EXHIBIT 10.10
HFI LOAN AND SECURITY AGREEMENT
BETWEEN
TRIAD FINANCIAL CORPORATION
AND
FORD MOTOR CREDIT COMPANY
DATED: APRIL 29, 2005
TABLE OF CONTENTS
PAGE
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1. GENERAL DEFINITIONS..........................................................
1.1 "Account Debtor"....................................................
1.2 "Affiliate".........................................................
1.3 "Ancillary Agreements"..............................................
1.4 "Borrowing Base Certificate"........................................
1.5 "Business Day"......................................................
1.6 "Charges"........................................................... 2
1.7 "Closing Date" ..................................................... 2
1.8 "Code".............................................................. 2
1.9 "Collateral"........................................................ 2
1.10 "Default"........................................................... 2
1.11 "Depository Bank"................................................... 2
1.12 "Event of Default".................................................. 2
1.13 "GAAP".............................................................. 2
1.14 "HFI Accounts"...................................................... 2
1.15 "HFI Receivables"................................................... 2
1.16 "HFI Receivables Balance"........................................... 3
1.17 "Liabilities"....................................................... 3
1.18 "Loan".............................................................. 3
1.19 "Note".............................................................. 3
1.20 "Person"............................................................ 3
1.21 "Security Documents"................................................ 3
1.22 "Stock"............................................................. 3
1.23 "Subsidiary"........................................................ 3
1.24 Accounting Terms.................................................... 3
1.25 Other Terms......................................................... 4
2. LOAN: GENERAL TERMS.......................................................... 4
2.1 Facility............................................................ 4
2.2 Advances to Constitute One Loan..................................... 4
2.3 Interest Rate....................................................... 4
2.4 Prepayment.......................................................... 5
3. PAYMENTS..................................................................... 5
3.1 Borrower's Loan Account............................................. 5
3.2 Payment Terms....................................................... 5
3.3 Collection of Accounts and Payments................................. 6
3.4 Application of Payments and Collections............................. 6
3.5 Statements.......................................................... 7
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PAGE
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4. COLLATERAL: SECURITY INTEREST; GENERAL....................................... 7
4.1 Security Interest................................................... 7
4.2 Disclosure of Security.............................................. 7
4.3 Financing Statements................................................ 8
4.4 Inspection.......................................................... 8
4.5 Location of Collateral.............................................. 8
4.6 Borrowing Base Certificates: Information............................ 8
5. COVENANTS AND CONTINUING AGREEMENTS.......................................... 9
5.1 [No Title].......................................................... 9
5.2 [No Title].......................................................... 9
5.3 [No Title].......................................................... 9
5.4 [No Title].......................................................... 9
5.5 [No Title].......................................................... 10
5.6 [No Title].......................................................... 11
5.7 Negative Covenants.................................................. 11
5.8 Payment of Charges.................................................. 12
6. DEFAULT; RIGHTS AND REMEDIES ON DEFAULT...................................... 12
6.1 Default............................................................. 12
6.2 Acceleration of the Liabilities..................................... 13
6.3 Remedies............................................................ 13
6.4 Notice.............................................................. 15
7. MISCELLANEOUS................................................................ 15
7.1 Appointment of Lender as Borrower's Lawful Attorney................. 15
7.2 Modification of Agreement; Sale of Interest......................... 16
7.3 Attorneys' Fees and Expenses; Lender's Out of Pocket Expenses....... 16
7.4 No Waiver by Lender................................................. 17
7.5 Severability........................................................ 17
7.6 Parties; Entire Agreement........................................... 17
7.7 Conflict of Terms................................................... 18
7.8 Waivers by Borrower................................................. 18
7.9 Governing Law....................................................... 18
7.10 FORUM; SERVICE OF PROCESS........................................... 18
7.11 Notice.............................................................. 18
7.12 Delegation of Duties and Grant of Authority......................... 19
7.13 Section Titles...................................................... 20
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LIST OF EXHIBITS
Exhibit A: Collateral Locations
HFI LOAN AND SECURITY AGREEMENT
THIS HFI LOAN AND SECURITY AGREEMENT (this "Agreement") is made as
of the 29th day of April 2005 by and between Ford Motor Credit Company, a
corporation duly organized and existing under the laws of the State of Delaware
("Lender") and Triad Financial Corporation, a corporation duly organized and
existing under the laws of the State of California ("Borrower").
WITNESSETH:
WHEREAS, Lender has entered into that certain Stock Purchase
Agreement dated as of December 23, 2004 (the "Stock Purchase Agreement"), with
Triad Acquisition Corp., a corporation duly organized and existing under the
laws of the State of Delaware ("Purchaser"), and the other parties thereto,
pursuant to which Lender has sold all of the issued and outstanding capital
stock of Borrower to Purchaser;
WHEREAS, pursuant to the Stock Purchase Agreement, Lender has agreed
to offer certain financing to Borrower;
WHEREAS, Borrower desires to borrow funds from Lender, and Lender is
willing to make a certain loan to Borrower upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, and of the Loan (as defined herein), the parties hereto hereby
agree as follows:
1. GENERAL DEFINITIONS
When used herein, the following terms shall have the following meanings:
1.1 "ACCOUNT DEBTOR" means any Person who is or who may become obligated
to Borrower under, with respect to, or on account of an HFI Account.
1.2 "AFFILIATE" means any Person (i) which directly or indirectly owns
more than 10% of the common stock or other equity interest of
Borrower or which is entitled to receive 10% or more of Borrower's
income; or (ii) which has more than 10% of its common stock or other
equity interests owned, directly or indirectly, by Borrower, any
Affiliate of Borrower as defined under part (i) hereof, or any of
Borrower's directors or officers; or (iii) which is a Subsidiary.
