EXHIBIT 10.7
LOAN AGREEMENT
BY AND BETWEEN
BANK ONE, NA
AS LENDER
AND
LONG BEACH ACCEPTANCE CORP.
AS BORROWER
EFFECTIVE AS OF
AUGUST 16, 2000
COLUMBUS, OHIO
LOAN AGREEMENT
TABLE OF CONTENTS
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RECITALS .................................................................. 1
AGREEMENT ................................................................. 1
SECTION 1. CERTAIN DEFINITIONS AND TERMS .................................. 1
1.1 Advance Request .................................................... 1
1.2 Affiliate .......................................................... 1
1.3 Agreement .......................................................... 1
1.4 Assignment ......................................................... 1
1.5 Borrowing Base ..................................................... 2
1.6 Borrowing Base Report .............................................. 2
1.7 Borrowing Date ..................................................... 2
1.8 Business Day ....................................................... 2
1.9 Calculation Date ................................................... 2
1.10 Change of Control .................................................. 2
1.11 Chase .............................................................. 2
1.12 Chase Lockbox Agreement ............................................ 2
1.13 Claim .............................................................. 2
1.14 Closing Date ....................................................... 2
1.15 Code ............................................................... 2
1.16 Collateral ......................................................... 3
1.17 Collection Account ................................................. 3
1.18 Commitment ......................................................... 3
1.19 Commitment Fee ..................................................... 3
1.20 Commitment Period .................................................. 3
1.21 Commitment Termination Date ........................................ 3
1.22 Confidential Information ........................................... 3
1.23 Contracts .......................................................... 3
1.24 Current Financials ................................................. 3
1.25 Custodian .......................................................... 3
1.26 Custody Agreement .................................................. 3
1.27 Debt ............................................................... 3
1.28 Default ............................................................ 4
1.29 Default Rate ....................................................... 4
1.30 Eligible Contract .................................................. 4
1.31 ERISA .............................................................. 5
1.32 ERISA Affiliate .................................................... 5
1.33 Event of Default ................................................... 5
1.34 Financial Report Certificate ....................................... 5
1.35 Financial Statements ............................................... 5
1.36 GAAP ............................................................... 6
1.37 Governmental Authority ............................................. 6
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1.38 Guarantors ......................................................... 6
1.39 Guaranty ........................................................... 6
1.40 Indemnified Party .................................................. 6
1.41 Indemnity Matters .................................................. 6
1.42 Interest Remittance Date ........................................... 6
1.43 Law ................................................................ 6
1.44 Legal File ......................................................... 6
1.45 LIBOR Rate ......................................................... 6
1.46 Lien ............................................................... 7
1.47 Lien Certificate ................................................... 7
1.48 Litigation ......................................................... 7
1.49 Loan Document(s) ................................................... 7
1.50 Loan Guidelines .................................................... 7
1.51 Lockbox Account .................................................... 7
1.52 Lockbox Depository ................................................. 7
1.53 Lockboxes .......................................................... 7
1.54 Material Adverse Effect ............................................ 7
1.55 Maximum Rate ....................................................... 7
1.56 Multiemployer Plan ................................................. 8
1.57 Net Worth .......................................................... 8
1.58 Obligations ........................................................ 8
1.59 Obligor ............................................................ 8
1.60 Origination Date ................................................... 8
1.61 Person ............................................................. 8
1.62 Plan ............................................................... 8
1.63 Program ............................................................ 8
1.64 Revolving Credit Loans ............................................. 8
1.65 Revolving Credit Note .............................................. 8
1.66 Revolving Rate ..................................................... 8
1.67 Rights ............................................................. 9
1.68 Security Agreement ................................................. 9
1.69 Security Documents ................................................. 9
1.70 Special Purpose Subsidiary ......................................... 9
1.71 Subsidiary ......................................................... 9
1.72 Taxes .............................................................. 9
1.73 Termination Fee .................................................... 9
1.74 UCC ................................................................ 9
1.75 Unused Line Fee .................................................... 9
1.76 Wire Address ....................................................... 9
1.77 Warehouse Facilities ............................................... 10
SECTION 2. REVOLVING CREDIT FACILITY ..................................... 10
2.1 Revolving Credit Commitment ........................................ 10
2.2 Borrowing Procedure; Disbursement .................................. 10
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2.3 Revolving Credit Note ............................................. 10
2.4 Manner of Payments ................................................ 10
2.5 Interest .......................................................... 11
2.6 Computation of Interest ........................................... 11
2.7 Default Rate ...................................................... 12
2.8 Principal Payments ................................................ 12
2.9 Mandatory Payment of Revolving Credit Loans ....................... 12
2.10 Cancellation of Commitment ........................................ 12
2.11 Voluntary Principal Prepayments ................................... 13
2.12 Termination Fee ................................................... 13
2.13 Order of Application .............................................. 13
2.14 Use of Proceeds ................................................... 13
2.15 Unused Line Fee ................................................... 13
2.16 Commitment Fee .................................................... 13
2.17 Application of Payments, Establishment of Lockboxes, Lockbox
Account and Collection Account .................................... 14
SECTION 3. CONDITIONS PRECEDENT ........................................... 14
3.1 Initial Loans ..................................................... 14
3.2 Each Loan ......................................................... 14
3.3 Waiver of Conditions .............................................. 15
SECTION 4. REPRESENTATIONS AND WARRANTIES ................................. 15
4.1 Organization and Powers ........................................... 15
4.2 Validity and Binding Nature ....................................... 15
4.3 Compliance with Laws and Documents ................................ 16
4.4 Prior Names ....................................................... 16
4.5 Relationship with Lender .......................................... 16
4.6 Financial Statements .............................................. 16
4.7 Registrations and Licenses ........................................ 16
4.8 Litigation ........................................................ 16
4.9 Taxes ............................................................. 17
4.10 Government Regulation ............................................. 17
4.11 Employee Benefit Plans ............................................ 17
4.12 Purpose of Loan ................................................... 17
4.13 Properties; Liens; Debt ........................................... 17
4.14 Material Agreements ............................................... 17
4.15 No Consents ....................................................... 17
4.16 Ownership and Control ............................................. 18
4.17 General ........................................................... 18
4.18 Subsequent Affirmations ........................................... 18
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SECTION 5. COVENANTS ...................................................... 18
5.1 Affirmative Covenants ............................................. 18
5.1(a) Compliance with Law; Maintenance of Properties ............ 18
5.1(b) Insurance ................................................. 19
5.1(c) Inspection ................................................ 19
5.1(d) Further Assurances ........................................ 19
5.1(e) Indemnity ................................................. 19
5.1(f) Books and Records ......................................... 20
5.1(g) Taxes ..................................................... 20
5.1(h) Payment of Obligations .................................... 20
5.1(i) Expenses of Lender ........................................ 21
5.1(j) Supplemented Schedules .................................... 21
5.1(k) Reserved .................................................. 21
5.1(l) Delivery of Contracts ..................................... 21
5.1(m) Annual Independent Certified Public Accountant's Report ... 22
5.2 Negative Covenants ................................................ 22
5.2(a) Debt ...................................................... 22
5.2(b) Acquisitions, Mergers and Dissolutions .................... 23
5.2(c) Loans, Advances and Investments ........................... 23
5.2(d) Employee Benefit Plans .................................... 23
5.2(e) Dividends ................................................. 23
5.2(f) Issuance of Securities .................................... 23
5.2(g) Transactions with Guarantor, Affiliates or Subsidiaries ... 24
5.2(h) Change in Management of Borrower .......................... 24
5.2(i) Debt to Net Worth ......................................... 24
5.2(j) Net Worth ................................................. 24
5.2(k) Net Worth of Guarantor .................................... 24
5.2(l) Compliance with Laws and Documents ........................ 24
5.2(m) New Businesses ............................................ 25
5.2(n) Fiscal Year and Accounting Methods ........................ 25
5.2(o) Use of Name Confidentiality ............................... 25
5.2(p) Business Locations ........................................ 25
5.2(q) Modification of Loan Guidelines ........................... 25
5.3 Reporting Requirements ............................................ 25
5.4 Use of Reports .................................................... 27
5.5 Audits ............................................................ 27
SECTION 6. EVENTS OF DEFAULT ............................................. 28
6.1 Payment of Obligation ............................................. 28
6.2 Other Covenants ................................................... 28
6.3 Loan Documents and Security Documents ............................. 28
6.4 Bankruptcy ........................................................ 28
6.5 Attachment ........................................................ 28
6.6 Payment of Judgments .............................................. 28
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6.7 Default Under Other Debt .......................................... 29
6.8 Material Adverse Effect ........................................... 29
6.9 Misrepresentation ................................................. 29
SECTION 7. RIGHTS AND REMEDIES ............................................ 29
7.1 Remedies .......................................................... 29
7.2 Performance by Lender ............................................. 30
7.3 Delegation of Duties and Rights ................................... 31
7.4 Expenditures by Lender ............................................ 30
SECTION 8. MISCELLANEOUS .................................................. 30
8.1 Notices ........................................................... 30
8.2 Amendments, Etc. .................................................. 31
8.3 No Waiver; Remedies Cumulative .................................... 31
8.4 Successors and Assigns ............................................ 31
8.5 Number and Gender of Words ........................................ 31
8.6 Headings .......................................................... 31
8.7 Exhibits and Schedules ............................................ 31
8.8 Form and Number of Documents ...................................... 31
8.9 Conflicts ......................................................... 32
8.10 Waivers by Borrowers .............................................. 32
8.11 Waiver of Jury .................................................... 32
8.12 Changes in GAAP ................................................... 32
8.13 Exceptions to Covenants ........................................... 33
8.14 Survival .......................................................... 33
8.15 Governing Law ..................................................... 33
8.16 Maximum Interest Rate ............................................. 33
8.17 Severability ...................................................... 34
8.18 Lender Not in Control ............................................. 34
8.19 Confidentiality ................................................... 34
8.20 Entirety and Amendments ........................................... 35
8.21 Multiple Counterparts ............................................. 35
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LOAN AGREEMENT
This
loan agreement ("Agreement") is entered into as of August 16,
2000, by and between LONG BEACH ACCEPTANCE CORP., a Delaware corporation
("Borrower") and BANK ONE, NA, a national banking association ("Lender").
R E C I T A L S
A. Borrower is engaged in the business of extending credit
secured by new and/or used motor vehicles.
B. The borrower desires to borrow funds from Lender to finance
Borrower's working capital needs arising in the ordinary course of business,
which borrowings are to be secured by the Contracts (as hereinafter defined) of
Borrower and guaranteed by the Guarantor.
C. Based upon the foregoing and subject to the terms and
conditions hereinafter set forth, Lender is willing to make loans to Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereby agree as follows:
AGREEMENT
SECTION 1. CERTAIN DEFINITIONS AND TERMS
As used herein, the following terms shall have the meanings herein
indicated:
1.1 ADVANCE REQUEST has the meaning set forth in Section 2.2.
1.2 AFFILIATE means any Person who (i) would be an "affiliate" of
Borrower within the meaning of the regulations promulgated pursuant to the
Securities Act of 1933, as such regulations and Act are amended and in effect on
the date in question, if such Person were subject to such Act and regulations,
(ii) owns any legal or beneficial interest in such Person, or (iii) is a
director or officer of Borrower.
1.3 AGREEMENT means this
Loan Agreement, including any Schedules
and Exhibits hereto, as the same may be in effect from time to time after giving
effect to any amendments, supplements, increases, extensions, and renewals
hereof.
1.4 ASSIGNMENT has the meaning set forth in Section 5.1(l).
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1.5 BORROWING BASE means, as of the last day of each calendar
month), an amount equal to ninety percent (90%) of the aggregate amount of the
principal balances outstanding under the Eligible Contracts as calculated by
Borrower's accounting systems and as agreed to by Lender. The Borrowing Base
shall contain no more than one percent (1%) of Eligible Contracts in Loan Class
Type IV and no more than twenty-five percent (25%) of Eligible Contracts in Loan
Class Type III (both as defined in the Loan Guidelines) calculated by the
aggregate principal balances of each type of such Contracts as percentages of
the aggregate principal balances of all Eligible Contracts included in the
Borrowing Base. The Borrowing Base value of each Eligible Contract shall
amortize monthly by the reduction of ninety percent (90%) of the principal
balance of such Eligible Contract received by the Borrower attributable to the
previous month as calculated by Borrower's accounting systems and as agreed to
by Lender. Borrowing Base Reports shall be furnished by Borrower to Lender as
provided in Section 5.3(c).
1.6 BORROWING BASE REPORT means a certificate containing such
information as Lender may request concerning the amount or calculation of the
Borrowing Base presently substantially in the form of EXHIBIT D
1.7 BORROWING DATE has the meaning set forth in Section 2.2.
1.8 BUSINESS DAY means any day excluding Saturday and Sunday and
excluding any other day on which Lender is required or authorized to close.
1.9 CALCULATION DATE has the meaning set forth in Section 5.3(c).
1.10 CHANGE OF CONTROL has the meaning set forth in Section 4.16.
1.11 CHASE means The Chase Manhattan Bank, successor by merger to
Chase Bank of Texas, National Association, formerly known as Texas Commerce Bank
National Association.
1.12 CHASE LOCKBOX AGREEMENT means the Agency Agreement dated as of
March 1, 1997, among Chase, Borrower, Lender, and other parties, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and hereof.
1.13 CLAIM has the meaning set forth in Section 5.1 (e).
1.14 CLOSING DATE means August 16, 2000.
1.15 CODE means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated and rulings issued thereunder.
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1.16 COLLATERAL means all present and future tangible or intangible
property and rights of any kind in which the Lender is granted a Lien pursuant
to the Security Documents (whether or not perfected) or this Agreement and shall
include Contracts of the Borrower.
1.17 COLLECTION ACCOUNT has the meaning set forth in Section 2.9.
1.18 COMMITMENT means the commitment of the Lender to make
Revolving Credit Loans to Borrower pursuant to Section 2.1 hereof in an
aggregate principal amount at any one time outstanding not to exceed Thirty
Million Dollars ($30,000,000) or such lower amount as may be provided for
pursuant to the terms of this Agreement.
1.19 COMMITMENT FEE means a fee paid to Lender by Borrower in the
amount of Two Hundred Twenty Five Thousand and 00/100 Dollars ($225,000.00), as
a condition precedent to this Agreement.
1.20 COMMITMENT PERIOD means the period from and including the
Closing Date to, but not including, the Commitment Termination Date.
1.21 COMMITMENT TERMINATION DATE means the earlier of (i) noon,
Eastern Time, on the second anniversary of the Closing Date, and (ii) the date
on which the Commitment is otherwise terminated in accordance with the terms of
this Agreement.
1.22 CONFIDENTIAL INFORMATION has the meaning set forth in Section
8.19.
1.23 CONTRACTS means chattel paper, conditional or installment
sales contracts, other instruments or documents (i) arising from the financing
of the purchase of new or used motor vehicles evidencing both a debt and
security interest in such motor vehicles, and (ii) which are subject to the
Liens of Lender under the Security Documents.
1.24. CURRENT FINANCIALS means the Financial Statements of Borrower
for the fiscal year ending December 31, 1999, and the month ending June 30,
2000.
1.25 CUSTODIAN means, initially, Chase or its successor, pursuant
to that certain Custody Agreement dated _____________ ("Custody Agreement").
1.26 CUSTODY AGREEMENT has the meaning set forth in Section 1.24.
1.27 DEBT of any Person includes, without duplication, (i) all
obligations, contingent or otherwise, which in accordance with GAAP should be
classified upon such Person's balance sheet as liabilities, (ii) all obligations
of such Person for borrowed money, (iii) all obligations of such Person
evidenced by bonds, debentures,
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notes and other similar instruments, (iv) all obligations of such Person upon
which interest charges are customarily paid, (v) all obligations created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (vi) all obligations
of such Person issued or assumed as the deferred purchase price of property
or services (other than accounts payable to suppliers incurred in the
ordinary course of business and paid, in each case, within thirty (30) days
of the date when each such account is payable), and (vii) all obligations
under leases which shall have been or should be, in accordance with GAAP,
recorded as capitalized leases in respect of which such Person is liable as
lessee.
1.28 DEFAULT means any event which with the passage of time or the
giving of notice or both will be an Event of Default.
1.29 DEFAULT RATE has the meaning set forth in Section 2.7
1.30 ELIGIBLE CONTRACT means a Contract payable to Borrower which
meets all of the following requirements at all relevant times, including,
without limitation, at the time of presentation of each Borrowing Base Report:
(a) arises from the financing by Borrower of the sale of
a new or used motor vehicle in accordance with the Loan Guidelines in the
ordinary course of Borrower's business;
(b) represents a valid and binding obligation of the
Obligor thereon enforceable in accordance with its terms for the amount
outstanding thereof without offset, counterclaim or defense and not subject to
rescission;
(c) complies in all respects with applicable Law,
including, without limitation, truth in lending and credit disclosure laws and
regulations;
(d) is secured by a first priority security interest in
and lien on the new or used motor vehicle financed by such Contract and Lender
has been granted a first priority perfected Lien on the Contract, free and clear
of any Liens or claims of any other Person;
(e) the Obligor thereon is not subject to any pending
receivership, insolvency or bankruptcy proceeding (unless such Contract is
reaffirmed in accordance with 11 U.S.C. Section 524 or unless such Contract is
unimpaired by a confirmed plan under 11 U.S.C. Section 1301 et seq.);
(f) the Obligor thereon is not an Affiliate of Borrower
or employed by Borrower;
4
(g) the Obligor thereunder has accepted delivery of and
is in possession of the new or used motor vehicle subject of the Contract and
such vehicle has not been returned by the obligor or repossessed by Borrower;
(h) the first payment thereunder is due within forty-six
(46) days of the Contract's Origination Date;
(i) all payments under the Contract are current or less
than sixty (60) days contractually past due based upon the terms of the Contract
as of its Origination Date; provided, however, the payment date of a Contract
may be extended once within the sixty (60) days immediately following its
Origination Date, if, at the time of such extension, and unless otherwise agreed
to by Lender (Lender shall respond in writing within five (5) Business Days of
Borrower's written request), no payment under the Contract is more than thirty
(30) days past due; and
(j) has not been charged-off.
A Contract shall be deemed an Eligible Contract pending timely receipt
by Lender of documentation required by Lender to determine eligibility. Lender
reserves the right to determine if a Contract complies with the foregoing
criteria, in its reasonable discretion. An Eligible Contract shall become
ineligible at any time in which it fails to meet the foregoing criteria.
1.31 ERISA means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated and rulings issued thereunder.
1.32 ERISA AFFILIATE means any Person who for purposes of Title IV
of ERISA is a member of Borrower's control group, or who is under common control
with Borrower, within the meaning of Section 414 of the Code and the regulations
promulgated and rulings issued thereunder.
1.33 EVENT OF DEFAULT has the meaning set forth in Section 6 of
this Agreement and in the Loan Documents.
