EXHIBIT 10.3
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
PRA III, LLC
Borrower
WESTSIDE FUNDING CORPORATION
Lender
and
PORTFOLIO RECOVERY ASSOCIATES, L.L.C.
PRA RECEIVABLES MANAGEMENT, LLC
(d/b/a ANCHOR RECEIVABLES MANAGEMENT)
PRA II, LLC AND
PRA HOLDING I, LLC
Guarantor
RIVERSIDE COMMERCE CENTER
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Address
PRA III, LLC - ▇▇▇▇ # ▇▇-▇▇▇▇▇▇▇
Borrower Federal Employer's Identification Number
$40,000,000.00
Amount of Loan
SEPTEMBER 18, 2001
Date
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TABLE OF CONTENTS
PAGE NO.
1. DEFINITIONS ..............................................................5
2. LOAN ....................................................................18
2.1. AMOUNT OF LOAN ..................................................18
2.2. CONTINUATION OF EURODOLLAR LOANS ................................18
2.3. LIMITS ON BORROWING .............................................18
2.4. INTEREST RATE; FEES .............................................18
2.5. INABILITY TO DETERMINE INTEREST RATE ............................19
2.6. ILLEGALITY ......................................................20
2.7. REQUIREMENTS OF LAW .............................................20
2.8. TAXES ...........................................................21
2.9. INDEMNITY .......................................................22
2.10. PAYMENTS ........................................................23
2.11. PAYMENT DUE ON A NON-BUSINESS DAY ...............................23
2.12. MANDATORY PAYMENTS ..............................................23
2.13. OPTIONAL PREPAYMENTS ............................................24
2.14. OPTIONAL TERMINATION OF THE FACILITY ............................24
2.15. MAXIMUM INTEREST-CONTROLLING AGREEMENT ..........................24
2.16. INTEREST AFTER DEFAULT ..........................................26
2.17. STATEMENT OF ACCOUNT ............................................26
2.18. APPLICATION OF PAYMENTS .........................................26
3. SECURITY ................................................................27
3.1. SECURITY INTEREST ...............................................27
3.2. FINANCING STATEMENTS AND FURTHER ASSURANCES .....................28
3.3. PLEDGE OF ACCOUNTS ..............................................29
3.4. FAILURE TO DELIVER ..............................................29
3.5. NOTICE OF COLLATERAL ASSIGNMENT .................................29
3.6. LOCATION OF ACCOUNTS ............................................29
3.7. RECORDS AND INSPECTIONS .........................................30
3.8. ADDITIONAL DOCUMENTS ............................................30
3.9. COLLECTION ......................................................30
3.10. BLOCKED ACCOUNTS ................................................30
3.11. BACKUP SERVICER .................................................31
3.12. PROTECTION OF ACCOUNT RECORDS ...................................32
3.13. USE OF COLLECTIONS AND MODIFICATION OF ACCOUNTS .................33
3.14. USE OF PROCEEDS .................................................33
3.15. RETURN OF COLLATERAL ............................................33
3.16. LENDER'S PAYMENT OF CLAIMS ......................................33
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4. CONDITIONS OF CLOSING; SUBSEQUENT ADVANCES ..............................33
4.1. INITIAL ADVANCE .................................................33
4.2. SUBSEQUENT ADVANCES .............................................35
4.3. ALL ADVANCES TO CONSTITUTE ONE LOAN .............................36
4.4. ADVANCES ........................................................36
5. REPRESENTATIONS AND WARRANTIES OF BORROWER AND
GUARANTOR ......................................................................36
5.1. REPRESENTATIONS AND WARRANTIES ..................................36
5.2. WARRANTIES AND REPRESENTATIONS AS TO ELIGIBLE ACCOUNTS ..........40
6. COVENANTS AND OTHER AGREEMENTS ..........................................41
6.1. AFFIRMATIVE COVENANTS ...........................................41
6.2. NEGATIVE COVENANTS ..............................................43
6.3. REPORTING REQUIREMENTS AND ACCOUNTING PRACTICES .................45
6.4. ACCOUNT DEBTORS' ADDRESSES ......................................45
6.5. FINANCIAL REPORTS ...............................................46
6.6. REQUIRED AUDITS .................................................47
6.7. NOTICE OF CHANGES ...............................................47
7. EVENTS OF DEFAULT AND REMEDIES ..........................................47
7.1. EVENTS OF DEFAULT ...............................................47
7.2. TERMINATION OF COMMITMENT; ACCELERATION OF THE
OUTSTANDING FACILITY AMOUNT ....................................................50
7.3. REMEDIES ........................................................50
7.4. NO WAIVER .......................................................52
7.5. APPLICATION OF PROCEEDS .........................................52
7.6. APPOINTMENT OF LENDER AS ATTORNEY-IN-FACT .......................52
8. EXPENSES AND INDEMNITIES ................................................53
8.1. REIMBURSEMENT FOR EXPENSES ......................................53
8.2. LENDER'S EXPENSES AND ATTORNEY'S FEES ...........................54
8.3. GENERAL INDEMNIFICATION .........................................54
9. MISCELLANEOUS ...........................................................55
9.1. NOTICES .........................................................55
9.2. PARTICIPATIONS ..................................................55
9.3. SURVIVAL OF AGREEMENTS ..........................................55
9.4. NO OBLIGATION BEYOND MATURITY ...................................56
9.5. PRIOR AGREEMENTS SUPERSEDED .....................................56
9.6. PARTIES BOUND ...................................................56
9.7. NUMBER AND GENDER ...............................................56
9.8. NO THIRD PARTY BENEFICIARY ......................................56
9.9. EXECUTION IN COUNTERPARTS .......................................56
9.10. SEVERABILITY OF PROVISIONS ......................................56
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9.11. HEADINGS ........................................................57
9.12. EXHIBITS ........................................................57
9.13. FURTHER INSTRUMENTS .............................................57
9.14. GOVERNING LAW ...................................................57
9.15. JURISDICTION AND VENUE ..........................................57
9.16. WAIVER ..........................................................58
9.17. WAIVER OF RIGHT TO TRIAL BY JURY ................................59
9.18. ADVICE OF COUNSEL ...............................................59
9.19. TIME OF ESSENCE .................................................59
9.20. NON PETITION ....................................................60
SCHEDULE
Schedule I -- Existing Debt
EXHIBITS
Exhibit A -- Request for Advance Form
Exhibit B -- Sample Backup Servicer Report
Exhibit C -- Covenant Compliance Report
Exhibit D -- Availability Report
Exhibit E -- Asset Pool Report
Exhibit F -- Tranche Rollover Request Form
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LOAN AND SECURITY AGREEMENT
BORROWER: PRA III, LLC
ADDRESS: RIVERSIDE COMMERCE CENTER
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
GUARANTOR: PORTFOLIO RECOVERY ASSOCIATES, L.L.C.
PRA RECEIVABLES MANAGEMENT, LLC
(d/b/a ANCHOR RECEIVABLES MANAGEMENT)
PRA II, LLC AND
PRA HOLDING I, LLC
DATE: SEPTEMBER 18, 2001
This Loan and Security Agreement is entered into on the above date
between WESTSIDE FUNDING CORPORATION, a Delaware corporation ("Lender"), whose
registered office address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
the borrower named above (the "Borrower"), whose chief executive office is
located at the above address (referred to herein as "Borrower's Address") and
the Guarantors named above (collectively referred to herein as the "Guarantor"),
all of whose chief executive offices are located at Riverside Commerce Center,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (referred to herein
as "Guarantor's Address").
1. DEFINITIONS
ABR. The term "ABR" shall mean for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the greater of (i) the
Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in the
Prime Rate or Federal Funds Effective Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate or the Federal
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Funds Effective Rate, respectively. If for any reason the Lender shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Federal Funds Effective Rate for any reason,
including the inability or failure of the Lender to obtain sufficient quotations
in accordance with the terms thereof, the ABR shall be determined without regard
to clause (ii) of the first sentence of this definition, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due to a
change in the Prime Rate or Federal Funds Effective Rate shall be effective on
the effective date of such change in the Prime Rate or Federal Funds Effective
Rate, respectively.
ABR LOANS. The term "ABR Loans" means the loans, the rate of interest
applicable to which is based upon the ABR.
ACCOUNT. The term "Account" shall mean an account established for a bank
credit card, retail credit card, consumer installment loan, defaulted auto loans
or lines of credit in the name of an Account Debtor, as set forth and described
in a Purchase Agreement, and all unpaid balances due from such Account Debtor,
together with all documents evidencing such Account Debtor's agreement to make
payment of such unpaid balances, including without limitation each credit card
application or agreement, and each promissory note, receivable, obligation,
chattel paper, payment agreement, contract, installment sale agreement or other
obligation or promise to pay of an Account Debtor, all as described and referred
to in a Purchase Agreement.
ACCOUNT DEBTOR. The term "Account Debtor" shall mean any Person or
Persons that are an obligor in any contractual arrangement for amounts due to
Borrower, Guarantor or any co-▇▇▇▇▇▇ in respect of such contractual arrangement.
ACCRUAL PERIOD. The term "Accrual Period" shall mean (i) initially, the
period commencing on the date of the initial borrowing hereunder and ending on
the day before the next succeeding Settlement Date and (b) thereafter, each
period commencing on the next succeeding Settlement Date and ending on the day
before the Settlement Date occurring thereafter.
AGREEMENT. The term "Agreement" shall mean this Loan and Security
Agreement among Lender, Guarantor and Borrower and any amendment, modifications
or extension hereof.
ASSET. The term "Asset" shall mean, with respect to an Asset Pool, each
Account and any property or other right obtained by Borrower in connection with
collection of any such Account or in substitution therefor, all of which
constitutes a part of the Asset Pool into which such Account was initially
delivered.
ASSET POOL. The term "Asset Pool" shall mean all Accounts and other
Assets described in an Asset Pool Report, as the context may require, which
Accounts shall all have been originated by a single creditor and from which
Borrower or Guarantor has purchased such Accounts on the same Business Day,
together with (i) each and every Asset obtained in replacement or satisfaction
of or substitution for, any such Account so purchased, (ii) each and every item
of property obtained by Borrower or Guarantor as a result of their collection
activities with respect to any such Account, (iii) each and every item of
collateral or security, including all
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security interests, liens, guarantees and other interests securing payment of
any Account, and all other rights and interests of Borrower or Guarantor with
respect to each Account, (iv) each judgment rendered against an Account Debtor
in respect to an Account, together with all lien rights related thereto, (v)
Asset Pool Proceeds derived from or paid or payable with respect thereto,
together with any and all earnings thereon, and (vi) each and every other right,
claim and interest associated therewith.
ASSET POOL PROCEEDS. The term "Asset Pool Proceeds" shall mean, with
respect to an Asset Pool, any and all payments, revenues, income, receipts,
collections, recoveries and other proceeds or assets received with respect to
such Asset Pool, including (without limitation) (i) payments of principal,
interest, fees, late charges, insufficient funds charges, guaranty payments and
any interest thereon, credit insurance costs, guaranty fees and other amounts
recovered on account of any Asset in such Asset Pool, and (ii) settlements,
compromises, liquidations, foreclosure proceeds, dispositions, sales, transfers
or other proceeds, whether cash or otherwise, received as a result of or in any
way in connection with collection activities related to any Asset or in
connection with the sale of any Asset constituting a part of such Asset Pool.
ASSET POOL REPORT. The term "Asset Pool Report" shall mean a report, in
a form and substance acceptable to Lender, that sets forth each Asset Pool
purchased by Borrower.
ASSET POOL SELLER. The term "Asset Pool Seller" shall mean, with respect
to an Asset Pool, the party described in an Asset Pool Report which has agreed
to sell a specified Asset Pool to Borrower or Guarantor pursuant to the terms
and conditions of a Purchase Agreement.
ASSUMED NAME. The term "Assumed Name" shall mean with respect to
Borrower, PRA III, LLC and with respect to Guarantor, Portfolio Recovery
Associates, L.L.C., PRA Receivables Management, LLC, Anchor Receivables
Management, PRA II, LLC and PRA Holding I, LLC.
AVAILABILITY REPORT: The term "Availability Report" shall mean the a
report in the form of Exhibit "D" attached hereto and made a part hereof.
AVAILABILITY ON ELIGIBLE ACCOUNTS. The term "Availability on Eligible
Accounts" shall mean an amount equal to the lesser of, as of any date of
determination;
A. sixty-five percent (65%) of the aggregate of the Net
Finance Balance of all Eligible Asset Pools;
B. thirty-five percent (35%) of the aggregate of the
Estimated Remaining Collections of all Eligible Asset Pools;
C. an amount, with respect to all Eligible Asset Pools,
which is the sum of amounts determined with respect to each Eligible
Asset Pool, which is determined by multiplying the applicable percentage
determined below for each Eligible Asset Pool, based upon the number of
months that have elapsed from the earlier of the date of
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purchase of such Asset Pool by Borrower or Guarantor (based upon a
thirty 30 day month), by the Purchase Price of such Eligible Asset Pool
as of the date of purchase of such Eligible Asset Pool by Borrower or
Guarantor:
Number of Months Elapsed
since date of purchase Advance Rate
---------------------- ------------
less than 3 months eighty-percent (80%)
3 to less than 6 months seventy-five percent (75%)
6 to less than 9 months sixty-five percent (65%)
9 to less than 12 months fifty-five percent (55%)
12 to less than 15 months forty-five percent (45%)
15 to less than 18 months thirty-five percent (35%)
18 to less than 2l months twenty-nine percent (29%)
21 to less than 24 months twenty-two percent (22%)
24 to less than 27 months fourteen percent (14%)
27 to less than 30 months seven percent (7%)
30 months or more zero percent (0%)
;and
D. the Facility Amount.
BACKUP SERVICER. The term "Backup Servicer" shall mean any Backup
Servicer appointed by Lender from time to time pursuant to Section 3.11.
BACKUP SERVICER FEE. The term "Backup Servicing Fee" shall mean (i)
prior to the utilization of the Backup Servicer, an amount equal to seven
thousand five hundred Dollars ($7,500.00) per month and (ii) after such
utilization, an amount agreed upon between the Lender and the Backup Servicer.
BORROWER'S LOCATIONS. The term "Borrower's Locations" shall mean either
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇.,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
BUSINESS DAY. The term "Business Day" shall mean a day, other than a
Saturday or Sunday, on which commercial banks are open for business to the
public in New York, New York.
CAPITAL STOCK. The term "Capital Stock" shall mean any and all shares,
interests, participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent units, ownership or membership
interests in a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
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CHANGE IN CONTROL. The term "Change in Control" shall mean any of the
following (i) the failure of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company to continue to own,
directly or indirectly, in the aggregate, free and clear of all liens except for
liens in favor of the Lender, a majority of the issued and outstanding voting
shares of PRA; (ii) the failure of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company to directly or
indirectly elect or designate for election a majority of the board of directors
of PRA or (iii) the failure of PRA to continue to own, in the aggregate, free
and clear of all liens except for liens in favor of the Lender, 100% of the
issued and outstanding membership interest of the Borrower.
CLOSING DATE. The term "Closing Date" shall mean September 18, 2001.
CLOSING FEE. The term "Closing Fee" shall mean the amount equal to the
product of (i) 0.50% and (ii) the Facility Amount.
CODE. The term "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
COLLATERAL. The term "Collateral" shall have the meaning set forth in
Section 3.1. hereof.
COMMITMENT FEE. The term "Commitment Fee" shall mean an amount equal to
the product of (i) 0.35% and (ii) the Facility Amount.
COMMONLY CONTROLLED ENTITY. The term "Commonly Controlled Entity" shall
mean an entity, whether or not incorporated, which is under common control with
Borrower or Guarantor within the meaning of Section 414(b) or (c) of the Code.
DEFAULT. The term "Default" shall mean an event which with the passage
of time or notice or both would constitute an Event of Default (as defined in
Section 7.1).
DESIGNATED MATURITY. The term "Designated Maturity" shall mean, (i) with
respect to any Interest Period of one, two, three or six months, a period equal
to such Interest Period, (ii) with respect to any Interest Period of one week or
less, one week, (iii) with respect to any Interest Period of two weeks or less,
but greater than one week, two weeks, (iv) with respect to any Interest Period
of three weeks or less, but greater than two weeks, three weeks and (v) with
respect to any Interest Period of four weeks or less, but greater than three
weeks, four weeks.