1.3 "ANCILLARY AGREEMENTS" means the Security Documents and the Note.
1.4 "BORROWING BASE CERTIFICATE" means a report to be delivered to
Lender by Borrower pursuant to Section 4.6 of this Agreement.
1.5 "BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in Detroit, Michigan are authorized or
required to close under the laws of the State of Michigan or the
laws of the United States.
1.6 "CHARGES" means all national, federal, state, county, city,
municipal, and/or other governmental (including, without limitation,
the Pension Benefit Guaranty Corporation) taxes, levies,
assessments, charges, liens, claims or encumbrances upon and/or
relating to (i) the Collateral, (ii) the Liabilities, (iii)
Borrower's employees, payroll, income and/or gross receipts, (iv)
Borrower's ownership and/or use of any of its assets, or (v) any
other aspect of Borrower's business.
1.7 "CLOSING DATE" shall have the meaning assigned to such term in the
Stock Purchase Agreement.
1.8 "CODE" means the Uniform Commercial Code of the State of Michigan,
as the same may be amended from time to time.
1.9 "COLLATERAL" means all of the property and interests in property
described in Section 4.1 of this Agreement and all other property
and interests in property which shall, from time to time, secure the
Liabilities.
1.10 "DEFAULT" means the occurrence or existence of any one or more of
the events described in Section 6.1 of this Agreement.
1.11 "DEPOSITORY BANK" has the meaning set forth in Section 3.3 of the
Agreement.
1.12 "EVENT OF DEFAULT" means any event or condition which, upon
occurrence or with the passage of time, or upon the giving of
notice, or both, would constitute a Default.
1.13 "GAAP" means generally accepted accounting principles as in effect
in the United States from time to time.
1.14 "HFI ACCOUNTS" means the accounts, contract rights, instruments,
notes, drafts, documents, chattel paper, payment intangibles and
other obligations or indebtedness owed to Borrower under or in
connection with the HFI Receivables; all rights of Borrower to
receive any payments in money or kind in respect of the foregoing;
all guaranties of the foregoing and security therefor; all letters
of credit, guarantee claims, security interests or other security
held by or granted to Borrower to secure payment by an Account
Debtor; all of the right, title, and interest of Borrower in and
with respect to the goods, services, or other property that gave
rise to or that secure any of the foregoing and insurance policies
and proceeds relating thereto; and all rights of Borrower with
respect to such goods and services, including, but not limited to,
the rights of stoppage in transit, replevin, reclamation, and
resale; and all proceeds of the foregoing, whether now owned or
existing or hereafter created or acquired.
1.15 "HFI RECEIVABLES" shall have the meaning set forth for such term in
the Stock Purchase Agreement.
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1.16 "HFI RECEIVABLES BALANCE" shall have the meaning set forth for such
term in the Stock Purchase Agreement.
1.17 "LIABILITIES" means all of Borrower's liabilities, obligations and
indebtedness to Lender arising under this Agreement or under any of
the Ancillary Agreements, whether primary, secondary, direct,
indirect, absolute, contingent, fixed, or otherwise, (including,
without limitation, interest, charges, expenses, attorneys' fees and
other sums chargeable to Borrower by Lender, future advances made to
or for the benefit of Borrower and obligations of performance),
whether heretofore, now or hereafter owing, arising, due, or payable
from Borrower to Lender hereunder or thereunder.
1.18 "LOAN" means the loan being made by Lender to Borrower described in
Section 2.2 of this Agreement.
1.19 "NOTE" means the promissory note made by Borrower to the Lender in
the form of Exhibit B to the Stock Purchase Agreement and evidencing
the Loan.
1.20 "PERSON" means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association,
corporation, institution, entity, party, or government (whether
national, federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division,
agency, body or department thereof).
1.21 "SECURITY DOCUMENTS" means this Agreement and all other agreements,
instruments, documents, financing statements, warehouse receipts,
bills of lading, notices of assignment of accounts, schedules of
accounts assigned, mortgages and other written matter necessary or
requested by Lender to perfect and maintain perfected Lender's
security interest in the Collateral.
1.22 "STOCK" means all shares, options, interests, participations or
other equivalents (however designated) of or in a corporation,
whether voting or non-voting, including, without limitation, common
stock, warrants, preferred stock, convertible debentures and all
agreements, instruments and documents convertible, in whole or in
part, into any one or all of the foregoing.
1.23 "SUBSIDIARY" means any corporation of which more than 50% of the
outstanding shares of Stock which have voting power sufficient to
elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time Stock of any other class
or classes shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly
owned by the Borrower, by the Borrower and one or more other
Subsidiaries, or by one or more other Subsidiaries.
1.24 ACCOUNTING TERMS. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily
given them in accordance with GAAP.
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1.25 OTHER TERMS. All other terms contained in this Agreement which are
not otherwise defined in Section 1 or in any other section of this
Agreement shall, unless the context indicates otherwise, have the
meanings provided for by the Code to the extent the same are used or
defined therein. Wherever the term "including" appears in this
Agreement, such term shall be construed to mean "including, without
limitation," it being the express intention of the parties hereto
that any rule of limitation applicable to any listing of items in a
contract is hereby rejected.
2. LOAN: GENERAL TERMS
2.1 FACILITY. On the date hereof, Lender will loan Borrower an amount
equal to eighty-seven percent (87%) of the "HFI Receivables Balance"
(as defined in the Stock Purchase Agreement) (such amount, the
"Initial Loan Amount"). The Loan shall be repayable as provided in
Sections 3.2 and 3.4 of this Agreement, and shall be evidenced by
the Note.
