens in favor of the
Lender only, on any of the Contracts or the Collateral pledged to the Lender
pursuant to this Agreement, the Security Agreement or any other Loan Document;
and
(K) such other items as the Lender may reasonably request.
The delivery of an Advance Request by Borrower and the acceptance by
Borrower of the proceeds of any Loan hereunder shall each be deemed to
constitute a representation and warranty by Borrower as to the matters specified
in this Section 3.2.
3.3. WAIVER OF CONDITIONS. Lender may, at its election, make any
Revolving Credit Loan without all conditions being satisfied, but this shall not
be deemed to be a waiver of the requirement that each such condition precedent
be satisfied as a prerequisite for any subsequent Revolving Credit Loan, unless
Lender specifically waives each such item in writing.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender as follows:
4.1. ORGANIZATION AND POWERS. Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (iii) is qualified to do business in every jurisdiction where such
qualification is necessary (except where the failure to be so qualified could
not individually or in the aggregate have a Material Adverse Effect on the
Collateral or the business or condition (financial or otherwise) of the Borrower
or, so long as a Material Portion is not affected, impair the enforceability of
any Contracts or other Collateral pledged to the Lender), (iv) has the power and
authority to execute, deliver and perform each Loan Document to which it is or
will be a party, and (v) has taken all action necessary to authorize the
execution, delivery and performance of the Loan Documents to which it is or will
be a party.
4.2. VALIDITY AND BINDING NATURE. This Agreement has been duly executed
and delivered by Borrower and is, and each other Loan Document when executed and
delivered by Borrower will be, a legal, valid and binding obligation of Borrower
enforceable against it in accordance with its terms (except as enforcement
thereof may be limited by bankruptcy, reorganization, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and
equitable principles relating to or affecting enforcement of creditors' rights
generally or relief of debtors generally).
16
4.3. COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower is not, nor will the
execution, delivery and the performance of and compliance with the terms of the
Loan Documents cause Borrower to be, in violation of any Laws or its bylaws or
certificate of incorporation (as each may be amended). The execution, delivery
and the performance of and compliance with the terms of the Loan Documents are
not inconsistent with, and will not conflict with or result in any breach of, or
constitute a default under, or result in the creation or imposition of any Lien
(except in favor of the Lender, pursuant to the Loan Documents) upon any of the
property, assets or revenues of Borrower pursuant to the terms of, any
indenture, mortgage, lease, deed of trust, agreement, contract instrument or Law
to which Borrower is a party or by which Borrower or any of Borrower's property,
assets or revenue is bound or to which it is subject.
4.4. PRIOR NAMES. Except as disclosed on Schedule 4.4, in the last five
years, Borrower has not transacted business under any other corporate or trade
name, been a party to any merger, combination, or consolidation or acquired all
or substantially all of the assets of any Person.
4.5. RELATIONSHIP WITH LENDER. No Person who may be deemed to have
"control" of Borrower is an "executive officer," "director," or "principal
shareholder" of Lender or any correspondent of Lender, as such quoted terms are
defined in Section 215.2 of Regulation 0 of the Board of Governors of the
Federal Reserve System, as amended.
4.6. FINANCIAL STATEMENTS. The Current Financials were prepared in
accordance with GAAP and present fairly the financial condition and the result
of operations of Borrower as of, and for the portion of the fiscal year ending
on, the date or dates thereof. All material liabilities (direct or indirect,
fixed or contingent) of Borrower as of the date or dates of the Current
Financials are reflected therein or in the notes thereto. Between the date or
dates of the Current Financials and the date hereof, there has been no material
adverse change in the financial condition of Borrower, nor has Borrower incurred
any material liability (direct or indirect, fixed or contingent).
4.7. REGISTRATIONS AND LICENSES. Borrower possesses adequate authority
and licenses including, without limitation, licenses and registrations necessary
to Eligible Contracts and to continue to conduct its business as presently
conducted (except where the failure to have such authority and licenses would
not individually or in the aggregate have a Material Adverse Effect on the
Collateral or the business or condition (financial or otherwise) of the Borrower
or, so long as a Material Portion is not affected, impair the enforceability of
any Contracts or other Collateral pledged to the Lender).
4.8. LITIGATION. There are no proceedings or investigations pending,
or, to the Borrower's knowledge, threatened before any Governmental Authority
having jurisdiction over the Borrower or its property: (A) asserting the
invalidity of this Agreement or any other Loan Agreement, (B) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
any other Loan Agreement, or (C) seeking any determination or ruling that might
have a Material Adverse Effect; in addition, except for the Litigation described
on Schedule 4.8, Borrower is not involved in, nor is Borrower aware of, any
Litigation involving Borrower involving amounts in excess of $25,000, nor are
there any outstanding or unpaid judgments against Borrower. None of the
Litigation described on Schedule 4.8 could, collectively or individually, have a
Material Adverse Effect if determined adversely against Borrower.
4.9. TAXES. All tax returns and reports of Borrower required to be
filed have been filed, and all Taxes imposed upon Borrower which are due and
payable have been paid, other than Taxes being contested in good faith for which
the criteria for Permitted Liens have been satisfied as set forth on
17
Schedule 4.13; PROVIDED, HOWEVER, that the Borrower shall not be in violation of
this covenant if Taxes have not been paid, and/or tax returns and reports have
not been filed, with respect to Taxes not exceeding an aggregate amount of
$250,000.
4.10. GOVERNMENT REGULATION. Neither Borrower nor any transaction
contemplated hereunder is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940,
the Interstate Commerce Act (as any of the preceding acts have been amended),
any regulations promulgated by the Office of Foreign Assets Control as codified
in Chapter V of 31 C.F.R., or any other Law (other than Regulation T, U or X of
the Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
4.11. EMPLOYEE BENEFIT PLANS. Borrower does not currently sponsor or
contribute to, nor has any contract or other obligation to contribute to (nor
has Borrower in the preceding sixty (60) calendar months sponsored or
contributed to, or contracted to or become otherwise obligated to contribute to)
any Plan or any Multiemployer Plan, except as set forth on Schedule 4.11.
4.12. PURPOSE OF LOAN. The proceeds of the Revolving Credit Loans will
be used only for the purposes set forth in Section 2.13 and shall not be used
(a) to purchase or carry any "Margin Stock" (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), or (b) for any purpose
in violation of Regulations T, U or X of said Board of Governors.
4.13. PROPERTIES; LIENS; DEBT. Borrower has good and marketable title
to all of its property. Except for Liens permitted by Lender to be listed on
Schedule 4.13 and the Liens in favor of Lender (collectively, the "Permitted
Liens"), there is no Lien on any of Borrower's property or income. In addition,
none of the Permitted Liens, other than those Liens in favor of Lender, and
including, without limitation, the Liens of GMAC Bank or Greenwich Capital
Financial Products, Inc. (as set forth in Schedule 4.13), are Liens against any
of the Contracts or the Collateral pledged to the Lender pursuant to this
Agreement, the Security Agreement or any other Loan Document.
4.14. MATERIAL AGREEMENTS. Borrower is not, nor will the execution,
delivery and performance of and compliance with the terms of the Loan Documents
cause Borrower to be, in default (nor has any potential default occurred) under
any material agreement, document or instrument other than such defaults or
potential defaults which could not, individually or collectively, cause a
Material Adverse Effect.
4.15. NO CONSENTS. No order, consent, approval, license, permit,
waiver, exemption, authorization of or validation of, or filing, recording or
registration with (except as heretofore have been obtained or made), or
exemption by, any Person is required to authorize, or is required in connection
with, the execution, delivery, performance, legality, validity, binding effect,
or enforceability of the Loan Documents.