DISTRIBUTIONS. The term "Distributions" shall mean, during the period of
determination, any dividends or other distribution of earnings to Guarantor's
shareholders or equity holders, the net increase in the outstanding balance of
all obligations or indebtedness due from Guarantor's shareholders or equity
holders to Guarantor and the net decrease in the outstanding balance of all
obligations or indebtedness due from Guarantor to such Guarantor's
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shareholders or equity holders. Distributions shall not include any payments
made pursuant to Existing Debt.
DOLLAR. The term "Dollar" shall mean lawful currency of the United
States of America.
ELIGIBLE ASSET POOL. The term "Eligible Asset Pool" shall mean those
existing Asset Pools accepted by Lender at closing and newly acquired Asset
Pools of Borrower acquired from Asset Pool Sellers not affiliated with the
Borrower that are (a) acceptable to Lender, in its sole discretion, and (b) in
each case, that meet, at a minimum, all of the following requirements:
(i) the Accounts in such Asset Pool, taken as a whole, comply in all
material respects with all applicable laws and regulations, including, but not
limited to, truth in lending and credit disclosure laws and regulations;
(ii) all amounts and information appearing on the applicable Asset Pool
Report furnished to Lender in connection therewith are true and correct in all
material respects;
(iii) Borrower has good and marketable title and has the right to
pledge, assign and deliver the Assets of such Asset Pool, free from all liens,
claims, encumbrances or security interests whatsoever;
(iv) no more than one percent (1%) of the number of Accounts in such
Asset Pool constitute Accounts with respect to which the Account Debtor thereon
or any guarantor thereof is employed by or related to Borrower or Guarantor or
is Borrower or Guarantor;
(v) to the best knowledge of Borrower and Guarantor no condition exists
that materially or adversely affects the Level Yield of the Asset Pool;
(vi) on the date of purchase, the original Purchase Price does not
exceed the Maximum Purchase Price;
(vii) on the date of purchase, the average number of months (based upon
a thirty 30 day month), with respect to all the Accounts in an Asset Pool, that
have expired since the seller of such Asset Pool has charged off the Account as
uncollectible does not exceed forty eight (48) months;
(viii) on the date of purchase, the average outstanding balance of all
Accounts contained in such Asset Pool does not exceed seven thousand seven
hundred fifty Dollars ($7,750.00) on an individual Asset Pool basis and three
thousand seven hundred fifty Dollars ($3,750.00) on an aggregate Asset Pool
basis;
(ix) on the date of purchase, the aggregate of the outstanding balances
of all Accounts within such Asset Pool with a balance in excess of ten thousand
Dollars ($10,000.00) shall not
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have an aggregate balance in excess of 55% of the aggregate balance of all loans
within such Asset Pool;
(x) payments under the Assets are to be made exclusively in Dollars;
(xi) Either of Borrower or Guarantor has the ability to obtain, if
requested, the material portion of the original documents that evidence each
Account Debtors' obligations with respect to each Account in the Asset Pool,
subject to the terms of the applicable portfolio purchase agreement;
(xii) since the acquisition of the Asset Pool by Guarantor or Borrower,
no sale of any Account within the Asset Pool has occurred except arms length
sales to non-affiliated third parties; and
(xiii) the concentration of the aggregate outstanding balance of
Accounts in any single state shall not exceed more than 25% of the total
aggregate outstanding balance of all Accounts within all Eligible Asset Pools.
ERISA. The term "ERISA" shall mean the Employee Retirement income
Security Act of 1974, as amended from time to time.
ESTIMATED REMAINING COLLECTIONS. The term "Estimated Remaining
Collections" shall mean the aggregate gross remaining cash collections which
Borrower or Guarantor anticipates to receive from an Asset Pool or as referred
to by Borrower or Guarantor as the "Level Yield", determined and reported by
Borrower or Guarantor pursuant to its financial statements and other reporting
provided to Lender. Such remaining book balance shall be calculated by Borrower
or Guarantor (as the case may be) pursuant to a method utilized by Borrower or
Guarantor (as the case may be) in its past business practices, in accordance
with GAAP and in compliance with procedures approved by Borrower's or
Guarantor's (as the case may be) independent certified public accountants, who
are acceptable to Lender.
EUROCURRENCY RESERVE REQUIREMENTS. The term "Eurocurrency Reserve
Requirements" shall mean for any day as applied to a Eurodollar Loan, the
aggregate (without duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any regulations of
the Board of Governors of the Federal Reserve System or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained by a member
bank of such System. Any change in the Eurocurrency Reserve Requirements shall
be effective on the effective date of such change in the Eurocurrency Reserve
Requirements.
EURODOLLAR BASE RATE. The term "Eurodollar Base Rate" shall mean with
respect to any Eurodollar Loan for any Interest Period, the rate per annum
determined by the Lender to be the average of the respective rates per annum for
the corresponding Designated
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Maturity posted by each of the principal London office of banks posting rates as
displayed on the Dow ▇▇▇▇▇ Telerate screen, page 3750 or such other page as may
replace such page on such service for the purpose of displaying the London
interbank offered rate of major banks for deposits in Dollars at approximately
11:00 A.M. (London Time) two (2) Business Days prior to the beginning of such
Interest Period, as specified in the Request for Advance or Tranche Rollover
Request Form (and rounded, if necessary, upward to the next whole multiple of
1/100 of 1%); provided that, to the extent an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the "Eurodollar Base
Rate" shall be the interest rate per annum determined by the Lender to be the
average (rounded, if necessary, upward to the nearest whole multiple of 1/100 of
1% per annum, if such average is not such a multiple) of the rates per annum at
which deposits in Dollars are offered for such relevant Designated Maturity to
major banks in the London interbank market in London, England by such other
major banks in the London interbank market in London, England at approximately
11:00 a.m. (London time) on the date which is two (2) Business Days prior to the
beginning of such Interest Period.
EURODOLLAR LOANS. The term "Eurodollar Loans" shall mean Loans, the rate
of interest applicable to which is based upon the Eurodollar Rate.
EURODOLLAR RATE. The term "Eurodollar Rate" shall mean with respect to
each day during each Interest Period pertaining to a Eurodollar Loan, a rate per
annum determined for such day in accordance with the following formula (rounded,
if necessary, upward to the nearest whole multiple of 1/100th of 1%).
Eurodollar Base Rate
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1.00 - Eurocurrency Reserve Requirements
EXISTING DEBT. The term "Existing Debt" shall mean the debts and
capitalized leases set forth on Schedule I attached hereto and made a part
hereof.
FACILITY AMOUNT. The term "Facility Amount" shall mean forty million
Dollars ($40,000,000.00).
FEDERAL FUNDS EFFECTIVE RATE. The term "Federal Funds Effective Rate"
shall mean for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.
FUNDING PERIOD. The term "Funding Period" shall mean the period
beginning on the Closing Date and ending on the earlier of (i) September 15,
2004 and (ii) the date of the occurrence of an Event of Default.
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GAAP. The term "GAAP" shall mean generally accepted accounting
principles and other standards as promulgated by the American Institute of
Certified Public Accountants.
GOVERNING RATE. The term "Governing Rate" shall mean either the
Eurodollar Rate or ABR, as applicable.
GOVERNMENTAL AUTHORITY. The term "Governmental Authority" shall mean any
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
GUARANTOR. The term "Guarantor" shall mean Portfolio Recovery
Associates, L.L.C., PRA Receivables Management, LLC (d/b/a Anchor Receivables
Management), PRA II, LLC and PRA Holding I, LLC.
GUARANTOR'S LOCATIONS. The term "Guarantor's Locations" shall mean
either ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
GUARANTY. The term "Guaranty" shall mean the Guaranty, dated as of the
date hereof, executed by the Guarantor in favor of the Lender, and any
amendment, modification or extension thereof.
INTEREST AFTER DEFAULT. The term "Interest After Default" shall have the
meaning set forth in Section 2.16.
INTEREST PERIOD. The term "Interest Period" shall mean with respect to
any Eurodollar Loan: (a) initially, the period commencing on the borrowing date
and ending on the next succeeding Settlement Date and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending on the Settlement Date occurring
one, two, three or six months thereafter, as selected by the Borrower, in a
completed Request for Advance or Tranche Rollover Request Form delivered to the
Lender by 10:00 A.M., New York, New York time, not less than three (3) Business
Days prior to the last day of the then current Interest Period with respect
thereto; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
1. any Interest Period that would otherwise
extend beyond the Maturity Date shall end on the
Maturity Date or such date of final payment, as the case
may be; and
2. the Borrower shall select Interest
Periods so as not to require a payment or prepayment of
any Eurodollar Loan during an Interest Period for such
Loan.
LIEN. The term "Lien" shall mean, any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge,
claim or other security
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interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing leases
having substantially the same economic effect as any of the foregoing).
LEVERAGE RATIO. The term "Leverage Ratio" shall mean, at any date of
determination, total liabilities of Guarantor, including the Outstanding
Facility Amount, less the outstanding balance due pursuant to all Subordinated
Debt divided by the sum of the amount of Guarantor's Tangible Net Worth plus the
outstanding balance due pursuant to all Subordinated Debt, all calculated on a
consolidated basis.
LIQUIDATED DAMAGES. The term "Liquidated Damages" shall mean (i) prior
to the 25th month after the Closing Date the product of (a) the Facility Amount
and (b) 0.50% and (ii) during the 25th month after the Closing Date and
thereafter, zero Dollars ($0.00).
LOAN. The term "Loan" shall have the meaning set forth in Section 2.1.
LOAN DOCUMENTS. The term "Loan Documents" shall mean this Agreement, the
Note, the Guaranty, the Management Agreement, the PRA Purchase Agreement
subordination agreements, agency and custodian agreements and all other
documents executed in connection with this Agreement, together with any and all
renewals, amendments, restatements or replacements of such documents.
MANAGEMENT AGREEMENT. The term "Management Agreement" shall mean the
Management Agreement dated September 18, 2001 between Borrower and PRA, and any
amendment, modification or extension thereof.
MATERIAL ADVERSE EFFECT. The term "Material Adverse Effect" shall mean a
material adverse effect on (a) the business, operations, property, financial
condition or prospects of Borrower or Guarantor taken as a whole, (b) the
validity or enforceability of this or any of the other Loan Documents or (c) the
rights or remedies of Lender hereunder or under any of the other Loan Documents.
MATURITY DATE. The term "Maturity Date" shall mean September 15, 2005.
MAXIMUM PURCHASE PRICE. The term "Maximum Purchase Price" shall mean the
lesser of (a) the amount paid per the sales contract, (b) two million five
hundred thousand Dollars ($2,500,000.00) and (c) the amount calculated by
multiplying the applicable percentage determined below labeled Maximum Price,
based upon the average number of months (based upon a thirty 30 day month) that
have expired since the seller of such Asset Pool has charged off the Accounts in
such Asset Pool as uncollectible, by the aggregate outstanding balance of such
Accounts:
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AVERAGE MONTHS SINCE
CHARGE-OFF MAXIMUM PRICE
Less than 4 months 9.25%
4 to less than 7 months 8.25%
7 to less than 10 months 6.60%
10 to less than 13 months 5.00%
13 to less than 16 months 4.75%
16 to less than 19 months 4.40%
19 to less than 22 months 4.25%
22 to less than 25 months 4.00%
25 to less than 31 months 3.60%
31 to less than 37 months 3.00%
37 to less than 43 months 2.50%
43 to less than 49 months 1.60%
49 or more months 0.00%
MAXIMUM RATE. The term "Maximum Rate" shall mean the highest lawful and
non-usurious rate of interest applicable to the Note made and delivered by
Borrower to Lender in connection herewith, that at any time or from time to time
may be contracted for, taken, reserved, charged, or received on the Note and the
Outstanding Facility Amount under the laws of the United States and the laws of
such states as may be applicable thereto, that are in effect or, to the extent
allowed by such laws, that may be hereafter in effect and that allow a higher
maximum non-usurious and lawful interest rate than would any applicable laws now
allow.
NET FINANCE BALANCE. The term "Net Finance Balance" shall mean the
remaining book balance of PRA's net investment in all Asset Pools or as referred
to by PRA as the "unamortized portfolio price", determined and reported by
Borrower pursuant to its consolidated financial statements and other reporting
provided to Lender. Such remaining book balance shall be calculated by PRA
pursuant to a method utilized by PRA in its past business practices, in
accordance with GAAP and in compliance with procedures approved by PRA's
independent certified public accountants, who are acceptable to Lender.
NET INCOME. The term "Net Income" shall mean with respect to any fiscal
period, the net earnings of PRA (excluding all extraordinary gains or
nonrecurring income) before provision for income taxes for such fiscal period of
PRA, all as reflected on the financial statements of PRA supplied to Lender
pursuant to Sections 6.5(B) and 6.5(C) hereof, all calculated on a consolidated
basis.
NON-EXCLUDED TAXES. The term "Non-Excluded Taxes" shall have the meaning
set forth in Section 2.8.
NOTE. The term "Note" shall mean the promissory note of even date
herewith, and all renewals, extensions, or modifications executed by Borrower
and payable to the order of Lender.
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OUTSTANDING FACILITY AMOUNT. The term "Outstanding Facility Amount"
shall mean the total principal amount advanced and outstanding hereunder from
time to time to Borrower.
PERSON. The term "Person" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
PLAN. The term "Plan" shall mean any pension plan that is covered by
Title IV of ERISA and with respect to which Borrower or Guarantor or a Commonly
Controlled Entity is an "Employer" as defined in section 3(5) of ERISA.
PRA. The term "PRA" shall mean Portfolio Recovery Associates, L.L.C.
PRA PURCHASE AGREEMENT. The "PRA Purchase Agreement" shall mean the
Purchase Agreement dated September 18, 2001 between Borrower and PRA for the
sale of the initial Eligible Asset Pools.
PRIME RATE. The term "Prime Rate" shall mean the rate of interest per
annum publicly announced from time to time by the Lender at its principal office
in the State of New York as its prime rate on a particular day in effect for
domestic (United States) commercial loans; such rate is not necessarily intended
to be the lowest rate of interest charged by the Lender in connection with
extensions of credit. Each change in the Prime Rate shall be effective on the
date such change is publicly announced.
PURCHASE AGREEMENT. The term "Purchase Agreement" shall mean the
agreement between Borrower or Guarantor and any Asset Pool Seller for the
purchase of an Asset Pool.
PURCHASE PRICE. The term "Purchase Price" shall mean the actual purchase
price paid by Borrower or Guarantor for an Asset Pool, pursuant to the terms of
a Purchase Agreement.
REQUEST FOR ADVANCE. The term "Request for Advance" shall mean a written
request for an advance in the form of Exhibit "A" attached hereto and made a
part hereof.
REQUIREMENT OF LAW. The term "Requirement of Law" shall mean as to any
Person, the Certificate of Incorporation and By-Laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
SETTLEMENT DATE. The term "Settlement Date" shall mean the fifteenth
(15th) day of each month. If such day is not a Business Day, then the Settlement
Date shall mean the next succeeding Business Day.
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STATED INTEREST RATE. The term "Stated Interest Rate" shall mean (i)
with respect to Eurodollar Loans, the Eurodollar Rate plus 4.35% per annum and
(ii) with respect to ABR Loans, the ABR plus 1.50% per annum; provided, that in
no event shall the Stated Interest Rate exceed the Maximum Rate.
SUBORDINATED DEBT. The term "Subordinated Debt" shall mean the aggregate
amount of any indebtedness of Borrower or Guarantor to Persons other than Lender
that by its terms is (i) subordinated in all respects, including, but not
limited to, the right of payment, to the prior payment in full of the
Outstanding Facility Amount and (ii) consented to in writing by the Lender. A
subordination and standstill agreement, in a form and substance satisfactory to
Lender in its sole discretion, shall be entered into by all holders of
Subordinated Debt.