2.2 ADVANCES TO CONSTITUTE ONE LOAN. All loans and advances by Lender to
Borrower under this Agreement and the Ancillary Agreements shall
constitute one loan (the "Loan"), and all indebtedness and
obligations of Borrower to Lender under this Agreement and the
Ancillary Agreements shall constitute one general obligation secured
by the Collateral.
2.3 INTEREST RATE. Borrower shall pay Lender interest on the outstanding
principal balance of the Liabilities at a rate equal to six percent
(6%) per annum. All interest shall be computed on the basis of a
year of 360 days and actual days elapsed, and shall be payable as
provided in Section 3.2 of this Agreement. Upon the occurrence and
during the continuance of a Default, Borrower shall pay Lender
interest on the outstanding principal balance of the Liabilities at
a rate equal to nine percent (9%) per annum. In no contingency or
event whatsoever shall the rate of interest paid by Borrower under
this Agreement or any of the Ancillary Agreements exceed the maximum
amount permissible under any law which a court of competent
jurisdiction shall, in a final determination and following
exhaustion of all appeals, deem applicable hereto. In the event that
such a court determines that Lender has received interest hereunder
in excess of the maximum rate permitted by any such law, (i) Lender
shall apply the excess amount of interest paid by Borrower to any
unpaid principal owed by Borrower to Lender or, if the amount of
such excess exceeds the unpaid balance of such principal, Lender
shall promptly refund such excess interest to Borrower, and (ii) the
provisions hereof shall be deemed amended to provide for such
permissible rate. All sums paid, or agreed to be paid, by Borrower
which are, or hereafter may be construed to be, compensation for the
use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, spread and
allocated throughout the full term of all such indebtedness until
the indebtedness is paid in full.
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2.4 PREPAYMENT. Borrower may prepay the outstanding principal amount of
the Loan in whole or in part and all accrued but unpaid interest
thereon up to an including the date of such prepayment on any
Payment Date (as defined below) without penalty or premium. If a
Change of Control (as defined in the Stock Purchase Agreement) shall
occur, Borrower shall prepay the entire principal amount of the
Loan, without penalty or premium, and all accrued but unpaid
interest thereon up to and including the Change of Control Date (as
defined in the Stock Purchase Agreement), plus all other amounts
payable hereunder or under any of the Ancillary Agreements, on such
Change of Control Date.
3. PAYMENTS
3.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain a loan account ("Loan
Account") on its books in which shall be recorded (i) all loans and
advances made by Lender to Borrower pursuant to this Agreement, (ii)
all payments made by Borrower on all such loans and advances and
(iii) all other appropriate debits and credits as provided in this
Agreement, including, without limitation, all fees, charges,
expenses and interest.
3.2 PAYMENT TERMS. All of the Liabilities shall be payable to Lender at
the address set forth in Section 7.11 of this Agreement. Except as
otherwise provided in this Agreement in the case of acceleration of
the Liabilities or mandatory prepayment:
(a) The initial payment on the Loan shall be due on the tenth
(10th) day of the second month after the month in which the
Closing Date occurs, or if such day is not a Business Day,
the first Business Day thereafter (the "Initial Payment
Date") and shall include payment of principal and payment
of interest. The amount of the initial payment of principal
shall be equal to the difference between (A) the Initial
Loan Amount minus (B) the product of (i) eighty-seven
percent (87%) and (ii) the outstanding principal balance of
the HFI Receivables as at the last day of the month
immediately preceding the Initial Payment Date, as shown on
the books and records of the Borrower, excluding reserves.
The amount of the initial interest payment shall be equal
to (C) the Initial Loan Amount, multiplied by (D) the
applicable interest rate, multiplied by (E) the number of
days from and including the Closing Date up to and
excluding the Initial Payment Date, divided by 360.
(b) Payments on the Loan after the Initial Payment Date shall
be due on the tenth (10th) day of each month, or if such
day is not a Business Day, the first Business Day
thereafter (each such date, a "Payment Date") and shall
include payment of principal, if any, and payment of
interest. The amount of the payment of principal, if any,
shall be equal to the difference (if such difference is a
positive number)
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between (A) the outstanding principal amount of the Loan
immediately prior to the applicable Payment Date minus (B)
the product of (i) eighty-seven percent (87%) and (ii) the
outstanding principal balance of the HFI Receivables as of
the last day of the month immediately preceding such
Payment Date, as shown on the books and records of the
Borrower, excluding reserves; provided that if the
principal amount of the Loan outstanding immediately prior
to a Payment Date is less than Fifteen Million Dollars
($15,000,000), the amount of the payment of principal due
upon such Payment Date shall be equal to the amount of the
Loan outstanding as of such period. The amount of the
payment of interest shall be equal to the (X) the amount of
the Loan outstanding immediately after the preceding
month's Payment Date, multiplied by (Y) the applicable
interest rate, multiplied by (Z) the number of days from
and including the immediately preceding Payment Date up to
and excluding the current Payment Date, divided by 360.
Fees, costs, expenses and similar charges provided for
hereunder shall be payable on demand. All payments shall be
made by wire in immediately available funds by 10:00 AM,
Eastern time, on the applicable Payment Date. Payments
received after 10:00 AM shall be deemed to be received on
the following Business Day. Wire transfers should be sent
to Lender's account no. 1000052280 at Comerica Bank,
Detroit, Michigan, ABA No. 000000000, Reference: Triad, as
such account may be changed from time to time pursuant to
provision of notice to Triad in accordance with Section
7.11 hereof.