1.34 FINANCIAL REPORT CERTIFICATE means a certificate containing
such certifications, statements, calculations, explanations, and conclusions as
Lender may require concerning compliance with the Loan Documents in form and
substance satisfactory to Lender, presently in the form of EXHIBIT B.
1.35 FINANCIAL STATEMENTS means balance sheets, profit and loss
statements, and statements of cash flows prepared in comparative form with
respect to the corresponding period of the preceding fiscal year and prepared in
accordance with GAAP.
5
1.36 GAAP means all applicable generally accepted accounting
principles of the Accounting Principles Board of the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board.
1.37 GOVERNMENTAL AUTHORITY means any nation or government, any
state, county, or city and any political subdivision of any of the foregoing and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.38 GUARANTOR means Ameriquest Mortgage Company.
1.39 GUARANTY means a Guaranty Agreement in form and content
acceptable to Lender, in its sole discretion, to be executed and delivered by
Guarantor to Lender, as amended, modified, restated, supplemented or renewed
from time to time.
1.40 LNDEMNIFIED PARTY has the meaning set forth in Section 5.1(e).
1.41 INDEMNITY MATTERS has the meaning set forth in Section 5.1(e).
1.42 INTEREST REMITTANCE DATE has the meaning set forth in
Section 2.5.
1.43 LAW means all applicable statutes, laws, ordinances,
regulations, orders, writs, injunctions or decrees of any Governmental
Authority.
1.44 LEGAL FILE means, as to each Contract, the original Contract,
and the assignment of such Contract to Borrower, the Assignment to Lender, the
original or a copy of the credit application, evidence of verification of
physical damage insurance, the Lien Certificate and any applicable notice to
co-signer.
1.45 LIBOR RATE means the offered rate for the period equal to or
next greater than the thirty (30) days for U.S. Dollar deposits of not less than
$1,000,000 as of 11:00 a.m., City of London, England time, two London Business
Days prior to the first day of the calendar month as shown on the display
designated as "British Bankers Association Interest Settlement Rates" on Reuters
for the purpose of displaying such rate. In the event such rate is not available
on Reuters, then such offered rate shall be otherwise independently determined
by Lender from an alternate, substantially similar independent source available
to Lender or shall be calculated by Lender by a substantially similar
methodology as theretofore used to determine such offered rate. The LIBOR Rate
shall be a fixed rate for the duration of each calendar month. The initial LIBOR
Rate shall be the rate in effect two (2) Business Days prior to the Closing Date
and shall be adjusted on the last day of each calendar month to the LIBOR Rate
in effect two (2) Business Days prior to such date.
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1.46 LIEN means any mortgage, pledge, assignment, security
interest, encumbrance, lien, charge or deposit arrangement or other arrangement
having the practical effect of the foregoing and shall include the interest of a
vendor or lessor under any conditional sale agreement, capitalized lease or
other title retention agreement.
1.47 LIEN CERTIFICATE means, with respect to a motor vehicle
subject of a Contract, an original certificate of title, certificate of lien or
other notification issued by the Registrar of Titles of the applicable state to
a secured party or such other evidence acceptable to the Registrar of Titles of
the applicable state, in each case, which indicates that the lien of the secured
party on the Financed Vehicle is recorded on the original certificate of title.
In any jurisdiction in which the original certificate of title is required to be
given to the Obligor, the term "Lien Certificate" means only a certificate or
notification issued to a secured party.
1.48 LITIGATION means any proceeding, claim, lawsuit or
investigation conducted by or before any Governmental Authority.
1.49 LOAN DOCUMENT(S) means this Agreement, the Revolving Credit
Note, the Security Documents and any other agreements, notes, guaranties,
certificates, instruments or other documents delivered pursuant to or therewith
as the same may be amended, modified, supplemented, extended or restated.
1.50 LOAN GUIDELINES means the loan guidelines supplied by Borrower
and approved by Lender, pursuant to which Borrower makes or purchases Eligible
Contracts and which are attached hereto as EXHIBIT C, as they may be amended
from time to time.
1.51 LOCKBOX ACCOUNT means an account designated as such,
established and maintained pursuant to Section 2.17.
1.52 LOCKBOX DEPOSITORY means Chase, and/or such other financial
institutions as agreed to by Lender and Borrower.
1.53 LOCKBOXES has the meaning set forth in Section 2.17(a).
1.54 MATERIAL ADVERSE EFFECT means any set of circumstances or
events which would reasonably be expected to (i) have any adverse effect upon
the validity or enforceability of any Loan Document, or (ii) be material and
adverse to the financial condition or business operations of Borrower or to the
prospects of Borrower.
1.55 MAXIMUM RATE means the maximum rate or amount of interest
which Lender is allowed to contract for, charge, take, reserve or receive under
applicable Law.
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1.56 MULTIEMPLOYER PLAN means a multiemployer plan as defined in
Sections 3(37) or 4001 (a) (3) of ERISA or Section 414 of the Code.
1.57 NET WORTH means total assets (including Debt which is
subordinated to the Obligations) minus all Debt (excluding Debt which is
subordinated to the Obligations), all determined in accordance with GAAP, and
shall be consistent with the methodology of calculation in the Financial
Statements required by Section 5.3(a).
1.58 OBLIGATIONS means (i) the obligation of Borrower for the due
and punctual payment of the principal of and interest on the Revolving Credit
Note when due, whether at maturity, by acceleration, by notice of voluntary
prepayment or otherwise, (ii) all other obligations and all out-of-pocket
expenses and indemnities now or hereafter existing of Borrower to Lender under
this Agreement, (iii) all reasonable out-of-pocket costs and expenses, now or
hereafter existing, that may be incurred by Lender in connection with the
administration (as set forth in Section 5.1 (i)) and enforcement of the Loan
Documents or the realization on the security provided for by the Loan Documents,
(iv) the obligations of each of the pledgors, debtors, grantors, mortgagors,
guarantors or other Person obligated to Lender under the Security Documents, and
(v) all obligations of Borrower under Section 5.1 (e).
1.59 OBLIGOR means, with respect to a Contract, the purchaser or
co-purchaser of the motor vehicle subject of a Contract and/or any other person
who owes payments under such Contract.
1.60 ORIGINATION DATE means that date on which a Contract is first
entered into between the seller of a motor vehicle and the seller's customer.
1.61 PERSON means any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, entity, party, or Governmental Authority.
1.62 PLAN means any employee pension benefit plan as defined in
Section 3(2) of ERISA that is covered by Title IV of ERISA (including a
Multiemployer Plan) or subject to the minimum funding standards of Section 412
of the Code which is or has been maintained for the employees of Borrower or any
ERISA Affiliate.
1.63 PROGRAM has the meaning set forth in Section 5.1(m).
1.64 REVOLVING CREDIT LOANS has the meaning set forth in
Section 2.l.
1.65 REVOLVING CREDIT NOTE has the meaning set forth in
Section 2.3.
1.66 REVOLVING RATE has the meaning set forth in Section 2.5.
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1.67 RIGHTS means rights, remedies, powers, privileges and
benefits.
1.68 SECURITY AGREEMENT means that certain security agreement by
and between Borrower and the Lender and in form and content acceptable to
Lender, in its sole discretion, as the same may be amended, supplemented, or
otherwise modified from time to time.
1.69 SECURITY DOCUMENTS means (i) the Guaranty, (ii) the Security
Agreements, and (iii) all other documents, certificates and instruments from
time to time securing or guaranteeing the Obligations or securing the Guaranty,
in each case as the same may be amended, modified, restated, supplemented,
renewed, extended, substituted for or replaced from time to time.
1.70 SPECIAL PURPOSE SUBSIDIARY means (i) Long Beach Acceptance
Receivables Corp. or (ii) any other corporation which may be established and
owned, directly or indirectly, by Borrower and used by Borrower exclusively in
securitizations or other structured financings of its automotive installment
loan contracts or securities backed by such contracts, all in form, purpose and
use substantially similar to such entities previously established by Borrower
and with financial support from Borrower (in any form whatsoever, including,
without limitation, capital contributions, loans, advances (in money or other
assets)) substantially similar in amounts and in kind to that provided by
Borrower to such previously established entities.
1.71 SUBSIDIARY means every firm, corporation, association,
partnership, joint venture, trust, or other entity of which an aggregate of
fifty percent (50%) or more of the equity interests or the issued and
outstanding stock having ordinary voting power (except directors' qualifying
shares) is, at the time the determination is being made, is owned, either
directly or indirectly, or is controlled by a Person in control of the Borrower.
1.72 TAXES means all taxes, assessments, fees, levies, imposts,
duties, deductions, withholdings, or other charges of any nature whatsoever from
time to time or at any time imposed by any Law or Governmental Authority.
1.73 TERMINATION FEE means an amount equal to one percent (1%) of
the Commitment.
1.74 UCC means the Uniform Commercial Code as enacted in the State
of
Ohio or other applicable jurisdiction, as amended.
1.75 UNUSED LINE FEE has the meaning set forth in Section 2.15.
1.76 WIRE ADDRESS has the meaning set forth in Section 2.2.
9
1.77 WAREHOUSE FACILITIES has the meaning set forth on
Schedule 5.2(a).
SECTION 2. REVOLVING CREDIT FACILITY.
2.1 REVOLVING CREDIT COMMITMENT. Subject to and in reliance upon
the terms, conditions, representations and warranties contained in this
Agreement, Lender agrees to make revolving credit loans to Borrower in one or
more advances (the "Revolving Credit Loans") so long as the aggregate of the
Revolving Credit Loans outstanding never exceeds the lesser of (a) an amount
equal to the Borrowing Base or (b) the Commitment. Lender shall have no
obligation to make any Revolving Credit Loan on a non-Business Day or on or
after the Commitment Termination Date; provided that, Borrower's Obligations and
Lender's Rights under the Loan Documents shall continue in full force and effect
until the Obligations are paid and performed in full. During the Commitment
Period, Borrower may borrow, repay and reborrow the Revolving Credit Loans in
whole or part, all in accordance with terms and conditions of this Agreement.
2.2 BORROWING PROCEDURE; DISBURSEMENT. Each Revolving Credit Loan
shall be made on Borrower' notice substantially in the form of EXHIBIT E (the
"Advance Request") to Lender requesting an advance on a certain date (the
"Borrowing Date"). Each Advance Request shall be in a form acceptable to Lender
and must be received by Lender no later than noon (Eastern Time) on the
Borrowing Date. If Lender fails to fund on the Borrowing Date and funds on the
next day, does not reject any checks, drafts, ACH transfers or other instruments
which would have been honored by funding on the Borrowing Date, Lender shall be
deemed to have complied with its obligation to fund on the Borrowing Date. Each
amount advanced shall be wired as immediately available funds on the Borrowing
Date to the account designated by Borrower ("Wire Address") which initially
shall be:
Bank One, NA
ABA #000000000
For further credit to Long Beach Acceptance Corp.
Originations
Account #____________
2.3 REVOLVING CREDIT NOTE. All Revolving Credit Loans shall be
evidenced by one (1) promissory note executed by Borrower, substantially in the
form of EXHIBIT A attached hereto (the "Revolving Credit Note"), payable to the
order of Lender, representing the obligation of Borrower to pay the aggregate
unpaid principal amount of all Revolving Credit Loans made by Lender, together
with interest thereon as prescribed by this Agreement.
2.4 MANNER OF PAYMENTS. All payments made by Borrower to Lender
hereunder on account of principal, interest or otherwise shall be received by
Lender not
10
later than noon, Eastern Standard Time, at Lenders account number 980404443,
ABA #000000000 at Lender's banking office in Columbus,
Ohio or at such other
place as Lender shall direct in Columbus,
Ohio, in immediately available
United States funds. Any payments made by Borrower to Lender by mail shall
not be effective until received by Lender as set forth in this Section 2.4.
If any payment by Borrower under this Agreement or the Revolving Credit Note
is to be made on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time will in
such case be included in computing interest in connection with such payment.
All payments shall be made by Borrower to Lender without offset, recoupment
or other reduction.
2.5 INTEREST. The Revolving Credit Loans shall bear interest from
day to day at a rate per annum which shall, from day to day, be equal to the
lesser of (i) the Maximum Rate, or (ii) the LIBOR Rate then in effect plus two
percent (2%) ("Revolving Rate").
Accrued and unpaid interest on the Revolving Credit Loans for each month
(or any shorter period) shall be payable monthly in arrears on the last day of
such month (or shorter period) ("Interest Remittance Date"), commencing on the
first such date to occur after the date of this Agreement and continuing
regularly and monthly thereafter until the Obligations evidenced by the
Revolving Credit Note are paid in full; and, interest shall also be paid on the
Commitment Termination Date (whether at stated maturity, by acceleration or
otherwise) and, after the Commitment Termination Date, on demand.
2.6 COMPUTATION OF INTEREST.
(a) Interest on the Revolving Credit Note shall be
calculated on the basis of actual days elapsed, and computed on a year
consisting of 360 days, subject to the provisions of Section 8.16 below.
Further, for the purpose of computing interest, all items of payment received by
Lender in immediately available funds shall be applied by Lender against the
Obligations on the Business Day such payment is received and, any other items of
payment received in a form other than immediately available funds shall be
applied by Lender (subject to final payment of all drafts and other items)
against the Obligations on the second Business Day after receipt. The
determination of when a payment is received by Lender will be made in accordance
with Section 2.4. Each determination of an interest rate by Lender pursuant to
any provision of this Agreement shall be presumptively conclusive and binding on
Borrower in the absence of manifest error, subject, however, to the provisions
of Section 8.16 below.
(b) Notwithstanding anything to the contrary in the
Revolving Credit Note or herein contained, in the event that the Revolving Rate
should ever exceed the Maximum Rate, thereby causing the interest accruing on
any of the indebtedness evidenced by the Revolving Credit Note to be limited to
such Maximum Rate, then any
11
subsequent reduction in the LIBOR Rate shall not reduce the rate of interest
charged hereunder below the Maximum Rate until the total amount of interest
accrued on such indebtedness equals the amount of interest which would have
accrued on such indebtedness if the Revolving Rate had been in effect at all
times in the period during which the rate charged thereon was limited to the
Maximum Rate.
2.7 DEFAULT RATE. At Lender's option and to the extent permitted
by applicable Law and this Agreement, all past due Obligations shall bear
interest from maturity (whether at stated maturity, by acceleration or
otherwise) at the Revolving Rate then in effect plus three percent (3.0%)
("Default Rate") (provided, however, the Default Rate shall never exceed the
Maximum Rate) until paid, regardless of whether such payment is made before or
after entry of a judgment.
2.8 PRINCIPAL PAYMENTS. Any unpaid principal balance of the
Revolving Credit Note and any accrued and unpaid interest shall be due and
payable on the Commitment Termination Date.
2.9 MANDATORY PAYMENT OF REVOLVING CREDIT LOANS. Borrower shall
establish an account with Lender (or other financial institution acceptable to
Lender in its sole discretion) ("Collection Account") and shall deposit into the
Collection Account all funds received by Borrower attributable to the Contracts
within three (3) Business Days of receipt of such funds, which funds shall be
applied by Lender to the Obligations of Borrower hereunder in the order and
manner as Lender deems appropriate on a daily basis. Funds deposited in the
Collection Account shall be deemed to be the property of Lender and Borrower
shall have no right to make withdrawals from the Collection Account or otherwise
have access to funds deposited into the Collection Account.
If, at any date during the Commitment Period, (i) the unpaid principal
balance of the Revolving Credit Note shall exceed the lesser of (a) the
Borrowing Base, and (b) the Commitment, then, Borrower shall, within one (1)
Business Day of such date repay, without premium or penalty, the Revolving
Credit Loans in an amount equal to such excess, along with accrued unpaid
interest on the amount so repaid to the date of such repayment.
2.10 CANCELLATION OF COMMITMENT. The Commitment shall, at the
election of Lender, terminate upon the occurrence and continuance of an Event of
Default; provided, however, that the Commitment shall automatically terminate
upon the occurrence of an Event of Default pursuant to Section 6.4(a) through
(f) and Section 6.4 (i) (with respect to Section 6.4(a) through (f) inclusive).
Borrower may terminate the Commitment and this Agreement in its entirety by
giving written notice of such termination to Lender no less than thirty (30)
days prior to the designated termination
12
date and payment of the Termination Fee, if any. On the designated
termination date, all of the Obligations shall become due and payable in
immediately available funds.
2.11 VOLUNTARY PRINCIPAL PREPAYMENTS. Prior to the Commitment
Termination Date, the Revolving Credit Loans may be prepaid in whole or in part
at any time. Subject to the conditions of this Agreement, amounts so prepaid may
be reborrowed hereunder, and this Agreement shall not be deemed to be terminated
or canceled prior to the expiration or termination of Lender's Commitment
hereunder solely because the Obligations may from time to time be paid in full,
subject to the provisions of Section 2.12.
2.12 TERMINATION FEE. Borrower shall pay to Lender the Termination
Fee if Borrower voluntarily terminates the Commitment prior to the expiration of
five hundred forty (540) days following the Closing Date.
2.13 ORDER OF APPLICATION. At any time during which a Default or
Event of Default has occurred and is continuing, all payments and prepayments of
the Obligations, including proceeds from the exercise of any Rights under the
Loan Documents or proceeds of any of the Collateral shall be applied to the
Obligations in the order and manner as Lender deems appropriate.
2.14 USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Credit Loans to finance the working capital needs of Borrower arising
in the ordinary course of business. All loan proceeds shall be used by Borrower
only for legal and proper purposes (duly authorized by their respective
governing bodies) which are consistent with all applicable Laws. The foregoing
notwithstanding, Borrower shall not use any proceeds of the Revolving Credit
Loans directly or indirectly to purchase ineligible securities, as defined by
applicable regulations of the Federal Reserve Board, underwritten by any
affiliate of Bank One Corporation during the underwriting period and for thirty
(30) days thereafter.
2.15 UNUSED LINE FEE. Prior to voluntary termination of the
Commitment by Borrower, Borrower shall pay to Lender an Unused Line Fee equal to
one-quarter of one percent (.25%) per annum on the average amount of the unused
portion of the Revolving Loan ("Unused Line Fee"). The Unused Line Fee will be
in addition to the interest charge provided for herein and will be payable one
(1) Business Day following the end of each calendar quarter in arrears. The
Unused Line Fee shall be calculated on the basis of actual days elapsed, but
computed as if each year consisted of three hundred and sixty (360) days.
2.16 COMMITMENT FEE. Borrower shall pay to Lender the Commitment
Fee, which Commitment Fee shall be in addition to the interest charge provided
for herein.
13
2.17 APPLICATION OF PAYMENTS, ESTABLISHMENT OF LOCKBOXES, LOCKBOX
ACCOUNT, AND COLLECTION ACCOUNT.
(a) From time to time, Borrower shall establish pursuant
to one or more agreements among Borrower, Lender and one or more depository
institutions, and shall thereafter cause to be maintained one or more post
office boxes (the "Lockboxes"). Borrower shall direct the Obligor under each
Contract to forward all payments and other amounts in respect of such Contracts
to a Lockbox.