SUBSIDIARY. The term "Subsidiary" shall mean as to any Person, a
corporation, partnership or other entity of which shares of Capital Stock or
other ownership interests having ordinary voting power (other than Capital Stock
or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
TANGIBLE COLLATERAL LOCATIONS. The term "Tangible Collateral Locations"
shall mean collectively, the Borrower's Locations and the Guarantor's Locations.
TANGIBLE NET WORTH. The term "Tangible Net Worth" shall mean, at any
time of determination, the shareholder's equity of PRA determined in accordance
with GAAP minus the aggregate amount of all intangible assets and all assets
consisting of obligations due to PRA from shareholders, directors, officers, or
any affiliate of PRA hereunder, all calculated on a consolidated basis.
TRANCHE ROLLOVER REQUEST FORM. The term "Tranche Rollover Request Form"
shall mean a written request in the form of Exhibit "F" attached hereto and made
a part hereof.
TRUST ACCOUNTS. The term "Trust Accounts" shall mean the bank accounts
utilized by PRA Receivables Management, LLC (d/b/a Anchor Receivables
Management) for the collection of funds on behalf of third parties, including
the following Bank of America accounts: (i) ARM General Trust (account number
00412 281 7384), (ii) ARM NC Trust (account number 00412 281 7368) and (iii) ARM
ME Trust (account number 00412 281 7371) and shall also include any additional
trust accounts which may be opened from time to time for the collection of funds
on behalf of third parties.
UCC. The term "UCC" shall mean the Uniform Commercial Code as in effect
in the State of New York.
UNUSED FACILITY FEE. The term "Unused Facility Fee" shall mean for any
Settlement Date, an amount equal to the product of (i) one-twelfth of 0.25% and
(ii) the
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difference between (a) the Facility Amount and (b) the daily average principal
amount of the Outstanding Facility Amount for the month immediately preceding
such Settlement Date.
2. LOAN
2.1. AMOUNT OF LOAN
A. Subject to the terms, covenants and conditions
hereinafter set forth, Lender agrees upon Borrower's request from time
to time, during the Funding Period, to make advances to Borrower
(collectively, the "Loan"), in an aggregate amount not to exceed at any
time outstanding the lesser of the following: (a) the Facility Amount or
(b) the Availability on Eligible Accounts. Within the limits of this
Section 2.1, Borrower may borrow, repay and reborrow the advances. The
Loan shall be evidenced by the Note.
B. Except as otherwise provided herein, all Loans hereunder
shall be Eurodollar Loans.
2.2. CONTINUATION OF EURODOLLAR LOANS.
Except as otherwise provided herein, each Eurodollar Loan may be
continued as such upon the expiration of the then current Interest Period with
respect thereto by the Borrower delivering to the Lender a Tranche Rollover
Request Form, in accordance with the applicable provisions of the term "Interest
Period" set forth in Section 1, of the length of the next Interest Period to be
applicable to such Loan, provided that no Eurodollar Loan may be continued as
such when any Event of Default has occurred and is continuing and the Lender has
determined that such a continuation is not appropriate, and provided, further,
that if the Borrower shall fail to give such notice such Loans shall be
automatically converted to Eurodollar Loans with Interest Period of one month or
such shorter period as may be required by the definition of "Interest Period."
2.3. LIMITS ON BORROWING
A. All borrowings shall be in a in a minimum amount equal
to not less than $1,000,000 or if less, the unused Facility Amount. In
no event shall there be more than six (6) tranches of Eurodollar Loans
outstanding at any time.
B. There may be no more than one borrowing each calendar
week.
2.4. INTEREST RATE; FEES
A. The outstanding principal balance of the Loan, and all
other fees and all amounts that are due and unpaid hereunder, shall bear
interest at the Stated Interest Rate. If Lender is ever prevented from
charging or collecting interest at the rate set forth in Stated Interest
Rate Section (i) because interest at such rate would exceed interest at
the Maximum Rate, then the rate set forth in Stated Interest Rate
Section (i) shall continue to
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be the Maximum Rate until Lender has charged and collected the full
amount of interest chargeable and collectable had interest at the rate
set forth in Stated Interest Rate Section (i) always been lawfully
chargeable and collectible.
All changes in the Governing Rate or the Stated Interest Rate shall be
made without notice to Borrower. Lender shall notify Borrower afterwards of any
such changes. The monthly interest due on the Outstanding Facility Amount shall
be computed for the actual number of days elapsed during the month in question
on the basis of a year consisting of three hundred sixty (360) days and shall be
calculated by determining the avenge daily principal balance outstanding for
each day of the month in question. The daily rate shall be equal to 1/360th
times the Stated Interest Rate (but shall not exceed the Maximum Rate).
B. The Borrower agrees to pay Lender:
(1) on the Closing Date, the Closing Fee;
(2) annually, on the first anniversary of the
Closing Date and each anniversary of the Closing
Date thereafter, the Commitment Fee;
(3) on each Settlement Date, commencing on the first
Settlement Date after the Closing Date, the
Unused Facility Fee; and
(4) on each Settlement Date, commencing on the first
Settlement Date after the Closing Date, the
Backup Servicer Fee.
2.5. INABILITY TO DETERMINE INTEREST RATE
If prior to the first day of any Interest Period:
A. the Lender shall have determined (which determination
shall be conclusive and binding upon the Borrower in the absence of
manifest error) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
B. the Lender shall have determined that the Eurodollar
Rate determined or to be determined for such Interest Period will not
adequately and fairly reflect the cost to Lender (as conclusively
certified by Lender), of making or maintaining its affected Loans during
such Interest Period;
the Lender shall give telecopy or telephonic notice thereof to the Borrower as
soon as practicable thereafter. If such notice is given (x) any Eurodollar Loans
requested to be made on the first day of such Interest Period shall be made as
ABR Loans and (y) any Loans that on the first day of such Interest Period were
to have been continued as, or converted to, Eurodollar Loans shall be converted
to or continued as ABR Loans. Until such notice has been withdrawn by the
Lender,
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no further Eurodollar Loans shall be made, or as of the first day of the
immediately succeeding Interest Period, continued as such.
2.6. ILLEGALITY
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof, in each case after the Closing Date, shall make it unlawful for Lender
to make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of Lender to make Eurodollar Loans and continue Eurodollar Loans as
such shall forthwith be suspended and (b) the Loans of Lender then outstanding
as Eurodollar Loans, if any, shall be converted automatically to ABR Loans on
the respective last days of the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of the
then current Interest Period with respect thereto, the Borrower shall pay to
Lender such amounts, if any, as may be required pursuant to Section 2.9.
2.7. REQUIREMENTS OF LAW
A. If the adoption of or any change in any Requirement of
Law or in the interpretation or application thereof or compliance by
Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority, in each
case, made subsequent to the date hereof:
(1) shall subject Lender to any tax of any kind
whatsoever with respect to this Agreement or the
Note made by it or any Eurodollar Loan made by
it, or change the basis of taxation of payments
to Lender in respect thereof (except for
Non-Excluded Taxes covered by Section 2.8 and
changes in the rate of net income taxes or
franchise taxes (imposed in lieu of net income
taxes) of Lender);
(2) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or
similar requirement against assets held by,
deposits or other liabilities in or for the
account of, advances, loans or other extensions
of credit by, or any other acquisition of funds
by, any office of Lender which is not otherwise
included in the determination of the Eurodollar
Rate hereunder; or
(3) shall impose on Lender any other condition;
and the result of any of the foregoing is to increase the cost to Lender of
making, converting into, continuing or maintaining Eurodollar Loans or to reduce
any amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay Lender within fifteen
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(15) days after written request therefor such additional amount or amounts as
will compensate Lender for such increased cost or reduced amount receivable.
B. If Lender shall have determined that the adoption of or
any change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof, in each case, after the date
hereof, or compliance by any corporation controlling Lender with any
request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the
date hereof shall have the effect of reducing the rate of return on
Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which Lender or such
corporation could have achieved but for such adoption, change or
compliance by the Lender (taking into consideration Lender's or such
corporation's policies with respect to capital adequacy) then from time
to time, the Borrower shall pay to Lender such additional amount or
amounts as will compensate Lender within fifteen (15) days after written
request therefor for such reduction.
C. If Lender becomes entitled to claim any additional
amounts pursuant to this Section 2.7, Lender shall promptly notify the
Borrower (with a copy to PRA) of the event by reason of which it has
become so entitled. The agreements in this Section 2.7 shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.8. TAXES
A. All payments made by the Borrower under this Agreement
and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on the
Lender as a result of the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from
the Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any Note). If
any such non-excluded taxes, levies, imposts, duties, charges, fees,
deductions or withholdings ("Non-Excluded Taxes") are required to be
withheld from any amounts payable to Lender hereunder or under the Note,
the amounts so payable to Lender shall be increased to the extent
necessary to yield to Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement. Whenever any Non-Excluded Taxes
are payable by the Borrower, as promptly as possible thereafter the
Borrower shall send to the Lender a certified copy of an original
official receipt received by the Borrower showing payment thereof. If
the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to Lender the required
receipts or other required documentary evidence, the Borrower shall
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indemnify the Lender for any incremental taxes, interest or penalties
that become payable by Lender as a result of any such failure. The
agreements in this Section 2.8 shall survive the termination of this
Agreement and the payment of the Outstanding Facility Amount and all
other amounts payable hereunder.
B. If Lender shall receive a credit or refund from a taxing
authority with respect to, and actually resulting from, an amount of
Non-Excluded Taxes actually paid to or on behalf of Lender by the
Borrower (a "Tax Credit"), Lender shall promptly notify the Borrower of
such Tax Credit. If such Tax Credit is received by Lender in the form of
cash, Lender shall promptly pay to the Borrower the amount so received
with respect to the Tax Credit. If such Tax Credit is not received by
Lender in the form of cash, Lender shall pay the amount of such Tax
Credit not later than the time prescribed by applicable law for filing
the return (including extensions of time) for Lenders' taxable period
which includes the period in which Lender receives the economic benefit
of such Tax Credit. In any event, the amount of any Tax Credit payable
by Lender to the Borrower pursuant to this clause (B) shall not exceed
the actual amount of cash refunded to, or credits received and usable
(in accordance with the actual practices then in use by Lender) by
Lender from a taxing authority. In determining the amount of any Tax
Credit, Lender may use such apportionment and attribution rules as
Lender customarily employs in allocating taxes among its various
operations and income sources and such determination shall be conclusive
absent manifest error. The Borrower, further agrees promptly to return
to Lender the amount paid to the Borrower with respect to a Tax Credit
by Lender if Lender is required to repay, or is determined to be
ineligible for, a Tax Credit for such amount. Notwithstanding anything
to the contrary contained herein, the Borrower hereby acknowledges and
agrees that (i) Lender shall not be obligated to provide the Borrower
with details of the tax position of Lender and (ii) the Borrower shall
have no right to inspect any records (including tax returns) of Lender.
2.9. INDEMNITY.
Each of the Borrower and Guarantor agree to indemnify Lender and to hold
Lender harmless from any loss or expense which Lender sustains or incurs as a
consequence of (a) failure by the Borrower to make a borrowing of, conversion
into or continuation of Eurodollar Loans after the Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
failure by the Borrower to make any prepayment after the Borrower has given a
notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment or payment of the principal amount of any Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto. Such indemnification shall include an amount equal to the excess, if
any, of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to the
last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue the Interest Period that would have commenced on the date of
such failure) in each case at the applicable rate of interest for such Loans
provided for herein over (ii) the amount of interest (as
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reasonably determined by Lender) which would have accrued to Lender on
such amount by placing such amount on deposit for a comparable period
with leading banks in the interbank eurodollar market. This indemnity
shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
2.10. PAYMENTS
All payments to Lender made by mail shall be payable at Westside Funding
Corporation, ▇/▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
Avenue of the Americas, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or payments made by overnight
mail shall be payable at Westside Funding Corporation, c/o Westdeutsche
Landesbank Girozentrale, New York Branch, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇. All payments made by wire transfer or other method of electronic
transfer methods to Lender shall be payable to Westside Funding Corporation, AT
CHASE MANHATTAN BANK, NEW YORK, NEW YORK, ABA# ▇▇▇▇▇▇▇▇▇, ACCOUNT NAME: WESTLB
NEW YORK, ACCOUNT NUMBER: ▇▇▇-▇-▇▇▇▇▇▇, REFERENCE: WFC/PRA. All payments
received pursuant to this Agreement by wire transfer or other electronic
transfer method, where immediate credit occurs, shall be applied to Borrower's
Outstanding Facility Amount on the Business Day of actual receipt of such
payment by Lender's depository bank, payments received by any other method shall
be applied to Borrower's Outstanding Facility Amount three (3) Business Days
after the actual receipt of such payment by Lender's depository bank if such
payment is credited to Lender's account. On each Settlement Date, the
Outstanding Facility Amount and interest thereon shall be due and payable as
follows:
A. An amount equal to accrued but unpaid interest, in
arrears, and the Backup Servicer Fee;
B. An amount equal to the Commitment Fee (due on an annual
basis) and the Unused Facility Fee;
C. Any costs, fees, indemnities and expenses payable
pursuant to this Agreement shall be due and payable by Borrower or
Guarantor to Lender or to such other Person(s) designated by Lender in
writing on demand; and
D. The entire outstanding balance of the Outstanding
Facility Amount plus interest shall be due and payable, if not prepaid,
on the Maturity Date.
2.11. PAYMENT DUE ON A NON-BUSINESS DAY
If any Settlement Date falls due on a day other than a Business Day,
then such due date shall be extended to the next succeeding Business Day.
2.12. MANDATORY PAYMENTS
Provided that Borrower or Guarantor is not otherwise in Default
hereunder, if at any time the amount advanced by Lender to Borrower exceeds the
maximum amount of the Loan allowed
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pursuant to Section 2.1, Borrower shall immediately and without notice, repay to
Lender an amount sufficient to eliminate such excess, or, at Lender's option,
assign and deliver additional Eligible Asset Pools sufficient for such purpose.
In the event Borrower seeks to sell, transfer, assign or otherwise disposes of
all or any portion of its Accounts, other than in the ordinary course of
business, Borrower shall (i) obtain written consent from Lender prior to such
sale, transfer, assignment or other disposition and (ii) apply all proceeds of
any such sale, transfer, assignment or other disposition to reduce the
outstanding balance of the Outstanding Facility Amount.
2.13. OPTIONAL PREPAYMENTS
A. The Borrower, with the reasonable consent of the Lender,
may at any time and from time to time prepay the Eurodollar Loans, in
whole or in part, without premium, penalty or Liquidated Damages
(subject to the provisions of Section 2.9), upon at least five (5)
Business Days' notice to the Lender. The Borrower may at any time and
from time to time prepay the ABR Loans, in whole or in part, without
premium, penalty or Liquidated Damages.
B. Partial prepayments shall be in an aggregate principal
amount of $1,000,000 or an integral multiple thereof or in the amount of
the outstanding Loans.
2.14. OPTIONAL TERMINATION OF THE FACILITY
Subject to Section 2.9, Borrower may, at its option, voluntarily prepay
the Outstanding Facility Amount in full, but not in part, and terminate the
Facility Amount, on the final day of any Accrual Period or Interest Period
(unless otherwise consented to in writing by the Lender) and request a
termination of Lender's security interest in the Collateral, provided, however,
that Borrower has given Lender fifteen (15) days written notice of any such
intention to prepay the Outstanding Facility Amount in full and terminate the
Facility Amount, Borrower requests Lender to terminate its security interest in
the Collateral and as liquidated damages, not as a penalty, pays to Lender the
amount of Liquidated Damages. Borrower may not make such prepayment prior to the
expiration of such fifteen (15) day period. Upon written notice of prepayment of
the Outstanding Facility Amount in full and the termination of the Facility
Amount, the commitment by Lender to advance funds to Borrower and all the
obligations of Lender shall terminate on the expiration of said fifteen (15) day
notice period, and the entire amount of the Outstanding Facility Amount shall be
due and payable on such date.
2.15. MAXIMUM INTEREST; CONTROLLING AGREEMENT
The contracted for rate of interest of the Loan without limitation,
shall consist of the following: (i) the Stated Interest Rate, calculated and
applied to the principal balance of the Note in accordance with the provisions
of the Note and this Agreement; (ii) interest after Event of Default or due
date, calculated and applied to the amounts due under the Note in accordance
with the provisions thereof; and (iii) all Additional Sums (as herein defined),
if any. Borrower agrees
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to pay an effective contracted for rate of interest which is the sum of the
above-referenced elements.