3.3 COLLECTION OF ACCOUNTS AND PAYMENTS. So long as any Default exists
and is continuing: Borrower shall establish a cash collateral
account in the Borrower's name with a depository bank reasonably
acceptable to Lender (the "Depository Bank") pursuant to an
agreement reasonably satisfactory to Lender, to which Borrower will
immediately deposit all remittances on HFI Accounts in the identical
form in which such payment was made, whether by cash or check. So
long as no Default or Event of Default exists and is continuing
thereafter, any remaining balance in such cash collateral account
shall be transferred promptly to Borrower or as Borrower shall
designate.
3.4 APPLICATION OF PAYMENTS AND COLLECTIONS. Borrower irrevocably waives
the right to direct the application of payments and collections
received by Lender from or on behalf of Borrower during the
continuance of a Default, and Borrower agrees that Lender shall have
the continuing, exclusive right to apply and reapply any and all
payments and collections against the Liabilities in such manner as
Lender may reasonably deem appropriate during the continuance of a
Default, notwithstanding any term or provision hereof or any entry
by Lender upon any of its books and records. To the extent that
Borrower makes a payment or payments to Lender or Lender receives
any payment or proceeds of the Collateral for Borrower's benefit,
which
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payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver, custodian or
any other party under any bankruptcy act, state or federal law,
common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or part thereof intended to be
satisfied shall be revived and shall continue in full force and
effect, as if such payments or proceeds had not been received by
Lender.
3.5 STATEMENTS. Until such time as Lender shall have rendered to
Borrower written statements of account as provided in this Section
3.5, the balance in Borrower's Loan Account, as set forth on
Lender's books, shall be rebuttably presumptive evidence of the
amounts due and owing to Lender by Borrower. Lender may render to
Borrower a statement setting forth the balance of Borrower's Loan
Account, including principal, interest, expenses and fees. Each such
statement shall be subject to subsequent adjustment by Lender and
Lender's right to reapply payments in accordance with Section 3.4 of
this Agreement but shall, absent manifest errors or omissions, be
presumed correct and conclusively binding upon Borrower and shall
constitute an account stated unless, within thirty (30) days after
receipt of any statement from Lender, Borrower shall deliver to
Lender written objection thereto specifying the error or errors, if
any, contained in such statement.
4. COLLATERAL: SECURITY INTEREST; GENERAL
4.1 SECURITY INTEREST. To secure the prompt payment to Lender of the
Liabilities, Borrower does hereby grant to Lender a continuing
security interest in and to the following property of Borrower
whether now existing or hereafter acquired, wherever now or
hereafter located:
4.1.1 All HFI Accounts;
4.1.2 All ledger sheets, files, books and records, documents, and
instruments (including, but not limited to computer programs,
tapes, and related electronic data processing software)
evidencing an interest in or related to the above;
4.1.3 All of Borrower's deposit accounts (general or special) in which
collections on HFI Accounts are deposited, but only to the extent
of such deposited collections; and
4.1.4 All cash or non cash proceeds of any of the foregoing, including
insurance proceeds and any accession or addition to, and
replacements and products of, any of the foregoing.
4.2 DISCLOSURE OF SECURITY. Borrower shall make appropriate entries upon
its financial statements and books and records disclosing Lender's
security interest in the Collateral.
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4.3 FINANCING STATEMENTS. At Lender's request, Borrower shall execute
and/or deliver to Lender, at any time or times hereafter, all
Security Documents that Lender may reasonably request, in form and
substance reasonably acceptable to Lender. Borrower hereby
authorizes the Lender to prepare and file one or more financing
statements as necessary or appropriate to perfect the Lender's
security interests in the Collateral. Upon the occurrence of a
Default, Borrower hereby irrevocably makes, constitutes and appoints
Lender (and all Persons designated by Lender for that purpose) as
Borrower's true and lawful attorney (and agent in fact) to sign the
name of Borrower on any of the Security Documents and to deliver any
of the Security Documents to such Persons as Lender, in its sole
discretion, may elect.
4.4 INSPECTION. Lender (by any of its officers, employees and/or agents)
shall have the right to inspect the Collateral, all records related
thereto (and to make extracts from such records) and the premises
upon which any of the Collateral is located and to verify the
amount, quality, quantity, value and condition of, or any other
matter relating to, the Collateral, all upon reasonable notice and
at such reasonable times during normal business hours and as often
as may reasonably be requested.
4.5 LOCATION OF COLLATERAL. Borrower's chief executive office, principal
place of business and all other offices and locations of the
Collateral (other than items in process of collection after deposit
in the Depository Bank) and books and records related thereto
(including, without limitation, computer programs, printouts and
other computer materials and records concerning the Collateral) are
set forth on EXHIBIT A attached hereto and made a part hereof.
Borrower shall not remove its books and records or the Collateral
from any such locations and shall not open any new offices in any
new state or county or relocate any of its books and records or the
Collateral in any new state or county except that such removal,
opening or relocation may be made to a place within the Continental
United States of America with at least thirty (30) days' prior
written notice thereof to Lender.
4.6 BORROWING BASE CERTIFICATES: INFORMATION. Borrower shall keep
accurate and complete records of its HFI Accounts and Borrower shall
deliver to Lender a Borrowing Base Certificate setting forth the
calculations pursuant to Section 3 hereof, signed by an officer of
Borrower and delivered to Lender on or before the payment date in
the applicable monthly period. Borrower shall also deliver to
Lender, promptly following demand, such other information relating
to the status of then-existing HFI Accounts as Lender shall
reasonably request.
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5. COVENANTS AND CONTINUING AGREEMENTS
Borrower covenants that it will:
5.1 As soon as available, but not later than twenty-five (25) days after
the end of each month, furnish the Lender a detailed aging of all
HFI Accounts;
5.2 At its sole cost and expense, use commercially reasonable efforts to
keep and maintain insurance against loss or damage by fire, theft,
explosion, sprinklers and all other hazards and risks ordinarily
insured against by others in similar businesses (provided that the
foregoing shall in no event require Borrower to procure or maintain
any insurance in excess of that presently maintained by Borrower).