4.16. SUBSIDIARIES AND AFFILIATES. Borrower has no Subsidiaries or
Affiliates other than as disclosed on Schedule 4.16 below.
4.17. CAPITALIZATION AND CONTROL. The capitalization of Borrower as set
forth on Schedule 4.17 is true, correct and, as of March 15, 2002, complete. All
of the issued and outstanding stock of Borrower has been duly and validly issued
in accordance with Borrower's organizational documents and all applicable
requirements of law and is fully paid and nonassessable. There are no options,
rights, calls,
18
commitments, plans, contracts or other agreements granted or issued regarding
the stock of Borrower and none are authorized, except the Warrant and as set
forth in Schedule 4.17.
4.18. GENERAL. To the best of Borrower's knowledge, there are no facts
or conditions relating to the Loan Documents, any of the Collateral or the
financial condition and business of Borrower which would, individually or
collectively, cause a Material Adverse Effect and which have not been revealed
in writing to Lender. All writings heretofore or hereafter exhibited or
delivered to Lender by or on behalf of Borrower are and will be genuine and in
all respects what they purport and appear to be. No information furnished to
Lender by or on behalf of Borrower contains any material misstatement of fact or
omits to state any fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they were made, not misleading
which would result in a Material Adverse Effect.
4.19. CONTRACT PURCHASE AGREEMENTS. EXHIBIT C hereto represents a list
of all of Borrower's Contract Purchase Agreements; such agreements are in full
force and effect; and, Borrower is not in default under any such agreement.
4.20. FORMS OF AGREEMENTS. Each of the Dealer Agreements, E-Fund
Agreements and Note and Security Agreements actually entered into by the
Borrower is in substantially the form attached hereto as Exhibit D, Exhibit E
and Exhibit F, respectively, and any changes therefrom related to any particular
Contract are not adverse to the Lender.
4.21. SUBSEQUENT AFFIRMATIONS. Affirmations of the foregoing
Representations and Warranties subsequent to the Closing Date shall be based on
information delivered to Lender by Borrower as of the Closing Date (or
subsequent information delivered by Borrower in compliance with Section 5.1(j),
if any,) and Financial Statements to be supplied by Borrower subsequent to the
Closing Date in compliance with Sections 5.3(a), 5.3(b) and 5.3(c).
4.22. ACCOUNTS. Each of the Collection Account, the Concentration
Account, the Collection Sweep Investment Account, the ACH Account, the Checking
Account, and any amounts or other property deposited therein are not subject to,
and are free and clear of, any Liens, except for Permitted Liens in favor of the
Lender only.
4.23. ORGANIZATION. The jurisdiction of organization of the Borrower is
situated in the State of Delaware and the Borrower is a "registered
organization" within the meaning of Article 9 of the Delaware UCC; and the
principal place of business and chief executive office of the Borrower are
situated in the State of California.
4.24. COMPLIANCE WITH 1940 ACT. The Borrower is neither an "investment
company" nor a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended from time to time, or
any successor statute.
4.25. PARTNERSHIPS; JOINT VENTURES. The Borrower is not a partner or
joint venturer in any partnership or joint venture.
4.26. DEFAULT; EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
19
4.27. OWNERSHIP OF TRADEMARKS. Borrower possesses and owns all
necessary trademarks, trade name, copyrights, patents, patent rights, franchises
and licenses which are material to the conduct of its businesses as now
operated.
4.28. ELIGIBILITY. Each Contract that forms part of the Collateral
pledged to the Lender is an Eligible Contract.
4.29. OTHER. All of the representations and warranties made in the Loan
Documents shall be true and correct as of each Borrowing Date.
4.30. [RESERVED]
4.31. ADVANCE REQUEST; BORROWING BASE REPORT. Each Advance Request and
Borrowing Base Report which has been furnished to the Lender pursuant to this
Agreement was accurate and complete in all material respects on the date of
delivery thereof to the Lender.
SECTION 5. COVENANTS.
5.1. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender,
so long as this Agreement shall remain in effect and the principal of or
interest on the Revolving Credit Note, or any other Obligation, shall be unpaid,
as follows:
5.1(A) COMPLIANCE WITH LAW; MAINTENANCE OF PROPERTIES. Borrower shall
do or cause to be done all things necessary (i) to preserve and keep in full
force and effect at all times its existence as a company in good standing (and a
"registered organization") under the laws of the State of Delaware and its
rights, licenses and franchises, (ii) to continue to conduct its business
substantially as now proposed to be conducted, (iii) to comply with all
applicable Laws, the violation of which might have a Material Adverse Effect on
the operations of Borrower or the Collateral, (iv) to preserve all property in
use or useful in the conduct of its business and keep the same in good repair,
working order and condition and from time to time make, or cause to be made, all
necessary and proper repairs, renewals and replacements, betterment and
improvements thereto so its business carried on in connection therewith may be
properly and advantageously conducted at all times. Failure to comply with this
provision may be cured by Borrower within thirty (30) days of such failure; and
upon such timely cure, Borrower shall be in compliance with this provision.
5.1(B) INSURANCE. Borrower shall maintain comprehensive general
liability and public liability insurance and such other types of insurance
reasonably requested by Lender, all such insurance to be maintained with
financially sound and reputable insurance companies, against such casualties,
risks and contingencies, and in such types and amounts, as are consistent with
customary practices and standards of companies engaged in a similar business.
All insurance insuring the Collateral shall name Lender as a loss payee.
5.1(C) INSPECTION. Borrower shall permit any representative of the
Lender to visit and inspect any of its property, including the Collateral, to
examine its books and records and to make copies and take extracts therefrom,
and to discuss its affairs, finances and accounts with its officers. If no Event
of Default has occurred and is continuing, Lender shall give Borrower reasonable
notice of such examination and such examination shall occur during regular
business hours.
20
5.1(D) FURTHER ASSURANCES. Borrower shall execute any and all further
documents and take all further actions which may be required under applicable
law, or which the Lender may request, to grant, preserve, protect and perfect
the first priority Lien on the Collateral created by the Security Documents
(subject only to Liens permitted by the Loan Documents), including without
limitation, those actions required to perfect Liens on and assignment of any
interest of Borrower in any Contract in accordance with the laws of the
jurisdiction governing such Liens and the assignments.
5.1(E) INDEMNITY. Borrower shall indemnify Lender and its officers,
directors, employees, representatives, agents, attorneys and affiliates (each,
an "Indemnified Party") from, hold each of them harmless against, promptly upon
demand pay or reimburse each of them with respect to any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
demands, causes of action, costs, losses, liabilities, damages or expenses of
any kind or nature whatsoever (collectively, the "Indemnity Matters") other than
those proximately resulting from an Indemnified Party's negligence or willful
misconduct which may be incurred by or asserted against or involve any of them
(whether or not any of them is designated a party thereto) as a result of,
arising out of or in any way related to (i) any actual or proposed use by
Borrower of the proceeds of any of the Revolving Credit Loans, (ii) the breach
of any representation or warranty set forth in any Loan Document, or (iii) any
other aspect of this Agreement and the other Loan Documents, including, without
limitation, the reasonable fees and disbursements of counsel (including
allocated costs of internal counsel), and all other expenses incurred in
connection with investigating, defending or preparing to defend any such
Indemnity Matter. Borrower shall be obligated to pay or reimburse each
Indemnified Party for all out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred by such
Indemnified Party in connection with any Indemnity Matter at the time such costs
and expenses are incurred and such Indemnified Party has given Borrower written
notice thereof. Borrower's Obligations under this Section 5.1(e) are subject to
Section 8.14 hereof. In the event that any claim, demand, investigation,
litigation or inquiry (a "Claim") is brought against any Indemnified Party, the
Indemnified Party agrees to give written notice to Borrower with respect to
same, together with a copy of such Claim, and so long as no Event of Default
shall have occurred and be continuing, Borrower shall have the right in good
faith and by appropriate proceedings to defend any Indemnity Matter and to
employ counsel acceptable to the Indemnified Party to conduct such defense (at
Borrower's sole expense) so long as such defense shall not involve any danger of
the foreclosure, sale, forfeiture or loss of, or imposition of any Lien, other
than a Permitted Lien, on any part of the Collateral, or subject any Indemnified
Party to criminal liability. Should Borrower elect to engage its own counsel
acceptable to the Indemnified Party and Lender, the Indemnified Party and Lender
may continue to participate in the defense of any such Indemnified Matter and
will retain the right to settle any such matter on terms and conditions
satisfactory to Lender, Indemnified Party and Borrower. All such settlements
shall be paid by and remain the sole responsibility of Borrower. In the event
Borrower does not accept the defense of the Indemnity Matter as provided above,
Indemnified Party shall have the full right to defend against such Claim, in its
sole discretion, and pursue its rights hereunder.