All fees, charges, goods, things in action or any other sums or things
of value (other than amounts described in the immediately previous paragraph),
paid or payable by Borrower (collectively, the "Additional Sums"), whether
pursuant to the Note, this Agreement or any other documents or instruments in
any way pertaining to this lending transaction, or otherwise with respect to
this lending transaction, that under any applicable law may be deemed to be
interest with respect to this lending transaction, for the purpose of any
applicable law that may limit the maximum amount of interest to be charged with
respect to this lending transaction, shall be payable by Borrower as, and shall
be deemed to be, additional interest and for such purposes only, the agreed upon
and "contracted for rate of interest" of this lending transaction shall be
deemed to be increased by the rate of interest resulting from the inclusion of
the Additional Sums.
It is the intent of the parties to comply with the usury law
("Applicable Usury Law") applicable pursuant to the terms of the preceding
paragraph or such other usury law which is applicable if the law chosen by the
parties is not applicable. Accordingly, it is agreed that notwithstanding any
provisions to the contrary in the Loan Documents, or in any of the documents
securing payment hereof or otherwise relating hereto, in no event shall the Loan
Documents or such documents require the payment or permit the collection of
interest in excess of the maximum contract rate permitted by the Applicable
Usury Law. In the event (a) any such excess of interest otherwise would be
contracted for, charged or received from Borrower or otherwise in connection
with the loan evidenced hereby, or (b) the maturity of the indebtedness
evidenced by the Loan Documents is accelerated in whole or in part, or (c) all
or part of the principal or interest of the Loan Documents shall be prepaid, so
that under any of such circumstances the amount of interest contracted for,
charged or received in connection with the loan evidenced hereby, would exceed
the maximum contract rate permitted by the Applicable Usury Law, then in any
such event (1) the provisions of this paragraph shall govern and control, (2)
neither Borrower nor any other Person or entity now or hereafter liable for the
payment hereof will be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum contract rate permitted by the
Applicable Usury Law, (3) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal amount hereof or
refunded to Borrower, at Lender's option, and (4) the effective rate of interest
will be automatically reduced to the maximum amount of interest permitted by the
Applicable Usury Law. It is further agreed, without limiting the generality of
the foregoing, that to the extent permitted by the Applicable Usury Law; (x) all
calculations of interest which are made for the purpose of determining whether
such rate would exceed the maximum contract rate permitted by the Applicable
Usury Law shall be made by amortizing, prorating, allocating and spreading
during the period of the full stated term of the loan evidenced hereby, all
interest at any time contracted for, charged or received from Borrower or
otherwise in connection with such loan; and (y) in the event that the effective
rate of interest on the loan should at any time exceed the maximum contract rate
allowed under the Applicable Usury Law, such excess interest that would
otherwise have been collected had there been no ceiling imposed by the
Applicable Usury Law
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shall be paid to Lender from time to time, if and when the effective interest
rate on the loan otherwise falls below the maximum amount permitted by the
Applicable Usury Law, to the extent that interest paid to the date of
calculation does not exceed the maximum contract rate permitted by the
Applicable Usury Law, until the entire amount of interest which would have
otherwise been collected had there been no ceiling imposed by the Applicable
Usury Law has been paid in full. Borrower further agrees that should the maximum
contract rate permitted by the Applicable Usury Law be increased at any time
hereafter because of a change in the law, then to the extent not prohibited by
the Applicable Usury Law, such increases shall apply to all indebtedness
evidenced hereby regardless of when incurred; but, again to the extent not
prohibited by the Applicable Usury Law, should the maximum contract rate
permitted by the Applicable Usury Law be decreased because of a change in the
law, such decreases shall not apply to the indebtedness evidenced hereby
regardless of when incurred.
2.16. INTEREST AFTER DEFAULT
Upon the occurrence and during the continuation of an Event of Default,
Borrower shall pay Lender interest on the daily outstanding balance of
Borrower's loan account and all other amounts that are due and unpaid hereunder,
at a rate per annum which is 3.15% in excess of the Stated Interest Rate (the
"Interest After Default"), but not greater than the Maximum Rate.
2.17. STATEMENT OF ACCOUNT
Lender shall provide Borrower, each month, on the Settlement Date with a
statement of Borrower's account, prepared from Lender's records, which shall be
in a form and substance that will enable Borrower to readily verify its
correctness, and shall conclusively be deemed correct and accepted by Borrower,
unless Borrower gives Lender a written statement of exceptions within thirty
(30) days after receipt of such statement.
2.18. APPLICATION OF PAYMENTS
The amount of all payments or amounts received by Lender hereunder shall
be applied to the extent applicable under this Agreement: (i) first, to accrued
interest through the date of such payment, including any Interest After Default;
(ii) then, to the Backup Servicer Fee, (iii) then, to the Commitment Fees and
the Unused Facility Fees; (iv) then, to any late fees, examination fees and
expenses, collection fees and expenses and any other fees and expenses due to
Lender hereunder; and (v) last, the remaining balance, if any, to the unpaid
principal balance of the Outstanding Facility Amount; provided, however, while a
Default exists under the Loan Documents, each payment hereunder shall be applied
to amounts owed to Lender by Borrower as Lender in its sole discretion may
determine. In calculating interest and applying payments as set forth above; (a)
interest shall be calculated and collected through the date a payment is
actually applied by Lender under the terms of this Agreement; (b) interest on
the Outstanding Facility Amount shall be charged during any grace period
permitted hereunder; (c) to the extent that Borrower or Guarantor makes a
payment or Lender receives any payment or proceeds of the Collateral for
Borrower's or Guarantor's benefit that is subsequently invalidated, set aside or
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required to be repaid to any other Person or entity, then, to such extent, the
obligations intended to be satisfied shall be revived and continue as if such
payment or proceeds had not been received by Lender and Lender may adjust the
outstanding balance of the Outstanding Facility Amount as Lender, in its
reasonable discretion, deems appropriate under the circumstances.
3. SECURITY
3.1. SECURITY INTEREST
To secure the prompt payment to Lender of the Outstanding Facility
Amount (whether now existing or hereafter arising or incurred and including,
without limitation, interest accruing at the then applicable rate provided
herein after the maturity of the Loan and interest accruing at the then
applicable rate provided herein after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower or Guarantor, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) and any and all other
obligations now existing or hereinafter arising owed by Borrower and/or
Guarantor to Lender, whether on account of principal, interest, fees,
indemnities, costs, expenses or otherwise, each of Borrower and Guarantor hereby
irrevocably grants to Lender a security interest in the following property and
all right, title and interests of Borrower and Guarantor therein, whether now
owned or existing or hereafter acquired or arising and wheresoever located (the
"Collateral"):
A. All Accounts, Assets and Asset Pools; all accounts,
chattel paper, instruments, contract rights, cash and general
intangibles; all right, remedies, security, Liens, guaranties, other
contracts of suretyship, secondary obligations and supporting
obligations with respect thereto; all deposits or other security or
support for the obligation of any Account Debtor; all equipment and
lease agreements; all real estate and leaseholds; and credit and other
insurance acquired by Account Debtor, the Borrower or Guarantor in
connection therewith;
B. All assets realized, collected or obtained in connection
with or as a result of collections made on account of any Account;
C. All Asset Pool Proceeds;
D. All rights in and to each Purchase Agreement and the PRA
Purchase Agreement;
E. All monies, securities, Capital Stock and personal
property, now or hereafter held, received by, or entrusted to, in the
possession or under the control of Lender or a bailee of Lender;
F. All books and records (including, without limitation,
customer lists, credit files, tapes, ledger cards, computer software and
hardware, electronic data processing
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software, computer printouts and other computer materials and records)
of Borrower or Guarantor evidencing or containing information regarding
any of the foregoing;
G. All labels, copyrights, rights of use of any name, trade
secrets, trade names, trademarks and advertising matter or any property
of a similar nature, if any, as it pertains to the Collateral;
H. To the extent not included in the foregoing, all
personal and fixture property of every kind and nature including without
limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts
(including health-care-insurance receivables), chattel paper (whether
tangible or electronic), deposit accounts, letter-of-credit rights
(whether or not the letter of credit is evidenced by a writing),
commercial tort claims, securities and all other investment property,
supporting obligations and any other contract rights or rights to the
payment of money, insurance, claims and proceeds, tort claims, and all
general intangibles (including all payment intangibles);
I. All accessions to, substitutions for and all
replacements and proceeds of the foregoing, including, without
limitation, proceeds of insurance policies (including but not limited to
claims paid and premium refunds); and
J. Lender acknowledges that Borrower and/or Guarantor has
and will have Existing Debt and Lender shall only have a security
interest in any assets securing such Existing Debt to the extent that
such security interest is permitted by the documents governing such
Existing Debt. Further, anything herein to the contrary notwithstanding,
the Collateral hereunder shall not include any assets of Borrower and/or
Guarantor securing their $12,500,000 credit facility with AG PRA 1999
Funding Co., LLC as provided in the documents governing such facility on
the date hereof or the Trust Accounts.
3.2. FINANCING STATEMENTS AND FURTHER ASSURANCES
A. Each of Borrower and Guarantor hereby authorizes Lender
to file UCC-l Financing Statements and any other instruments or
documents reasonably necessary to evidence, preserve, protect or enforce
Lender's security interest in the Collateral. Each of Borrower and
Guarantor agrees to execute UCC-l Financing Statements if required.
Borrower and Guarantor agree that financing statements shall be filed
covering all of Borrower's Locations and all of Guarantor's Locations,
respectively.
B. If Borrower or Guarantor shall at any time hold or
acquire any Capital Stock which constitutes a certificated security (as
defined in the UCC), Borrower or Guarantor (as the case may be) shall
forthwith deliver the same to the Lender, accompanied by such
instruments of transfer or assignment duly executed in blank as the
Lender may from time to time specify.
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C. Each of Borrower and Guarantor further agrees to take
any other action reasonably requested by Lender to insure attachment,
perfection and first priority of, and the ability of Lender to enforce,
the Lender's security interest in any and all of the Collateral.
D. Upon Lender's request, each of Borrower and Guarantor
agrees to deliver to Lender, at such places as Lender may reasonably
designate, on computer disk or other electronic data storage means which
shall be machine readable in Microsoft Access or such other form as
mutually agreed upon by the parties hereto, schedules prepared by
Borrower or Guarantor (as the case may be), listing the Accounts and
fully and correctly specifying in adequate detail the aggregate
unmatured unpaid face amount of each Account and the amount of the
deferred installments thereof falling due each month. These schedules
shall be in form and substance satisfactory to or supplied by Lender.
3.3. PLEDGE OF ACCOUNTS
Each of Borrower and Guarantor hereby agrees to pledge all Accounts and,
upon the occurrence of an Event of Default and for so long as such Event of
Default shall be continuing, if so requested by Lender, Borrower and Guarantor
(as applicable) shall promptly deliver to Lender all documents, then in
Borrower's and Guarantor's control, evidencing Accounts of Borrower and
Guarantor.
3.4. FAILURE TO DELIVER
Failure to deliver physical possession of any instruments, documents or
writings in respect of any Account to Lender shall not invalidate Lender's
security interest therein. To the extent that possession may be required by
applicable law for the perfection of Lender's security interest, the original
chattel paper and instruments representing the Accounts shall be deemed to be
held by Lender, although kept by Borrower or Guarantor as the custodial agent of
Lender.
3.5. NOTICE OF COLLATERAL ASSIGNMENT
All computer records representing or evidencing an Account shall contain
(by way of stamp or other method satisfactory to Lender) the following language:
"PLEDGED TO WESTSIDE FUNDING CORPORATION AS COLLATERAL". Upon an Event of
Default, if requested by Lender, all contracts, documents, instruments and
chattel paper evidencing an Account shall contain (by way of stamp or other
method satisfactory to Lender) the above quoted language.
3.6. LOCATION OF ACCOUNTS
Borrower or Guarantor (as the case may be) shall, at any reasonable time
and at Borrower's or Guarantor's own expense, upon Lender's reasonable request,
physically deliver to Lender on computer disk or other electronic data storage
means which shall be in machine readable in Microsoft Access or such other form
as mutually agreed upon by the parties hereto, copies of all Accounts (including
any instruments, documents or writings in respect of any
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Account together with all instruments, documents or writings in respect of any
collateral securing each Account then in Borrower's or Guarantor's control)
assigned to Lender to any reasonable place or places designated by Lender. All
Accounts shall, regardless of their location, be deemed to be under Lender's
dominion and control (with both paper and computer files so labeled) and deemed
to be in Lender's possession.
3.7. RECORDS AND INSPECTIONS
Borrower and Guarantor shall at all times keep complete and accurate
records pertaining to the Collateral, which records shall be current on a daily
basis and located only at the Borrower's Locations or at Guarantor's Locations,
such locations to be within the United States. Lender by or through any of its
officers, agents, employees, attorneys or accountants, shall have the right,
upon two (2) days prior written notice if no Default has occurred or is
continuing, to enter any such locations, at any reasonable time or times during
regular business hours, for so long as Lender may desire, to inspect the
Collateral and to inspect, audit and make extractions or copies from the books,
records, journals, orders, receipts, correspondence or other data relating to
the Collateral or this Agreement, provided however, that such inspections shall
be carried out in a manner that will not interfere with the routine operation of
Borrower's or Guarantor's business. Lender in its sole discretion shall be able
to, on a quarterly basis or at such other frequency deemed appropriate by
Lender, have a nationally recognized firm of independent public accountants
acceptable to Lender perform certain agreed upon procedures with respect to the
accuracy of the Availability Reports, the Request for Advance reports and the
Tranche Rollover Request Forms.
3.8. ADDITIONAL DOCUMENTS
Each of Borrower and Guarantor hereby agrees to prepare and (if
required) execute any additional documents or financing statements which Lender
deems necessary in order to evidence or perfect Lender's security interest in
the Collateral. Borrower and Guarantor shall not allow any financing statement,
notice of assignment or notices to obligors of accounts receivable, other than
those executed in connection with this Agreement, to be on file in any public
office covering any Collateral, proceeds thereof or other matters subject to the
security interest granted to Lender.
3.9. COLLECTION
Borrower agrees at its own expense to promptly and diligently collect
each installment of all Accounts in trust for the exclusive account of Lender,
to hold Lender harmless from any and all loss, damage, penalty, liability, fine
or expense arising from such collection by Borrower or its agents and to
faithfully account therefor to Lender. Upon the occurrence of a Default, Lender
expressly retains the unqualified right at any time it so elects to take over
the collection of the Accounts and to utilize the Backup Servicer.
3.10. BLOCKED ACCOUNTS
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Upon the occurrence of a Default or an Event of Default, at Lender's
request, any checks, notes, drafts or any other payment upon and/or proceeds of
the Collateral received by Borrower (or any subsidiaries, divisions, affiliates,
proprietorships, shareholders, directors, officers, employees, agents or those
Persons acting for or in concert with Borrower), shall no later than the next
Business Day following receipt thereof, be delivered to Lender, at Lender's
address set forth above or to such other address or account as Lender may
direct, for application in accordance with Section 2.18 and shall be reflected
in the Statement of Account as provided in Section 2.17 herein, until such time
as Lender has established a depository account at a bank for the deposit of such
payments, made arrangements for such deposits to be transferred to Lender or to
an account maintained by Lender at the Backup Servicer or otherwise). From and
after the establishment of a lock-box or other arrangement, Borrower shall (i)
deposit or cause all Items, as defined below, to be deposited in the special
account so established or transfer all Items to Lender for application in
accordance with Section 2.18 and to the Outstanding Facility Amount and to be
reflected in the Statement of Account as provided in Section 2.17 and (ii)
maintain copies of all checks or other items of payment and deposit slips
related thereto, together with a collection report in a form satisfactory to
Lender. Upon the occurrence of a Default or an Event of Default, all cash
payments, checks, drafts, or similar items of payment upon and/or proceeds of
the Accounts (collectively "Items") by or for the account of Borrower shall be
the sole and exclusive property of Lender immediately upon the earlier of the
receipt of such Items by Lender or the receipt of such Items by Borrower;
provided, however, that no such item received by Lender shall constitute payment
to Lender and be applied to reduce the Outstanding Facility Amount until the
later of: (i) three (3) Business Days from collection of such Item by Lender's
depository bank, or (ii) such Item being actually collected by Lender's
depository bank and such collection being credited to Lender's account.