5.3 Promptly upon Borrower's learning thereof, inform Lender, in
writing, of (i) any material delay in Borrower's performance of any
of its obligations to any Account Debtor and of any written
assertion of any claims, offsets, defenses or counterclaims by any
Account Debtor and of any allowances or credits granted (including
all credits issued for returned or repossessed inventory) and/or
other monies advanced by Borrower to any Account Debtor, in each
case, only as would be reasonably expected to have a materially
adverse effect on the ability of Borrower to pay principal and
interest on the Loan and (ii) all adverse written information
relating to the financial or other condition of any Account Debtor,
in each case, only as would be reasonably expected to have a
materially adverse effect on the ability of Borrower to pay
principal and interest on the Loan;
5.4 Keep books of account and prepare financial statements and furnish
to Lender the following (all of the foregoing and following to be
kept and prepared in accordance with GAAP):
(a) as soon as available, and in any event within ninety (90)
days after the end of each fiscal year of the Borrower, a
copy of the annual audited financial statements reported on
by independent certified public accountants selected by the
Borrower and reasonably acceptable to Lender, which annual
financial statements shall include the balance sheet of the
Borrower as at the end of such fiscal year and the related
statements of income, retained earnings and cash flows of
the Borrower for the fiscal year then ended, all in
reasonable detail and all prepared in accordance with GAAP
and a certificate of the chief financial officer of the
Borrower stating that such financial statements have been
prepared in accordance with GAAP and whether or not he has
knowledge of the occurrence of any Event of Default or
Default hereunder and, if so, stating in reasonable detail
the facts with respect thereto;
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(b) as soon as available and in any event within forty-five
(45) days after the end of each fiscal quarter other than
the last fiscal quarter of Borrower's fiscal year, an
income statement and balance sheet of the Borrower for such
quarterly period and for the year to date, in reasonable
detail and stating in comparative form the figures for the
corresponding date and period in the previous year
(provided that no information need be provided with respect
to periods ending on or prior to December 31, 2004), and
reflecting all adjustments necessary to fairly present the
results of operations for such periods and certified by the
chief financial officer of the Borrower and accompanied by
a certificate of said officer stating (i) that such
financial statements have been prepared on a consistent
basis and reflect all adjustments (other than normal
year-end and audit adjustments) necessary to fairly present
the results of operations for such periods, and (ii)
whether or not he has knowledge of the occurrence of any
Default or Event of Default hereunder and, if so, stating
in reasonable detail the facts with respect thereto;
(c) as promptly as practicable and in any event not later than
five business days after an officer of the Borrower obtains
knowledge of the occurrence of any event which constitutes
a Default or Event of Default, notice of such occurrence,
together with a detailed statement by a responsible officer
of the Borrower of the steps being taken by the Borrower to
cure the effect of such event; and
(d) such other data and information (financial and other) as
Lender, from time to time, may reasonably request, bearing
upon or related to the Collateral, Borrower's and/or any
Subsidiary's financial condition and/or results of
operations, including, but not limited to, an aged trial
balance of all of Borrower's HFI Accounts existing as of
the date of the most recent Borrowing Base Certificate as
of the date of the request.
5.5 Manage, service, administer, and make collections on the HFI
Accounts with reasonable care and diligence, in accordance with
applicable laws, rules and regulations, and in accordance with the
Borrower's existing practices and procedures or such new practices
and procedures as are not materially less prudent than those
presently utilized by Borrower. The Borrower shall take such steps
in the ordinary course of business consistent with past practice as
are reasonably necessary to maintain perfection of the security
interest created to secure each HFI Account and the related financed
vehicle, including without limitation, taking such steps as are
reasonably necessary to maintain the Borrower as the noted lien
holder on each certificate of title relating to each such financed
vehicle in all states where such notation is a means of perfection.
The Borrower shall use reasonable efforts, in accordance with its
existing collection practices and guidelines and prudent servicing
procedures
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to repossess or otherwise convert the ownership of a finance vehicle
securing any HFI account as to which the Borrower shall have
determined eventual payment in full is unlikely in accordance with
its customary policies and practices; and
5.6 Use commercially reasonable efforts to comply in all material
respects with all applicable laws, rules, regulations, and orders
unless contested in good faith and by appropriate proceedings, and,
if required by GAAP, with respect to which a reserve adequate under
GAAP has been established.
5.7 NEGATIVE COVENANTS. Borrower covenants that it will not:
5.7.1 Declare or pay dividends or make distributions upon any of
Borrower's Stock, or make any loans, advances and/or extensions
of credit to any Affiliate (other than reasonable advances of
money to its employees in payment of reasonable expenses incurred
by such employees in the ordinary course of business), either (i)
where such dividends, distributions, loans, advances and/or
extensions of credit would reasonably be expected to materially
and adversely affect the repayment of the Liabilities or (ii)
when a Default has occurred and is continuing;
5.7.2 Redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of Borrower's Stock, or make any material change
in Borrower's capital structure, either (i) where such action
would reasonably be expected to materially and adversely affect
the repayment of the Liabilities or (ii) when a Default has
occurred and is continuing;
5.7.3 Enter into, or be a party to, any transaction with any Affiliate
or stockholder of Borrower, except upon fair and reasonable terms
which are no less favorable to Borrower than would obtain in a
comparable arm's length transaction with a Person not an
Affiliate or stockholder of Borrower, either (i) where any such
transaction would reasonably be expected to materially and
adversely affect the repayment of the Liabilities or (ii) when a
Default has occurred and is continuing;
5.7.4 Enter into any transaction which materially and adversely affects
the Collateral or Borrower's ability to repay the Liabilities;
5.7.5 Pledge, mortgage, grant a security interest in, encumber, assign,
sell, lease or otherwise dispose of or transfer, whether by sale,
merger, consolidation, liquidation, dissolution, or otherwise,
any of the Collateral;
5.7.6 Change its name, legal structure or identity (including by means
of merger, consolidation or conversion) or add any new fictitious
name without first providing Lender with ten (10) Business Days'
prior written notice of such action; and
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5.7.7 Change or relocate its chief executive office or principal place
of business without first providing Lender with ten (10) Business
Days' prior written notice of such action.