(b) As of the first Borrowing Date, Borrower has
established an Eligible Deposit Account at Chase entitled "Chase Agent Account -
Auto Loan Programs," account number 00100916395 (the "Chase Lockbox Account"),
into which payments actually collected and other amounts received from Obligors
or other sources on or in respect of the Contracts shall initially be deposited
and cleared. The Chase Lockbox Account has been established in accordance with
the Chase Lockbox Agreement. As funds relating to the Contracts become available
in the Chase Lockbox Account and in no event later than two Business Days after
receipt, all such collections shall be swept from the Chase Lockbox Account to
the Collection Account pursuant to daily wire instructions from Borrower. All
collections relating to the Contracts not received at the Chase Lockbox Account
by Borrower shall be held in trust and promptly, but in no event later than two
Business Days after receipt, deposited to the Collection Account. All expenses
incurred in connection with the Chase Lockboxes and the Chase Lockbox Account
including, without limitation, all insufficient funds charges imposed by Chase
shall be borne by Borrower.
(c) From time to time, Borrower, with Lender's approval,
may establish additional or substitute Lockboxes and Lockbox Accounts, and in
such case the procedures set forth in this Section 2.17 shall apply thereto.
(d) On each Interest Remittance Date, Borrower shall
cause to be wire transferred in immediately available funds to Lender pursuant
to Section 2.4 an amount equal to interest due and payable by Borrower to Lender
hereunder as of such Interest Remittance Date.
SECTION 3. CONDITIONS PRECEDENT.
3.1 INITIAL LOANS. Lender will not be obligated to make the
initial Revolving Credit Loan unless it has received all of the items described
on SCHEDULE 3.1 in form and substance satisfactory to Lender and its legal
counsel and unless Borrower has complied with all the conditions and terms
described on SCHEDULE 3.1 to the satisfaction of Lender and its legal counsel.
3.2 EACH LOAN. In addition, Lender will not be obligated to make
any Revolving Credit Loan unless (a) the Lender has received an Advance Request
with
14
respect to such proposed Revolving Credit Loan and each statement or
certification made by Borrower in the Advance Request shall be true and
correct in all material respects on the Borrowing Date; (b) at the time of
each Revolving Credit Loan (i) the representations and warranties made in the
Loan Documents are true and correct in all material respects, and (ii)
neither any change in the financial condition or prospect of Borrower which
could reasonably be expected to have a Material Adverse Effect nor any
Default or Event of Default shall have occurred and shall be continuing; (c)
the making of each Revolving Credit Loan is permitted by Law; and (d) all
conditions related to any Revolving Credit Loan are satisfactory to Lender
and its counsel, and, if requested by Lender, Borrower shall have delivered
to Lender evidence substantiating any of the conditions contained in this
Agreement which are necessary to enable Borrower to qualify for any Revolving
Credit Loan.
The delivery of an Advance Request by Borrower and the acceptance by
Borrower of the proceeds of any Loan hereunder shall each be deemed to
constitute a representation and warranty by Borrower as to the matters specified
in this Section 3.2.
3.3 WAIVER OF CONDITIONS. Lender may, at its election, make any
Revolving Credit Loan without all conditions being satisfied, but this shall not
be deemed to be a waiver of the requirement that each such condition precedent
be satisfied as a prerequisite for any subsequent Revolving Credit Loan, unless
Lender specifically waives each such item in writing.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender as follows:
4.1 ORGANIZATION AND POWERS. Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted and as proposed to be
conducted, (iii) is qualified to do business in every jurisdiction where such
qualification is necessary except where the failure to so qualify would not have
a Material Adverse Effect, (iv) has the power and authority to execute, deliver
and perform each Loan Document to which it is a party, and (v) has taken all
action necessary to authorize the execution, delivery and performance of the
Loan Documents to which it is a party.
4.2 VALIDITY AND BINDING NATURE. This Agreement has been duly
executed and delivered by Borrower and is, and each other Loan Document when
executed and delivered by Borrower will be, a legal, valid and binding
obligation of such Borrower enforceable against it in accordance with its terms
(except as enforcement thereof may be limited by bankruptcy, reorganization,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally and equitable principles relating to or affecting enforcement
of creditors' rights generally or relief of debtors generally).
15
4.3 COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower is not, nor will
the execution, delivery and the performance of and compliance with the terms of
the Loan Documents cause Borrower to be, in violation of any Laws or its bylaws
or certificate of incorporation (as each may be amended). The execution,
delivery and the performance of and compliance with the terms of the Loan
Documents will not conflict with or result in any breach of, or constitute a
default under, or result in the creation or imposition of any Lien (except
pursuant to the Loan Documents) upon any of the property, assets or revenues of
Borrower pursuant to the terms of, any indenture, mortgage, lease, deed of
trust, agreement, contract instrument or Law to which Borrower is a party or by
which Borrower or any of Borrower's property, assets or revenue is bound or to
which it is subject.
4.4 PRIOR NAMES. Except as disclosed on SCHEDULE 4.4, in the last
five years, Borrower has not transacted business under any other corporate or
trade name, been a party to any merger, combination, or consolidation or
acquired all or substantially all of the assets of any Person.
4.5 RELATIONSHIP WITH LENDER. No Person who may be deemed to have
"control" of Borrower is an "executive officer," "director," or "principal
shareholder" of Lender or any correspondent of Lender, as such quoted terms are
defined in Section 215.2 of Regulation 0 of the Board of Governors of the
Federal Reserve System, as amended.
4.6 FINANCIAL STATEMENTS. The Current Financials supplied to
Lender by Borrower were prepared in accordance with GAAP and present fairly the
financial condition and the result of operations of Borrower as of, and for the
portion of the fiscal year ending on, the date or dates thereof. All material
liabilities (direct or indirect, fixed or contingent) of Borrower as of the date
or dates of the Current Financials are reflected therein or in the notes
thereto. Between the date or dates of the Current Financials and the Closing
Date, there has been no material adverse change in the financial condition of
Borrower, nor has Borrower incurred any material liability (direct or indirect,
fixed or contingent).
4.7 REGISTRATIONS AND LICENSES. Borrower possesses adequate
authority and licenses including, without limitation licenses and registrations
necessary to make Eligible Contracts or to continue to conduct its business as
presently conducted unless failure to obtain such authority and licenses would
not result in a Material Adverse Effect.
4.8 LITIGATION. Except for the Litigation described on SCHEDULE
4.8, Borrower is not involved in any single Litigation involving an amount in
controversy in excess of $100,000 nor are there any outstanding or unpaid
judgments involving sums in the aggregate amount in excess of $250,000 against
Borrower. None of the Litigation described on SCHEDULE 4.8 could, collectively
or individually, have a Material Adverse
16
Effect if determined adversely against Borrower except for the case of
XXXXXX V. LBAC described thereon.
4.9 TAXES. To the best of Borrower's knowledge, after due inquiry,
all tax returns and reports of Borrower required to be filed have been filed,
and all Taxes imposed upon Borrower which are due and payable have been paid,
other than Taxes being contested in good faith and for which no Lien has
attached to Lender's Collateral.
4.10 GOVERNMENT REGULATION. Neither Borrower nor any transaction
contemplated hereunder is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Investment Company Act of 1940,
the Interstate Commerce Act (as any of the preceding acts have been amended),
any regulations promulgated by the Office of Foreign Assets Control as codified
in Chapter V of 31 C.F.R., or any other Law (other than Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System) which regulates the
incurrence of Debt.
4.11 EMPLOYEE BENEFIT PLANS. To the best of Borrower's knowledge,
after due inquiry, Borrower does not currently sponsor or contribute to, nor has
any contract or other obligation to contribute to (nor has Borrower in the
preceding sixty (60) calendar months sponsored or contributed to, or contracted
to or become otherwise obligated to contribute to) any Plan or any Multiemployer
Plan, except as set forth on SCHEDULE 4.11.
4.12 PURPOSE OF LOAN. The proceeds of the Advances will be used
only for the purposes set forth in Section 2.14 and shall not be used (a) to
purchase or carry any "Margin Stock" (within the meaning of Regulation G or U of
the Board of Governors of the Federal Reserve System), or (b) for any purpose in
violation of Regulations G, T, U or X of said Board of Governors.
4.13 PROPERTIES; LIENS; DEBT. Borrower has good and marketable
title to the Contracts. Except for Liens in favor of Lender there is no Lien on
any of the Contracts. Borrower has no Debt other than that described in Section
5.2(a) and listed on SCHEDULE 5.2(a).
4.14 MATERIAL AGREEMENTS. Borrower is not, nor will the execution,
delivery and performance of and compliance with the terms of the Loan Documents
cause Borrower to be, in default (nor has any potential default occurred) under
any material agreement, document or instrument other than such defaults or
potential defaults which could not, individually or collectively, cause a
Material Adverse Effect.
4.15 NO CONSENTS. Except as set forth on SCHEDULE 4.15, no order,
consent, approval, license, permit, waiver, exemption, authorization of or
validation of, or filing, recording or registration with (except as heretofore
have been obtained or made), or
17
exemption by, any Person (other than Lender) is required to authorize, or is
required in connection with, the execution, delivery, performance, legality,
validity, binding effect, or enforceability of the Loan Documents.
4.16 OWNERSHIP AND CONTROL. To the best of Borrower's knowledge,
after due inquiry, the ownership of Borrower as set forth on SCHEDULE 4.16 is
true, correct and complete. All of the issued and outstanding stock of Borrower
has been duly and validly issued in accordance with Borrower's organizational
documents and all applicable requirements of law and is fully paid and
nonassessable. There are no options, warrants, rights, calls, commitments,
plans, contracts or other agreements granted or issued regarding the stock of
Borrower and none are authorized which if exercised or enforced would result in
a change in control of Borrower (i.e. a change in the ownership of fifty-one
percent (51%) or more of Borrower's shares entitled to vote) (a "Change in
Control").
4.17 GENERAL. To the best of Borrower's knowledge, after due
inquiry: there are no facts or conditions relating to the Loan Documents, any of
the Collateral or the financial condition and business of Borrower or Guarantor
which could, individually or collectively, cause a Material Adverse Effect and
which have not been disclosed in writing to Lender. All writings heretofore or
hereafter exhibited or delivered to Lender by or on behalf of Borrower and/or
Guarantor are and will be genuine and in all respects what they purport and
appear to be; and no information furnished to Lender by or on behalf of Borrower
and/or Guarantor contains any material misstatement of fact or omits to state
any fact necessary to make the statements contained herein or therein, in light
of the circumstances in which they were made, not misleading which would result
in a Material Adverse Effect.
4.18 SUBSEQUENT AFFIRMATIONS. Affirmations of the foregoing
Representations and Warranties subsequent to the Closing Date shall be based on
information delivered to Lender by Borrower as of the Closing Date (or
subsequent information delivered by Borrower in compliance with Section 5.1(j),
if any,) and Financial Statements to be supplied by Borrower subsequent to the
Closing Date in compliance with Sections 5.3(a), 5.3(b) and 5.3(c).
SECTION 5. COVENANTS.
5.1 AFFIRMATIVE COVENANTS. Borrower covenants and agrees with
Lender, so long as this Agreement shall remain in effect and the principal of or
interest on the Revolving Credit Note, or any other Obligation, shall be unpaid,
as follows:
5.1(a) COMPLIANCE WITH LAW; MAINTENANCE OF PROPERTIES.
Borrower shall do or cause to be done all things necessary (i) to preserve and
keep in full force and effect at all times its existence and, as necessary to
conduct its business, its rights, licenses and franchises, (ii) to continue to
conduct its business substantially as now
18
proposed to be conducted, and (iii) to comply with all applicable Laws, the
violation of which could reasonably be expected to have a Material Adverse
Effect on the operations of Borrower or the Collateral. Failure to comply
with this provision may be cured by Borrower within twenty (20) days of such
failure; and upon such timely cure, Borrower shall be in compliance with this
provision.
5.1(b) INSURANCE. Borrower shall maintain comprehensive
general liability and public liability insurance and such other types of
insurance reasonably requested by Lender, all such insurance to be maintained
with financially sound and reputable insurance companies, against such
casualties, risks and contingencies, and in such types and amounts, as are
consistent with customary practices and standards of companies engaged in a
similar business. All insurance insuring the Collateral shall name Lender as a
loss payee. Failure to comply with this provision may be cured by Borrower
within thirty (30) days of such failure; and upon such timely cure, Borrower
shall be in compliance with this provision.
5.1(c) INSPECTION. Upon five (5) Business Days prior written
notice (or less upon agreement of Lender and Borrower), Borrower shall permit
any representative of the Lender to visit and inspect any of its property,
including the Collateral, to examine its books and records and to make copies
and take extracts therefrom, and to discuss its affairs, finances and accounts
with its officers during Borrower's normal business hours.
5.1(d) FURTHER ASSURANCES. Upon five (5) Business Days
notice, Borrower shall execute any and all further documents and take all
further actions which may be required under applicable law, or which the Lender
may reasonably request, to grant, preserve, protect and perfect the first
priority Lien on the Collateral created by the Security Documents (subject only
to Liens permitted by the Loan Documents), including without limitation, those
actions required to perfect Liens on and assignment of any interest of Borrower
in any Contract in accordance with the laws of the jurisdiction governing such
Liens and the assignments.
5.1(e) INDEMNITY. Borrower shall indemnify Lender and its
officers, directors, employees, representatives, agents, attorneys and
affiliates (each, an "Indemnified Party") from, hold each of them harmless
against, promptly upon demand pay or reimburse each of them with respect to any
and all actions, suits, proceedings (including any investigations, litigation or
inquiries), claims, demands, causes of action, costs, losses, liabilities,
damages or expenses of any kind or nature whatsoever (collectively, the
"Indemnity Matters") other than those proximately resulting from an Indemnified
Party's negligence or willful misconduct which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a party
thereto) as a result of, arising out of or in any way related to (i) any actual
or proposed use by Borrower of the proceeds of any of the Revolving Credit
Loans, (ii) the breach by Borrower of any representation or warranty set forth
in any Loan Document,
19
or (iii) any other aspect of this Agreement and the other Loan Documents,
including, without limitation, the reasonable fees and disbursements of
counsel (including allocated costs of internal counsel), and all other
expenses incurred in connection with investigating, defending or preparing to
defend any such Indemnity Matter. Borrower shall be obligated to pay or
reimburse each Indemnified Party for all out-of-pocket costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
incurred by such Indemnified Party in connection with any Indemnity Matter at
the time such costs and expenses are incurred and such Indemnified Party has
given Borrower written notice thereof. Borrower's Obligations under this
Section are subject to Section 8.14 hereof. In the event that any claim,
demand, investigation, litigation or inquiry (a "Claim") is brought against
any Indemnified Party, the Indemnified Party agrees to give written notice to
Borrower with respect to same, together with a copy of such Claim, and so
long as no Event of Default shall have occurred and be continuing, Borrower
shall have the right in good faith and by appropriate proceedings to defend
any Indemnity Matter and to employ counsel acceptable to the Indemnified
Party to conduct such defense (at Borrower's sole expense) so long as such
defense shall not involve any danger of the foreclosure, sale, forfeiture or
loss of, or imposition of any Lien, other than a Permitted Lien, on any part
of the Collateral, or subject any Indemnified Party to criminal liability.
Should Borrower elect to engage its own counsel acceptable to the Indemnified
Party and Lender, the Indemnified Party and Lender may continue to
participate in the defense of any such Indemnified Matter and will retain the
right to settle any such matter on terms and conditions satisfactory to
Lender, Indemnified Party and Borrower. All such settlements shall be paid by
and remain the sole responsibility of Borrower. In the event Borrower does
not accept the defense of the Indemnity Matter as provided above, Indemnified
Party shall have the full right to defend against such Claim, in its sole
discretion, and pursue its rights hereunder.
5.1(f) BOOKS AND RECORDS. Borrower shall keep, in accordance
with GAAP, proper and complete books, records and accounts. Failure to comply
with this provision may be cured by Borrower within twenty (20) days of such
failure; and upon such timely cure, Borrower shall be in compliance with this
provision.
5.1(g) TAXES. Borrower shall promptly pay when due any and
all Taxes, except Taxes being contested in good faith and for which no Lien has
attached to Lender's Collateral. Failure to comply with this provision may be
cured by Borrower within five (5) Business Days of the receipt of written notice
from Persons other than Lender or actual knowledge of such failure; and upon
such timely cure, Borrower shall be in compliance with this provision.
5.1(h) PAYMENT OF OBLIGATIONS. Borrower shall promptly pay
all of its Debt as it becomes due except to the extent that any such Debt is
being contested in good faith and by appropriate and lawful proceedings
diligently conducted and for which reserves or other provisions (if any)
required by GAAP shall have been made; provided, however, Borrower shall not,
directly or indirectly, make any payment of principal of or
20
interest on any Debt subordinated to the Obligations (such subordination to
be in form and substance satisfactory to Lender), without the prior written
consent of Lender. Failure to comply with this provision may be cured by
Borrower within twenty (20) days of such failure; and upon such timely cure,
Borrower shall be in compliance with this provision.
5.1(i) EXPENSES OF LENDER. Whether or not the transactions
contemplated by this Agreement shall be consummated, Borrower shall pay on
demand all reasonable out-of-pocket expenses (including, without limitation, the
fees and expenses of counsel for Lender) in connection with the negotiation,
preparation, execution, filing, recording, refiling, re-recording, modification,
release, supplement and waiver of the Loan Documents and the making, servicing
and collection of the Obligations including, without limitation, the Obligations
under Section 7.4.
5.1(j) SUPPLEMENTED SCHEDULES. Borrower shall as soon as
possible and in any event within thirty (30) days after the occurrence thereof,
supplement in writing and deliver to Lender revisions of the Schedules annexed
to this Agreement to the extent necessary to disclose new or changed facts or
circumstances after the Closing Date so as to cause the representations and
warranties set forth herein to remain accurate and not misleading; provided,
that, subsequent disclosures shall not constitute a cure or waiver of any
Default or Event of Default resulting from the matters disclosed.
5.1(k) RESERVED.
5.1(l) DELIVERY OF CONTRACTS.
(a) On or before the tenth (10th) Business Day
following each Advance Request, the Borrower shall deliver to the Custodian the
original Contracts pledged as Collateral for the Revolving Credit Loans made
pursuant to such Advance Request together with the Legal File for each such
Contract.
(b) On or before the tenth (10th) Business Day
following each Advance Request, the Borrower shall make available to Lender, via
the Borrower's document imaging system or at Borrower's premises, images or
copies of such Legal Files.