Notwithstanding anything to the contrary herein, all such items of payment shall
be deemed not received if the same is subsequently dishonored or not duly
credited to Lender's depository account for any reason whatsoever.
3.11. BACKUP SERVICER
A. Lender shall have the right to appoint and remove, from
time to time, a Backup Servicer with respect to this Agreement and the
transactions contemplated hereby and by the other Loan Documents. ▇▇▇▇▇
Fargo Bank Minnesota, National Association is hereby appointed to act as
initial Backup Servicer.
B. The Backup Servicer shall perform such duties with
respect to the administration and servicing of the Collateral as Lender
and Backup Servicer may, from time to time, agree.
C. Borrower agrees to provide monthly to the Backup
Servicer a computer diskette or computer tape with all information
necessary for the Backup Servicer, including any subservicer to the
Backup Servicer, to perform all of the servicing obligations of Borrower
under this Agreement. However, during the continuation of either a
Default or an Event of Default, Borrower will provide such computer
diskette or other electronic transmission up to four times per month if
reasonably requested by
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Lender or the Backup Servicer. Borrower further agrees to provide all
updates with respect to its computer processing necessary for the Backup
Servicer to maintain a continuous ability to carry out its duties as
Backup Servicer. The Backup Servicer shall not be obligated to verify
the information contained in such transmission.
D. On each Settlement Date, Borrower will deliver to the
Backup Servicer a computer diskette (or other electronic transmission)
in a format acceptable to the Backup Servicer containing the fields
listed in Exhibit B hereto, which fields contain information with
respect to the Accounts as of the close of business on the last day of
the related Accrual Period. The Backup Servicer shall not be obligated
to verify the information contained in such transmission.
E. Other than the duties specifically agreed by Lender and
the Backup Servicer, the Backup Servicer shall have no obligations
hereunder, including without limitation to supervise, verify, monitor
or administer the performance of Borrower. Without limiting the
foregoing, unless expressly agreed to in writing by the Backup Servicer,
the Backup Servicer shall not assume any of the duties or obligations of
the Lender hereunder. The Backup Servicer shall have no liability for
any actions taken or omitted by Borrower. The duties and obligations of
the Backup Servicer shall be determined solely by the express provisions
of this Agreement and any agreement between Lender and the Backup
Servicer and no implied covenants or obligations shall be read into this
Agreement against the Backup Servicer. The Backup Servicer shall be
entitled to all of the benefits and indemnities afforded the Lender
pursuant to the provisions of this Agreement. The Backup Servicer shall
not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers (other than in the
ordinary course of the performance of such duties or the exercise of
such rights or powers), if the repayment of such funds or adequate
written indemnity against such risk or liability is not reasonably
assured to it in writing prior to the expenditure or risk of such funds
or incurrence of financial liability.
F. Neither the Backup Servicer nor any of its directors,
officers, employees or agents shall be under any liability to any of the
parties hereto, except as specifically provided in this Agreement, for
any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided however,
that this provision shall not protect the Backup Servicer against any
misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Backup Servicer and any of its directors, officers,
employees or agents may rely in good faith on the advice of counsel or
on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising under this Agreement.
3.12. PROTECTION OF ACCOUNT RECORDS
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Each of Borrower and Guarantor hereby agrees to take the following
protective actions to prevent destruction of either Borrower's or Guarantor's
Collateral and records pertaining to such Collateral: if the Collateral records
are computerized, each of Borrower and Guarantor agrees to create a tape or
diskette "back-up" of the computerized information and upon the request of
Lender, provide Lender with a tape or diskette copy of such "back-up"
information and to the extent the Collateral records are not computerized,
Borrower and Guarantor will timely transfer the Collateral records to a computer
system.
3.13. USE OF COLLECTIONS AND MODIFICATION OF ACCOUNTS
Provided that no Default or Event of Default has occurred, Borrower may
use or dispose of the funds received on the Accounts for any lawful purpose in
the ordinary course of business, collect or compromise accounts or obligations,
the mandatory prepayment of Outstanding Facility Amount, as Borrower shall
determine based upon its reasonable discretion.
3.14. USE OF PROCEEDS
Borrower shall use the proceeds of the initial Loan to purchase the
initial Eligible Asset Pools pursuant to the PRA Purchase Agreement, and
thereafter in the ordinary course of business, solely in its operations for
costs and expenses incurred in the purchasing of Eligible Asset Pools, the
collection of such Accounts or otherwise incurred in Borrower's ordinary course
of business, and for payments to Lender hereunder.
3.15. RETURN OF COLLATERAL
Upon the payment in full of the Outstanding Facility Amount and to the
extent written documents evidencing any Asset Pool are held by Lender, Lender
shall return such written documents upon Borrower's or Guarantor's (as the case
may be) written request for the return of such documents.
3.16. LENDER'S PAYMENT OF CLAIMS
Lender may, in its sole discretion, discharge or obtain the release of
any security interest, Lien, claim or encumbrance asserted by any Person against
the Collateral. All sums paid by Lender in respect thereof shall be payable, on
demand, by Borrower to Lender and shall be a part of the Outstanding Facility
Amount.
4. CONDITIONS OF CLOSING; SUBSEQUENT ADVANCES
4.1. INITIAL ADVANCE
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The obligation of Lender to make the initial advance hereunder is
subject to the fulfillment, to the satisfaction of Lender and its counsel, of
each of the following conditions prior to the initial advance hereunder:
A. Loan Documents. Lender shall have received each of the
following Loan Documents: (i) this Loan and Security Agreement executed
by the respective parties; (ii) the Note executed by Borrower; (iii)
Guaranty Agreement executed by Guarantor (iv) the PRA Purchase
Agreement; (v) the Management Agreement; and (vi) such other documents,
instruments and agreements in connection herewith as Lender shall
require, executed, certified and/or acknowledged by such parties as
Lender shall designate;
B. Terminations by Existing Lender and Intercreditor
Agreements. With the exception of Existing Debt, Guarantor's existing
lender(s) shall have executed and delivered UCC termination statements
and other documentation evidencing the termination of its Liens and
security interests in the Collateral or intercreditor agreement with
those lenders of Guarantor who are not being paid in full with the
initial advance hereunder, each in form and substance satisfactory to
Lender in its sole discretion;
C. Organizational Documents. Lender shall have received
copies of Borrower's and Guarantor's Certificate of Formation and
Operating Agreement (or other similar document which governs the limited
liability company) and Articles or Certificate of Organization, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of each of Borrower and Guarantor;
D. Good Standing. Lender shall have received a certificate
of status with respect to Borrower and Guarantor, dated within fifteen
(15) days of the Closing Date, by the Secretary of State of the state of
formation of Borrower and Guarantor, which certificate shall indicate
that each of Borrower and Guarantor is in good standing in such state;
E. Foreign Qualification. Lender shall have received
certificates of legal status with respect to Borrower and Guarantor,
dated within ten (10) days of the Closing Date, issued by the Secretary
of State of each state in which Borrower's or Guarantor's failure to be
duly qualified or licensed would have a Material Adverse Effect on its
financial condition or assets, indicating that Borrower and/or Guarantor
is in good standing;
F. Authorizing Resolutions and Incumbency. Lender shall
have received a certificate from the Members of Borrower and Guarantor
certifying that (i) the authorization of the members of Borrower and
Guarantor authorizing the borrowing of money from Lender, and execution
and delivery of this Agreement and the other Loan Documents to which
Borrower and Guarantor is a party, and authorizing specific officers of
Borrower to execute same, and (ii) the authenticity of original specimen
signatures of such officers;
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G. Initial Availability Report. Lender shall have received
an initial Availability Report from Borrower executed by an authorized
member/manager/officer of Borrower;
H. Searches; Certificates of Title. Lender shall have
received searches reflecting the filing of its financing statements and
other filings in such jurisdictions as it shall determine, and shall
have received certificates of title with respect to the Collateral which
shall have been duly executed in a manner sufficient to perfect all of
the security interests granted to Lender and shall have received other
background reports and information with respect to Borrower and
Guarantor, which is satisfactory to Lender, in Lender's reasonable
discretion;
I. Landlord and Mortgagee Waivers. If applicable, Lender
shall have received landlord and mortgagee waivers from the lessors and
mortgagees of all locations where any Collateral is located;
J. Fees. Borrower shall have paid all fees payable by it on
the Closing Date pursuant to this Agreement, including the Closing Fee;
K. Opinion of Counsel. Lender shall have received an
opinion of Borrower's and Guarantor's counsel covering such matters as
Lender shall determine in its sole discretion;
L. Solvency Certificate. Lender shall have received a
signed certificate of each of Borrower's and PRA's duly authorized
member/manager/officer concerning the solvency and financial condition
of each of Borrower and PRA, in form and substance satisfactory to
Lender;
M. Initial Purchase. The purchase of Accounts under the PRA
Purchase Agreement shall have been consummated and all necessary UCC-1
Financing Statements thereunder shall have been filed or delivered to
Lender for filing; and
N. Other Matters. All other documents and legal matters in
connection with the transactions contemplated by this Agreement shall
have been delivered, executed and recorded and shall be in form and
substance satisfactory to Lender and its counsel.
4.2. SUBSEQUENT ADVANCES
The obligation of Lender to make any advance hereunder (including the
initial advance) shall be subject to the further conditions precedent that, on
and as of the date of such advance, which shall be within the Funding Period:
(a) the representations and warranties of Guarantor and Borrower set forth in
this Agreement shall be accurate, before and after giving effect to such advance
or issuance and to the application of any proceeds thereof; (b) no Default or
Event of Default has occurred and is continuing, or would result from such
advance or issuance or from the application of any proceeds thereof; (c) no
material adverse change has occurred in the
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Borrower's or any of Guarantor's businesses, operations, financial conditions,
or assets or in the prospect of repayment of the Outstanding Facility Amount;
(d) Lender shall have received such other approvals, opinions or documents as
Lender shall reasonably request; (e) Borrower shall submit to Lender a completed
Request for Advance in the form and substance of Exhibit "A" attached hereto at
least three (3) Business Days prior to the date of such advance and the Lender
shall have consented in writing to the making of such advance; (f) after giving
effect to such advances, the Outstanding Facility Amount does not exceed the
Facility Amount; (g) after giving effect to such advance, there is no deficiency
with respect to the Availability on Eligible Accounts; (h) if requested the
Lender shall have received the related receivable file for each Eligible Asset
Pool included in the Availability on Eligible Accounts calculations; (i) the
Lender shall have received all requested audit and financial reports; (j) the
proceeds are to be used in the Borrower's ordinary course of business, solely in
its operations for costs and expenses incurred in the purchasing of Eligible
Asset Pools, the collection of such Accounts or otherwise incurred in Borrower's
ordinary course of business, and for payments to Lender (k) the Borrower is and
continues to be an entity separate and distinct from all other Persons and
entities, including PRA and each of the other Guarantors and (l) any other
condition deemed necessary by Lender has been satisfied.
4.3. ALL ADVANCES TO CONSTITUTE ONE LOAN
All evidences of credit, loans and advances made by Lender to Borrower
under this Agreement and any other documents or instruments executed in
connection herewith shall constitute one loan, and all indebtedness and
obligations of Borrower to Lender under this Agreement and all other such
documents and instruments shall constitute one general obligation secured by
Lender's security interest in all of the Collateral and by all other Liens
heretofore, now, or at any time or times hereafter granted by Borrower to
Lender. Borrower agrees that all of the rights of Lender set forth in this
Agreement shall apply to any modification of or supplement to this Agreement and
any other such documents and instruments.
4.4. ADVANCES
Lender shall have the right in Lender's discretion, subject to
availability hereunder on behalf of and without notice to Borrower, to make and
use advances to pay Lender for any amounts due to Lender pursuant to this
Agreement or otherwise, to cure any default hereunder, notwithstanding the
expiration of any applicable cure period. If Lender make such advances, Lender
shall notify Borrower of such advances and the details with respect thereto.
5. REPRESENTATIONS AND WARRANTIES OF BORROWER AND GUARANTOR
5.1. REPRESENTATIONS AND WARRANTIES
Borrower and Guarantor hereby continuously represent and warrant to
Lender as follows:
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A. Each of Borrower and Guarantor is a limited liability
company duly formed, validly existing and in good standing under the
laws of the state of its formation, is duly qualified to do business and
is in good standing as a foreign limited liability company in all states
where such qualification is required, has all necessary power and
authority to enter into this Agreement and each of the documents and
instruments relating hereto and to perform all of its obligations
hereunder and thereunder.
B. Each of Borrower and Guarantor operates its business
only under the Assumed Names and has not used any other Assumed Name for
the operation of its business activities.
C. Each of Borrower and Guarantor has all requisite right
and power and is duly authorized and empowered to enter into, execute,
deliver and perform under this Agreement and all documents and
instruments relating hereto and this Agreement and all documents and
instruments relating hereto, are the legal, valid and binding
obligations of Borrower and Guarantor and are enforceable against each
of Borrower and Guarantor in accordance with their terms.
D. The execution, delivery and performance by each of the
Borrower and Guarantor of this Agreement does not and shall not (i)
violate any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect
having applicability to Borrower or Guarantor; (ii) violate any
provision of their respective Certificate of Formation or Operating
Agreement; or (iii) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement, lease
or instrument to which either Borrower or Guarantor is a party or by
which it or any of its assets or properties may be bound or affected;
and Borrower and Guarantor are not in default of any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, agreement, lease or instrument even if any
provision of such law or contract would be rendered ineffective by
Article 9 of the Uniform Commercial Code.
E. No consent, approval, license, exemption of or filing or
registration with, giving of notice to, or other authorization of or by,
any court, administrative agency or other Governmental Authority is or
shall be required in connection with the execution, delivery or
performance by either Borrower or Guarantor for the valid consummation
of the transactions contemplated by this Agreement.
F. No event has occurred and is continuing which
constitutes a Default or an Event of Default, as defined in this
Agreement. To the best of Borrower's and Guarantor's knowledge and
belief, there is no material action, suit, proceeding or investigation
pending or threatened against or affecting Borrower or Guarantor (as
applicable) before or by any court, administrative agency or other
Governmental Authority that brings into question the validity of the
transactions contemplated hereby,
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or that might result in any material adverse change in the businesses,
assets, properties or financial conditions of Borrower or Guarantor.
G. Borrower and/or Guarantor are not, to the best of their
knowledge and belief, in default in the payment of any taxes levied or
assessed against either of them or any of their assets or properties,
except for taxes being contested in good faith, for which appropriate
reserves are maintained and by appropriate proceedings.
H. Each of Borrower and Guarantor have good and marketable
title to their assets and properties as reflected in the financial
statements furnished to Lender and have taken actions to perfect sales
of assets to Borrower by the Asset Pool Seller.
I. Each of the financial statements furnished to Lender by
PRA was prepared in accordance with GAAP and fairly and accurately
reflects its financial condition as of the date thereof. PRA hereby
certifies, to the best of its knowledge and belief, that there have been
no material adverse changes in its condition, financial or otherwise,
since the date of such statements, and there are no material contingent
liabilities which are known to PRA, not provided for or disclosed in
such statements.
J. None of this Agreement, any Availability Report or any
statement or document referred to herein or delivered to Lender by
Borrower and/or Guarantor, to their best knowledge and belief, contains
any untrue statement of a material fact or omits to state a material
fact necessary to make the statements made herein or therein not
misleading.
K. Each of Borrower and Guarantor has good, indefeasible
and merchantable title to and ownership of the Collateral, free and
clear of all Liens, except those of Lender and except where such Liens
are removed contemporaneously with the execution of this Agreement or
are subordinate to those of Lender, in a form and substance acceptable
to Lender.