5.1(F) BOOKS AND RECORDS. Borrower shall keep, in accordance with GAAP,
proper and complete books, records and accounts.
5.1(G) TAXES. Borrower shall file or cause to be filed when due all
federal, state and local returns, filings, elections and reports which are
required to be filed by it in respect of all Taxes, and shall pay all such Taxes
as may be required by law and in accordance with any assessment or demand for
payment received by it as and when such Taxes become due and payable PROVIDED,
HOWEVER, that the Borrower shall not be in violation of this covenant if Taxes
have not been paid, and/or tax returns and
21
requests have not been filed with respect to Taxes, not exceeding an aggregate
amount of $250,000; and the Borrower shall provide evidence of payment of any
Taxes if so requested by the Lender.
5.1(H) PAYMENT OF OBLIGATIONS. Borrower shall promptly pay all of its
Debt as it becomes due except to the extent that any such Debt is being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and for which reserves or other provisions (if any) required by GAAP
shall have been made; PROVIDED, HOWEVER, that except for payments to Borrower's
mortgage warehouse lenders, Borrower shall not, directly or indirectly, make (i)
any prepayment of principal of or interest on any Debt other than the
Obligations, or (ii) any payment of principal of or interest on any Debt
subordinated to the Obligations (such subordination to be in form and substance
satisfactory to Lender) without the prior written consent of Lender.
5.1(I) EXPENSES OF LENDER. Whether or not the transactions contemplated
by this Agreement shall be consummated, Borrower shall pay on demand all
out-of-pocket expenses (including, without limitation, the reasonable fees and
expenses of counsel for Lender) in connection with the negotiation, preparation,
execution, filing, recording, refiling, re-recording, modification, release,
supplement and waiver of the Loan Documents and the making, servicing and
collection of the Obligations including, without limitation, the Obligations
under Section 7.4. Borrower's Obligations under this Section 5.1(i) are subject
to Section 8.14 hereof.
5.1(J) SUPPLEMENTED SCHEDULES. Borrower shall as soon as possible and
in any event within twenty (20) days after the occurrence thereof, supplement in
writing and deliver to Lender revisions of the Schedules annexed to this
Agreement to the extent necessary to disclose new or changed facts or
circumstances after the Closing Date so as to cause the representations and
warranties set forth herein to remain accurate and not misleading; provided that
subsequent disclosures shall not constitute a cure or waiver of any Default or
Event of Default resulting from the matters disclosed.
5.1(K) LOAN GUIDELINES. The Contracts of Borrower shall comply at all
times with Law, with the Loan Guidelines and the terms, conditions and
disclosures in each lending relationship by and between Borrower and its
customer.
5.1(L) NOTIFICATION FOR DEFAULT OR EVENT OF DEFAULT. Not later than one
(1) Business Day after the occurrence thereof, the Borrower shall notify the
Lender in writing of the occurrence of any Default or Event of Default.
5.1(M) NOTIFICATION FOR MATERIAL ADVERSE CHANGE. Not later than one (1)
Business Day after the occurrence thereof, the Borrower shall notify the Lender
in writing of the occurrence of any Material Adverse Change in respect of
itself.
5.1(N) NOTIFICATION FOR CHANGE TO GENERAL UNDERWRITING POLICY. Borrower
shall promptly notify the Lender in writing of any material change in the
General Underwriting Policy.
5.1(O) NOTIFICATION OF LITIGATION. Borrower shall promptly notify the
Lender in writing of the occurrence of any Litigation, action, suit, dispute,
arbitration, proceeding or other circumstance affecting the Borrower, the result
of which, if determined adversely, would be a judgment or award against the
Borrower (i) in excess of $25,000 or (ii) which would result in a Material
Adverse Change in respect of the Borrower, and the Borrower shall from time to
time provide the Lender with all information reasonably requested by the Lender
concerning the status thereof.
22
5.1(P) OBLIGOR INSURANCE. Borrower shall provide evidence that each
Obligor at origination has obtained the insurance required by the related
Contract.
5.1(Q) WITHHOLDING. Borrower shall from time to time withhold and remit
all amounts required to be withheld (including without limitation, in respect of
income tax, withholding taxes on payments to non-residents, any ERISA pension
plan and employment insurance) from all payments made to officers and employees
or to all non-residents and to all other applicable Persons and the Borrower
shall pay all such amounts, together with any interest and penalties due, to the
appropriate authority as required by law.
5.1(R) PRESERVATION OF RIGHTS. Borrower shall preserve and maintain all
of its material rights, privileges, licenses and franchises.
5.1(S) LENDER'S RIGHT TO LEAD MANAGE; FIRST REFUSAL. Lender shall have
the right:
i. to lead manage the first Six Hundred Million Dollars
($600,000,000) of any Securitization, or any other long-term
debt financing, of any Receivables originated by the Borrower
or any Affiliate or Subsidiary thereof at commercially
reasonable fees; and
ii. of first refusal regarding all future warehousing or financing
relationships of the Borrower for a period of two (2) years
beginning on the Closing Date; provided, however, that the
Lender shall have no right of first refusal regarding (a)
whole loan sales with no further interest retained by the
Borrower, (b) any corporate, non-asset backed securities
financing of the Borrower or any Affiliate or Subsidiary
thereof, (c) any sale of any equity securities of the Borrower
or any Affiliate or Subsidiary thereof or (d) any financing of
the Borrower or any Affiliate or Subsidiary thereof not
secured in whole or in part by Eligible Contracts.
Borrower's Obligations under this Section 5.1(s) are subject
to Section 8.14 hereof.
5.2. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender, so
long as this Agreement shall remain in effect and the principal of or interest
on the Revolving Credit Note, or any other Obligation, shall be unpaid, as
follows:
5.2(A). DEBT. Without the prior written consent of Lender,
Borrower shall not, directly or indirectly, create, incur or suffer to exist any
direct, indirect, fixed or contingent liability or any Debt in excess of Five
Million Dollars ($5,000,000).
5.2(B). LIENS. Without the prior written consent of Lender,
Borrower shall not, do anything to (i) adversely affect the priority, perfection
or validity of the security interest of the Lender in the Collateral or (ii)
create, incur or assume any Lien upon any of the Collateral except for Permitted
Liens in favor of the Lender only.
5.2(C). ACQUISITIONS, MERGERS AND DISSOLUTIONS. Without the prior
written consent of Lender, Borrower shall not, directly or indirectly (i)
acquire all or any substantial portion of the assets or stock of, or interest
in, any Person, (ii) merge or consolidate with any Person, or (iii) liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution).