Borrower shall place in the Legal File for each Contract a document
bearing the following legend: THE UNDERSIGNED ASSIGNS TO AND GRANTS TO BANK ONE,
NA ("BANK"), 000 XXXX XXXXX XXXXXX, XXXXXXXX, XXXX 00000, AN ASSIGNMENT OF AND A
SECURITY INTEREST IN THIS AGREEMENT, CONTRACT NUMBER [#######], DATED [DD/MM/YY]
BETWEEN [BORROWER'S NAME(S)] AS BUYER(S) AND [DEALER NAME] AS SELLER, FOR THE
PURCHASE OF THE FOLLOWING VEHICLE: [YEAR, MAKE, MODEL, VIN], THE PROPERTY
21
DESCRIBED THEREIN AND THE OBLIGATIONS OF THE DEBTOR THEREUNDER. THIS
AGREEMENT MAY NOT BE SOLD, ASSIGNED OR SUBJECTED TO A SECURITY INTEREST
WITHOUT BANK'S PRIOR WRITTEN CONSENT (THE "ASSIGNMENT").
Such Assignment shall be completed as to Contract number; shall bear the
original signature of Borrower and shall be in the form of EXHIBIT F.
5.1(m) ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S
REPORT. Borrower shall cause a firm of nationally recognized independent
certified public accountants, who may also render other services to Borrower, to
deliver to Lender on or before April 30 of each year beginning April 30, 2001, a
report addressed to the Board of Directors of Borrower and to the Board of
Directors of Guarantor, to the effect that such firm has examined the financial
statements of Borrower and Guarantor, respectively, and issued its report
thereon and that such examination (a) was made in accordance with generally
accepted auditing standards, and accordingly, included such tests of the
accounting records and such other auditing procedures as such firm considered
necessary in the circumstances; (b) included a copy of such firm's management
letter, if any, addressed to Borrower or Guarantor, respectively, in connection
with such examination; (c) with respect to Borrower only, included tests
relating to automotive loans serviced for others in accordance with the
requirements of the Uniform Single Attestation Program for Mortgage Bankers (the
"Program"), to the extent the procedures in the Program are applicable to
Borrower's obligations set forth in this Agreement; and (d) except as described
in the report, disclosed no exceptions or errors in the records relating to
automobile, van, sport utility vehicle and light duty truck loans serviced by
Borrower for others that, in the firm's opinion, the Program requires such firm
to report. Such report will also indicate that the firm is independent of
Borrower and Guarantor, respectively, within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
5.2 NEGATIVE COVENANTS. Borrower covenants and agrees with Lender,
so long as this Agreement shall remain in effect and the principal of or
interest on the Revolving Credit Note, or any other Obligation, shall be unpaid,
as follows:
5.2(a) DEBT. The Borrower shall not, directly or indirectly,
create, incur or suffer to exist any direct, indirect, fixed or contingent
liability or any debt which is not fully subordinated to the Obligations on
terms and conditions satisfactory to Lender, except: (i) trade payables, accrual
of general and administrative expenses, equipment leases and office space leases
in the ordinary course of Borrower's business; (ii) Debt for Taxes; (iii) such
warehousing or similar financing facilities, including residual type financing
facilities arising from the sale of automotive installment loan contracts to
Persons other than Lender (with or without recourse); provided, however, that
Borrower shall provide Lender with (1) written notice of such facility; (2)
written notice and identification of all collateral, pledged under such
facility, updated from time to time and
22
for each day such facility is operative, whether administered by the Borrower
or by a collateral agent ("Warehouse Facilities"); provided, however, that
such Warehouse Facilities shall not be secured by Liens on the Contracts
which are the Collateral of Lender. All Debt of the Borrower which is not
subsumed in (i), (ii) or (iii) is described on SCHEDULE 5.2(a)(1); all Debt
described in (iii) and the collateral therefore is described on SCHEDULE
5.2(a)(2). Failure to comply with this provision may be cured by Borrower
within twenty (20) days of such failure; and upon such timely cure, Borrower
shall be in compliance with this provision.
5.2(b) ACQUISITIONS, MERGERS AND DISSOLUTIONS. Without the
prior written consent of Lender, Borrower shall not, directly or indirectly (i)
acquire all or any substantial portion of the assets or stock of, or interest
in, any Person other than a Special Purpose Subsidiary, (ii) merge or
consolidate with any Person, (iii) liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution) or (iv) otherwise undergo a Change in
Control.
5.2(c) LOANS, ADVANCES AND INVESTMENTS. Without the prior
written consent of Lender, Borrower shall not directly or indirectly, make any
loan, advance or extensions of credit in aggregate amounts in excess of
$500,000, or capital contribution to, make any investments in, or purchase or
commit to purchase any stock or other securities or evidences of contractual
obligations of, or interests in, any Person, except for (i) investments in
obligations of the United States of America and agencies thereof and obligations
guaranteed by the United States of America maturing within one year from the
date of acquisition, (ii) certificates of deposit issued by commercial banks
organized under the Laws of the United States of America or any state thereof
and having a combined capital, surplus and undivided profits of not less than
$500,000, or completely insured by the Federal Deposit Insurance Corporation,
(iii) other investment grade investments, and (iv) transactions involving a
Special Purpose Subsidiary.
5.2(d) EMPLOYEE BENEFIT PLANS. Borrower shall not, directly
or indirectly, sponsor or contribute to, or create or suffer to exist any
contractual or other obligation to contribute to, any Multiemployer Plan or to
any Plan if such action would result in an Event of Default. Failure to comply
with this provision may be cured by Borrower within fifteen (15) days of such
failure; and upon such timely cure, Borrower shall be in compliance with this
provision.
5.2(e) DIVIDENDS. Borrower shall not pay any dividends or
distributions to any Person if a Default or Event of Default has occurred or if
such payment would result in the occurrence of a Default or Event of Default.
Failure to comply with this provision may be cured by Borrower within fifteen
(15) days of such failure; and upon such timely cure, Borrower shall be in
compliance with this provision.
5.2(f) ISSUANCE OF SECURITIES. Borrower shall not, directly
or indirectly, issue, sell or otherwise dispose of (i) any of its shares of
capital stock or other
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investment securities of any class such as to result in a change in the
controlling interest in Borrower, (ii) any securities convertible into or
exchangeable for any such shares, or (iii) any carrying Rights, warrants,
options, or other rights to subscribe for or purchase any such shares.
Failure to comply with this provision may be cured by Borrower within fifteen
(15) days of such failure; and upon such timely cure, Borrower shall be in
compliance with this provision.
5.2(g) TRANSACTIONS WITH GUARANTOR, AFFILIATES OR
SUBSIDIARIES. Borrower shall not, directly or indirectly, enter into any
transaction (including, but not limited to, the sale or exchange of property or
the rendering of service) with the Guarantor, any of its Affiliates or
Subsidiaries, other than in the ordinary course of business of Borrower and upon
fair and reasonable terms no less favorable than Borrower could obtain or could
become entitled to in an arm's-length transaction with a Person which was not
the Guarantor, an Affiliate or a Subsidiary.
5.2(h) CHANGE IN MANAGEMENT OF BORROWER. Without the prior
written consent of Lender, Borrower shall not initiate a change in the
president, chief executive officer, or chief financial officer of Borrower until
a replacement acceptable to Lender has been engaged by Borrower. If such a
change occurs which is not initiated by Borrower, Borrower shall obtain
replacement management reasonably acceptable to Lender within ninety (90) days.
During such ninety (90) day period, in addition to and supplemental to all other
Rights of Lender under this Agreement, Lender may install an auditor(s) in any
of the business locations of Borrower to ascertain Borrower's compliance with
this Agreement.
5.2(i) DEBT TO NET WORTH. Borrower shall not permit its
ratio of (i) Debt minus Debt subordinated to the Obligations on terms and
conditions satisfactory to Lender, to (ii) Net Worth to exceed 6.0 to 1.0, as of
the Closing Date and the last day of each calendar month.
5.2(j) NET WORTH. Borrower shall not permit its Net Worth to
be less than $37,000,000, as of the Closing Date and the last day of each
calendar month.
5.2(k) NET WORTH OF GUARANTOR. The Net Worth of the
Guarantor shall not be less than $90,000,000 as of the Closing Date and the last
day of each calendar month.
5.2(l) COMPLIANCE WITH LAWS AND DOCUMENTS. Borrower shall
not, directly or indirectly, violate the provisions of any Laws, its articles of
incorporation, bylaws, other governance documents or any agreements if such
violation could reasonably be expected to have a Material Adverse Effect.
Failure to comply with this provision may be cured by Borrower within twenty
(20) days of the receipt of written notice from Persons other than Lender or
actual knowledge of such failure; and upon such timely cure, Borrower shall be
in compliance with this provision.
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5.2(m) NEW BUSINESSES. Without the prior written consent of
Lender, Borrower shall not, directly or indirectly, engage in any business other
than that in which it is presently engaged. Failure to comply with this
provision may be cured by Borrower within twenty (20) days of such failure; and
upon such timely cure, Borrower shall be in compliance with this provision.
5.2(n) FISCAL YEAR AND ACCOUNTING METHODS. Borrower shall
not change its fiscal year, which currently ends each December 31, or method of
accounting, other than immaterial changes in methods to which its independent
certified public accountants concur without the prior written consent of Lender
or as required by the requirements of GAAP.
5.2(o) USE OF NAME CONFIDENTIALITY. Without the prior
written consent of Lender, Borrower shall not use Lender's name or trademark in
connection with the operation of Borrower's business, including, but not limited
to, any advertising undertaken by Borrower, and Borrower shall use all
reasonable efforts to keep confidential the terms and conditions of the Loan
Documents.
5.2(p) BUSINESS LOCATIONS. All present business locations of
Borrower are set forth on SCHEDULE 5.2(p), including, without limitation,
Borrower's principal place of business. Without the prior written consent of
Lender, which consent shall not be unreasonably withheld or delayed, Borrower
shall not conduct its business operations or store or otherwise locate any of
the Collateral at any other location except as set forth on SCHEDULE 5.2(p) or
in accordance with the Custody Agreement. Borrower shall establish no new
Business location without giving written notice to Lender thirty (30) days prior
to such establishment and executing and delivering to Lender any documents
considered necessary by Lender, in Lender's sole discretion, to perfect or
continue perfection of its Liens on the Collateral. Failure to comply with this
provision may be cured by Borrower within five (5) Business Days of such
failure; and upon such timely cure, Borrower shall be in compliance with this
provision.
5.2(q) MODIFICATION OF LOAN GUIDELINES. Without the prior
written consent of Lender, which shall not be unreasonably withheld or delayed,
Borrower shall not amend, modify, supplement or otherwise change the Loan
Guidelines. Borrower shall send all proposed changes to Lender and Lender shall
respond to such proposed changes within five (5) Business Days of receipt
thereof.
5.3 REPORTING REQUIREMENTS. Borrower shall furnish to Lender such
information as reasonably requested by Lender. Additionally, Borrower shall
cause the following to be furnished to Lender:
5.3(a) As soon as available, but no later than ninety (90)
days after the last day of each fiscal year of Borrower, unqualified audited
Financial Statements
25
showing the financial condition and result of operations of Borrower as of,
and for the year ended on, such last day, accompanied by (i) the opinion of a
firm of independent certified public accountants acceptable to Lender, based
on an audit using generally accepted auditing standards, that such Financial
Statements were prepared in accordance with GAAP and present fairly the
financial condition and result of operations of Borrower, and (ii) a
Financial Report Certificate with respect to such Financial Statements.
Failure to comply with this provision may be cured by Borrower within thirty
(30) days of such failure; and upon such timely cure, Borrower shall be in
compliance with this provision.
5.3(b) As soon as available, but no later than thirty (30)
days after the last day of each calendar month (i) unaudited Financial
Statements (balance sheet and income statement only) showing the financial
condition and results of operations of Borrower as of, and for the period from
the beginning of the current fiscal year, to such last day, and (ii) a Financial
Report Certificate with respect to such Financial Statements. Failure to comply
with this provision may be cured by Borrower within fifteen (15) days of such
failure; and upon such timely cure, Borrower shall be in compliance with this
provision.
5.3(c) A Borrowing Base Report on the 15th day (or if such
day is not a Business Day, then the next Business Day after such 15th day) of
each calendar month, as of the last day of the preceding calendar month,
("Calculation Date") or within two (2) days thereafter (Borrower may cause to be
furnished to Lender additional Borrowing Base Reports whenever Borrower so
chooses). Each Borrowing Base Report prepared by Borrower shall be certified to
be true, correct and complete by the president, chief executive officer, chief
financial officer, any vice president, or treasurer.
5.3(d) Notice, promptly after Borrower knows or has good
faith reason to believe, of (i) the existence and status of any Litigation with
respect to Borrower or any Guarantor which could have a Material Adverse Effect,
(ii) any change in any material fact or circumstance represented or warranted in
any Loan Document, and/or (iii) a Default or Event of Default, specifying the
nature thereof and what action Borrower has taken, is taking, or proposes to
take with respect thereto.
5.3(e) Promptly, but within ten (10) Business Days upon
request therefor by Lender, such information and/or documentation (not otherwise
required to be furnished under the Loan Documents) respecting the business
affairs, assets and liabilities of Borrower, or any Person providing Collateral
to secure all or any part of the Obligations and such opinions, certifications
and documents, in addition to those mentioned in this Agreement, as Lender may
request.
5.3(f) As soon as available, but no later than ninety (90)
days after the last day of each fiscal year of Guarantor, unqualified audited
Financial Statements
26
showing the financial condition and result of operations of Guarantor as of,
and for the year ended on, such last day, accompanied by (i) the opinion of a
firm of independent certified public accountants acceptable to Lender, based
on an audit using generally accepted auditing standards, that such Financial
Statements were prepared in accordance with GAAP and present fairly the
financial condition and result of operations of Guarantor, and (ii) a
certificate by the President, Chief Operating Officer or Chief Financial
Officer of the Guarantor that such Financial Statements are true, correct and
complete and that no default has occurred and is continuing under its
Guaranty. Failure to comply with this provision may be cured by Guarantor
within thirty (30) days of such failure; and upon such timely cure, Guarantor
shall be in compliance with this provision.
5.3(g) As soon as available, but no later than thirty (30)
days after the last day of each calendar quarter (i) unaudited Financial
Statements (balance sheet and income statement only) showing the financial
condition and results of operations of Guarantor as of, and for the period from
the beginning of the current fiscal year, to such last day, and (ii) a
certificate by the President, Chief Operating Officer or Chief Financial Officer
of the Guarantor that such Financial Statements are true, correct and complete
and that no default has occurred and is continuing under this Guaranty. Failure
to comply with this provision may be cured by Guarantor within fifteen (15) days
of such failure; and upon such timely cure, Guarantor shall be in compliance
with this provision.
5.4 USE OF REPORTS. Borrower acknowledges and agrees that although
Lender may rely on the unaudited financial statements and reports delivered to
Lender pursuant to Section 5.3 to determine whether Borrower is in compliance
with the financial covenants set forth in Section 5.2, Lender may make any
internal adjustment to Lender's records consistent with GAAP to the information
contained in such reports and statements, it determines to be necessary to more
accurately reflect the financial condition of Borrower or to more accurately
reflect the value of the Collateral. Lender shall advise Borrower of any
material adjustments made pursuant to this Section 5.4. Any dispute between
Borrower and Lender as to the interpretation and/or application of GAAP shall be
resolved by obtaining the opinion of the firm of certified public accountants
which audited Borrower's Financial Statements pursuant to Section 5.3(a) or E &
Y Xxxxxxxxx, Xxxxxx Xxxxxxxx, LLP, Price Warehouse Coopers, LLP, KPMGLLP, or
Deloitte & Touche, LLP, at the expense of Borrower.
5.5 AUDITS. Upon two (2) days' prior written notice (or less upon
the agreement of Borrower and Lender), Borrower shall permit Lender or its
designated representative to enter upon Borrower's premises at any of Borrower's
business locations to conduct periodic audits of Borrower's books, accounts,
inventory and operations during Borrower's normal business hours. Such audits
shall be conducted during each calendar quarter during the term of this
Agreement; provided, however, the frequency of such audits may be increased or
decreased within the sole discretion of Lender.
27
SECTION 6. EVENTS OF DEFAULT. The term "Event of Default" means the occurrence
of any one or more of the following events:
6.1 PAYMENT OF OBLIGATIONS. The failure or refusal of Borrower to
pay any portion of the Obligations within three (3) Business Days of the date
the same becomes due in accordance with the terms of the Loan Documents.
6.2 OTHER COVENANTS. The failure or refusal of Borrower to
punctually and properly comply with any covenant, agreement or condition
contained in this Agreement.
6.3 LOAN DOCUMENTS AND SECURITY DOCUMENTS. An Event of Default
shall occur and be continuing under any Security Document or other Loan
Document.
6.4 BANKRUPTCY. (a) Borrower or Guarantor shall commence a
voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor thereto,
(b) an involuntary case is commenced against Borrower or Guarantor and the
petition is not controverted within ten (10) days, or is not dismissed within
thirty (30) days, after commencement of the case, (c) a custodian is appointed
for, or takes charge of, all or any substantial part of the property of Borrower
or Guarantor, (d) Borrower or Guarantor commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to Borrower or Guarantor or there is commenced
against Borrower or Guarantor any such proceeding which remains undismissed for
a period of thirty (30) days, (e) Borrower or Guarantor is adjudicated insolvent
or bankrupt, (f) Borrower or Guarantor makes a general assignment for the
benefit of creditors, (g) Borrower or Guarantor shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its debts generally
as they become due, (h) Borrower or Guarantor shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts, or
(i) Borrower or Guarantor shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing.
6.5 ATTACHMENT. The failure to have discharged, within a period of
thirty (30) days after the receipt of written notice from Persons other than
Lender or actual knowledge thereof, any attachment, sequestration or similar
proceeding against any assets of Borrower, which, individually, or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.6 PAYMENT OF JUDGMENTS. Borrower shall fail to pay, bond, secure
or obtain a stay of enforcement from a court of competent jurisdiction of or
with respect to any money judgment against it or its assets at least ten (10)
days prior to the date on
28
which Borrower's assets may be sold lawfully to satisfy such judgment, if
failure to do so could reasonably be expected to have a Material Adverse
Effect.
6.7 DEFAULT UNDER OTHER DEBT. Borrower shall default in the due
and punctual payment of the principal of or the interest on any Debt, secured or
unsecured, including, without limitation, any Debt or other obligation to any
affiliate or subsidiary of Lender, or in the due performance or observance of
any covenant or condition of any indenture or other material agreement executed
in connection therewith, and such default shall have continued beyond any period
of grace provided with respect thereto and shall have resulted in the
acceleration of the maturity of such Debt if such default could reasonably be
expected to have a Material Adverse Effect.
6.8 MATERIAL ADVERSE EFFECT. The occurrence of any other event or
events which shall have or cause a Material Adverse Effect.
6.9 MISREPRESENTATION. Any statement, representation, or warranty
in the Loan Documents or in any writing ever delivered by Borrower or Guarantor
or on behalf of Borrower or Guarantor to Lender pursuant to the Loan Documents
is false, misleading or erroneous in any material respect when made or when
deemed to be repeated.
SECTION 7. RIGHTS AND REMEDIES.