L. To the best of each of Borrower's and Guarantor's
knowledge and belief, all books, records and documents relating to the
Collateral are and shall be genuine and in all respects what they
purport to be; the original amount and the unpaid balance of each Asset
Pool shown on the books and records of Borrower and in the schedules
represented as owing by each Account Debtor is and shall be, in all
material respects, the correct amount actually owing or to be owing by
such Account Debtor at maturity; each Account Debtor liable upon the
Accounts has and shall have capacity to contract; each of Borrower and
Guarantor has no knowledge of any fact which would impair the validity
or collectibility of any of the Accounts; and the payments shown to have
been made by each Account Debtor on the books and records of Borrower
shall reflect the amounts of and dates on which said payments were
actually made.
M. Each of Borrower and Guarantor has places of business
and jurisdiction of organization only at Borrower's Locations and
Guarantor's Locations and such locations
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are within the United States. Borrower shall not do business (either
directly or through subsidiaries) at other locations or cease to do
business at any of the above locations or at Borrower's principal place
of business without first notifying Lender at least 15 days in advance
and taking all actions to maintain Lender's security interest.
N. The tangible Collateral are kept only at the Tangible
Collateral Locations and such locations are within the United States.
Borrower and Guarantor shall not move any of the Collateral from any of
the Tangible Collateral Locations without first notifying Lender at
least 15 days in advance and taking all actions to maintain Lender's
security interest.
O. The present value of all benefits vested under all Plans
of Borrower and Guarantor or any Commonly Controlled Entity (based on
the assumptions used to fund the Plans) did not, as of the last annual
valuation date (which in case of any Plan was not earlier than December
31, 1982) exceed the value of the assets of the Plans applicable to such
vested benefits.
P. The liability to which Borrower or Guarantor or any
Commonly Controlled Entity would become subject under Sections 4063 or
4064 of ERISA if Borrower or Guarantor or any Commonly Controlled Entity
were to withdraw from all Multi-employer Plans or if such Multi-
employer Plans were to be terminated as of the valuation date most
closely preceding the date hereof, is not in excess of one thousand
Dollars ($1,000.00).
Q. Borrower or Guarantor is not engaged nor shall it
engage, principally or as one of its important activities, in a business
of extending credit for the purpose of "purchasing" or "carrying" any
"margin stock" within the respective meanings of each of the quoted
terms under Regulations U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. No part
of the proceeds of any advances hereunder shall be used for "purchasing"
or "carrying" "margin stock" as so defined or for any purpose which
violates, or which would be inconsistent with, the provisions of the
Regulations of such Board of Governors. If requested by Lender, Borrower
or Guarantor shall furnish to Lender a statement in conformity with the
requirement of Federal Reserve Form U-1 referred to in said Regulation U
to the foregoing effect. All of the outstanding Capital Stock of
Borrower and of Guarantor have been offered, issued, sold and delivered
in compliance with, or are exempt from, all federal and state laws and
rules and regulations of federal and state regulatory bodies governing
the offering, issuance, sale and delivery of securities.
R. Neither Borrower nor Guarantor is an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
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S. Each of the Exhibits and the Schedule to this Agreement
contains materially true, complete and correct information.
T. To the best of Guarantor's knowledge, the land and
improvements owned or leased by Borrower or by Guarantor for use in its
business operations are free of dangerous levels of contaminates, oils,
asbestos, radon, PCB's, hazardous substances or waste as defined by
federal, state or local environmental laws, regulations or
administrative orders or other materials, the removal of which is
required or the maintenance of which is prohibited, regulated or
penalized by any federal, state or local governmental authority.
U. Each of Borrower and Guarantor is solvent, generally
able to pay its obligations as they become due, has sufficient capital
to carry on its business and transactions and all businesses and
transactions in which it intends to engage, and the current value of
each of Borrower's and Guarantor's assets, at fair saleable valuation,
exceeds the sum of its liabilities. Neither Borrower nor Guarantor shall
be rendered insolvent by the execution and delivery of the Loan
Documents and the consummation of the transactions contemplated thereby
and the capital remaining in both Borrower and Guarantor is not now and
shall not foreseeably become unreasonably small to permit either of
Borrower or Guarantor to carry on its business and transactions and all
businesses and transactions in which it is about to engage. Borrower and
Guarantor do not intend to, nor does either reasonably believe it shall,
incur debts beyond its ability to repay the same as they mature.
V. Lender will continue after its recordation of the
financing statement covering the Collateral to have a perfected security
interest in favor of Lender in all of Borrower's and Guarantor's right,
title and interest in the Collateral, prior and superior to any other
security interest or Lien, except any statutory or constitutional lien
for taxes not yet due and payable.
W. There are no material actions, suits or proceedings
pending, or to the best of Borrower's and Guarantor's knowledge and
belief threatened against or affecting the assets of Borrower or
Guarantor or the consummation of the transactions contemplated hereby,
at law, or in equity, or before or by any governmental authority or
instrumentality or before any arbitrator of any kind. Neither Borrower
nor Guarantor is subject to any judgment, order, writ, injunction or
decree of any court or governmental agency. There is not a reasonable
likelihood of an adverse determination of any pending proceeding which
would, individually or in the aggregate, have a Material Adverse Effect
on the business operations or financial condition of Borrower or
Guarantor.
X. None of the Capital Stock of any Subsidiary of Borrower
or Guarantor shall be a certificated security.
5.2. WARRANTIES AND REPRESENTATIONS AS TO ELIGIBLE ACCOUNTS
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With respect to Eligible Asset Pools, each of Borrower and Guarantor
continuously warrants and represents to Lender that during the term of this
Agreement and so long as any of the Outstanding Facility Amount remains unpaid:
(i) in determining which Asset Pools are "Eligible Asset Pools," Lender may rely
upon all statements or representations made by Borrower and Guarantor; and (ii)
those Asset Pools designated as Eligible Asset Pools meet each requirement set
forth below at the time any Request for Advance is provided to Lender.
A. To the best of Borrower's and Guarantor's knowledge and
belief, the Eligible Asset Pools are genuine; are in all respects what
they purport to be; and are evidenced by at least one executed original
instrument, agreement, contract or document.
B. The amounts shown on any schedule of Asset Pools
provided to Lender are to the best of Borrower's and Guarantor's
knowledge actually and absolutely owing to Borrower in all material
respects.
C. The Eligible Asset Pools have not been assigned or
pledged to any other Person or entity.
6. COVENANTS AND OTHER AGREEMENTS
6.1. AFFIRMATIVE COVENANTS
During the term of this Agreement and so long as any of the Outstanding
Facility Amount remains unpaid, each of Borrower and Guarantor agrees and
covenants, jointly and severally, that they shall:
A. Pay or cause to be paid currently all of their expenses,
including all payments on their obligations whenever due, as well as all
payments of any and all taxes of whatever nature when due. This
provision shall not apply to taxes or expenses which are due, but which
are challenged in good faith.
B. Maintain, preserve, and protect the Collateral,
including, but not limited to, maintaining a first priority perfected
security interest for Lender, except to the extent provided in Section
6.2 (A), and identifying such Collateral as assigned to the Lender.
C. Furnish to Lender written notice as to the occurrence of
any Default or Event of Default hereunder.
D. Furnish to Lender notice of: (i) any development related
to the business, financial condition, properties or assets of Borrower
or Guarantor that would have or has a Material Adverse Effect, (ii) any
material and adverse litigation or investigation to which either of them
may be a party and (iii) if ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
give notice of their departure.
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E. Carry on and conduct their business in the same manner
and in the same fields of enterprise as they are presently engaged, and
shall preserve their limited liability company existence, licenses or
qualifications as a domestic limited liability company in the
jurisdiction of its organization and as a foreign limited liability
company in every jurisdiction in which the character of its assets or
properties or the nature of the business transacted by it at any time
makes qualification as a foreign limited liability company necessary,
and to maintain all other material limited liability company rights and
franchises, provided, however, nothing herein shall be construed to
prevent Borrower from closing any retail location in the good faith
exercise of its business judgment.
F. Comply in all material respects, and cause each
affiliate to comply in all material respects, with all statutes,
governmental rules and regulations applicable to them.
G. Permit and authorize Lender, without notifying Borrower
or Guarantor, to make such inquiries through business credit or other
credit reporting services concerning Borrower or Guarantor as Lender
shall reasonably deem appropriate.
H. Use advances acquired hereunder exclusively for the
purchase or acquisition of Eligible Asset Pools, costs and expenses
relating to such purchases, or otherwise incurred in Borrower's ordinary
course of business and/or other specific uses as consented to, in
advance, in writing, by Lender.
I. If ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ leave the
employment with PRA, PRA shall replace ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ with people of similar experience in the industry to that of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ reasonably acceptable to
Lender, within one hundred and fifty (150) days of PRA's knowledge of
such departure.
J. Maintain an additional purchase facility through the
Maturity Date.
K. On each anniversary of the Closing Date, pay Lender the
Commitment Fee.
L. With respect to any Person that, subsequent to the
Closing Date, becomes a Subsidiary, promptly (i) cause such Subsidiary
to become a party to this Agreement and the Guaranty, (ii) deliver to
Lender any certificates representing the Capital Stock of such
Subsidiary, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the Borrower or Guarantor or such
Subsidiary, as the case may be, (iii) cause such Subsidiary to take all
actions necessary or advisable to cause the security interest created by
this Agreement, to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of
financing statements in such jurisdictions as may be requested by the
Lender and (iv) deliver to Lender legal opinions relating to the matters
described in clauses (i), (ii) and (iii) immediately preceding, which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to Lender.
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M. In the event any Account is evidenced by an instrument,
promptly deliver such instrument to Lender with appropriate endorsements
to maintain the Lender's security interest in such Account, if requested
by Lender.
N. Provide Lender with the right of first refusal to
finance or agent any financing transaction for as long as the Facility
remains outstanding.
0. Pay the Lender the Backup Servicing Fee and the Unused
Commitment Fee on each Settlement Date.
P. Provide the Backup Servicer with such information as the
Backup Servicer may reasonably request.
Q. Comply with (i) the SPV and corporate separateness
covenants set forth in Section 4.02 of its Operating Agreement as in
effect as of the Closing Date, (ii) the covenants and agreements
contained in the certificates of each of Borrower and Guarantor
delivered to counsel to Borrower and Guarantor in connection with such
counsel's non-consolidation opinion, and (iii) the terms of the
Management Agreement; provided, that, PRA shall transfer any funds of
the Borrower deposited in a collection account containing funds of any
other Person to a separate account owned and titled solely in the name
of Borrower no later than two Business Days after the deposit of such
funds in such collection account.
R. PRA shall, when acting as the manager of the Borrower
under the Management Agreement, clearly indicate that it is acting on
behalf of the Borrower.
6.2. NEGATIVE COVENANTS
During the term of this Agreement and until the Outstanding Facility
Amount secured hereby has been paid in full, each of Borrower and Guarantor
covenants and agrees that it shall not, without Lender's prior written consent,
which consent shall not be unreasonably withheld, do any of the following:
A. Incur or permit to exist any mortgage, pledge, title
retention lien or other Lien with respect to the Collateral now owned or
hereafter acquired by Borrower or Guarantor (as the case may be), except
(i) liens in favor of Lender, (ii) liens existing on the date hereof
securing the Existing Debt, (iii) future capital leases and (v) the
Trust Accounts.
B. Delegate, transfer or assign any of their obligations or
liabilities under this Agreement, or any part thereof, to any other
Person or entity.
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C. Be a party to or participate in: (i) any merger or
consolidation; (ii) any purchase or other acquisition of all or
substantially all of the assets or properties or shares of any class of,
or any partnership or joint venture interest in, any other corporation
or entity; (iii) any sale, transfer, conveyance or lease of all or
substantially all of Borrower's or Guarantor's assets or properties; or
(iv) any sale or assignment with or without recourse of any Assets other
than in the ordinary course of business. Notwithstanding the foregoing
to the contrary, the restrictions set forth in this subsection
6.2.C.(ii) shall not apply to any transaction or transactions occurring
in any twelve (12) month period wherein the aggregate value/purchase
price of all such transactions does not exceed five percent (5%) of
PRA's Tangible Net Worth.
D. Cause or take any of the following actions with respect
to either Borrower or Guarantor: (i) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower's or
Guarantor's outstanding Capital Stock; or (ii) purchase or acquire,
directly or indirectly, any shares of Capital Stock, evidences of
indebtedness or other securities of any Person or entity.
E. Amend, supplement or otherwise modify either of
Borrower's or Guarantor's Certificate of Formation or Operating
Agreement in such a way which would have a Material Adverse Effect on
the condition and operations, prospects or financial condition of the
Borrower or Guarantor (as the case may be).
F. Incur, assume or suffer to exist any debt (including
capitalized leases) other than (i) the Outstanding Facility Amount, (ii)
accounts payable incurred in the ordinary course of business, (iii)
Subordinated Debt, (iv) Existing Debt, (v) Trust Accounts, (vi)
indebtedness in a principal amount not to exceed $500,000 to finance the
acquisition and development of approximately two (2) acres of land
located at ▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ into an
approximately 125-space parking lot, or (vii) other debt consented to in
writing by Lender. Notwithstanding the foregoing to the contrary,
Borrower and Guarantor may enter into and maintain capitalized leases
for the acquisition of equipment in an amount not to exceed, in the
aggregate in each fiscal year five percent (5%) of PRA's Tangible Net
Worth.
G. Directly or indirectly make loans to, invest in, extend
credit to, or guaranty the debt of any Person or entity, other than in
the ordinary course of Borrower's or Guarantor's business.
H. Amend, modify, or otherwise change in any respect that
would have a Material Adverse Effect upon any material agreement,
instrument, or arrangement (written or oral) by which Borrower, any of
Borrower's assets, Guarantor or any of Guarantor's assets are bound.
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1. Allow Borrower or Guarantor to be owned and controlled
directly or indirectly by any Person or entity other than the
shareholders and senior management that own and control Borrower or
Guarantor (as the case may be) as of the date hereof.
J. Permit the Leverage Ratio to be more than 4 to 1, on a
consolidated basis.
K. Permit the Net Income to be less than $0.01, on a
consolidated basis in any fiscal quarter.
L. Make or allow Distributions for any calendar year,
within such calendar year, in the aggregate, to exceed the 75% of Net
Income on a consolidated basis for such year; provided, however, that no
Distributions shall be made if a Default or an Event of Default shall
exist.
M. Permit any equity holder of Borrower or Guarantor to
pledge or otherwise hypothecate any equity interest in Borrower or
Guarantor (as the case may be).
N. Purchase Eligible Asset Pools in excess of, in the
aggregate, $4 million in fundings per month or $10 million in fundings
per quarter, unless such other amount is approved in advance in writing
by Lender.
0. Enter into with any Person, any agreement which
prohibits or limits the ability of the Borrower or the Guarantor to
create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired,
other than (i) the Loan Documents or (ii) any such agreements relating
to the Existing Debt and Trust Accounts or (iii) other financings
permitted by this Agreement (in which cases, any prohibition or
limitation shall only be effective against the assets financed thereby).
6.3. REPORTING REQUIREMENTS AND ACCOUNTING PRACTICES
PRA shall maintain (i) a modem system of accounting in accordance with
GAAP or other systems of accounting acceptable to Lender and (ii) standard
operating procedures applicable to all of its locations with respect to the
handling and disposition of cash receipts and other proceeds of Collateral on a
daily basis, including the depositing thereof, aging of account receivables,
record keeping and such other matters as Lender may reasonably request. For the
sole purpose of determining compliance with the covenants and representations in
the Loan Documents, Lender shall have the right to recast any financial
statement or report presented to Lender by or on behalf of PRA to comply with
GAAP.
6.4. ACCOUNT DEBTORS' ADDRESSES
Borrower agrees to furnish to Lender from time to time, promptly upon
request, a list of all Account Debtors' names, their most current addresses,
their current balances and payment information. Borrower agrees that Lender may
from time to time, consistent with standard or
-45-
generally accepted auditing practices, verify the validity, amount and any other
matters relating to the Accounts by means of mail, telephone or otherwise, in
the name of Borrower and upon the occurrence of an Event of Default in the name
of Lender or such other name as Lender may choose. Lender shall in all of its
dealing with such records and all contacts with Account Debtors, comply with
applicable laws of privacy, the Federal Fair Debt Collection Practices Act and
any applicable similar state statutes; and Lender shall indemnify and hold
harmless Borrower, its officers, managers, members, employees and agents, from
and against all liability, claims and demands, and all reasonable costs and
expenses including reasonable attorneys fees, which they may incur as a
consequence of any claim asserted against them by any Account Debtor arising
solely from a violation by Lender of its duties thereunder.