23
5.2(D). MAINTENANCE OF CASH OR CASH EQUIVALENTS. Borrower shall
not permit its maintenance of cash or cash equivalents (in the form of
unrestricted cash, restricted cash not in excess of Five Million Dollars
($5,000,000), but excluding amounts borrowed to satisfy commitments to acquire
Contracts) to be less than Fifteen Million Dollars ($15,000,000), as of the
Closing Date and the last day of each calendar month.
5.2(E). EMPLOYEE BENEFIT PLANS. Borrower shall not, directly or
indirectly, sponsor or contribute to, or create or suffer to exist any
contractual or other obligation to contribute to, any Plan or Multiemployer
Plan, other than those set forth on Schedule 4.11.
5.2(F). DIVIDENDS. Borrower shall not pay any dividends or
distributions to any Person if a Default or Event of Default has occurred or if
such payment would result in the occurrence of a Default or Event of Default.
5.2(G). AGGREGATE ORIGINATIONS. Borrower shall not permit its
three (3) month rolling average of the aggregate principal amount of all
Contracts and mortgage loans (including without limitation home equity loans and
lines of credit) and originated and funded by Borrower to be less than Two
Hundred Fifty Million Dollars ($250,000,000), as of the Closing Date and the
last day of each calendar month.
5.2(H). TRANSACTIONS WITH AFFILIATES OR SUBSIDIARIES. Borrower
shall not, directly or indirectly, enter into any transaction (including, but
not limited to, the sale or exchange of property or the rendering of service)
with any of its Affiliates or Subsidiaries, other than in the ordinary course of
business of Borrower and upon fair and reasonable terms no less favorable than
Borrower could obtain or could become entitled to in an arm's-length transaction
with a Person which was not an Affiliate or Subsidiary. All existing
transactions of Borrower with any Affiliate or Subsidiary are described on
Schedule 5.2(h) hereto.
5.2(I). SALE OF ASSETS. Without Lender's prior written consent,
Borrower shall not, directly or indirectly, sell, lease or otherwise dispose of
substantially all of its assets.
5.2(J). CHANGE IN MANAGEMENT OF BORROWER. Without Lender's prior
written consent, Borrower shall not initiate a change in its president, chief
executive officer or chief financial officer before a replacement acceptable to
Lender has been engaged by Borrower. If such a change occurs which is not
initiated by Borrower, Borrower shall obtain replacement management acceptable
to Lender within sixty (60) days. During such sixty (60) day period, in addition
to and supplemental to all other Rights of Lender under this Agreement, Lender
may install an auditor(s) in any of the business locations of Borrower to
ascertain Borrower's compliance with this Agreement.
5.2(K). QUICK RATIO. Borrower shall not permit its ratio of (i)
cash or cash equivalents as described in Section 5.2(d) above, to (ii) current
liabilities, excluding amounts payable under Borrower's warehouse or revolving
lines of credit used to fund its mortgage or direct auto loans, to be less than
1 to 1, as of the last day of each calendar month.
5.2(L). TANGIBLE NET WORTH. Borrower shall not permit its
Tangible Net Worth to be less than Twenty-five Million Dollars ($25,000,000), as
of the Closing Date and the last day of each calendar month.
24
5.2(M). CONTRACT REDOCUMENTATION AND MODIFICATION. Borrower shall
not redocument or otherwise modify any Contract without the prior written
consent of Lender.
5.2(N). COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower shall not,
directly or indirectly, violate the provisions of any Laws, its articles of
incorporation, bylaws, other governance documents or any agreements.
5.2(O). NEW BUSINESSES. Borrower shall not, directly or
indirectly, engage in any business other than that in which it is presently
engaged without the prior written consent of Lender.
5.2(P). FISCAL YEAR AND ACCOUNTING METHODS. Borrower shall not
change its fiscal year, which currently ends each December 31, or method of
accounting, other than immaterial changes in methods to which its independent
certified public accountants concur without the prior written consent of Lender.
5.2(Q). USE OF NAME CONFIDENTIALITY. Borrower shall not use
Lender's name or trademark in connection with the operation of Borrower's
business, including, but not limited to, any advertising undertaken by Borrower,
and Borrower shall use all reasonable efforts to keep confidential the terms and
conditions of the Loan Documents except as required to satisfy disclosure
requirements of the Securities Exchange Commission or other supervising
governmental agency.
5.2(R). BUSINESS LOCATIONS; JURISDICTION OF ORGANIZATION. All
present business locations of Borrower are set forth on Schedule 5.2(r),
including, without limitation, Borrower's principal place of business. Without
the prior written consent of Lender, Borrower shall not conduct its business
operations or store or otherwise locate any of the Collateral at any other
location except as set forth on Schedule 5.2(r). Borrower is "located" in the
State of Delaware within the meaning of Section 9-307 of the UCC. Borrower shall
neither establish a new chief executive office or change its jurisdiction of
organization without giving written notice to Lender thirty (30) days prior to
such establishment and executing and delivering to Lender any documents
considered necessary by Lender, in Lender's sole discretion, to perfect or
continue perfection of its Liens on the Collateral.
5.2(S). FUNDING OF LOANS. Borrower shall fund no direct loans for
the purchase of Vehicles until the Dealer in a subject transaction has complied
with the Dealer Agreement and corresponding E-Fund Agreement.
5.2(T). MODIFICATION OF DEALER AGREEMENT. Without the prior
written consent of Lender, Borrower shall not amend, modify, supplement or
otherwise change any Dealer Agreement in a manner adverse to the Lender.
5.2(U). CONTRACTS HELD-FOR-SALE. Borrower shall not permit the
aggregate principal amount of its Contracts held-for-sale, excluding Contracts
for which a Revolving Credit Loan has been made hereunder, for a period of more
than twenty (20) days to exceed One Million Five Hundred Thousand Dollars
($1,500,000), as of any date of determination.
5.2(V). OPERATION OF BUSINESS. Without the prior written consent
of the Lender, Borrower shall not operate its business in a manner which would
reasonably be expected to lead to a Material Adverse Change with respect
thereto.
25
5.2(W). CHANGE OF NAME. Borrower shall not change its name
without providing the Lender with written notice thereof at least thirty (30)
Business Days prior to any such change and promptly taking such steps as may be
required to maintain the perfection of the security interest granted to the
Lender in the Collateral in connection with any such change.
5.2(X). ACCOUNTS. Without the prior written consent of the
Lender, Borrower shall not create, incur, assume or permit to exist any Lien
upon any of the Collection Account, the Concentration Account, the Collection
Sweep Investment Account, the ACH Account, the Checking Account, or any amounts
deposited therein, except for Permitted Liens in favor of the Lender only.
5.2(Y). SALE OR DISPOSITION OF COLLATERAL. Without the prior
written consent of the Lender, Borrower shall not sell, transfer, assign, convey
or otherwise dispose of any Collateral other than in accordance with the express
terms and conditions of the Loan Documents. For the avoidance of doubt, Borrower
may, at any time, and from time to time, sell Prime Contracts (pledged to the
Lender hereunder) to E-LOAN Auto Fund One, LLC for the purpose of funding such
Prime Contracts under the Credit Agreement so long as the proceeds of such
funding are applied in full to repay the Obligations of the Borrower hereunder.
5.2(Z). INVOLUNTARY LIENS. Without the prior written consent of
the Lender, Borrower shall not permit (i) to exist any Lien upon any of the
Collateral, except for Permitted Liens in favor of the Lender only, or (ii)
anything to adversely affect the priority, perfection or validity of the
security interest of the Lender in any of the Collateral; PROVIDED, HOWEVER,
that the Borrower shall not be in violation of this covenant so long as (x) the
aggregate Discounted Contract Balance of all the affected Contracts plus the
face value of all other affected Collateral shall not exceed an aggregate amount
of $1,000,000 and (y) any failure under this Section 5.2(z) shall be cured
within ten (10) Business Days.