7.1 REMEDIES. Upon the occurrence and continuance of an Event of
Default, Lender may, at its election, do any one or more of the following
without notice of any kind, including, without limitation, notice of
acceleration or of intention to accelerate, presentment and demand or protest,
all of which are hereby expressly waived by Borrower: (a) declare the entire
unpaid balance of the Obligations, or any part thereof, immediately due and
payable, whereupon it shall be due and payable (provided that, upon the
occurrence of an Event of Default under Section 6.4 (a)-(f) inclusive, the
entire Obligations shall automatically become due and payable without notice or
other action of any kind whatsoever); (b) terminate its commitment to lend
hereunder; (c) exercise the Rights of offset or banker's lien against the
interest of Borrower in and to every account and other property of Borrower
which are in the possession of Lender to the extent of the full amount of the
Obligations; (d) foreclose any or all Liens held by Lender or otherwise realize
upon any and all of the Rights Lender may have in and to the Collateral, or any
part thereof; and (e) exercise any and all other legal or equitable Rights
afforded by the Loan Documents or under Law. Notwithstanding the foregoing,
Lender may, but shall be under no obligation, to use reasonable efforts to
notify Borrower of any of the foregoing; provided, however, the parties hereto
expressly agree that the failure of Lender to provide notice shall not in any
way affect or impair any action taken by Lender, it being understood that any
absolute obligation of notice is hereby waived by Borrower to the fullest extent
permitted by Law.
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7.2 PERFORMANCE BY LENDER. If any covenant, duty or agreement of
Borrower is not performed in accordance with the terms of the Loan Documents,
Lender may, at its option, perform or attempt to perform, such covenant, duty or
agreement on behalf of Borrower. In such event, any amount expended by Lender in
such performance or attempted performance shall be payable by Borrower to Lender
on demand, shall become part of the Obligations and shall bear interest at the
Default Rate from the date of such expenditure by Lender until paid.
Notwithstanding the foregoing, it is expressly understood that Lender does not
assume and shall never have, except by express written consent of Lender, any
liability or responsibility for the performance of any covenant, duty or
agreement of Borrower.
7.3 DELEGATION OF DUTIES AND RIGHTS. Lender may perform any of its
duties or exercise any of its Rights under the Loan Documents by or through its
officers, directors, employees, attorneys, agents or other representatives.
7.4 EXPENDITURES BY LENDER. Borrower shall indemnify Lender for
all court costs, reasonable attorneys' fees, other reasonable costs of
collection and other reasonable sums spent by Lender pursuant to the exercise of
any Right (including, without limitation, any effort to collect or enforce the
Revolving Credit Note) provided herein shall be payable to Lender on demand,
shall become part of the Obligations and shall bear interest at the Default Rate
from the date spent until the date repaid. If a court of competent jurisdiction
determines that Lender has materially breached any of its obligations to
Borrower under this Agreement, Lender shall indemnify Borrower for all court
costs, reasonable attorneys' fees, other reasonable costs and sums spent to
enforce Borrower's rights under this Agreement arising from or related to such
material breach.
SECTION 8. MISCELLANEOUS.
8.1 NOTICES. All notices, requests and other communications to be
given hereunder shall be in writing and shall be given to such party at its
address or fax number set forth on SCHEDULE 8.1 hereto or such other address or
fax number as such party may hereafter specify by notice to Lender and Borrower.
Each such notice, request or other communication shall be effective (i) if given
by fax during the business hours of the party receiving notice, when transmitted
to the fax number specified in this Section and a confirmation of receipt (which
may be telephonic) is given by the recipient, (ii) if given by mail, on the
third day after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means
(including, without limitation, by air courier), when delivered at the address
specified in this Section; provided, that, notices under this (iii) to Borrower
or to Lender shall not be effective until received. All notices shall also be
given, simultaneously and in like manner, to such party's legal counsel at its
address or fax number set forth on SCHEDULE 8.1 hereto or such other address or
fax number as such party may hereafter specify by notice to the other parties.
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8.2 AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement or any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender and Borrower, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
8.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of Lender in exercising any Right or remedy hereunder and no course of
dealing between Borrower and Lender shall operate as a waiver thereof, nor shall
any single or partial exercise of any Right or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other Right or remedy
hereunder. The Rights and remedies herein expressly provided are cumulative and
not exclusive of any Rights or remedies which Lender would otherwise have.
8.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors
and permitted assigns. Borrower may not assign or transfer any of its rights or
obligations hereunder without the written consent of Lender and any purported
assignment in violation of the foregoing shall be null and void.
8.5 NUMBER AND GENDER OF WORDS. Whenever in any Loan Document the
singular number is used, the same shall include the plural where appropriate,
and vice versa; and words of any gender in any Loan Document shall include each
other gender where appropriate. The words "herein," "hereof," and "hereunder,"
and other words of similar import refer to the relevant Loan Document as a whole
and not to any particular part or subdivision thereof.
8.6 HEADINGS. The headings, captions, and arrangements used in any
of the Loan Documents are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify, or modify the terms of the Loan
Documents, nor affect the meaning thereof.
8.7 EXHIBITS AND SCHEDULES. If any EXHIBIT or SCHEDULE, which is
to be executed and delivered, contains blanks, the same shall be completed
correctly and in accordance with the terms and provisions contained and as
contemplated herein prior to, at the time of, or after the execution and
delivery thereof. Each of the EXHIBITS and SCHEDULES are incorporated herein by
this reference.
8.8 FORM AND NUMBER OF DOCUMENTS. Each agreement, document,
instrument, or other writing to be furnished to Lender under any provision of
this Agreement must be in form and substance and in such number of counterparts
as may be satisfactory to Lender and its counsel.
31
8.9 CONFLICTS. Except as otherwise provided in this Agreement and
except as otherwise provided in the other Loan Documents by specific reference
to the applicable provisions of this Agreement, if any provision contained in
this Agreement is in conflict with or is inconsistent with any provision in the
other Loan Documents, the provision contained in this Agreement shall govern and
control. The foregoing notwithstanding, as to the subject matter of the Loan
Document entitled Agreement With Respect to Prevention and Resolution of
Disputes, the provisions of that Loan Document shall govern and control.
8.10 WAIVERS BY BORROWER. TO THE FULLEST EXTENT PERMITTED BY LAW,
EXCEPT AS OTHERWISE PROVIDED FOR IN THIS AGREEMENT, BORROWER WAIVES (A)
PRESENTMENT, DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, NOTICE OF INTENT TO
ACCELERATE THE MATURITY OF THE OBLIGATIONS AND NOTICE OF SUCH ACCELERATION,
PROTEST, DEFAULT, NON-PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT,
EXTENSION, OR RENEWAL; (B) ALL RIGHTS TO NOTICE OF A HEARING PRIOR TO THE
LENDER'S TAKING POSSESSION OR CONTROL OF, OR THE LENDER'S REPLEVY, ATTACHMENT OR
LEVY UPON, THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY
COURT PRIOR TO ALLOWING THE LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; AND (C)
THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS. BORROWER
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL WITH RESPECT TO THIS AGREEMENT
AND THE TRANSACTIONS EVIDENCED BY THIS AGREEMENT.
8.11 WAIVER OF JURY. LENDER AND BORROWER HEREBY VOLUNTARILY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN
LENDER AND BORROWER ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN BORROWER AND LENDER IN
CONNECTION WITH THE LOAN DOCUMENTS, THIS AGREEMENT, OR ANY OTHER AGREEMENT OR
DOCUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO ENTER INTO
THE FINANCING TRANSACTION. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND
OR MODIFY LENDER'S ABILITY TO PURSUE ITS REMEDIES, INCLUDING, BUT NOT LIMITED
TO, ANY CONFESSION OR JUDGMENT OR COGNOVIT PROVISION CONTAINED IN THE LOAN
DOCUMENTS OR ANY OTHER DOCUMENT RELATED HERETO.
8.12 CHANGES IN GAAP. All accounting and financial terms used in
any of the Loan Documents and the compliance with each covenant contained in the
Loan Documents which relates to financial matters shall be determined in
accordance with GAAP, except to the extent that a deviation therefrom is
expressly stated in such Loan Documents. Should a change in GAAP require a
change in any method of accounting, then such change shall not result in an
Event of Default if, at the time of such change, such Event of Default had not
occurred and was not then continuing, based upon the former methods of
accounting used by or on behalf of Borrower; provided that, after any such
change in accounting methods, the Financial Statements required to be delivered
32
to Lender pursuant to the terms hereof shall be prepared in compliance with
such new method or methods of accounting but accompanied by such information,
in form and detail satisfactory to Lender, that will allow Lender to readily
determine the effect of such changes in accounting methods on such Financial
Statements, and, for the purpose of determining whether an Event of Default
has occurred, Lender shall look solely to such Financial Statements as
adjusted to reflect compliance with such former method or methods of
accounting.
8.13 EXCEPTIONS TO COVENANTS. Borrower shall not take any action or
fail to take any action which is permitted as an exception to any of the
covenants contained in any of the Loan Documents if such action or omission
would result in the breach of any other covenant contained in any of the Loan
Documents.
8.14 SURVIVAL. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Documents shall survive
all closings under the Loan Documents and, except as otherwise indicated, shall
not be affected by any investigation made by any party. Borrower's obligations
under Sections 5.1(e) and 5.1(i) hereof shall remain operative and in full force
and effect regardless of the termination of this Agreement, the repayment of the
Revolving Credit Note, or the existence of any investigation made on behalf of
the Lender regarding the representations and warranties made by Borrower in
connection with the Loan Documents. If and to the extent that the obligations of
Borrower under Sections 5.1(e) and 5.1(i) are unenforceable for any reason,
Borrower hereby agrees to make the maximum contribution to the payment and
satisfaction of such obligations that is permissible under applicable Law.
8.15 GOVERNING LAW; VENUE. THIS AGREEMENT AND ALL OTHER LOAN
DOCUMENTS AND SECURITY DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF
OHIO. VENUE FOR ANY PROCEEDING RELATED TO
OR ARISING FROM THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS SHALL BE FRANKLIN
COUNTY,
OHIO, AT THE OPTION OF LENDER.
8.16 MAXIMUM INTEREST RATE. It is the intention of the parties
hereto to comply with applicable usury laws (now or hereafter enacted);
accordingly, notwithstanding any provision to the contrary in this Agreement,
the Revolving Credit Note, the other Loan Documents, or any other document
relating hereto, in no event shall this Agreement or any such other document
require the payment or permit the collection of interest in excess of the
maximum amount permitted by such laws. If from any circumstances whatsoever,
fulfillment of any provision of this Agreement or of any other document
pertaining hereto or thereto, shall involve transcending the limit of validity
prescribed by law for the collection or charging of interest, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstances Lender shall ever receive anything of value
as interest or deemed interest by applicable law under this Agreement, the
Revolving Credit Note, the other Loan Documents, or any
33
other document pertaining hereto or otherwise an amount that would exceed the
highest lawful rate, such amount that would be excessive interest shall be
applied to the reduction of the principal amount owing under the Revolving
Credit Note or on account of any other indebtedness of Borrower to Lender,
and not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal of such indebtedness, such excess shall be
refunded to Borrower. In determining whether or not the interest paid or
payable with respect to any indebtedness of Borrower to Lender, under any
specific contingency, exceeds the highest lawful rate, Borrower and Lender
shall, to the maximum extent permitted by applicable law, (a) characterize
any non-principal payment as an expense, fee or premium rather than as
interest, (b) exclude voluntary prepayments and the effects thereof, (c)
amortize, prorate, allocate and spread the total amount of interest
throughout the full term of such indebtedness so that the actual rate of
interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law, and/or (d) allocate interest between portions of
such indebtedness, to the end that no such portion shall bear interest at a
rate greater than that permitted by applicable law.
8.17 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected thereby.
8.18 LENDER NOT IN CONTROL. None of the covenants or other
provisions contained in this Agreement shall, or shall be deemed to, give Lender
the Right or power to exercise control over the affairs or management of
Borrower, the power of Lender being limited to the Right to exercise the
remedies provided in Section 7.
8.19 CONFIDENTIALITY. Lender shall not at any time use or disclose
to any Person, except (a) to any professional adviser who needs to know such
information in connection with the transactions contemplated hereby; (b) in
connection with any litigation or arbitral proceedings commenced by or against
Lender or any of its affiliates; (c) in connection with any proposed sale or
transfer of an interest in Lender or of an interest or participation in Lender's
rights or obligations under this Agreement; or (d) as required to be disclosed
by judicial or administrative process or by any other requirement of law,
information concerning Borrower, Guarantor, their affiliates and their
respective businesses, operations and plans, all of which is confidential and/or
proprietary in nature and subject to the terms hereof (each item individually
and all collectively are referred to herein as "Confidential Information");
PROVIDED that the foregoing shall not apply to the extent that such information
was (x) previously known by Lender from sources other than Borrower or Guarantor
or their respective directors, officers or agents, (y) in the public domain
through no fault of Lender, or (z) lawfully acquired by Lender on a
non-confidential basis from other sources who are not known by Lender to be
bound by a confidentiality agreement with Borrower or Guarantor. Lender shall
inform each of its employees and other representatives who receives
34
Confidential Information of the requirements of this Section 8.19 and shall
cause each such employee or representative to comply with such requirements.
If Lender or any of its representatives is requested or required (orally or
in writing, by interrogatory, subpoena, civil investigatory demand or any
similar process relating to any legal proceeding, investigation, hearing or
otherwise) to disclose Confidential Information, Lender shall provide
Borrower with prompt notice in advance of such disclosure so that Borrower
may seek a protective order or other appropriate remedy and/or waive
compliance with this Section 8.19, and Lender agrees to cooperate with
Borrower in pursuing any such course of action. In the event that any such
protective order or other remedy is not obtained or if Borrower waives
compliance with the provisions of this Section 8.19, Lender shall furnish
only such information as Lender is advised by its legal counsel to be legally
required and shall exercise its best efforts to obtain assurance that
confidential treatment will be accorded to any information which is compelled
to be disclosed. The parties agree that Borrower's remedy at law for breach
hereof is inadequate and that Borrower shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief to enjoin
any breach or threatened breach hereof without proof of any actual damages
that may be or may have been caused to it by such breach. The foregoing
remedies shall be in addition to any other right, power or remedy available
to Borrower under law or equity. No forbearance, failure or delay in
exercising any such right, power or remedy shall operate as a waiver or
preclude the further exercise thereof. The provisions of this Section 8.19
shall survive termination of this Agreement and repayment of the Revolving
Credit Loans and shall not be extinguished thereby. The Lender may at any
time sell, assign or transfer one or more interests or participations in all
or any part of its rights or obligations under this Agreement to one or more
purchasers whether or not related to the Lender and nothing in this Section
8.19 shall be deemed or construed to limit this Right of Lender.
8.20 ENTIRETY AND AMENDMENTS. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT BETWEEN
BORROWER AND LENDER AND SUPERSEDE ALL PRIOR PROPOSALS, AGREEMENTS AND
UNDERSTANDINGS RELATING TO THE SUBJECT MATTER HEREOF. BORROWER CERTIFIES THAT IT
IS RELYING ON NO REPRESENTATION, WARRANTY, COVENANT OR AGREEMENT EXCEPT FOR
THOSE SET FORTH HEREIN AND THE OTHER LOAN DOCUMENTS OF EVEN DATE HEREWITH.
8.21 MULTIPLE COUNTERPARTS. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one Agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one such counterpart.
35
Lender:
BANK ONE, NA
By:
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
Borrower:
LONG BEACH ACCEPTANCE CORP.
By:
-----------------------------------------
Name:
Title:
36
EXHIBITS
TO
LOAN AGREEMENT
EXHIBIT A REVOLVING CREDIT NOTE
EXHIBIT B FINANCIAL REPORT CERTIFICATE
EXHIBIT C LOAN GUIDELINES
EXHIBIT D BORROWING BASE REPORT
EXHIBIT E ADVANCE REQUEST FORM
EXHIBIT F FORM OF ASSIGNMENT
EXHIBIT A
REVOLVING CREDIT NOTE
$30,000,000 EFFECTIVE AS OF
AUGUST 16, 2000
FOR VALUE RECEIVED, the undersigned, LONG BEACH ACCEPTANCE CORP., a
Delaware corporation, ("MAKER"), hereby unconditionally promises to pay on the
Commitment Termination Date to the order of BANK ONE, NA, a national banking
association ("LENDER"), not later than noon, Eastern Time, at its office located
at 000 Xxxx Xxxxxx Xxxx Xxxxxxxxx, Xxxxxxxx, Xxxx 00000 or at such other place
as may be designated by Lender from time to time, in lawful money of the United
States of America and in immediately available funds, the principal amount of
the lesser of (i) THIRTY MILLION AND NO/100 DOLLARS ($30,000,000), or (ii) the
aggregate unpaid principal balance of all Revolving Credit Loans (as defined in
that certain
Loan Agreement, dated as of even date herewith by and between Maker
and Lender, as amended, modified or supplemented from time to time, the "
LOAN
AGREEMENT") made by Lender to the undersigned pursuant to the
Loan Agreement,
together with any interest from the date hereof until maturity at the rates per
annum provided below. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to such terms in the
Loan Agreement.
1. RATES OF INTEREST AND PAYMENTS. Subject to the provisions of the
Loan Agreement, Maker agrees to pay interest in like money on the unpaid
principal amount hereof from time to time outstanding from the date hereof until
the principal balance hereof is paid in full at a fluctuating rate per annum
equal to the applicable rate of interest as set forth in Section 2.5 of the Loan
Agreement. Principal and interest payments on the unpaid principal balance and
accrued interest due hereunder shall be made and applied in accordance with the
provisions of the Loan Agreement, particularly Sections 2.5, 2.6, 2.7, 2.8, 2.9,
2.11, 2.12 and 2.13 of the Loan Agreement. The provisions of Sections 2.6, 2.7
and 8.16 of the Loan Agreement shall control the computation of interest
hereunder.
2. NOTICES. All notices required or permitted hereunder shall be in
writing, and given in the matter, and addressed to the Maker and Lender at
the addresses set forth in, Section 8.1 of the Loan Agreement, or at such
other address as such party may from time to time designate by written notice
to the others.
3. LOAN AGREEMENT. This is the Revolving Credit Note referred to in
the Loan Agreement, and the holder hereof is entitled to all the benefits
provided therein and in the other Loan Documents. Reference is made to the
Loan Agreement and the other Loan Documents which, among other things,
contain provisions regarding optional and mandatory prepayment and
acceleration of maturity upon certain Events of
1
Default described therein. This Revolving Credit Note is secured by the Security
Documents.