6.5. FINANCIAL REPORTS
PRA shall furnish to Lender the following financial statements and
reports, in a form satisfactory to Lender:
A. As soon as practicable and in any event received by
Lender within fifteen (15) days after the end of each fiscal month: (i)
"Availability Report," in the form and substance of Exhibit "D" attached
hereto; (ii) Asset Pool Report in form and substance of Exhibit "E"
attached hereto; and (iii) a Covenant Compliance Report, in a form and
substance of Exhibit "C" attached hereto.
B. As soon as practicable and in any event received by
Lender with fifteen (15) days after the end of each fiscal month, a
monthly Profit and Loss Statement and consolidated Balance Sheet,
certified by PRA's chief financial officer or equivalent duly appointed
member of PRA and including all previous months since the last fiscal
year.
C. Within ninety (90) days after the end of each of PRA's
fiscal years, annual financial statements, prepared in accordance with
GAAP, consistently applied and certified by its chief financial officer
or equivalent duly elected officer or member. The financial statements
shall be prepared by and under the method acceptable to Lender and shall
consist of a balance sheet as of the end of such fiscal year and
comparative statements of earnings, cash flows, and change in
stockholders' equity for such fiscal year and shall be audited by
independent certified public accountants, acceptable to Lender.
D. With reasonable promptness, such other financial data as
Lender may reasonably request, including but not limited to tax returns,
business plans and reports.
E. Together with each delivery of financial statements
required by subsections A, B and C above, each of Borrower and Guarantor
shall deliver to Lender and shall cause each of its subsidiaries to
deliver to Lender, if requested by Lender, a certificate in form
satisfactory to Lender, certifying that to the best of Borrower's.or
Guarantor's (as the case may be) knowledge and belief no Default or
Event of Default exists under this Agreement as of the date of such
certificate, or if a Default or an Event
-46-
of Default exists, specifying the nature and period of existence thereof
and what action Borrower or Guarantor (as the case may be) proposes to
take with respect thereto.
6.6. REQUIRED AUDITS
Guarantor, at its own expense, shall cause PricewaterhouseCoopers or
another firm of nationally recognized independent public accountants acceptable
to the Lender to furnish a report to the Lender to the effect that such
independent public accountants have applied certain agreed-upon procedures, in
accordance with standards established by the American Institute of Certified
Public Accountants, which will entail the comparison of amounts presented for
each of the Availability Reports and Request for Advance reports for such
preceding reporting period to amounts on computer reports and purchase
agreements which were the source of such amounts, or, if such amounts are
mathematically derived from such reports, will entail the verification of the
mathematical accuracy of such amounts derived. The first reporting period is
from the Closing Date through September 30, 2001, the second reporting period is
from October 1, 2001 through December 31, 2001, and semi-annually thereafter,
or at such other frequency deemed appropriate by Lender. Each such report must
be delivered within 45 days after the end of each reporting period.
6.7. NOTICE OF CHANGES
Each of Borrower and Guarantor shall promptly notify Lender in writing
of any change of its officers, members or key employees; change of location of
its principal offices, change of its jurisdiction of organization; change of
location of any of its principal assets; any acquisition, disposition or
reorganization of any Subsidiary, affiliate or parent of either Borrower or
Guarantor; change of either Borrower's or Guarantor's name; death or withdrawal
of any partner (if Borrower or Guarantor is a partnership); any sale or purchase
out of the regular course of Borrower's or Guarantor's business; material
litigation of which Borrower or Guarantor is a party; and any other material
change in the business or financial affairs of Borrower or Guarantor.
7. EVENTS OF DEFAULT AND REMEDIES
7.1. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
A. If any payment of principal or interest or any other
amount due Lender is not paid within five (5) Business Days after the
same shall be due and payable.
B. If Borrower or Guarantor shall default in the observance
or performance of any agreement contained in Sections 6.1(Q) or 6.2
herein.
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C. Except as provided in (A) and (B) above, if either
Borrower or Guarantor fails or neglects to perform, keep or observe any
of the terms, provisions, conditions or covenants, contained in this
Agreement, any of the other Loan Documents or any other agreement or
document executed in connection with the transactions contemplated by
this Agreement or if any representation, warranty or certification made
by Borrower or Guarantor herein or in any certificate or other writing
delivered pursuant hereto shall prove to be untrue in any material
respect as of the date upon which the same was made or at any time
thereafter, and the same is not cured to Lender's satisfaction within
ten (10) days after Lender has given written notice to Borrower or
Guarantor (as the case may be) identifying such default, provided
however, if such failure or neglect can not reasonably be cured within
such ten (10) day period, Borrower or Guarantor (as the case may be)
shall have up to thirty (30) days from the date of such written notice
from Lender to cure, provided such cure is continuously and diligently
pursued during such thirty (30) day period.
D. If the validity or enforceability of any lien, charge,
security interest, mortgage, pledge or other encumbrance granted to
Lender to secure the Outstanding Facility Amount shall be impaired in
any respect or to any degree, for any reason, or if any other lien,
charge, security interest, mortgage, pledge or other encumbrance shall
be created or imposed upon the Collateral unless such lien, charge,
security interest, mortgage, pledge or other encumbrance is subordinate
to that of Lender, pursuant to a subordination and standstill agreement
in a form and substance acceptable to Lender in its sole discretion.
E. If any judgment against Borrower or Guarantor not
covered by insurance in an amount in excess of one hundred thousand
Dollars ($100,000.00), or any attachment or other levy against the
properties or assets of Borrower or Guarantor with respect to a claim
for any amount in excess of one hundred thousand Dollars ($100,000.00),
remains unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days.
F. Any litigation, claim, counterclaim or proceeding
brought against Borrower or Guarantor which materially and adversely
affects the interests of the Lender.
G. Default in the payment of any sum due under any
instrument of indebtedness for borrowed money owed by either of Borrower
or Guarantor to any Person, or any other default under such instrument
of indebtedness for borrowed money that permits such indebtedness for
borrowed money to become due prior to its stated maturity or permits the
holders of such indebtedness for borrowed money to elect a majority of
the members or to manage the business of Borrower or Guarantor.
H. If a court or governmental authority of competent
jurisdiction shall enter an order, judgment or decree appointing, with
or without either of Borrower's or Guarantor's consent or acquiescence,
a receiver, custodian, liquidator, trustee or other
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officer with similar powers of Borrower or Guarantor or of the whole or
any substantial part of its properties or assets, or approving a
petition filed against Borrower or Guarantor seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under the federal bankruptcy laws or any other applicable
law, and such order, judgment or decree shall remain unvacated, unstayed
or not set aside for an aggregate of thirty (30) days (whether or not
consecutive) from the date of the entry thereof or if any petition
seeking such relief shall be filed against Borrower or Guarantor (as the
case may be) and such petition shall not be dismissed within thirty (30)
days.
I. An event shall occur which shall have a Material Adverse
Effect.
J. If either Borrower or Guarantor shall: (i) be generally
not paying their respective debts as they become due; (ii) file a
petition in bankruptcy or a petition to take advantage of any insolvency
act or other act for the relief or aid of debtors; (iii) make an
assignment for the benefit of their creditors; (iv) consent to or
acquiesce in the appointment of a receiver, custodian, liquidator,
trustee or other officer with similar powers of either of their
properties or assets; (v) file a petition or answer seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the federal bankruptcy laws or any
other applicable law; (vi) be adjudicated insolvent or be liquidated;
(vii) admit in writing either of their inability to pay debts as they
become due; (viii) voluntarily suspend transaction of usual business; or
(ix) take any action for the purpose of any of the foregoing.
K. Any of the following shall occur: (i) entry of a court
order that enjoins, restrains or in any way prevents either of Borrower
or Guarantor from conducting all or any material part of its business
affairs in the ordinary course of business or (ii) withdrawal or
suspension of any license or authority required for the conduct of any
material part of either Borrower's or Guarantor's business and that
would have a Material Adverse Effect on either Borrower or Guarantor.
L. If Guarantor gives notice of termination or terminates
his liability pursuant to the Guaranty Agreement executed in conjunction
with this Agreement or gives notice in writing of its intention not to
comply with any provision contained herein.
M. The occurrence of a material exception in any audit
which may have a Material Adverse Effect in general and on the interest
of the Lender.
N. A Change in Control.
O. The Outstanding Facility Amount exceeds zero on the
Maturity Date.
P. If, on any date of determination, the Outstanding
Facility Amount exceeds the Availability on Eligible Accounts and such
deficiency is not cured within three (3) Business Days.
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7.2. TERMINATION OF COMMITMENT; ACCELERATION OF THE OUTSTANDING
FACILITY AMOUNT
Upon and after an Event of Default,
A. If such event is an Event of Default specified in clause
H or J of Section 7.1, automatically the commitment of Lender to make
any Loan hereunder shall immediately terminate and the Outstanding
Facility Amount and all other amounts owing by Borrower and/or Guarantor
to Lender shall immediately become due and payable, without demand,
presentment, notice of dishonor, notice of intent to demand or
accelerate payment, diligence in collecting, grace, notice and protest
or legal process of any kind, all of which are expressly waived;
B. If such event is any other Event of Default, (i) the
Lender may by notice to Borrower declare the commitment of Lender to
make any Loan hereunder to be terminated, whereupon such commitment
shall immediately terminate, and (ii) the Outstanding Facility Amount
and all other amounts owing by Borrower and/or Guarantor to Lender may,
at the option of Lender and without demand, presentment, notice of
dishonor, notice of intent to demand or accelerate payment, diligence in
collecting, grace, notice and protest or legal process of any kind, all
of which are hereby expressly waived, be declared, and immediately shall
become due and payable.
7.3. REMEDIES
Upon and after an Event of Default, Lender shall have the following
rights and remedies, which individual remedies shall be non-exclusive,
cumulative and in addition to each and every other remedy set forth in the Loan
Documents or in this Agreement:
A. All of the rights and remedies of a secured party under
the UCC, as in effect from time to time, or other applicable law.
B. The right, to the fullest extent permissible by law, to:
(i) enter upon the premises of Borrower or Guarantor, or any other place
or places where the Collateral is located and kept, without any
obligation to pay rent to Borrower or Guarantor, through self-help and
without judicial process, without first obtaining a final judgment or
giving Borrower or Guarantor notice and opportunity for a hearing on the
validity of Lender's claim, and remove the Collateral therefrom to the
premises of Lender or any agent of Lender, for such time as Lender may
desire, in order to effectively collect and liquidate the Collateral;
and/or (ii) require Borrower or Guarantor to assemble the Collateral and
make it available to Lender at a place to be designated by Lender, in
Lender's reasonable discretion.
C. The right to utilize the Backup Servicer.
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D. The right to sell or otherwise dispose of any or all
Collateral in its then condition at public or private sale or sales, in
lots or in bulk, for cash or on credit, all as Lender, in its
discretion, may deem advisable; provided that such sales may be
adjourned from time to time with or without notice. The requirement of
reasonable notice to Borrower or Guarantor of the time and place of any
public sale of the Collateral or of the time after which any private
sale either by Lender or at its option, a broker, or any other intended
disposition thereof is to be made, shall be met if such notice is
mailed, postage prepaid, to Borrower or Guarantor (as the case may be)
at the address of Borrower or Guarantor (as the case may be) designated
herein at least ten (10) Business Days before the date of any public
sale or at least ten (10) Business Days before the time after which any
private sale or other disposition is to be made unless applicable law
requires otherwise.
Lender shall have the right to conduct such sales on Borrower's
or Guarantor's (as the case may be) premises or elsewhere and shall have
the right to use Borrower's or Guarantor's premises (as the case may be)
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 and Guarantor's labels, 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 and
Guarantor's rights under all licenses and all franchise agreements shall
inure to Lender's benefit. Lender agrees to hold Borrower and Guarantor
harmless from any liability arising out of Lender's use of Borrower's or
Guarantor's premises, labels, 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 advertising for sale,
marshaling or selling the Collateral.
Lender shall have the right to sell, lease or otherwise dispose
of the Collateral, or any part thereof, for cash, credit or any
combination thereof, and Lender may purchase all or 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 Outstanding Facility Amount owing by Borrower to
Lender. The proceeds realized from the sale of any Collateral shall be
applied first to reasonable costs and expenses, attorney's fees, expert
witness fees incurred by Lender for collection and for acquisition,
completion, protection, removal, storage, sale and delivery of the
Collateral; second, as provided in Section 2.18; and third the
remainder, if any, to Borrower, its successors or assigns, or to
whomsoever may be lawfully entitled to receive the same. If any
deficiency shall arise, Borrower and Guarantor shall remain liable to
Lender therefor.
E. In the event that Borrower or Guarantor is domiciled in,
or Collateral is located in, Louisiana, and to the extent of such
domicile or location where Louisiana law is applicable to this
Agreement, the right to cause all and singular the herein above
described Collateral to be seized and sold under executory process
without appraisement,
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appraisement being hereby expressly waived, as an entirety or in
parcels, as Lender may determine, to the highest bidder for cash.
F. The right to appoint or seek appointment of a receiver,
custodian or trustee of Borrower or Guarantor or any of its properties
or assets pursuant to court order.
G. All other rights and remedies that Lender may have at
law or in equity.
7.4. NO WAIVER
No delay, failure or omission of Lender to exercise any right upon the
occurrence of any Default or Event of Default shall impair any such right or
shall be construed to be a waiver of any such Default or Event of Default or an
acquiescence therein. Lender may, from time to time, in a writing waive
compliance by the other parties with any of the terms of this Agreement and its
rights and remedies upon any Default or Event of Default, and, each of Borrower
and Guarantor agrees that no waiver by Lender shall ever be legally effective
unless such waiver shall be acknowledged and agreed in writing by Lender. No
waiver of any Default or Event of Default shall impair any right or remedy of
Lender not specifically waived. No single, partial or full exercise of any right
of Lender shall preclude any other or further exercise thereof. No modification
or amendment of or supplement to this Agreement or any other written agreement
between the parties hereto shall be valid or effective (or serve as a basis of
reliance by way of estoppel) unless the same is in writing and signed by the
party against whom it is sought to be enforced. The acceptance by Lender at any
time and from time to time of a partial payment or partial performance of any
of Borrower's or Guarantor's obligations set forth herein shall not be deemed a
waiver, reduction, modification or release from any Default or Event of Default
then existing. No waiver by Lender of any Default or Event of Default shall be
deemed to be a waiver of any other existing or any subsequent Default or Event
of Default.
7.5. APPLICATION OF PROCEEDS
After an Event of Default shall have occurred and is continuing,
all amounts received by Lender on account of any Outstanding Facility Amount and
realized by Lender with respect to the Collateral, including any sums which may
be held by Lender, or the proceeds of any thereof, shall be applied in the same
manner as proceeds of Collateral as set forth in subsection 7.3.D. hereof.
7.6. APPOINTMENT OF LENDER AS ATTORNEY-IN-FACT
Each of Borrower and Guarantor irrevocably designates, makes,
constitutes and appoints Lender (and all Persons reasonably designated by
Lender) until this Agreement terminates, with full power of substitution, as
Borrower's and Guarantor's true and lawful attorney-in-fact (and not
agent-in-fact) and Lender, or Lender's agent, may, without notice to Borrower or
Guarantor (as the case may be), and at such time or times thereafter as Lender
or said agent, in its discretion, may determine, in Borrower's, Guarantor's or
Lender's name, at no duty or obligation on Lender, do the following:
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A. All acts and things necessary to fulfill Borrower's or
Guarantor's administrative duties pursuant to this Agreement, including,
but not limited to, the authorization of financing statements;
B. After a Default or Event of Default has occurred and for
so long as such Default or Event of Default shall be continuing, all
acts and things necessary to fulfill Borrower's or Guarantor's (as the
case may be) obligations under this Agreement and the Loan Documents,
except as set forth in subsection 7.6.C below, at the cost and expense
of Borrower or Guarantor (as the case may be).