5.3. REPORTING REQUIREMENTS. Borrower shall furnish to Lender such
information as requested by Lender. Additionally, Borrower shall cause the
following to be furnished to Lender:
5.3.(A) soon as available, but no later than one hundred five
(105) days after the last day of each fiscal year of Borrower, unqualified
audited Financial Statements showing the financial condition and result of
operations of Borrower as of, and for the year ended on, such last day,
accompanied by (i) the opinion of a firm of independent certified public
accountants acceptable to Lender, based on an audit using GAAP, that such
Financial Statements were prepared in accordance with GAAP and present fairly
the financial condition and result of operations of Borrower, and (ii) a
Financial Report Certificate with respect to such Financial Statements.
5.3.(B). As soon as available, but no later than thirty (30) days
after the last day of each calendar month (i) unaudited Financial Statements
(balance sheet, income statement and cash flow statement only) showing the
financial condition and results of operations of Borrower as of, and for the
period from the beginning of the current fiscal year, to such last day, for the
same time period (ii) a Financial Report Certificate with respect to such
Financial Statements.
5.3.(VC. As soon as available, but no later than five (5)
Business Days after the last day of each calendar month, a summary of (i)
Contracts originated, (ii) Contracts sold to Contract Purchasers, and (iii)
Contracts held-for-sale.
5.3.(D). Notice, promptly after Borrower knows or has good faith
reason to believe, of (i) the existence and status of any Litigation with
respect to Borrower which could have a Material Adverse
26
Effect, (ii) any change in any material fact or circumstance represented or
warranted in any Loan Document or Credit Document, and/or (iii) a Default or
Event of Default, specifying the nature thereof and what action Borrower has
taken, is taking, or proposes to take with respect thereto.
5.3.(E). Promptly, but within ten (10) Business Days upon request
therefor by Lender, such information (not otherwise required to be furnished
under the Loan Documents) respecting the business affairs, assets and
liabilities of Borrower or any Person guaranteeing or providing Collateral to
secure all or any part of the Obligations and such opinions, certifications and
documents, in addition to those mentioned in this Agreement, as Lender may
reasonably request.
5.3.(F). Promptly, but no later than five (5) Business Days after
receipt thereof by Borrower, copies of each report required to be submitted by a
Contract Purchaser pursuant to a Contract Purchase Agreement.
5.4. USE OF REPORTS. Borrower acknowledges and agrees that although
Lender may rely on the unaudited financial statements and reports delivered to
Lender pursuant to Section 5.3 to determine whether Borrower is in compliance
with the financial covenants set forth in Section 5.2, Lender may make any
adjustment consistent with GAAP to such reports and statements, as it
determines, in its sole discretion, which is necessary to more accurately
reflect the financial condition of Borrower or to more accurately reflect the
value of the Collateral. Lender shall advise Borrower of any material
adjustments made pursuant to this Section 5.4. Any dispute between Borrower and
Lender as to the interpretation and/or application of GAAP shall be resolved by
obtaining the opinion of a certified public accountant and acceptable to Lender,
at the expense of Borrower.
5.5. AUDITS. Borrower shall permit Lender or its designated
representative to enter upon Borrower's premises at any of Borrower's business
locations to conduct periodic audits of Borrower's books, accounts, inventory
and operations. Such audits shall be conducted during each calendar quarter
during the term of this Agreement; PROVIDED, HOWEVER, the frequency of such
audits may be increased or decreased within the sole discretion of Lender. If no
Event of Default has occurred and is continuing, Lender shall provide reasonable
notice to Borrower of such audits and shall conduct such audits during regular
business hours.
SECTION 6. EVENTS OF DEFAULT.
The term "Event of Default" means the occurrence of any one or more of
the following events:
6.1. PAYMENT OF OBLIGATIONS. The failure or refusal of Borrower to pay
any portion of the Obligations as the same becomes due in accordance with the
terms of the Loan Documents.
6.2. RESERVED.
6.3. LOAN DOCUMENTS AND SECURITY DOCUMENTS. An Event of Default shall
occur and be continuing under any Security Document or other Loan Document.
6.4. BANKRUPTCY. (a) Borrower or any of its Affiliates shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto,
(b) an involuntary case is commenced against Borrower or any of its Affiliates
and the petition is not controverted within ten (10) days, or is not dismissed
within thirty (30)
27
days, after commencement of the case, (c) a custodian is appointed for, or takes
charge of, all or any substantial part of the property of Borrower or any of its
Affiliates, (d) Borrower or any of its Affiliates commences any other proceeding
under any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Borrower or such Affiliate, as
the case may be, or there is commenced against Borrower or such Affiliate, as
the case may be, any such proceeding which remains undismissed for a period of
thirty (30) days, (e) Borrower or any of its Affiliates is adjudicated insolvent
or bankrupt, (f) Borrower or any of its Affiliates makes a general assignment
for the benefit of creditors, (g) Borrower or any of its Affiliates shall fail
to pay, or shall state that it is unable to pay, or shall be unable to pay, its
debts generally as they become due, (h) Borrower or any of its Affiliates shall
call a meeting of its creditors with a view to arranging a composition or
adjustment of its debts, or (i) Borrower or any of its Affiliates shall by any
act or failure to act indicate its consent to, approval of or acquiescence in
any of the foregoing.
6.5. MATERIAL ADVERSE EFFECT. The occurrence of any event or events
which in the reasonable business judgment of Lender shall have or cause a
Material Adverse Effect on the Borrower or on the Borrower's obligations
hereunder or under any other Loan Document.
6.6. MISREPRESENTATION. Any statement, representation, or warranty in
the Loan Documents or in any writing ever delivered by Borrower or on behalf of
Borrower to Lender pursuant to the Loan Documents is false, misleading or
erroneous in any material respect when made or when deemed to be repeated and is
not cured within ten (10) calendar days after the Borrower has knowledge thereof
or should have had knowledge with the exercise of ordinary diligence.
6.7. COVENANTS. Borrower shall breach any covenant in Section 5.1
hereof or any other obligation under this Agreement or any other Loan Document
(which obligation is not the subject of any other Event of Default as defined in
this Section 6) and such breach shall remain uncured for a period of thirty (30)
days after the Borrower shall have received written notice, or acquired actual
knowledge, thereof.
6.8. NEGATIVE COVENANTS. Borrower shall breach any negative covenant in
Section 5.2 hereof.
6.9. CREDIT AGREEMENT. An event of default or pending event of default
shall occur and be continuing under any of Sections 9.1(a), (c), (d), (e), (f),
(g), (h), (i), (l), (p) or (t) of the Credit Agreement.
6.10. ADVERSE JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Borrower or any of its
Affiliates involving in the aggregate a liability as to any single or related
series of transactions, incidents or conditions, for which such Person's
uninsured liability is Five Million Dollars ($5,000,000) or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof.
6.11. PERFECTION. Lender shall cease to have a valid and perfected
first priority security interest in the Collateral and such security interest is
not restored to being a valid and perfected first priority security interest
within ten (10) Business Days after the earlier that Borrower (i) becomes aware
thereof or (ii) receives notice from the Lender.
28
6.12. REPORTABLE EVENT. The occurrence of a Reportable Event (within
the meaning of Section 4043 of ERISA) with respect to any Plan, or the
occurrence of any event or condition with respect to a Plan which reasonably
could be expected to result in the imposition of a Lien on any of the
Collateral.