5.8 PAYMENT OF CHARGES. Borrower shall pay promptly when due all of the
Charges; provided that no such Charge need be paid if it is being
contested in good faith by appropriate proceedings for which an
adequate reserve (in the reasonable discretion of Borrower), if
required by GAAP, has been established.
6. DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
6.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a Default:
6.1.1 Borrower fails to pay any of the Liabilities when due and payable
and such default continues for a period of ten (10) Business
Days, or Borrower is in payment default on, or a default giving
rise to the accelerated repayment of, the applicable indebtedness
contemplated by Section 5.06 of the Stock Purchase Agreement or
any replacement facility;
6.1.2 Borrower materially breaches any other term, provision, condition
or covenant contained in this Agreement or in the Ancillary
Agreements, which is required to be performed, kept or observed
by Borrower and the same is not cured to Lender's reasonable
satisfaction within ten (10) Business Days after Lender gives
Borrower written notice identifying such default; or
6.1.3 A default shall occur and be continuing after the expiration of
all applicable cure periods under any document, instrument or
agreement evidencing or relating to any indebtedness contemplated
by Section 5.06 of the Stock Purchase Agreement or any
replacement facility; or
6.1.4 Any financial statement, or certificate made or delivered by
Borrower, or any of its officers, employees or agents, to Lender
is not true and correct in any material respect, or information
underlying the HFI Receivables Balance is not true and correct in
any material respect, and the same is not corrected within thirty
(30) days after Lender serves Borrower written notice of such;
6.1.5 All or a material portion of the Collateral is attached, seized,
levied upon or subjected to a writ or distress warrant, or come
within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors and the same is not cured
within thirty (30) days thereafter; an application is made by any
Person other than Borrower for the appointment of a receiver,
trustee, or custodian for the Collateral or any of Borrower's
other assets and the same is not dismissed within thirty (30)
days after the application therefor; or
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6.1.6 An application is made by Borrower for the appointment of a
receiver, trustee or custodian for the Collateral or any of
Borrower's other assets; a petition under any section or chapter
of the Bankruptcy Code or any similar law or regulation is filed
by Borrower; Borrower makes an assignment for the benefit of its
creditors or any case or proceeding is filed by Borrower for its
dissolution, liquidation, or termination; or
6.1.7 A petition under any section or chapter of the Bankruptcy Code or
any similar law or regulation is filed against Borrower and is
not dismissed within thirty (30) days after filing; or any case
or proceeding is filed against Borrower for its dissolution,
liquidation or termination and such case and proceeding is not
dismissed within thirty (30) days; or
6.1.8 Except as permitted in Section 5.8 of this Agreement, a notice of
lien, levy or assessment is filed of record with respect to all
or any substantial portion of Borrower's assets by the United
States, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other governmental agency,
including, without limitation, the Pension Benefit Guaranty
Corporation, or any taxes or debts owing to any of the foregoing
becomes a lien or encumbrance upon any substantial portion of
Borrower's assets and such lien or encumbrance is not released
within thirty (30) days after its creation; or
6.1.9 Judgment is rendered against Borrower for an amount in excess of
Ten Million Dollars ($10,000,000) and Borrower fails either to
pay such judgment within thirty (30) days of the date due, to
commence appropriate proceedings to appeal such judgment within
the applicable appeal period or, after such appeal is filed,
Borrower fails to diligently prosecute such appeal or such appeal
is denied.
6.2 ACCELERATION OF THE LIABILITIES. Upon and after the occurrence and
during the continuance of a Default under any provision of Section
6.1 other than Section 6.1.3, all of the Liabilities may, at the
option of Lender upon written notice to the Borrower, and without
demand or legal process of any kind, be declared, and immediately
shall become, due and payable.
6.3 REMEDIES. Upon the giving of notice by Lender under Section 6.2
hereof, Lender shall have the following rights and remedies
(provided that the Lender shall use reasonable efforts to notify
Borrower prior to the exercise of such rights and remedies):
6.3.1 All of the rights and remedies of a secured party under the Code
or other applicable law, all of which rights and remedies shall
be cumulative, and none exclusive, to the extent permitted by
law, in addition to any other rights and remedies contained in
this Agreement and in all of the Ancillary Agreements;
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6.3.2 The right to (i) peacefully enter upon the premises of Borrower
or any other place or places where the Collateral is located and
kept, without any obligation to pay rent to Borrower (if Borrower
owns the place or places where the Collateral is kept), through
self help and without judicial process or first obtaining a final
judgment or giving Borrower notice and opportunity for a hearing
on the validity of Lender's claim, and remove the Collateral from
such premises and places to the premises of Lender or any agent
of Lender, for such time as Lender may require to collect or
liquidate the Collateral, and/or (ii) require Borrower to
assemble and deliver the Collateral to Lender at a place to be
designated by Lender;
6.3.3 The right to (i) open Borrower's mail for the purpose of
collecting, and collect any and all amounts due to Borrower from
Account Debtors, (ii) notify Account Debtors that the Accounts
have been assigned to Lender and that Lender has a security
interest therein and (iii) direct such Account Debtors to make
all payments due from them to Borrower upon the Accounts directly
to Lender or to a lock box designated by Lender. Lender shall
promptly furnish Borrower with a copy of any such notice sent,
and Borrower hereby agrees that any such notice, in Lender's sole
and absolute discretion, may be sent on Lender's stationery, in
which event, at Lender's request Borrower shall co sign such
notice with Lender; provided, however, that Borrower's failure or
refusal to so co sign such notice shall have no effect on the
validity of such notice;
6.3.4 The right to sell or to otherwise dispose of all or any
Collateral in its then condition, at public or private sale or
sales, with such notice as provided in Section 6.4 of this
Agreement, in lots or in bulk, for cash or on credit, all as
Lender, in its sole and absolute discretion, may deem advisable.