4. WAIVERS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR IN THE LOAN
AGREEMENT, TO THE FULLEST EXTENT PERMITTED BY LAW, THE MAKER, SIGNERS, SURETIES,
GUARANTORS, ENDORSERS AND OTHER PARTIES EVER LIABLE FOR PAYMENT OF ANY SUMS OF
MONEY PAYABLE ON THIS REVOLVING CREDIT NOTE JOINTLY AND SEVERALLY WAIVE
VALUATION AND APPRAISAL, DEMAND, PRESENTMENT, NOTICE OF DISHONOR, NOTICE OF
INTENT TO DEMAND OR ACCELERATE PAYMENT HEREOF, NOTICE OF DEMAND, NOTICE OF
ACCELERATION, DILIGENCE IN COLLECTING, GRACE, NOTICE, AND PROTEST, AND AGREE TO
ONE OR MORE RENEWALS OR EXTENSIONS FOR ANY PERIOD OR PERIODS OF TIME, PARTIAL
PAYMENTS, AND RELEASES OR SUBSTITUTIONS OF SECURITY, IN WHOLE OR IN PART, WITH
OR WITHOUT NOTICE, BEFORE OR AFTER MATURITY. NO WAIVER BY LENDER OF ANY OF ITS
RIGHTS OR REMEDIES HEREUNDER OR UNDER ANY OTHER DOCUMENT EVIDENCING OR SECURING
THIS REVOLVING CREDIT NOTE OR OTHERWISE SHALL BE CONSIDERED A WAIVER OF ANY
OTHER SUBSEQUENT RIGHT OR REMEDY OF LENDER; NO DELAY OR OMISSION IN THE EXERCISE
OR ENFORCEMENT BY LENDER OF ANY RIGHTS OR REMEDIES SHALL EVER BE CONSTRUED AS A
WAIVER OF ANY RIGHT OR REMEDY OF LENDER; AND NO EXERCISE OR ENFORCEMENT OF ANY
SUCH RIGHTS OR REMEDIES SHALL EVER BE HELD TO EXHAUST ANY RIGHT OR REMEDY OF
LENDER.
5. LEGAL FEES. If this Revolving Credit Note shall be collected by
legal proceedings or through a probate or bankruptcy court, or shall be
placed in the hands of an attorney not a salaried employee of Lender for
collection after an Event of Default or maturity, the undersigned agrees to
indemnify Lender for all costs of collection, including, but not limited to
court costs and reasonable attorneys' fees.
6. ACCELERATION. Upon the occurrence of one or more of the Events of
Default specified in the Loan Agreement, the holder thereof may, at its
option, declare the entire unpaid balance of principal and accrued interest
on this Revolving Credit Note to be immediately due and payable, without
notice of any kind.
7. AGREEMENT WITH RESPECT TO PREVENTION AND RESOLUTION OF DISPUTES.
THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH A CERTAIN AGREEMENT WITH RESPECT TO PREVENTION
AND ENFORCEMENT OF DISPUTES ("DISPUTE RESOLUTION AGREEMENT"), THE TERMS AND
PROVISIONS OF WHICH ARE INCORPORATED HEREIN. AMONG OTHER PROVISIONS, THE
DISPUTE RESOLUTION AGREEMENT PROVIDES FOR WAIVER OF JURY TRIAL BY LENDER AND
MAKER, NONEXCLUSIVE JURISDICTION AND VENUE IN FRANKLIN COUNTY,
OHIO, AND
CONSTRUCTION AND INTERPRETATION UNDER THE LAWS OF THE STATE OF
OHIO.
8. NOTICE OF FINAL AGREEMENT. THIS AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
2
9. MISCELLANEOUS. Maker and Lender intend that this Revolving Credit
Note shall be in compliance with all applicable laws and shall be enforceable in
accordance with its terms. If any provision of this Revolving Credit Note shall
be illegal or unenforceable, such provision shall be deemed cancelled to the
same extent, as though it never had appeared herein, but the remaining
provisions shall not be affected thereby. In the event that the interest rate
provided for in this interest rate shall be deemed modified to the highest rate
permitted under such applicable usury law and all payments theretofore made
shall be credited as though such rate had been the rate originally provided for
herein.
Any and all references in this Revolving Credit Note to any other
document or documents shall be references to such other document or documents
as the same may from time to time be modified, amended, renewed, consolidated
or extended.
The term "Maker" as used herein shall include the undersigned and its
successors and assigns; provided that this paragraph shall not be deemed to be a
consent or approval by the Lender of any transfer or assignment by Maker.
This Revolving Credit Note is executed as of the date and year first
above written.
MAKER:
LONG BEACH ACCEPTANCE CORP.
___________________________
By:
Its:_______________________
3
EXHIBIT B
FINANCIAL REPORT CERTIFICATE
[Letterhead of Borrower]
_____________________, 2000
Bank One, NA-OH1-1009
000 Xxxx Xxxxxx Xxxx Xxxx., Xxxxx 000X
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
Ladies and Gentlemen:
The undersigned, an authorized officer of Long Beach Acceptance Corp.
("BORROWER"), gives this Financial Report Certificate (the "CERTIFICATE") to
Bank One, NA ("LENDER") in accordance with the requirements of that certain Loan
Agreement effective as of ________, 2000, between Borrower and Lender ("LOAN
AGREEMENT"). Capitalized terms used in this Certificate, unless otherwise
defined herein, shall have the meanings ascribed to them in the Loan Agreement.
1. Based upon my review of the balance sheets and statements of income
and other financial information of Borrower and of Ameriquest Mortgage Company
("Guarantor") for the [fiscal year] [month] ending _________, ____, copies of
which are attached hereto, I hereby certify that:
(a) The Borrower's ratio of Debt to Net Worth as of
____________ is _____ to ____ . (See Section 5.2(i) of the
Loan Agreement.)
(b) The Borrower's Net Worth as of _______________________ is
__________________. (See Section 5.2(j) of the Loan
Agreement.)
(c) As of ____________, the aggregate principal balances of
Contracts in Class Type II included in the Borrowing Base is
_____% of the aggregate principal balances of all Contracts
included in the Borrowing Base (See Section 1.5 of the Loan
Agreement.).
(d) As of ______________, the aggregate principal balances of
Contracts in Class Type IV included in the Borrowing Base is
___% of the aggregate principal balances of all Contracts
included in the Borrowing Base (See Section 1.5 of the Loan
Agreement.).
1
2. No Event of Default exists and is continuing on the date hereof,
other than ________________ [in none, so state].
Very truly yours,
________________________________
Printed Name:___________________
Title:__________________________
2
*****************************************
NOTE: ILLEGIBLE WORDS ENCASED IN BRACKETS
*****************************************
LBAC NATIONAL PROGRAMS (Investor Matrix) CALIFORNIA ONLY
THE M.A.C. PROGRAM-SM- EFFECTIVE 1/1/2000
MATRIX OF AUTOMOBILE CREDIT
-------------------------------------- --------------------- ----------------- ----------------- ---------------- -----------------
LBAC INVESTOR PROGRAMS CLASS I CLASS IIA CLASS IIB CLASS III LIMITED CREDIT
-------------------------------------- --------------------- ----------------- ----------------- ---------------- -----------------
ACQUISITION FEE Refer to State Matrix
[ ] FEE Refer to State Matrix
[ACCOUNT] FEE Refer to State Matrix
LOAN AMOUNTS
Minimum $5,000 $5,000 $5,000 $3,000 $3,000
Maximum $50,000 $40,000 $35,000 $25,000 $17,500
MAXIMUM ADVANCE PROGRAM 145% 145% 145% 140% 125%
--------------------- ------------------ ----------------
Invoice/NADA/XXXXXX CALIFORNIA ONLY [illegible] [illegible] [illegible] 115% 100%
--------------------- ------------------ ----------------
[illegible] [illegible] [illegible]
--------------------- ------------------ ----------------
Plus TT&L YES YES YES YES INCLUDES
--------------------- ----------------- ----------------- ---------------- -----------------
Plus Warranty [illegible] [illegible] [illegible] [illegible] [illegible]
--------------------- ----------------- ----------------- ---------------- -----------------
4x4/Highline/Premium Warranty $2,000 $2,000 $2,000 $2,000 $2,000
--------------------- ----------------- ----------------- ---------------- -----------------
Plus Alarm $500 $500 $500 $500 $500
--------------------- ----------------- ----------------- ---------------- -----------------
Plus Credit Life and Disability Xxxxx Xxx Xxxxx Xxx Xxxxx Xxx Xxxxx Xxx Xxxxx Cap
PROGRAM DESCRIPTION
Minimum Down Payment Required The issuer of $1000 or 10% Cash down 10% 10% 15%
--------------------- ----------------- ----------------- ---------------- -----------------
Residence and Employment Stability 2-2 YR 2-2 YR 1-1 YR 1-1 YR 2-1 YR
--------------------- ----------------- ----------------- ---------------- -----------------
Qualifying Monthly Income Gross
(Individual) Refer to State Matrix
Qualifying Monthly Income Gross
(Joint) Refer to State Matrix
Debt Ratio Gross w/Income less w/Income less w/Income less w/Income less
than $2000-50% than $2000-50% than $2000-50% than $2000-50%
w/Income greater w/Income greater w/Income greater w/Income greater
than $2000-55% than $2000-55% than $2000-55% than $2000-55% 50%
less than less than
2000 = 18 2000 = 18
Max Car Payment to Gross Income 25% 25% 25% greater than greater than
2000 = 20 2000 = 20
Rent Factor Refer to State Matrix
Insurance Factor $100 $100 $100 $100 $100
--------------------- ----------------- ----------------- ---------------- -----------------
2Y 2 Rev & 1 Ins with 1Y 2 Rev or 1 Ins
high 1 Y 2 Rev w/high 8 Mon 2 Rev or
Minimum Credit History credit of $3000 or 1 Ins credit of $1500 1 Ins N/A
Repossessions NONE 2 YR 1 YR 1 YR N/A
Bankruptcies NONE 2 YR-XXXXX 1 YR-XXXXX XXXXX N/A
Tax Liens None (open) 5% 5% 5% N/A
--------------------- ----------------- ----------------- ---------------- -----------------
Derogs:Judgement, Collection
and/or Charge Offs [illegible] [illegible] [illegible] [illegible] N/A
--------------------- ----------------- ----------------- ---------------- -----------------
CUR-MAX CURRENT CURRENT [illegible] N/A
Installment PREV 3X30 MAX PREV 60 MAX PREV N/A [illegible]
--------------------- ----------------- ----------------- ---------------- -----------------
CUR-MAX CURRENT CURRENT [illegible] N/A
Auto PREV 3X30 MAX PREV 60 MAX PREV N/A [illegible]
--------------------- ----------------- ----------------- ---------------- -----------------
CUR-MAX CURRENT CURRENT [illegible] N/A
Mortgage PREV 0x30 MAX PREV 60 MAX PREV N/A [illegible]
--------------------- ----------------- ----------------- ---------------- -----------------
CUR-MAX CURRENT [illegible] [illegible] N/A
Revolving: Minor/Major PREV 1X60 MAX PREV 80-80
--------------------- ----------------- ----------------- ---------------- -----------------
References 1 3 5 5 5
--------------------- ----------------- ----------------- ---------------- -----------------
--------------------- ----------------- ----------------- ---------------- -----------------
Cars in excess of 90,000 miles can only be advanced up to TERM EXTENSIONS
100% including TT&L (except CA) No term extensions without LBAC prior approval
No term extensions on cars with excess mileage
[ ]Max rebatable is $2000 on limited credit Maximum extension on Class III - 6 months-
[ ]Or NADA or XXXXXX value whichever is less (CA $500) Max term on Class III and Limited Credit is 60 months.
Factory rebate may be applied towards total down payment Max term 66 Mos. on new cars (including extension)
[ ]3yr history or residence & employment to be listed on application Class I and IIA only - 72 month term available for
[ ]For purpose of debt ratio use 3% payment factor on balances greater 1997 and newer vehicles
than $500 and less than 2 years old (in states where garnishments No term extension on Limited Credit
are allowed.)
[ ]Special consideration will be given to borrowers with stability in
both residence and employment, compensating factors, medical
judgments, and non credit judgments
------------------------
E X H I B I T
C
------------------------
CALIFORNIA ONLY 12/20/99 CALIFORNIA MATRIX
EXHIBIT D
BORROWING BASE
1.(a) Borrowing Base total as of the last date of $_____________
determination, _____________, ________, an
amount equal to ninety percent (90%) of the
aggregate amount of the Principal Balance
outstanding under the Eligible contracts as
calculated by Borrower's accounting systems and
as agreed to by Lender.
2. Ninety percent (90%) of the aggregate amount of $_____________
the Principal Balance for all Eligible Contracts as
set forth in the Advance Request Report.
3.(a) Ninety percent (90%) of the aggregate of the $_____________
Principal Balance for any Eligible Contract(s)
prepaid in whole or in part as per Section 2.11 of
the Loan Agreement.
3.(b) Mandatory Prepayment of Revolving Credit Loans $_____________
as per Section 2.9 of the Loan Agreement.
4. Adjustments as needed and agreed. $_____________
5. Borrowing Base ceiling. $30,000,000.00
6. Cash equivalent for amounts exceeded in Item 6. $_____________
7. Borrowing Base (Lines 1(a) + 2-3(a) - 3(b) +/- 4-8) $_____________
EXHIBIT E
ADVANCE REQUEST FORM
TO: Bank One, NA
000 Xxxx Xxxxxx Xxxx Xxxx., Xxxxx 000X
Xxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
DATED AS OF: ________________________
BORROWER: Long Beach Acceptance Corp.
Ladies and Gentlemen:
The undersigned is the an authorized officer of the Borrower, and is
authorized by the Borrower to make and deliver this certificate pursuant to that
certain Loan Agreement effective as of _______________, 2000, by and between
Borrower and Bank One, NA (as the same may be amended, renewed, extended,
modified and/or restated from time to time, the "AGREEMENT"). All terms defined
in the Agreement shall have the same meaning herein. Borrower hereby requests a
Revolving Credit Loan in the amount of $_____________ in accordance with SECTION
2.2 of the Agreement.
In connection with the foregoing and pursuant to the terms and
provisions of the Agreement, the Borrower hereby represents and warrants that:
(a) All of the representations and warranties of Borrower
contained in the Agreement and in any of the other Loan Documents are true and
correct in all material respects on the date hereof, as though made on and as of
such date.
(b) No change has occurred in the business, assets, operations,
prospects or financial or other condition of the Borrowers which could
reasonably be expected to have a Material Adverse Effect since the date of the
last Revolving Credit Loan.
(c) The aggregate unpaid principal amount of all Revolving
Credit Loans, after giving effect to this Revolving Credit Loan, is equal to
or less than the lesser of (x) the Borrowing Base, and (y) the Commitment.
(d) All information supplied herein and herewith is true, correct,
and complete as of the date hereof.
(e) No Event of Default exists and is continuing on the date
hereof, other than _____________________________________________________________
______________________________________________________[if none, so state].
Sincerely,
__________________________________
Printed Name:_____________________
Title:____________________________
EXHIBIT F
ACCOUNT NUMBER: #######
--------------------------------------------------------------------------------
SUBSEQUENT ASSIGNMENT
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are hereby
acknowledged, pursuant to the Loan Agreement dated as of August ___, 2000 by
and between BANK ONE, NA as Lender and the undersigned as Borrower, as it may
have been supplemented, amended or restated from time to time (the "Loan
Agreement"). THE UNDERSIGNED ASSIGNS TO AND GRANTS TO BANK ONE, NA ("BANK"),
000 XXXX XXXXX XXXXXX, XXXXXXXX, XXXX 00000, AN ASSIGNMENT OF AND A SECURITY
INTEREST IN THIS AGREEMENT, CONTRACT NUMBER [#######], DATED [DD/MM/YY]
BETWEEN [BORROWER'S NAME(S)] AS BUYER(S) AND [DEALER NAME] AS SELLER, FOR THE
PURCHASE OF THE FOLLOWING VEHICLE: [YEAR, MAKE, MODEL, VIN], THE PROPERTY
DESCRIBED THEREIN AND THE OBLIGATIONS OF THE DEBTOR THEREUNDER. THIS AGREEMENT
MAY NOT BE SOLD, ASSIGNED OR SUBJECTED TO A SECURITY INTEREST WITHOUT BANK'S
PRIOR WRITTEN CONSENT (THIS "ASSIGNMENT"). This Assignment is pursuant to the
terms of the Loan Agreement or such other Loan Documents as may be in effect
between the undersigned and Bank, its successors or assigns.
LONG BEACH ACCEPTANCE CORP.
BY: [authorized original signatory]
NAME: [printed name of authorized signatory]
TITLE: [title of authorized signatory]
DATE: [date funded - accounting]
SCHEDULES
SCHEDULE 3.1 CLOSING DOCUMENTS AND CONDITIONS
SCHEDULE 4.4 PRIOR NAMES AND TRADE NAMES OF BORROWER
SCHEDULE 4.8 PENDING LITIGATION INVOLVING BORROWER
SCHEDULE 4.11 EMPLOYEE BENEFIT PLANS
SCHEDULE 4.15 CONSENTS REQUIRED
SCHEDULE 4.16 OWNERSHIP
SCHEDULE 5.2(a)(1) DEBT TO BE SUBORDINATED
SCHEDULE 5.2(a)(2) WAREHOUSE FACILITIES AND COLLATERAL
SCHEDULE 5.2(p) BUSINESS LOCATIONS
SCHEDULE 8.1 NOTICES
SCHEDULE 3.1
CLOSING DOCUMENTS AND CONDITIONS
1. LOAN AGREEMENT. This Loan Agreement shall have been duly executed and
delivered to Lender by Borrower.
2. REVOLVING CREDIT NOTE. Lender shall have received the Revolving Credit
Note, dated on or about the Closing Date, conforming to the requirements of this
Loan Agreement and duly executed by Borrower.
3. GUARANTY AGREEMENT OF GUARANTOR. Lender shall have received the
Guaranty Agreement of Guarantor dated on or about the Closing Date, duly
executed by Guarantor.
4. AGREEMENT WITH RESPECT TO PREVENTION AND RESOLUTION OF DISPUTES. Lender
shall have received the Agreement With Respect To Prevention and Resolution of
Disputes, dated on or about the Closing Date, duly executed by Borrower and
Guarantor.
5. CUSTODY AGREEMENT. Lender shall have received a Custody Agreement,
dated on or about the Closing Date, duly executed by the Custodian.
6. SECURITY AGREEMENT. Lender shall have received the Security Agreement
of Borrower, dated on or about the Closing Date, duly executed by Borrower.
7. FINANCING STATEMENTS. All financing statements required or, in Lender's
opinion, advisable to be filed in order to create, in favor of Lender, a first
priority perfected Lien on the Contracts with respect to which a Lien can be
perfected by means of filing a UCC financing statement, shall have been properly
executed and delivered to Lender and filed of record, and all necessary filing,
subscription and inscription fees and all recording and other similar fees, and
all taxes and other expenses related to such filings and recordings shall have
been paid in full on behalf of the above referenced parties.
8. UCC SEARCHES. Lender shall have received the results of UCC searches
showing all filings of purported lien holders against Borrower in such other
offices as Lender may require, each search dated a date reasonably close to the
Closing Date.