6.13. 1940 ACT. Borrower becomes subject to regulation by the
Securities and Exchange Commission as an "investment company" within the meaning
of the Investment Company Act of 1940.
6.14. DENIAL OF OBLIGATIONS. Borrower denies its obligations under any
Credit Document to which it is a party.
6.15. CHANGE IN CONTROL. Without the prior written consent of Lender or
payoff and discharge in full and termination of Lender's Commitment under this
Agreement, Borrower shall, directly or indirectly, undergo a change in control
of more than twenty-five percent (25%) of the ownership of Borrower.
SECTION 7. RIGHTS AND REMEDIES.
7.1. REMEDIES. Upon and after the occurrence of an Event of Default,
Lender may, at its election and in addition to all remedies then available under
the Security Agreement, do any one or more of the following without notice of
any kind, including, without limitation, notice of acceleration or of intention
to accelerate, presentment and demand or protest, all of which are hereby
expressly waived by Borrower: (a) declare the entire unpaid balance of the
Obligations, or any part thereof, immediately due and payable, whereupon it
shall be due and payable; (b) terminate its commitment to lend hereunder; (c)
exercise the Rights of offset or banker's lien against the interest of Borrower
in and to every account and other property of Borrower which are in the
possession of Lender to the extent of the full amount of the Obligations; (d)
foreclose any or all Liens held by Lender or otherwise realize upon any and all
of the Rights Lender may have in and to the Collateral, or any part thereof; and
(e) exercise any and all other legal or equitable Rights afforded by the Loan
Documents or under Law.
7.2. PERFORMANCE BY LENDER. If any covenant, duty or agreement of
Borrower is not performed in accordance with the terms of the Loan Documents,
Lender may, at its option, perform or attempt to perform, such covenant, duty or
agreement on behalf of Borrower. In such event, any amount expended by Lender in
such performance or attempted performance shall be payable by Borrower to Lender
on demand, shall become part of the Obligations and shall bear interest at the
Default Rate from the date of such expenditure by Lender until paid.
Notwithstanding the foregoing, it is expressly understood that Lender does not
assume and shall never have, except by express written consent of Lender, any
liability or responsibility for the performance of any covenant, duty or
agreement of Borrower.
7.3. DELEGATION OF DUTIES AND RIGHTS. Lender may perform any of its
duties or exercise any of its Rights under the Loan Documents by or through its
officers, directors, employees, attorneys, agents or other representatives.
7.4. EXPENDITURES BY LENDER. Borrower shall indemnify Lender for all
court costs, reasonable attorneys' fees, other costs of collection and other
sums spent by Lender pursuant to the exercise of any Right (including, without
limitation, any effort to collect or enforce the Revolving Credit
29
Note) provided herein shall be payable to Lender on demand, shall become part of
the Obligations and shall bear interest at the Default Rate from the date spent
until the date repaid.
7.5. SAVING. Lender shall not be under any obligation to the Borrower
or any other Person to realize on any Collateral, enforce the Lender's security
interest or any part thereof or to require the enforcement by the Borrower of
its rights in the Collateral or any part thereof or to allow any of such
Collateral to be sold, dealt with or otherwise disposed of. Lender shall not be
responsible or liable to the Borrower or any other Person for any loss or damage
upon the realization or enforcement of, the failure to realize or enforce such
Collateral or any part thereof or the failure to allow any such Collateral to be
sold, dealt with or otherwise disposed of or for any act or omission on its part
or on the part of any director, officer, agent, servant or adviser in connection
with any of the foregoing.
7.6. REMEDIES CUMULATIVE. The rights and remedies of the Lender under
the Loan Documents are cumulative and are in addition to and not in substitution
for any rights or remedies provided by law. Any single or partial exercise by
the Lender of any right or remedy for a default or breach of any term, covenant,
condition or agreement contained herein or in any of the other Loan Documents
shall not be deemed to be a waiver of or to alter, affect, or prejudice any
other right or remedy or other rights or remedies to which the Lender may be
lawfully entitled for the same default or breach. Any waiver by the Lender of
the strict observance, performance or compliance with any term, covenant,
condition or agreement contained herein or in any of the other Loan Documents,
and any indulgence granted by the Lender shall be deemed not to be a waiver of
any subsequent default.
7.7. SET-OFF OR COMPENSATION. In addition to and not in limitation of
any rights now or hereafter granted under applicable law, at any time after an
Event of Default has occurred and is continuing, the Lender may at any time and
from time to time without notice to the Borrower or any other Person, any notice
being expressly waived by the Borrower, set-off and compensate and apply any and
all deposits, general or special, time or demand, provisional or final, matured
or unmatured, and any other indebtedness at any time owing by the Lender to or
for the credit of or the account of the Borrower, against and on account of the
Obligations hereunder notwithstanding that any of them are contingent or
unmatured.
SECTION 8. MISCELLANEOUS.
8.1. NOTICES. All notices, requests and other communications to be
given hereunder shall be in writing and shall be given to such party at its
address or fax number set forth below or such other address or fax number as
such party may hereafter specify by notice to each other party. Each such
notice, request or other communication shall be effective (i) if given by fax
during the business hours of the party receiving notice, when transmitted to the
fax number specified in this Section and, on the day of transmittal thereof, a
confirmation of receipt (which may be telephonic) is given by the recipient and
in any event no later than the next Business Day, (ii) if given by mail, on the
third day after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified in this Section; PROVIDED that notices given under this subsection
(iii) shall not be effective until received by the respective addressee. All
notices shall also be given, simultaneously and in like manner, to such party's
legal counsel at its address or fax number set forth below or such other address
or fax number as such party may hereafter specify by notice to the other
parties.
30
AS TO BORROWER: WITH A COPY TO:
E-LOAN, Inc. E-LOAN, Inc.
0000 Xxxxxx Xxxx 5875 Xxxxxx Road
Dublin, CA 94568 Xxxxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000) 000-0000 Telefax: (000) 000-0000
Attn: Xxx Xxxxxx, Treasurer Attn: Xxxxxx X. Xxxxxxxx, Esq.
AS TO LENDER: WITH A COPY TO:
Xxxxxxx Xxxxx Mortgage Capital Inc. Xxxxxxx Xxxxx Mortgage Capital Inc.
4 World Financial Center, 22nd Floor 4 World Financial Center, 22nd Floor
New York, NY 10080 Xxx Xxxx, XX 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telefax: (000) 000-0000 Telefax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Director Attn: Xxxxxxx Xxxx, Managing Director
8.2. AMENDMENTS; WAIVER. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
8.3. NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of
Lender in exercising any Right or remedy hereunder and no course of dealing
between Borrower and Lender shall operate as a waiver thereof, nor shall any
single or partial exercise of any Right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other Right or remedy
hereunder. The Rights and remedies herein expressly provided are cumulative and
not exclusive of any Rights or remedies which Lender would otherwise have.
8.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors and
permitted assigns. Borrower may not assign or transfer any of its rights or
obligations hereunder without the written consent of Lender and any purported
assignment in violation of the foregoing shall be null and void.
8.5. NUMBER AND GENDER OF WORDS. Whenever in any Loan Document the
singular number is used, the same shall include the plural where appropriate,
and vice versa; and words of any gender in any Loan Document shall include each
other gender where appropriate. The words "herein," "hereof," and "hereunder,"
and other words of similar import refer to the relevant Loan Document as a whole
and not to any particular part or subdivision thereof.
8.6. HEADINGS. The headings, captions, and arrangements used in any of
the Loan Documents are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, nor affect the meaning thereof.
8.7. EXHIBITS AND SCHEDULES. If any EXHIBIT or SCHEDULE, which is to be
executed and delivered, contains blanks, the same shall be completed correctly
and in accordance with the terms and provisions contained and as contemplated
herein prior to, at the time of, or after the execution and delivery thereof.