At any such sale or sales of the Collateral, the Collateral need
not be in view of those present and attending the sale, nor at
the same location at which the sale is being conducted. Lender
shall have the right to conduct such sales on Borrower's premises
or elsewhere and shall have the right to use Borrower's premises
without charge for such sales for such time or times as Lender
may see fit. Lender is hereby granted a license or other right to
use, without charge, Borrower's labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as
it pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all licenses
and all franchise agreements shall inure to Lender's benefit.
Lender may purchase all or any part of the Collateral at public
or, if permitted by law, private sale and, in lieu of actual
payment of such purchase price, may set off the amount of such
price against the Liabilities. The proceeds realized from the
sale of any Collateral shall be applied first to the reasonable
costs, expenses and attorneys' and paralegal fees and expenses
incurred by Lender for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of
the Collateral; second to interest due upon any of the
Liabilities; and third to the principal of the Liabilities. If
any deficiency shall arise, Borrower shall remain liable to
Lender therefor.
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6.4 NOTICE. Any notice required to be given by Lender of a sale, lease,
other disposition of the Collateral or any other intended action by
Lender, which is deposited in the United States mail, postage
prepaid and duly addressed to Borrower, at the address set forth in
Section 7.11 of this Agreement, ten (10)) days prior to such
proposed action, shall constitute commercially reasonable and fair
notice thereof to Borrower.
7. MISCELLANEOUS
7.1 APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY. Borrower,
irrevocably designates, makes, constitutes and appoints Lender (and
all Persons designated by Lender) as Borrower's true and lawful
attorney (and agent-in fact) and Lender or Lender's agent, may,
without notice to Borrower:
7.1.1 At any time after the occurrence and during the continuance of
any Default under Section 6.1 other than Section 6.1.3, in
Borrower's or Lender's name but in accordance with all
requirements of law and the terms of any Loan or installment sale
agreement with the applicable Account Debtor:
(a) demand payment of the HFI Accounts;
(b) enforce payment of the HFI Accounts, by legal proceedings
or otherwise;
(c) exercise all of Borrower's rights and remedies with respect
to the collection of the HFI Accounts;
(d) settle, adjust, compromise, extend or renew the HFI
Accounts;
(e) settle, adjust or compromise any legal proceedings brought
to collect the HFI Accounts;
(f) if permitted by applicable law, sell or assign the HFI
Accounts upon such terms, for such amounts and at such time
or times as Lender deems advisable;
(g) discharge and release the HFI Accounts;
(h) take control, in any manner, of any item of payment or
proceeds of any of the Collateral;
(i) prepare, file and sign Borrower's name on any Proof of
Claim in Bankruptcy or similar document against any Account
Debtor;
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(j) prepare, file and sign Borrower's name on any notice of
lien, assignment or satisfaction of lien or similar
document in connection with the HFI Accounts;
(k) do all acts and things necessary, in Lender's reasonable
discretion, to fulfill Borrower's obligations under this
Agreement;
(l) endorse by writing or stamp the name of Borrower upon any
chattel paper, document, instrument, invoice, freight xxxx,
xxxx of lading or similar document or agreement relating to
the HFI Accounts; and
(m) use for purposes of satisfying the Liabilities the
information recorded on or contained in any data processing
equipment and computer hardware and software relating to
the HFI Accounts to which Borrower has access; and
(n) notify the post office authorities to change the address
for delivery of Borrower's mail to an address designated by
Lender and receive, open and dispose of all mail addressed
to Borrower.
7.2 MODIFICATION OF AGREEMENT; SALE OF INTEREST. This Agreement may not
be modified, altered or amended, except by an agreement in writing
signed by Borrower and Lender. Neither party may sell, assign or
transfer this Agreement or any portion hereof or thereof, except
that Lender may assign its rights and remedies hereunder to an
Affiliate of Lender.
7.3 ATTORNEYS' FEES AND EXPENSES; LENDER'S OUT OF POCKET EXPENSES. If,
at any time or times, subsequent to the date hereof, and regardless
of the existence of a Default or an Event of Default, Lender employs
counsel for advice or other representation and incurs reasonable
legal and/or other costs and expenses in connection with:
(a) Any amendment or modification of this Agreement or the
Ancillary Agreements;
(b) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this
Agreement or the Ancillary Agreements; or
(c) Any attempt to enforce any rights of Lender against
Borrower or any other Person which may be obligated to
Lender by virtue of this Agreement or the Ancillary
Agreements, including, without limitation, the Account
Debtors;
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then, in any of the foregoing events, the reasonable attorneys'
fees arising from such services and all reasonably incurred
expenses, costs, charges and other fees of such counsel or of
Lender arising out of any of the events or actions described in
this Section 7.3 shall be payable, on written demand, by Borrower
to Lender and shall be additional Liabilities hereunder secured
by the Collateral. Without limiting the generality of the
foregoing, such expenses, costs, charges and fees may include
paralegals' fees, costs and expenses; accountants' fees, costs
and expenses; court costs, fees and expenses; photocopying and
duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram
charges; secretarial overtime charges; and expenses for travel,
lodging and food paid or incurred in connection with the
performance of such legal services.