C. In addition to, but not in limitation of the foregoing,
at any time or times upon the occurrence of an Event of Default, Lender
shall have the right: (i) to enter upon Borrower's or Guarantor's
premises and to receive and open all mail directed to Borrower or
Guarantor (as the case may be) and remove all payments to Borrower or
Guarantor on the Accounts; however, Lender shall turn over to Borrower
or Guarantor all of such mail not relating to Accounts; (ii) in the name
of Borrower or Guarantor (as the case may be), to notify the Post Office
authorities to change the address for the delivery of mail addressed to
Borrower or Guarantor (as the case may be) to such address as Lender may
designate (notwithstanding the foregoing, for the purposes of notice and
service of process to or upon Borrower or Guarantor as set forth in this
Agreement, Lender's rights to change the address for the delivery of
mail shall not give Lender the right to change the address for notice
and service of process to or upon Borrower or Guarantor in this
Agreement); (iii) demand, collect, receive for and give renewals,
extensions, discharges and releases of any Account; (iv) institute and
prosecute legal and equitable proceedings to realize upon the Accounts;
(v) settle, compromise, compound or adjust claims in respect of any
Account or any legal proceedings brought in respect thereof; (vi)
generally, sell in whole or in part for cash, credit or property to
others or to itself at any public or private sale, assign, make any
agreement with respect to or otherwise deal with any of the Accounts as
fully and completely as though Lender were the absolute owner thereof
for all purposes, except to the extent limited by any applicable laws
and subject to any requirements of notice to Borrower or other Persons
under applicable laws; (vii) take possession and control in any manner
and in any place of any cash or non-cash items of payment or proceeds of
Accounts; (viii) endorse the name of Borrower or Guarantor upon any
notes, acceptances, checks, drafts, money orders, chattel paper or other
evidences of payment of Accounts that may come into Lender's possession;
and (ix) sign Borrower's or Guarantor's (as the case may be) name on any
instruments or documents relating to any of the Collateral, or on drafts
against Account Debtors.
D. The appointment of Lender as attorney-in-fact for
Borrower and Guarantor is coupled with an interest and is irrevocable
until this Agreement terminates.
8. EXPENSES AND INDEMNITIES
8.1. REIMBURSEMENT FOR EXPENSES
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(a) Upon the occurrence of a Default, and as set forth below in (b),
each of Borrower and Guarantor agrees to reimburse Lender, upon demand, for all
reasonable out-of-pocket expenses (including costs of establishing and
maintaining accounts or arrangements set forth in Section 3.10, attorney's fees,
including those of in-house counsel, expert witness fees and legal expenses)
incurred in connection with the evaluation of Collateral, preservation of
Collateral, or collection of the indebtedness.
(b) Guarantor shall reimburse Lender for legal fees and expenses
incurred by Lender in the negotiation, documentation, modification, due
diligence, execution and closing of the transaction contemplated in the Loan
Documents (whether or not such transactions are actually consummated). Guarantor
shall also pay the expenses of the Lender in connection with the enforcement of
any Loan Documentation.
8.2. LENDER'S EXPENSES AND ATTORNEY'S FEES
UPON AND AFTER AN EVENT OF DEFAULT, LENDER SHALL BE ENTITLED TO RECOVER
FROM BORROWER AND GUARANTOR ALL OF LENDER'S ATTORNEY'S FEES, INCLUDING THOSE OF
IN-HOUSE COUNSEL, PROVIDED THE AMOUNT OF WHICH SHALL BE REASONABLE, AND
REASONABLE COSTS AND EXPENSES INCURRED IN THE EXERCISE OF LENDERS'S RIGHTS SET
FORTH IN THIS AGREEMENT, AND ALL DAMAGES SUSTAINED BY LENDER BY REASON OF
MISREPRESENTATION, BREACH OF WARRANTY OR BREACH OF COVENANT OF BORROWER OR
GUARANTOR HEREIN, WHETHER CAUSED BY THE ACTS OR DEFAULTS OF BORROWER OR
GUARANTOR, ACCOUNT DEBTORS OR OTHERS; INCLUDING WITHOUT LIMITATION, ALL
ATTORNEY'S FEES, INCLUDING THOSE OF IN-HOUSE COUNSEL, PROVIDED THE AMOUNT OF
WHICH SHALL BE REASONABLE, ARISING FROM SUCH SERVICES, EXPERT WITNESS FEES AND
ANY EXPENSES, COSTS AND CHARGES RELATING THERETO, AND ALL OF THE FOREGOING SHALL
CONSTITUTE PART OF THE OUTSTANDING FACILITY AMOUNT SECURED BY THE COLLATERAL AND
SHALL BE PAYABLE ON DEMAND.
8.3. GENERAL INDEMNIFICATION
Each of Borrower and Guarantor hereby, jointly and severally, agrees to
indemnify and hold Lender harmless from and against any and all claims,
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements (collectively "Claim" or "Claims") of any kind
or nature whatsoever, asserted by any party other than Borrower or Guarantor, or
with respect to Borrower or Guarantor, only as otherwise provided in this
Agreement or pursuant to applicable law regarding Lender's obligations to
Borrower or Guarantor, which may be imposed on, incurred by or asserted against
Lender, or any of its officers, directors, employees or agents (including
accountants, attorneys or other professionals hired by Lender) in any way
relating to or arising out of the actions or omissions of Borrower or Guarantor,
in relation to the Loan Documents or any action taken or omitted by Lender, or
any of its officers, directors, employees or agents (including accountants,
attorneys or other
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professionals hired by Lender) under the Loan Documents, except to the extent
such indemnified matters are finally found by a court of competent jurisdiction
to be directly caused by Lender's gross negligence or willful misconduct.
9. MISCELLANEOUS
9.1. NOTICES
All notices, demands, ▇▇▇▇▇▇▇▇, requests and other written
communications hereunder shall be deemed to have been properly given: (i) upon
personal delivery; (ii) on the third Business Day following the day sent, if
sent by registered or certified mail; (iii) on the next Business Day following
the day sent, if sent by overnight express courier; or (iv) on the day sent or
if such day is not a Business Day on the next Business Day after the day sent if
sent by telecopy, in each case, to Lender, Borrower or Guarantor at its address
and/or telecopy number as set forth in this Agreement, or at such other address
and/or telecopy number as either party may designate for such purpose in a
written notice given to the other party.
Lender shall have the right, on or after initial funding pursuant to the
terms of this Agreement, to issue a press release or other brochure announcing
the consummation of the Loan Documents and to distribute that information to
third parties in the normal course of Lender's business, at no cost to Borrower.
9.2. PARTICIPATIONS
Borrower and Guarantor acknowledge and agree that Lender may from time
to time sell or offer to sell interests in the Outstanding Facility Amount and
the Loan Documents to one or more participants. Borrower and Guarantor authorize
Lender to disseminate any information it has pertaining to the Outstanding
Facility Amount, including without limitation, complete and current credit
information on Borrower and any of its principals and Guarantor, to any such
participant or prospective participant.
9.3. SURVIVAL OF AGREEMENTS
All of the various representations, warranties, covenants and agreements
of Borrower and Guarantor (including without limitation, any agreements to pay
costs and expenses and to indemnify Lender) in the Loan Documents shall survive
the execution and delivery of the Loan Documents and the performance under such
Loan Documents, and shall further survive until one (1) year and one (1) month
after all of the Outstanding Facility Amount is paid in full to Lender and all
of Lender's obligations to Borrower under the Loan Documents are terminated;
provided that all indemnities set forth herein including, without limitation, in
Sections 2.6, 2.7, 2.8, 8.1, 8.2 and 8.3 shall survive such termination.
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9.4. NO OBLIGATION BEYOND MATURITY
Each of Borrower and Guarantor agrees and acknowledges that upon the
Maturity Date, Lender shall have no obligation to renew, extend, modify or
rearrange the Loan and shall have the right to require all amounts due and owing
under the Loan to be paid in full upon such date.
9.5. PRIOR AGREEMENTS SUPERSEDED
This Agreement constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings or written or oral agreements
between the parties respecting the subject matter of this Agreement. No
provision of this Agreement or other document or instrument relating hereto may
be modified, waived or terminated except by instrument in writing executed by
the party against whom a modification, waiver or termination is sought to be
enforced.
9.6. PARTIES BOUND
This Agreement shall be binding on and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns, except as otherwise expressly provided
for herein. Borrower and Guarantor shall not assign any of their respective
rights or obligations pursuant this Agreement.
9.7. NUMBER AND GENDER
Whenever used herein, the singular number shall include the plural and
the plural the singular, and the use of any gender shall be applicable to all
genders. The duties, covenants, obligations and warranties of Guarantor in this
Agreement shall be joint and several obligations of Guarantor and of each
Guarantor if more than one.
9.8. NO THIRD PARTY BENEFICIARY
This Agreement is for the sole benefit of Lender and its affiliates,
Borrower, Guarantor and the Backup Servicer and is not for the benefit of any
other third party.
9.9. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, and all of which taken together
shall constitute but one and the same instrument. Delivery of a facsimile
version of one or more signatures to this Agreement shall be deemed adequate
delivery for purposes of this Agreement.
9.10. SEVERABILITY OF PROVISIONS
Any provision which is determined to be unconscionable, against public
policy or any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to
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such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
9.11. HEADINGS
The Article and Section headings used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
9.12. EXHIBITS
Any and all exhibits hereto are hereby expressly incorporated by
reference as though fully set forth at that point verbatim. All terms and
provisions as defined or set forth in Article 1 are hereby incorporated into and
made a part of this Agreement. Each reference in this Agreement to any
information or definitions contained in Article 1 shall mean and refer to the
information or definitions as set forth in Article 1 unless the context
specifically requires otherwise. Any terms used in Article 1 which are not
defined shall have the meanings ascribed to such terms, as of the date of this
Agreement, by the UCC to the extent the same are defined therein.
9.13. FURTHER INSTRUMENTS
Borrower and Guarantor shall from time to time execute and deliver, and
shall cause each of Borrower's and Guarantor's subsidiaries to execute and
deliver, all such amendments, supplements and other modifications hereto and to
the other Loan Documents and all such financing statements or continuation
statements, instruments of further assurance and any other instruments, and
shall take such other actions, as Lender reasonably requests and deems necessary
or advisable in furtherance of the agreements contained herein, including but
not limited to authorization to file UCC financing statements.
9.14. GOVERNING LAW
THIS AGREEMENT HAS BEEN EXECUTED AND DELIVERED BY BORROWER AND GUARANTOR
AND ACCEPTED BY LENDER IN NEW YORK COUNTY, NEW YORK AND SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS
OF LAWS PROVISIONS OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5-1401) OF THE
STATE OF NEW YORK.
9.15. JURISDICTION AND VENUE
TO INDUCE THE LENDER TO ENTER INTO THIS AGREEMENT, BORROWER, GUARANTOR
AND LENDER IRREVOCABLY AGREE THAT, SUBJECT TO THE LENDER'S ELECTION, ALL ACTIONS
OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING OUT OF OR FROM OR RELATED
TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE COLLATERAL SHALL BE LITIGATED
IN
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COURTS HAVING SITUS WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK. BORROWER,
GUARANTOR AND LENDER HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL,
STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE AND WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON BORROWER OR GUARANTOR (AS THE CASE MAY BE),
AND AGREE THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL
DIRECTED TO BORROWER OR GUARANTOR (AS THE CASE MAY BE) AT THE ADDRESS SET
FORTH IN BELOW, DELIVERY OF COVER LETTER THAT STATES THIS IS SERVICE, AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
Lender: Westside Funding Corporation
c/o Westdeutsche Landesbank Girozentrale, as Administrator
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇)▇▇▇-▇▇▇▇
Facsimile: (▇▇▇)▇▇▇-▇▇▇▇
Borrower: PRA III, LLC
Riverside Commerce Center
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Guarantor: Portfolio Recovery Associates, L.L.C.
Riverside Commerce Center
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.16. WAIVER
EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT AND TO THE EXTENT
NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND GUARANTOR HEREBY WAIVES (i)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT,
NON-PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, AND ONE OR MORE
EXTENSIONS OR RENEWALS OF ANY OR ALL ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS,
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CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY THE LENDER ON WHICH BORROWER OR
GUARANTOR MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER THE
LENDER MAY DO IN THIS REGARD; (ii) ALL RIGHTS TO NOTICE AND HEARING PRIOR TO THE
LENDER'S TAKING POSSESSION OR CONTROL OF, OR THE LENDER'S REPLEVIN, ATTACHMENT
OR LEVY ON OR OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED
BY ANY COURT PRIOR TO ALLOWING THE LENDER TO EXERCISE ANY OF THE LENDER'S
REMEDIES; AND (iii) THE BENEFIT OF ALL VALUATION, APPRAISEMENT OR EXEMPTION
LAWS.
9.17. WAIVER OF RIGHT TO TRIAL BY JURY
LENDER, BORROWER AND GUARANTOR HEREBY COVENANT AND AGREE THAT IN ANY
SUIT, ACTION OR PROCEEDING IN RESPECT OF ANY MATTER ARISING OUT OF THIS
AGREEMENT, THE DOCUMENTS EXECUTED IN CONNECTION HEREWITH, ANY WRITTEN AGREEMENT
BETWEEN THE PARTIES HERETO, WHETHER NOW EXISTING OR HEREAFTER ARISING OR IN ANY
WAY RELATED TO, CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER SOUNDING IN
CONTRACT OR TORT OR OTHERWISE, TRIAL SHALL BE TO A COURT OF COMPETENT
JURISDICTION AND NOT TO A JURY; LENDER, BORROWER AND GUARANTOR HEREBY EXPRESSLY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY. ANY PARTY MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
9.18. ADVICE OF COUNSEL
EACH OF BORROWER AND GUARANTOR ACKNOWLEDGES THAT THEY HAVE BEEN
REPRESENTED AND ADVISED BY INDEPENDENT LEGAL COUNSEL WITH RESPECT TO THE
NEGOTIATION, EXECUTION AND ACCEPTANCE OF THIS AGREEMENT AND THE
TRANSACTION GOVERNED BY THIS AGREEMENT AND SPECIFICALLY WITH RESPECT TO THE
PROVISIONS CONTAINED IN SECTIONS 8.3, 9.14, 9.15, 9.16, 9.17, 9.19 and 9.20
HEREOF AND HAS RELIED UPON THE ADVICE OF ITS INDEPENDENT LEGAL COUNSEL IN
AGREEING TO THE TERMS AND CONDITIONS HEREIN AND IN EXECUTING AND DELIVERING THIS
AGREEMENT, AND THAT THEY HAVE FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
AS THE PRODUCT OF ARMS' LENGTH NEGOTIATIONS.
9.19. TIME OF ESSENCE
Time is of the essence for the performance of the obligations set forth
in this Agreement and the Loan Documents.
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9.20. NON PETITION
A. Each of Borrower and Guarantor hereby agrees (which
agreement shall pursuant to the terms of this Agreement, be binding upon
its successors and assigns) that it shall not institute against, or join
any other Person in instituting against, the Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or
other proceeding under any federal or state bankruptcy or similar law,
for one year and one day after the amounts owing under this Agreement
and all other credit agreements executed by the Lender have been paid in
full.
B. Guarantor hereby agrees (which agreement shall pursuant
to the terms of this Agreement, be binding upon its successors and
assigns) that it shall not institute against, or join any other Person
in instituting against, Borrower any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding
under any federal or state bankruptcy or similar law, for one year and
one day after the amounts owing under this Agreement and all other
credit agreements executed by the Borrower have been paid in full.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
BORROWER:
PRA III, LLC
a Virginia limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member Representative
GUARANTOR:
PORTFOLIO RECOVERY ASSOCIATES, L.L.C.
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: President
PRA RECEIVABLES MANAGEMENT, LLC
a Virginia limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member Representative
PRA II, LLC
a Virginia limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member Representative
PRA HOLDING I, LLC
a Virginia limited liability company
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member Representative
LENDER:
WESTSIDE FUNDING CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Director