Each of the EXHIBITS and SCHEDULES are incorporated herein by this reference.
31
8.8. FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished to Lender under any provision of
this Agreement must be in form and substance and in such number of counterparts
as may be satisfactory to Lender and its counsel.
8.9. CONFLICTS. Except as otherwise provided in this Agreement and
except as otherwise provided in the other Loan Documents by specific reference
to the applicable provisions of this Agreement, if any provision contained in
this Agreement is in conflict with or is inconsistent with any provision in the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
8.10. WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY LAW,
EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT, BORROWER WAIVES (A)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, NOTICE OF INTENT TO
ACCELERATE THE MATURITY OF THE OBLIGATIONS AND NOTICE OF SUCH ACCELERATION,
PROTEST, DEFAULT, NON-PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION, OR RENEWAL; AND (B) ALL RIGHTS TO NOTICE OF A HEARING PRIOR TO THE
LENDER'S TAKING POSSESSION OR CONTROL OF, OR THE LENDER'S REPLEVY, ATTACHMENT OR
LEVY UPON, THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING THE LENDER TO EXERCISE ANY OF LENDER'S REMEDIES.
BORROWER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL WITH RESPECT TO THIS
AGREEMENT AND THE TRANSACTIONS EVIDENCED BY THIS AGREEMENT.
8.11. WAIVER OF JURY. LENDER AND BORROWER HEREBY VOLUNTARILY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN
LENDER AND BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN BORROWER AND LENDER IN
CONNECTION WITH THE LOAN DOCUMENTS, THIS AGREEMENT, OR ANY OTHER AGREEMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ENTER INTO
THE FINANCING TRANSACTION. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND
OR MODIFY LENDER'S ABILITY TO PURSUE ITS REMEDIES AS SET FORTH IN THIS
AGREEMENT.
8.12. CHANGES IN GAAP. All accounting and financial terms used in any
of the Loan Documents and the compliance with each covenant contained in the
Loan Documents which relates to financial matters shall be determined in
accordance with GAAP, except to the extent that a deviation therefrom is
expressly stated in such Loan Documents. Should a change in GAAP require a
change in any method of accounting, then such change shall not result in an
Event of Default if, at the time of such change, such Event of Default had not
occurred and was not then continuing, based upon the former methods of
accounting used by or on behalf of Borrower; PROVIDED that after any such change
in accounting methods, the Financial Statements required to be delivered to
Lender pursuant to the terms hereof shall be prepared in compliance with such
new method or methods of accounting but accompanied by such information, in form
and detail satisfactory to Lender, that will allow Lender to readily determine
the effect of such changes in accounting methods on such Financial Statements,
and, for the purpose of determining whether an Event of Default has occurred,
Lender shall look solely to such Financial Statements as adjusted to reflect
compliance with such former method or methods of accounting.
8.13. EXCEPTIONS TO COVENANTS. Borrower shall not take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any of the Loan Documents if such action or omission
would result in the breach of any other covenant contained in any of the Loan
Documents.
32
8.14. SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and, except as otherwise indicated, shall
not be affected by any investigation made by any party. Borrower's obligations
under Sections 5.1(e), 5.1(i) and 5.1(s) hereof shall remain operative and in
full force and effect regardless of the termination of this Agreement, the
repayment of the Revolving Credit Note, or the existence of any investigation
made on behalf of the Lender regarding the representations and warranties made
by Borrower in connection with the Loan Documents.
8.15. GOVERNING LAW. THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS AND
SECURITY DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES;
PROVIDED THAT SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW
SHALL APPLY, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
8.16. MAXIMUM INTEREST RATE. It is the intention of the parties hereto
to comply with applicable usury laws (now or hereafter enacted); accordingly,
notwithstanding any provision to the contrary in this Agreement, the Revolving
Credit Note, the other Loan Documents, or any other document relating hereto, in
no event shall this Agreement or any such other document require the payment or
permit the collection of interest in excess of the maximum amount permitted by
such laws. If from any circumstances whatsoever, fulfillment of any provision of
this Agreement or of any other document pertaining hereto or thereto, shall
involve transcending the limit of validity prescribed by law for the collection
or charging of interest, then, IPSO FACTO, the obligation to be fulfilled shall
be reduced to the limit of such validity, and if from any such circumstances
Lender shall ever receive anything of value as interest or deemed interest by
applicable law under this Agreement, the Revolving Credit Note, the other Loan
Documents, or any other document pertaining hereto or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
the Revolving Credit Note or on account of any other indebtedness of Borrower to
Lender, and not to the payment of interest, or if such excessive interest
exceeds the unpaid balance of principal of such indebtedness, such excess shall
be refunded to Borrower.
8.17. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected thereby.
8.18. LENDER NOT IN CONTROL. None of the covenants or other provisions
contained in this Agreement shall, or shall be deemed to, give Lender the Right
or power to exercise control over the affairs or management of Borrower, the
power of Lender being limited to the Right to exercise the remedies provided in
Section 7.
8.19. INFORMATION SHARING. The Lender may provide any information the
Lender may have about the Borrower or about any matter relating to this
Agreement or the Obligations hereunder to any one or more purchasers or
potential purchasers of the Obligations. The Lender may at any time sell, assign
or transfer one or more interests or participations in all or any part of its
rights or obligations under this Agreement to one or more purchasers whether or
not related to the Lender. Notwithstanding the foregoing, the parties agree that
they shall not share personally identifiable information of any consumers or
customers with the other party, except as required to perform the parties'
respective obligations under this Agreement, and except as may be necessary for
Lender to exercise its rights under this Section 8.19 relative to sales,
transfers or potential sales or transfers, of the Obligations; and neither party
shall solicit any consumers or customers of the other party, based on personally
identifiable information received in connection with this Agreement. In the
event of a sale, assignment or transfer of interests or participations under
this Section 8.19, Lender shall not share personally identifiable
33
information of any consumers or customers with any purchaser, assignee or
transferee, except as required to perform the agreement for such sale,
assignment or transfer, and no purchaser, assignee or transferee shall solicit
any consumers or customers of the Lender or Borrower, based on personally
identifiable information received in connection with the agreement for such
sale, assignment or transfer
8.20. ENTIRETY AND AMENDMENTS. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN
BORROWER AND LENDER AND SUPERSEDE ALL PRIOR PROPOSALS, AGREEMENTS AND
UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF. BORROWER CERTIFIES THAT IT
IS RELYING ON NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT EXCEPT FOR
THOSE SET FORTH HEREIN AND THE OTHER LOAN DOCUMENTS OF EVEN DATE HEREWITH.
8.21. MULTIPLE COUNTERPARTS AND FACSIMILE. This Agreement may be
executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original, and such counterparts together
shall constitute one and the same agreement. For the purposes of this Section,
the delivery of a facsimile copy of an executed counterpart of this Agreement
shall be deemed to be valid execution and delivery of this Agreement, but the
party delivering a facsimile copy shall deliver an original copy of this
Agreement as soon as possible after delivering the facsimile copy.
8.22. SUBMISSION TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS ITSELF AND ITS PROPERTY TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE
UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK OR ANY OTHER
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK AND
APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY ACTION OR PROCEEDING RELATING TO THE
TRANSACTIONS CONTEMPLATED BY OR ARISING FROM, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT IN RESPECT OF, THE LOAN DOCUMENTS MAY BE BROUGHT IN SUCH COURTS;
(C) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION
OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(D) AGREES THAT ANY SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS OF WHICH EACH OF THE OTHER
PARTIES HERETO SHALL HAVE BEEN
34
NOTIFIED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT; AND
(E) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO XXX IN ANY OTHER JURISDICTION.
8.23. BREAKAGE FEE. The Lender shall refund to the Borrower, as agent
for E-LOAN Auto Fund One, LLC (the "SPV"), any Breakage Fee payable by the SPV
pursuant to the Credit Agreement to the extent such Breakage Fee was incurred in
connection with the SPV's sale of any Receivables in connection with a
Securitization in which Lender is the lead manager.
[Signature page follows.]
35
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
Lender:
XXXXXXX XXXXX MORTGAGE CAPITAL INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
------------------------------------
Borrower:
E-LOAN, INC.
By:
----------------------------------------
Name:
-----------------------------------
Title:
------------------------------------
36
EXHIBIT A
REVOLVING CREDIT NOTE
UP TO $10,000,000 NEW YORK, NEW YORK
JUNE __, 2002
FOR VALUE RECEIVED, the undersigned, E-LOAN, INC., a Delaware
corporation, ("Maker"), hereby unconditionally promises to pay on the Commitment
Termination Date to the order of Xxxxxxx Xxxxx Mortgage Capital Inc., a Delaware
corporation with its principal offices in 4 World Financial Center, New York,
New York 10080 ("Lender"), not later than 1:00 p.m., Eastern Time, at its office
located at 4 World Financial Center, New York, New York 10080 or at such other
place as may be designated by Lender from time to time, in lawful money of the
United States of America and in immediately available funds, the principal
amount of the lesser of (i) TEN MILLION DOLLARS ($10,000,000), or (ii) the then
aggregate unpaid principal balance of all Revolving Credit Loans (as defined in
that certain Loan Agreement, dated as of June __, 2002, by and between Maker and
Lender, as amended, modified or supplemented from time to time, the "Loan
Agreement") made by Lender to the undersigned pursuant to the Loan Agreement,
together with any accrued and unpaid interest from the date hereof until
maturity at the rates per annum provided below and any Unused Line Fee.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the Loan Agreement.
1. RATES OF INTEREST AND PAYMENTS. Subject to the provisions of the
Loan Agreement, Maker agrees to pay interest in like money on the unpaid
principal amount hereof from time to time outstanding from the date hereof until
the principal balance hereof is paid in full at a fluctuating rate per annum
equal to the applicable rate of interest as set forth in the Loan Agreement.
Subject to the provisions of the Loan Agreement, Maker also agrees to pay Unused
Line Fees in like money on the excess, if any, of the Commitment over the
average daily loan balance of the Revolving Loan. Principal and interest
payments on the unpaid principal balance, accrued interest due hereunder and
Unused Line Fees shall be made and applied in accordance with the provisions of
the Loan Agreement, particularly Sections 2.5, 2.6, 2.7, 2.8, 2.9, 2.11, 2.12
and 2.14 of the Loan Agreement. The provisions of Sections 2.6 and 8.16 of the
Loan Agreement shall control the computation of interest hereunder; and the
provisions of Section 2.14 of the Loan Agreement shall control the computation
of the Unused Line Fees hereunder.
2. NOTICES. All notices required or permitted hereunder shall be in
writing, and given in the manner, and addressed to the Maker and Lender at the
addresses set forth in, Section 8.1 of the Loan Agreement, or at such other
address as such party may from time to time designate by written notice to the
others.
3. LOAN AGREEMENT. This is the Revolving Credit Note referred to in the
Loan Agreement, and the holder hereof is entitled to all the benefits provided
therein and in the other Loan Documents. Reference is made to the Loan Agreement
and the other Loan Documents which, among other things, contain provisions
regarding optional and mandatory prepayment and acceleration of maturity upon
certain Events of Default described therein. This Revolving Credit Note is
secured by the Security Documents.
4. WAIVERS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THE LOAN
AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY LAW, THE MAKER, SIGNERS, SURETIES,
GUARANTORS, ENDORSERS AND OTHER PARTIES EVER LIABLE FOR PAYMENT OF ANY SUMS OF
MONEY PAYABLE ON THIS REVOLVING CREDIT NOTE JOINTLY AND SEVERALLY WAIVE
VALUATION AND APPRAISAL, DEMAND, PRESENTMENT, NOTICE OF DISHONOR, NOTICE OF
INTENT TO DEMAND OR ACCELERATE PAYMENT HEREOF, NOTICE OF DEMAND, NOTICE OF
ACCELERATION, DILIGENCE IN COLLECTING, GRACE, NOTICE, AND PROTEST, AND AGREE TO
ONE OR MORE RENEWALS OR EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME, PARTIAL
PAYMENTS, AND RELEASES OR SUBSTITUTIONS OF SECURITY, IN WHOLE OR IN PART, WITH
OR WITHOUT NOTICE, BEFORE OR AFTER MATURITY. NO WAIVER BY LENDER OF ANY OF ITS
RIGHTS OR REMEDIES HEREUNDER OR UNDER ANY OTHER DOCUMENT EVIDENCING OR SECURING
THIS REVOLVING CREDIT NOTE OR OTHERWISE SHALL BE CONSIDERED A WAIVER OF ANY
OTHER SUBSEQUENT RIGHT OR REMEDY OF LENDER; NO DELAY OR OMISSION IN THE EXERCISE
OR ENFORCEMENT BY LENDER OF ANY RIGHTS OR REMEDIES SHALL EVER BE CONSTRUED AS A
WAIVER OF ANY RIGHT OR REMEDY OF LENDER; AND NO EXERCISE OR ENFORCEMENT OF ANY
SUCH RIGHTS OR REMEDIES SHALL EVER BE HELD TO EXHAUST ANY RIGHT OR REMEDY OF
LENDER.
5. LEGAL FEES. If this Revolving Credit Note shall be collected by
legal proceedings or through a probate or bankruptcy court, or shall be placed
in the hands of an attorney for collection after an Event of Default or
maturity, the undersigned agrees to indemnify Lender for all costs of
collection, including, but not limited to court costs and reasonable attorneys'
fees.
6. ACCELERATION. Upon the occurrence of one or more of the Events of
Default specified in the Loan Agreement, the holder thereof may, at its option,
declare the entire unpaid balance of principal and accrued interest on this
Revolving Credit Note to be immediately due and payable, without notice of any
kind.
7. GOVERNING LAW. THIS REVOLVING CREDIT NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES; PROVIDED THAT SECTIONS 5-1401 AND 5-1402 OF THE
NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
8. NOTICE OF FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9. MISCELLANEOUS. Maker and the Lender intend that this Revolving
Credit Note shall be in compliance with all applicable laws and shall be
enforceable in accordance with its terms. If any provision of this Revolving
Credit Note shall be illegal or unenforceable, such provision shall be deemed
cancelled to the same extent, as though it never had appeared herein, but the
remaining provisions shall not be affected thereby. In the event that the
interest rate provided for in this Revolving Credit Note shall be deemed to be
usurious under applicable law, then such interest rate shall be deemed modified
to the highest rate permitted under such applicable usury law and all payments
theretofore made shall be credited as though such rate had been the rate
originally provided for herein.
Any and all references in this Revolving Credit Note to any other
document or documents shall be references to such other document or documents as
the same may from time to time be modified, amended, renewed, consolidated or
extended.
The term "Maker" as used herein shall include the undersigned and its
successors and assigns; provided that this paragraph shall not be deemed to be a
consent or approval by the Lender of any transfer or assignment by Maker.
This Revolving Credit Note is executed as of the date and year first
above written.
MAKER:
E-LOAN, INC.
-------------------------------------------
By:
----------------------------------------
Its:
---------------------------------------