7.4 NO WAIVER BY LENDER. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any
provision of this Agreement shall not constitute a waiver, or affect
or diminish any right of Lender thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by
Lender of a Default by Borrower under this Agreement or the
Ancillary Agreements shall not suspend, constitute a waiver of or
affect any other Default by Borrower under this Agreement or
Ancillary Agreements, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties and covenants of Borrower
contained in this Agreement or the Ancillary Agreements and no
Default by the Borrower under this Agreement or the Ancillary
Agreements shall be deemed to have been suspended or waived by
Lender, unless such suspension or waiver is by an instrument in
writing signed by an officer of Lender and directed to Borrower
specifying such suspension or waiver.
7.5 SEVERABILITY. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall
be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or
the remaining provisions of this Agreement.
7.6 PARTIES; ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements shall be binding upon and inure to the benefit of the
successors and permitted assigns of Borrower and Lender. Borrower's
successors and assigns shall include, without limitation, a trustee,
receiver or debtor in possession of or for Borrower. Nothing
contained in this Section 7.6 shall be deemed to modify Section 7.2
of this Agreement. This Agreement is the complete statement of the
agreement by and between Borrower and the Lender and supersedes all
prior negotiations, understandings and representations between them
with respect to the subject matter of this Agreement.
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7.7 CONFLICT OF TERMS. The provisions of the Ancillary Agreements are
incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement and except as otherwise
provided in the Ancillary Agreements by specific reference to the
applicable provision of this Agreement, if any provision contained
in this Agreement is in conflict with, or inconsistent with, any
provision in the Ancillary Agreements, the provision contained in
this Agreement shall govern and control.
7.8 WAIVERS BY BORROWER. Except as otherwise provided for in this
Agreement, Borrower waives (i) presentment, demand and protest,
notice of protest, notice of presentment, default, non payment,
maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, contract rights, documents,
instruments, payment intangibles, chattel paper and guaranties at
any time held by Lender on which Borrower may in any way be liable
in connection with this Agreement or the Collateral; (ii) all rights
to notice and a hearing prior to Lender's taking possession or
control of, or to Lender's replevy, attachment or levy upon, the
Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of Lender's remedies;
and (iii) the benefit of all valuation, appraisement, extension and
exemption laws. Borrower acknowledges that it has been advised by
counsel of its choice with respect to this Agreement and the
transactions evidenced by this Agreement.
7.9 GOVERNING LAW. This Agreement shall be interpreted, and the rights
and liabilities of the parties hereto determined, in accordance with
the internal laws (as opposed to conflicts of law provision) of the
State of Michigan.
7.10 FORUM; SERVICE OF PROCESS. AS PART OF THE CONSIDERATION FOR NEW
VALUE THIS DAY RECEIVED, BORROWER HEREBY CONSENTS TO THE EXCLUSIVE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN XXXXX
COUNTY, MICHIGAN. BORROWER WAIVES TRIAL BY JURY AND WAIVES ANY
OBJECTION WHICH THE BORROWER MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE
RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING CONTAINED IN
THIS SECTION 7.10 SHALL AFFECT THE RIGHT OF LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
7.11 NOTICE. Except as otherwise provided herein, any notice required
hereunder shall be in writing and shall be deemed to have been
validly served, given or delivered upon deposit in the United States
mails, with proper postage prepaid, certified or registered mail,
addressed to the party to be notified as follows:
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7.11.1 If to Lender, at:
Ford Motor Credit Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel
Telefax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxxxxx X. Xxxxxxxx
Telefax: (000) 000-0000
7.11.2 If to Borrower, at
Triad Financial Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: ___________________________________
Telefax: _____________________________________
with a copy to:
Hunters Xxxx Ltd.
000 Xxxxxxxx Xxxxx, XXX 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telefax: (000) 000-0000
or to such other address as each party may designate for itself by
like notice.
7.12 DELEGATION OF DUTIES AND GRANT OF AUTHORITY. Lender may perform any
of its duties under this Agreement or under the Ancillary Agreements
by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
In such capacity, such agent or attorney-in-fact shall have the
right to undertake, exercise and enforce, on behalf of Lender, all
duties, rights, demands and acts of discretion of Lender provided
for in, or in any way related to, this Agreement or the Ancillary
Agreements and to receive all payments, notices and requests from
Borrower on behalf of and for the account of Lender that are
provided for in, or in any way related to, this Agreement or the
Ancillary Agreements to "Lender" shall be deemed to mean a reference
to such agent or attorney in fact, as agent for Lender, as well as a
reference to Lender.
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7.13 SECTION TITLES. The section titles and Table of Contents contained
in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement
between the parties hereto.
-20-
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year specified at the beginning hereof.
TRIAD FINANCIAL CORPORATION
ATTEST: By: /s/ Xxxxxxx Xxxxxxxx
Its: Senior Vice President, Chief
Financial Officer
/s/ Xxxxxxx Xxxxxxx
Secretary
FORD MOTOR CREDIT COMPANY
By: /s/ Xxxxxxx Xxxxxxxxxx
Its: Director, Business Development
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EXHIBIT A
Triad Financial Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Triad Financial Corporation
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxxxx Xxxxx, XX 00000
FDI Consulting, Inc.
0000 Xxxxx Xxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Iron Mountain
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