9. RELEASES AND/OR ASSIGNMENTS. Lender shall have received releases and/or
assignments or agreements to execute such releases and/or assignments of all
existing Liens (other than permitted liens) on the Collateral.
10. RELATED DOCUMENTS RELATIVE TO BORROWER. Lender shall have received the
following, dated reasonably close to the Closing Date, for Borrower:
a. GENERAL CERTIFICATE WITH INCUMBENCY. Lender shall have
received a Certificate from the President, Secretary, Chief Financial Officer or
Chief Executive Officer of Borrower, dated the Closing Date, to the effect that:
(i) the representations and warranties made by Borrower in the Loan Documents to
which such Borrower is a party or which are contained in any certificate,
document or financial or other statement furnished at the time of or in
connection with the transaction contemplated hereunder shall be correct on and
as of the Closing Date as if made on and as of such date; (ii) no Default or
Event of Default shall have occurred and be continuing on the Closing Date; and,
(iii) no outstanding or unpaid judgment and/or actions, suits or proceedings,
before any court or before any governmental or administrative body or agency
which could reasonably be expected to prevent or preclude the consummation of
the transactions contemplated hereunder are pending or (to the best of his
knowledge) are threatened against Borrower.
b. CORPORATE PROCEEDINGS. Lender shall have received a copy of
the resolution of the Board of Directors of Borrower authorizing: (i) the
execution, delivery and performance of all Loan Documents to which such Borrower
is a party, (ii) the consummation of the transactions contemplated hereunder or
thereunder; and, (iii) the borrowings and grants of Liens under the Loan
Documents, all of the above certified by the secretary of Borrower on or about
the Closing Date. Such certificate shall state that the resolutions set forth
therein have not been amended, modified, revoked or rescinded as of the date of
such certificates.
c. INCUMBENCY CERTIFICATES. Lender shall have received a
certificate of the President, Secretary and/or Chief Executive Officer of
Borrower dated on or about the Closing Date, as to the incumbency and signature
of the officers of Borrower executing each of the Loan Documents to which
Borrower is a party, together with evidence of the incumbency of such Chief
Executive Officer, Secretary and/or President.
d. CHARTER DOCUMENTS AND BY-LAWS. Lender shall have received: (i)
a copy, certified as of the date reasonably close to the Closing Date by the
secretary of the state of incorporation or organization, of the Articles of
Incorporation, together with all amendments thereto, of Borrower; (ii) a copy,
certified as of the Closing Date by the Secretary, Chief Executive Officer
and/or President of Borrower, of its by-laws in effect on the Closing Date;
(iii) a certificate or telex confirmation as of a date reasonably close to the
Closing Date from the Secretary of State or other appropriate governmental
officer as to Borrower as to the existence and standing of Borrower; (iv) a
certificate dated as of a date reasonably close to the Closing Date from each
state in which Borrower is qualified to do business as to the existence and
standing of Borrower; and, (v) a certificate dated as of the Closing Date from
the Secretary, Chief Executive Officer and/or President of Borrower to the
effect that the documents delivered pursuant to
clauses (i) and (ii) are true and correct copies of such documents and, as
relates to the documents delivered pursuant to clause (i), as on file with
the secretary of state of the state of incorporation or organization or other
governmental officer and no action has been taken to amend, modify or repeal
such documents delivered pursuant to clauses (i) and (ii) above, the same
being in full force and effect in such form on the Closing Date.
11. RELATED DOCUMENTS RELATIVE TO GUARANTOR. Lender shall have received
documents, certificates, and information as described in paragraph 10 (a through
d, except that the certificate referred to in paragraph 10(d)(iv) shall be
limited to the State of California) and paragraph 16 as to Guarantor.
12. INSURANCE. Lender shall have received from Borrower evidence
satisfactory to Lender as to the satisfaction of the requirements relating to
insurance set forth in this Agreement.
13. LOAN GUIDELINES. The Loan Guidelines shall have been delivered by
Borrower to Lender which shall comport with the requirements of this Loan
Agreement.
14. REGULATORY APPROVALS: CONSENTS. Lender shall have received evidence
satisfactory to Lender that all requisite regulatory approvals and consents, if
any, of any other Person with respect to the transactions contemplated by the
Loan Documents have been obtained in order to consummate the transactions
contemplated hereby.
15. FINANCIAL STATEMENTS. Lender shall have received the audited,
consolidated Financial Statements for Guarantor and its subsidiaries for fiscal
year 1999 and projected Financial Statements for Guarantor and its Subsidiaries
for fiscal year 2000.
16. COMMITMENT FEE. Lender shall have received the Commitment Fee.
17. ABSENCE OF CHANGES. Lender shall have received evidence satisfactory to
Lender including, without limitation, a certificate executed by the President,
Chief Financial Officer or Chief Executive Officer of Borrower, to such effect,
that no material adverse change has occurred in the business, assets,
operations, prospects or financial or other condition of Borrower since the date
of the Current Financials.
18. REPORTS. Lender shall have received a Borrowing Base Report dated on or
about the Closing Date.
19. SUBORDINATION AGREEMENTS. Lender shall have received Subordination
Agreements in favor of Lender, in form and content acceptable to Lender in its
sole discretion, authorized and executed by each Person to whom/which Borrower
owes
Debt or other payment obligations as may be required by Lender pursuant to
Section 5.2(a).
20. OPINION OF COUNSEL. Lender shall have received the opinion of
Borrower's and Guarantor's legal counsel regarding the loan transaction
hereunder and such issues related thereto as Lender may require.
21. DUE DILIGENCE. The results of Lender's, its auditor's and legal
counsel's due diligence regarding the transaction hereunder shall be
satisfactory to Lender, and Lender shall be satisfied with the assets, books and
records and the business and financial condition of Borrower.
22. OTHER DOCUMENTS. Such other agreements, documents, instruments,
opinions, certificates and evidences as Lender or its legal counsel may request.
All of the foregoing shall be in a form and of a substance acceptable
to Lender.
SCHEDULE 4.4
PRIOR NAMES AND TRADE NAMES OF BORROWER
Long Beach Acceptance Texas (trade name; no longer used in ongoing operations)
SCHEDULE 4.8
PENDING LITIGATION INVOLVING BORROWER
(i) IN RE AUTO LIQUIDATORS OF ORANGE COUNTY (U.S. Bankruptcy Court, California)
Auto Liquidators and LBAC entered into a sublease under which Auto Liquidators
leased from LBAC a used car lot, and a bailment agreement under which Auto
Liquidators solicited offers for the purchase of repossessed and other vehicles
held by LBAC. Auto Liquidators breached the sublease and the bailment agreement
by selling vehicles and failing to remit the proceeds to LBAC, and failing to
pay rent and utilities. Additional discrepancies regarding contracts LBAC
purchased from Auto Liquidators and checks received from Auto Liquidators were
discovered. In addition, vehicles were sold out of trust, or otherwise illegally
sold by Auto Liquidators, On September 30, 1997, LBAC and Auto Liquidators
jointly terminated the sublease and Auto Liquidators abandoned the premises. An
investigation of Xxxxxxxxx Xxxxxxxxxxx (sole proprietor of Auto Liquidators),
her husband, Xxxxx Xxxxxxx, and Xxxxxxx X. Xxx has not uncovered any substantial
assets of those individuals. LBAC filed with the California Dept. of Motor
Vehicles a complaint against Auto Liquidators, Xxxxxxxxxxx, Xxxxxxx and Date
Auto Care for failure to provide the titles on contracts purchased from Auto
Liquidators, refusal to cancel and refund premiums on extended warranties sold
by Auto Liquidators, failure to pay for cars that Auto Liquidators had sold
under the bailment agreement, selling vehicles without obtaining LBSAC's
permission or informing LBAC that the vehicles were sold, and failure to forward
proceeds on a payoff. Xxxxxxxxxxx and Xxxxxxx filed bankruptcy. In 1/98 LBAC
filed a complaint to determine nondischargeability of debt against Xxxxxxxxxxx
and Xxxxxxx. In 5/99, Xxxxxxx, Xxxxxxxxxxx and LBAC executed an outline
regarding tentative settlement terms that had been reached. However, Xxxxxxx and
Xxxxxxxxxxx never executed the settlement documents. In early 2000 LBAC
recommenced litigation and discovery. However, during 6/00 efforts to finalize
the prior settlement proceeded again and on 7/5/00 revised settlement documents
were sent to Xxxxxxxxxxx and Xxxxxxx for approval. The amount in controversy is
approximately $500,000.
(ii) FUSI V. LBAC (California Superior Court). In late 1998 and early 1999
Fusi's account was delinquent and LBAC could not contact him. On 3/11/99 Fusi
advised LBAC that he had made a payment of $1,085 in 1/99. LBAC had no record of
receiving the funds and instructed Fusi to provide evidence of the payment. On
3/19/99 LBAC repossessed Fusi's vehicle. Subsequently, Fusi faxed to LBAC a copy
of his canceled check. However, the copy of the check was illegible and LBAC
began an investigation with LBAC's lockbox and with Fusi's bank, Bank of
America. On 4/16/99 Fusi cured his default and took possession of his vehicle,
at which time he discovered that some stereo equipment and his alarm system were
missing. In 11/99 LBAC received a letter from Fusi's attorney demanding $2,250
for the stereo and alarm system and $150,000 as compensation for LBAC's
negligence. On 11/18/99 LBAC conditionally credited Fusi's account for the
missing $1,085 payment. On 12/6/99 LBAC denied Fusi's allegations but asked Fusi
to submit estimates from a reputable company for the replacement and/or repair
of the stereo equipment and alarm system. Fusi submitted such estimates but
refused to release LBAC of all claims in exchange for LBAC's payment of $2,419,
the amount of the estimates. To this date, LBAC has not been able to determine
either through its lock box or through Fusi's bank who received credit for the
$1,085 check (LBAC has not). On 2/2/00 LBAC was served a complaint in which Fusi
claims that LBAC wrongfully repossessed his vehicle, breached its duty of good
faith under the UCC, and violated the Unfair and Deceptive Practices Act. Fusi
is seeking compensatory damages, punitive damages,
attorney's fees and court costs. On 3/1/00 LBAC filed an answer to Fusi's
complaint denying all allegations. Discovery is in progress. The amount in
controversy is unknown.
(iii) XXXXXXXXX V. LBAC (California Department of Fair Employment & Housing)
Xxxxxxxxx, a former LBAC employee who was terminated for cause, filed a
complaint against LBAC in which Xxxxxxxxx claims that she was denied leave and
was terminated because of a medical condition. The Department of Fair Employment
& Housing ("DFEH") sent the complaint to the EEOC for dual filing. On 4/17/00
LBAC filed its response denying all allegations. The amount in controversy is
unknown, but is expected to be less than $100,000.
(iv) XXXXXX V. LBAC ET. AL (California Superior Court, County of Los Angeles) On
5/12/00 the Kunerts filed on their own behalf and on behalf of others similarly
situated a complaint against LBAC and more than 25 other lenders (i.e. the
complaint is brought as a class action with both plaintiff and defendant
classes). The complaint alleges that unbeknownst to the plaintiffs, the
defendants participated in dealer reserve arrangements which increased the cost
of financing to the plaintiffs, and that that practice constitutes violations of
California law, including the Business and Professions Code, the Consumer Legal
Remedies Act, and the Xxxx-Xxxxxxxx Automobile Sales Finance Act, among other
violations. Several of the defendants filed a motion to have the case removed to
federal court and the plaintiffs filed a motion to remand the matter back to
California Superior Court. Several of the defendants filed a motion to dismiss.
On 7/19/00 LBAC filed a joinder to the motion to dismiss which was filed by
another defendant. The amount in controversy is unknown.
(v) XXXXX X. LBAC (Commowealth Court of Pennsylvania) On 6/13/00 LBAC received a
Writ of Summons issued against LBAC and International Recovery Systems, Inc.
("International") stating only that Xxxxx has commenced an action against LBAC
and International and that an arbitration hearing is scheduled for 2/2/01. To
our knowledge, Xxxxx has not yet filed his complaint. According to LBAC's
records for Xxxxx' account, Xxxxx is a chronic delinquent, and his vehicle has
been assigned for repossession since 11/99. In 7/99 Xxxxx stated several times
that he could not afford the vehicle and that he wanted voluntarily to surrender
the vehicle to LBAC. However, Xxxxx refused to tell LBAC the location of the
vehicle. In 8/99 LBAC spoke with Xxxxx' attorney, who claimed that LBAC was
harassing Xxxxx. Nevertheless, in 9/99 and 10/99 Xxxxx' attorney said that he
would arrange for a conference call among LBAC, Xxxxx and himself to make
arrangements for Xxxxx to either bring the account current or surrender the
vehicle. That conference call has never taken place. Subsequently, Xxxxx stated
several times that he wanted voluntarily to surrender the vehicle, but each time
the vehicle was not available to LBAC's repossession agent. The amount in
controversy is unknown, but is expected to be less than $100,000.
(vi) XXXXX V. LBAC (New Jersey Superior Court). Xxxxxx Xxxxx is an individual
who had been the credit manager for several motor vehicle dealers from which
LBAC purchased contracts. In 3/98 and again in 6/98 Xxxxx'x attorney wrote to
LBAC claiming that LBAC employees had contacted several of Xxxxx'x employers and
as a result Xxxxx'x positions of employment were terminated. LBAC asked Xxxxx
for specifics but received no response. On 8/21/99, Xxxxx filed a complaint
against LBAC and several of its former and current employees in which Xxxxx made
the same claims. Answers to the complaint have been filed on behalf of LBAC and
those employees who had been served, denying all allegations. Discovery is in
progress. The amount in controversy is unknown.
(vii) XXXXXXXX V. LBAC (California Department of Fair Employment and Housing)
Xxxxxxxx is an LBAC employee who filed a complaint with the California
Department of Fair Employment and Housing, which sent the complaint to the EEOC
for dual filing. In her complaint, Xxxxxxxx alleges that she was sexually
harassed, transferred to another department in retaliation for protecting the
alleged sexual harassment and "written up" for absences which she claims were
covered by her request for leave under the California Family Rights Act. On
6/20/00 LBAC filed an answer denying all allegations. The amount in
controversy is unknown, but is expected to be less than $100,000 .
SCHEDULE 4.11
EMPLOYEE BENEFIT PLANS
Ameriquest Capital Corporation 401(k) Plan 08/01/92 - 04/01/99
Ameriquest Mortgage Company 401(k) Plan 04/01/99 - Current
POS/HMO Health Plan 01/01/95 - 07/01/98
PPO/HMO Health Plan 07/01/98 - Current
Dental Plan 01/01/95 - Current
Vision Service Plan 07/01/98 - Current
Short and Long Term Disability Plan 01/01/95 - Current
Company Paid Life & AD&D 01/01/95 - Current
Dependent Care Reimbursement Plan 07/01/98 - Current
Health Care Spending Account 07/01/98 - Current
SCHEDULE 4.15
CONSENTS REQUIRED
None
SCHEDULE 4.16
OWNERSHIP
Ameriquest Mortgage Company - 100%
SCHEDULE 5.2(a)(1)
DEBT TO BE SUBORDINATED
None
SCHEDULE 5.2(a)(2)
WAREHOUSE FACILITIES AND COLLATERAL
FACILITY COLLATERAL
Chase Bank of Texas, N. A. Various retail installment contracts
Warehouse Facility pledged from time to time and which,
while pledged, are individually
designated in Borrower's servicing
system to the Chase facility
Greenwich Capital Financial Various retail installment contracts
Financial Products, Inc. pledged from time to time and which,
Warehouse Facility while pledged, are individually
designated in Borrower's servicing
system to the Greenwich facility
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto Grantor
Agreement to provide residual financing Trust 1997-1
for the Long Beach Acceptance Auto
Grantor Trust 1997-1 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto Grantor
Agreement to provide residual financing Trust 1997-2
for the Long Beach Acceptance Auto
Grantor Trust 1997-2 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto Grantor
Agreement to provide residual financing Trust 1998-1
for the Long Beach Acceptance Auto
Grantor Trust 1998-1 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto Grantor
Agreement to provide residual financing Trust 1998-2
for the Long Beach Acceptance Auto
Grantor Trust 1998-2 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto
Agreement to provide residual financing Recievables Trust 1999-1
for the Long Beach Acceptance Auto
Recievables Trust 1999-1 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto
Agreement to provide residual financing Recievables Trust 1999-2
for the Long Beach Acceptance Auto
Recievables Trust 1999-2 transaction
Greenwich Capital Financial The Excess Cashflow Certificate for
Products, Inc. - Credit and Security Long Beach Acceptance Auto
Agreement to provide residual financing Recievables Trust 2000-1
for the Long Beach Acceptance Auto
Recievables Trust 2000-1 transaction
SCHEDULE 5.2(p)
BUSINESS LOCATIONS
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
SCHEDULE 8.1
NOTICES
AS TO BORROWER
WITH COPY TO:
Long Beach Acceptance Corp.
One Xxxx Centre Drive Long Beach Acceptance Corp.
Xxxxxxx, XX 00000 000 Xxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Attention: General Counsel Xxxxxx, XX 00000
Telephone: 000-000-0000, Ext. 208 Attention: President
Telefax: 000-000-0000 Telephone: 000-000-0000
Telefax: 000-000-0000
AS TO LENDER: WITH COPY TO:
Xxxx X. Xxxxxx Xxxxxx X. Xxx, Esq.
Vice President Xxxxx & Xxxxxx, XXX
Xxxx Xxx, Xxxxxxxx, XX-XX0 -0 009 1 0 Xxxx Xxxxx Xxxxxx
000 Xxxx Xxxxxxxxxx Xxxx., Xxxxx 000X Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000 Telephone: 000-000-0000
Telephone: 000-000-0000 Telefax: 614-221-0479
Telefax: 000-000-0000
EXHIBIT D
BORROWING BASE
1.(a) Borrowing Base total as of the last date of determination, $___________
_______________, ______, an amount equal to ninety percent (90%) of
the aggregate amount of the Principal Balance outstanding under the
Eligible contracts as calculated by Borrower's accounting systems
and as agreed to by Lender.
2. Ninety percent (90%) of the aggregate amount of the Principal $__________
Balance for all Eligible Contracts as set forth in the Advance
Request Report.
3.(a) Ninety percent (90%) of the aggregate of the Principal Balance for $__________
any Eligible Contract(s) prepaid in whole or in part as per Section
2.11 of the Loan Agreement.
3.(b) Mandatory Prepayment of Revolving Credit Loans as per Section 2.9 of $__________
the Loan Agreement.
4. Adjustments as needed and agreed. $__________
5. Borrowing Base ceiling. $30,000,000.00
6. Cash equivalent for amounts exceeded in Item 6. $__________
7. Borrowing Base (Lines 1(a) + 2 -3(a) - 3(b) +/- 4-8) $__________
BANC ONE CREDIT COMPANY
XX Xxx 000000
Xxxxxxxx, XX 00000-0000
[BANK 1 ONE LOGO]
September 22, 2000
Xx. Xxxxx Xxxxxxxx, AVP Compliance
Long Beach Acceptance Corp.
Xxx Xxxx Xxxxxx Xx.
Xxxxxxx, XX. 00000
Subject: Amendment to the Loan Agreement
Dear Xxxxx,
Bank One is pleased to approve the newly proposed Underwriting Guidelines
(See attachment).
This memo serves as a written amendment to: Exhibit C of the Loan Agreement
between Bank One, NA and Long Beach Acceptance Corp.
If the foregoing accurately reflects our understanding, please signify by
signing the acknowledgement set forth below and return a copy this letter to
me via telefax and via regular mail.
Sincerely,
Nick Focarett
Credit Manager
Bank One, NA
Acknowledged and Agreed:
------------------------------
Xxxxx X. Xxxxxxxx
AVP Compliance/Investor Sales
Long Beach Acceptance Corp.
CC: Xxxx Xxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxx
LBAC NATIONAL PROGRAMS (Investor Maxtrix) CALIFORNIA ONLY
EFFECTIVE 7/20/2K
THE M.A.C. PROGRAM
Matrix of Automobile Credit
LBAC INVESTOR PROGRAMS CLASS I CLASS IIA CLASS IIB CLASS III LIMITED CREDIT
ACQUISITION FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
VSI FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
DISCOUNT FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
LOAN AMOUNTS
-----------------------------------------------------------------------------------------------------------------------------------
Minimum $5,000 $5,000 $5,000 $3,000 $3,000
-----------------------------------------------------------------------------------------------------------------------------------
Maximum $50,000 $40,000 $35,000 $25,000 $17,500
-----------------------------------------------------------------------------------------------------------------------------------
MAXIMUM ADVANCE PROGRAM 145% 145% 145% 140% 125%
-----------------------------------------------------------------------------------------------------------------------------------
Invoice/NADA/XXXXXX CALIFORNIA ONLY 120% 120% 115% 115% 100%
-----------------------------------------------------------------------------------------------------------------------------------
IF MAX ADVANCE IS LESS THAN OR EQUAL TO 130%,
INVOICE/NADA/XXXXXX INCREASES TO 130%
-----------------------------------------------------------------------------------------------------------------------------------
Plus TT&L YES YES YES YES INCLUDES
-----------------------------------------------------------------------------------------------------------------------------------
Plus Warranty $[ILLEGIBLE] $1,500 $[ILLEGIBLE] $1,500 $[ILLEGIBLE]
-----------------------------------------------------------------------------------------------------------------------------------
4x4/Highline/Premium Warranty $2,000 $2,000 $2,000 $2,000 $2,000
-----------------------------------------------------------------------------------------------------------------------------------
Plus Alarm $500 $500 $500 $500 $500
-----------------------------------------------------------------------------------------------------------------------------------
Plus Credit Life and Disability XXXXX XXX XXXXX XXX XXXXX XXX XXXXX XXX XXXXX CAP
-----------------------------------------------------------------------------------------------------------------------------------
PROGRAM DESCRIPTION
-----------------------------------------------------------------------------------------------------------------------------------
Minimum Down Payment Required THE LESSER OF $1000 OR 10% CASH DOWN 10% 15%
-----------------------------------------------------------------------------------------------------------------------------------
Residence and Employment Stability 2-2 YR 2-2 YR 1-1 YR 1-1 YR 2-1 YR
-----------------------------------------------------------------------------------------------------------------------------------
Qualifying Monthly Income Gross (Individual) REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
Qualifying Monthly Income Gross (Joint) REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
W/INCOME < W/INCOME < W/INCOME < W/INCOME <
$2000-50% $2000-50% $2000-50% $2000-50%
W/INCOME > W/INCOME > W/INCOME > W/INCOME >
Debt Ratio: Gross $2000-55% $2000-55% $2000-55% $2000-55% 50%
-----------------------------------------------------------------------------------------------------------------------------------
< 2000 = 18 < 2000 = 18
Max Car Payment to Gross Income 25% 25% 25% > 2000 = 20 > 2000 = 20
-----------------------------------------------------------------------------------------------------------------------------------
Rent Factor REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
Insurance Factor $100 $100 $100 $100 $100
-----------------------------------------------------------------------------------------------------------------------------------
2Y 2 REV & 1 INS 1Y 2 REV OR 1
WITH HIGH 1 YR 2 REV INS W/HIGH 6 MON 2 REV
Minimum Credit History CREDIT OF $3000 OR 1 INS CREDIT OF $1500 OR 1 INS N/A
-----------------------------------------------------------------------------------------------------------------------------------
Repossessions NONE 2 YR 1 YR 1 YR N/A
-----------------------------------------------------------------------------------------------------------------------------------
Bankruptcies NONE 2 YR-XXXXX 1 YR-XXXXX XXXXX N/A
-----------------------------------------------------------------------------------------------------------------------------------
Tax Liens NONE (OPEN) 5% 5% 5% N/A
-----------------------------------------------------------------------------------------------------------------------------------
Derogs: Judgement, Collection and/or AGGREGATE AGGREGATE AGGREGATE AGGREGATE
Charge Offs $500 $4000 $5000 $10,000 N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT CURRENT 30 DAY MAX
Installment PREV 3X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
30 DAY MAX
CUR-MAX CURRENT CURRENT IF TRADE
Auto PREV 3X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT CURRENT 30 DAY MAX
Mortgage PREV 0X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT 30 DAY MAX 60 DAY MAX
Revolving: Minor/Major PREV 1X60 MAX PREV 60-90 PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
References 1 3 5 5 5
-----------------------------------------------------------------------------------------------------------------------------------
Cars in excess of 90,000 miles can only be advanced up to 100% including TT&L
(except CA)
/ / Max rebatable is $2000 on limited credit
/ / Or NADA or XXXXXX value whichever is less (CA $500)
/ / Factory rebate may be applied towards total down payment
/ / 3 yr history or residence & employment to be listed on application
/ / For purpose of debt ratio use 3% payment factor on balances greater than
$500 and less than 2 years old (in states where garnishments are
allowed.)
/ / Special consideration will be given to borrowers with stability in both
residence and employment, compensating factors, medical judgments, and
non credit judgments
--------------------------------------------------------------------------------
TERM EXTENSIONS
NO TERM EXTENSIONS WITHOUT LBAC PRIOR APPROVAL
NO TERM EXTENSIONS ON CARS WITH EXCESS MILEAGE
MAXIMUM EXTENSION ON CLASS III-6 MONTHS-
MAX TERM ON CLASS III AND LIMITED CREDIT IS 60 MONTHS.
MAX TERM 66 MOS. ON NEW CARS (INCLUDING EXTENSION)
CLASS I, IIA AND IIB ONLY--72 MONTH TERM AVAILABLE FOR 1998 AND NEWER
VEHICLES
NO TERM EXTENSION ON LIMITED CREDIT
--------------------------------------------------------------------------------
CALIFORNIA ONLY
LBAC NATIONAL PROGRAMS (Investor Maxtrix) EAST COAST ONLY
EFFECTIVE 7/20/2K
THE M.A.C. PROGRAM
Matrix of Automobile Credit
LBAC INVESTOR PROGRAMS CLASS I CLASS IIA CLASS IIB CLASS III LIMITED CREDIT
ACQUISITION FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
VSI FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
DISCOUNT FEE REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
LOAN AMOUNTS
-----------------------------------------------------------------------------------------------------------------------------------
Minimum $5,000 $5,000 $5,000 $3,000 $3,000
-----------------------------------------------------------------------------------------------------------------------------------
Maximum $50,000 $40,000 $35,000 $25,000 $17,500
-----------------------------------------------------------------------------------------------------------------------------------
MAXIMUM ADVANCE PROGRAM 140% 140% 140% 140% 125%
-----------------------------------------------------------------------------------------------------------------------------------
Invoice/NADA/XXXXXX EAST COAST ONLY 120% 115% 115% 115% 100%
-----------------------------------------------------------------------------------------------------------------------------------
IF MAX ADVANCE IS LESS THAN OR EQUAL TO 122%,
COLLATERAL ADVANCE INCREASES TO 122%
-----------------------------------------------------------------------------------------------------------------------------------
Plus TT&L YES YES YES YES INCLUDES
-----------------------------------------------------------------------------------------------------------------------------------
Plus Warranty $1,500 $1,500 $1,500 $1,500 $1,500
-----------------------------------------------------------------------------------------------------------------------------------
4x4/Highline/Premium Warranty $2,000 $2,000 $2,000 $2,000 $2,000
-----------------------------------------------------------------------------------------------------------------------------------
Plus Alarm $500 $500 $500 $500 $500
-----------------------------------------------------------------------------------------------------------------------------------
Plus Credit Life and Disability XXXXX XXX XXXXX XXX XXXXX XXX XXXXX XXX XXXXX CAP
-----------------------------------------------------------------------------------------------------------------------------------
PROGRAM DESCRIPTION
-----------------------------------------------------------------------------------------------------------------------------------
Minimum Down Payment Required THE LESSER OF $1000 OR 10% CASH DOWN 10% 15%
-----------------------------------------------------------------------------------------------------------------------------------
Residence and Employment Stability 2-2 YR 2-2 YR 1-1 YR 1-1 YR 2-1 YR
-----------------------------------------------------------------------------------------------------------------------------------
Qualifying Monthly Income Gross (Individual) REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
Qualifying Monthly Income Gross (Joint) REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
W/INCOME < W/INCOME < W/INCOME < W/INCOME <
$2000-50% $2000-50% $2000-50% $2000-50%
W/INCOME > W/INCOME > W/INCOME > W/INCOME >
Debt Ratio: Gross $2000-55% $2000-55% $2000-55% $2000-55% 50%
-----------------------------------------------------------------------------------------------------------------------------------
< 2000 = 18 < 2000 = 18
Max Car Payment to Gross Income 25% 25% 25% > 2000 = 20 > 2000 = 20
-----------------------------------------------------------------------------------------------------------------------------------
Rent Factor REFER TO STATE MATRIX
-----------------------------------------------------------------------------------------------------------------------------------
Insurance Factor $100 $100 $100 $100 $100
-----------------------------------------------------------------------------------------------------------------------------------
2Y 2 REV & 1 INS 1Y 2 REV OR 1
WITH HIGH 1 YR 2 REV INS W/HIGH 6 MON 2 REV
Minimum Credit History CREDIT OF $3000 OR 1 INS CREDIT OF $1500 OR 1 INS N/A
-----------------------------------------------------------------------------------------------------------------------------------
Repossessions NONE 2 YR 1 YR 1 YR N/A
-----------------------------------------------------------------------------------------------------------------------------------
Bankruptcies NONE 2 YR-XXXXX 1 YR-XXXXX XXXXX N/A
-----------------------------------------------------------------------------------------------------------------------------------
Tax Liens NONE (OPEN) 5% 5% 5% N/A
-----------------------------------------------------------------------------------------------------------------------------------
Derogs: Judgement, Collection and/or AGGREGATE AGGREGATE AGGREGATE AGGREGATE
Charge Offs $500 $4000 $5000 $10,000 N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT CURRENT 30 DAY MAX
Installment PREV 3X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
30 DAY MAX
CUR-MAX CURRENT CURRENT IF TRADE
Auto PREV 3X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT CURRENT 30 DAY MAX
Mortgage PREV 0X30 MAX PREV 60 MAX PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
CUR-MAX CURRENT 30 DAY MAX 60 DAY MAX
Revolving: Minor/Major PREV 1X60 MAX PREV 60-90 PREV N/A PREV N/A N/A
-----------------------------------------------------------------------------------------------------------------------------------
References 1 3 5 5 5
-----------------------------------------------------------------------------------------------------------------------------------
Cars in excess of 90,000 miles can only be advanced up to 100% including TT&L
(except CA)
/ / Max rebatable is $2000 on limited credit
/ / Or NADA or XXXXXX value whichever is less (CA $500)
/ / Factory rebate may be applied towards total down payment
/ / 3 yr history or residence & employment to be listed on application
/ / For purpose of debt ratio use 3% payment factor on balances greater than
$500 and less than 2 years old (in states where garnishments are
allowed.)
/ / Special consideration will be given to borrowers with stability in both
residence and employment, compensating factors, medical judgments, and
non credit judgments
--------------------------------------------------------------------------------
TERM EXTENSIONS
NO TERM EXTENSIONS WITHOUT LBAC PRIOR APPROVAL
NO TERM EXTENSIONS ON CARS WITH EXCESS MILEAGE
MAXIMUM EXTENSION ON CLASS III-6 MONTHS
MAX TERM ON CLASS III AND LIMITED CREDIT IS 60 MONTHS.
MAX TERM 66 MOS. ON NEW CARS (INCLUDING EXTENSION)
CLASS I, IIA AND IIB ONLY--72 MONTH TERM AVAILABLE FOR 1998 AND NEWER
VEHICLES
NO TERM EXTENSION ON LIMITED CREDIT
--------------------------------------------------------------------------------
ADDENDUM TO LOAN AGREEMENT
AND OTHER LOAN DOCUMENTS
This Addendum to the Loan Agreement and other Loan Documents, dated as
of September ______, 2000 ("Addendum") is between BANK ONE, NA ("Lender") and
LONG BEACH ACCEPTANCE CORP. ("Borrower").
RECITALS
A. Effective August 16, 2000, the Lender and the Borrower entered
into a Loan Agreement and other Loan Documents, whereby, pursuant to the terms
and provisions thereof, Lender agreed to lend to Borrower and Borrower agreed to
repay such borrowings.
B. Pursuant to the terms of the certain letter agreement between
the Lender and the Borrower dated August 19, 2000 ("Closing Status Letter"),
funding under the Loan Agreement has been deferred until resolution of certain
Open Items (as defined in the Closing Status Letter) could be resolved between
the Lender and Borrower. Funding under the Loan Agreement has not yet occurred.
C. To accommodate certain procedural difficulties recently
discovered by Borrower in the administration of Contracts under the Custody
Agreement, which Contracts are to be the Collateral of Lender, the Borrower has
requested that certain provisions of the Loan Agreement and certain other Loan
Documents be modified. In particular, the Borrower has requested that the
Assignment as to each Contract which is to be included in each respective Legal
File be delivered to the Custodian in the form of EXHIBIT F hereto, rather than
as currently required by the Loan Agreement and other Loan Documents.
D. Pursuant to the provisions of this Addendum, the Lender has
agreed to this request of Borrower.
Now, therefore, in consideration of the mutual covenants herein and in
the Loan Agreement and other Loan Documents, the parties agree as follows:
SECTION 1. INCORPORATION AND CROSS REFERENCE
All of the terms, agreements, conditions, provisions, covenants and
remedies contained in the Loan Agreement and other Loan Documents are
incorporated herein by this reference and, except as modified by this Addendum,
shall remain in full force and effect in accordance with their respective terms.
All terms defined in the Loan Agreement and the other Loan Documents shall have
the same meaning herein as therein except as otherwise provided in this Addendum
or except as the context of this
Addendum clearly requires or intends otherwise. The Recitals set forth above
and this Incorporation and Cross Reference shall be deemed a part of this
Addendum.
SECTION 2. AMENDMENT TO LOAN AGREEMENT
2.1 Subparagraph (b) of Section 5.1(l) of the Loan Agreement shall
be deleted and shall be replaced by the following:
(b) On or before the 10th (tenth) Business Day following
each Advance Request, the Borrower shall make available to
Lender, via the Borrower's document imaging system or at
Borrower's premises, images or copies of such Legal Files.
Borrower shall place in the Legal File for each Contract a
document in the form of EXHIBIT F.
2.2. EXHIBIT F to the Loan Agreement shall be deleted and shall be
replaced with the document marked EXHIBIT F attached hereto and incorporated
herein.
SECTION 3. AMENDMENT TO SECURITY AGREEMENT AND ASSIGNMENT
3.1 Section 5(b) of the Security Agreement and Assignment shall be
deleted and shall be replaced by the following:
(b) On or before the 10th (tenth) Business Day following
each Advance Request, the Debtor shall make available to
Secured Party, via the Debtor's document imaging system or at
the Debtor's premises, images or copies of such Legal Files.
Debtor shall place in the Legal File for each contract the
document in the form of EXHIBIT F to the Loan Agreement.
3.2 Section 10(f) of the Security Agreement and Assignment shall
be deleted and shall be replaced with the following:
(f) APPOINTMENT OF ATTORNEY-IN-FACT. Debtor hereby
irrevocably appoints Secured Party or its designee as Debtor's
attorney-in-fact, with full authority in the place instead of
Debtor, from time to time in Secured Party's discretion prior
to, upon, during, and after an Event of Default, to take any
action and to execute any instrument which Secured Party may
deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation, (i) to perfect and
continue to perfect the security interests created by this
Agreement; (ii) to ask, demand, collect or xxx for, recover,
compound, receive and give acquittance in receipts for any
monies due or becoming due under or in respect for any
Collateral; (iii) to receive, endorse and collect any Contract
or any drafts or other instruments, or documents representing
proceeds therefrom; (iv) complete the Assignment in the form
of EXHIBIT F to the Loan Agreement with the name of Secured
Party as Subsequent Assignee, the name(s) of the obligor and
the seller as to each particular Contract, a description of
the vehicle subject of the Contract and execute the Assignment
in the name of and on behalf of the Debtor; and (v) to file
any claims or take any action or institute any proceeding
which Secured Party may deem necessary to desirable for the
collection of any Collateral or otherwise to enforce the
rights of Secured Party in the Collateral; and, in addition to
the foregoing, after an Event of Default, to sell or assign
any Contract held as Collateral upon such terms, for such
amounts and at such time or times Secured Party deems
advisable.
SECTION 4. MISCELLANEOUS
4.1 This Addendum is a Loan Document and shall be governed by, and
shall be construed and enforced in accordance with that certain Agreement With
Respect to Prevention and Resolution of Disputes, the terms and provisions of
which are incorporated herein.
4.2 This Addendum may be amended only by an instrument in writing
executed jointly by the Borrower and the Lender, and supplemented only by
documents delivered or to be delivered in accordance with the expressed terms
hereof.
4.3 This Addendum may be executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes and all
of which constitute, collectively, one agreement; but, in making proof of this
Addendum, it shall not be necessary to produce or account for more than one such
counterpart.
4.4 This Addendum shall be binding on the Borrower and its
successors and assigns and shall inure to the benefit of Lender and Lender's
successors and assigns.
4.5 This Addendum and the other Loan Documents represent the final
agreement between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements by the parties.
4.6 If any one or more of the provisions of this Addendum shall
for any reason be held invalid, then such provision shall be deemed severable
from this Addendum and shall not affect the enforceability or validity of any
other provision(s) of this Addendum.
Borrower:
LONG BEACH ACCEPTANCE CORP.
By:
-------------------------------------
Name:
Its:
---------------------------------
Lender:
BANK ONE, NA
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Its: Vice President
