EXHIBIT 10.30
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is made this 21st day
of October, 1997, by and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode
Island corporation with an office at 2711 Xxxxxxx Avenue, Suite 2100, LB 21,
Xxxxxx, Xxxxx 00000; and JAYHAWK ACCEPTANCE CORPORATION ("Borrower"), a Texas
corporation with its chief executive office and principal place of business at
0000 Xxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000. Capitalized terms used in this
Agreement have the meanings assigned to them in Appendix A, General Definitions.
SECTION 1. TERM LOAN
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement, the Reorganization Plan,
and the other Loan Documents, Lender and Borrower hereby convert the outstanding
balance of the revolving credit facility under the Prior Loan Agreement to a
term loan (the "Term Loan"), in accordance with the following:
1.1 Term Loan: The Term Loan shall be in the principal amount of Thirty-
Two Million Eight Hundred Fifty-Nine Thousand Seven Hundred Forty-One and 28/100
Dollars, ($32,859,741.28). This amount represents the unpaid principal amount of
sums owing to Lender under the Prior Loan Agreement, which was Sixty-Three
Million Seventy-Nine Thousand Seven Hundred Ninety-Seven and 34/1 00 Dollars
($63,079,797.34), as stipulated in the Cash Collateral Orders after giving
credit to Borrower for payments in the amount of Thirty Million Two Hundred
Twenty Thousand Fifty-Six and 06/100 Dollars ($30,220,056.06), made by Borrower
to Lender under the terms of the Cash Collateral Orders entered in the
Bankruptcy Proceedings.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rate of Interest. Interest shall accrue on the principal
amount of the Term Loan outstanding at the end of each day at a fluctuating rate
per annum equal to the Base Rate. The Base Rate shall increase or decrease by
an amount equal to any increase or decrease in the Base Rate, effective as of
the opening of business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence of
an Event of Default, and during the continuation thereof, the principal amount
of the Term Loan shall bear interest at a rate per annum equal to 2.00% above
the Base Rate or other applicable rate of interest (the "Default Rate").
2.1.3 Maximum Rate of Interest. Notwithstanding the foregoing,
(i) if at any time the amount of interest computed as provided in the Loan
Documents would exceed the amount of such interest computed upon the basis of
the maximum rate of interest permitted by applicable state
or federal law in effect from time to time hereafter (the "Maximum Legal Rate"),
the interest payable under this Agreement shall be computed upon the basis of
the Maximum Legal Rate, but any subsequent reduction in the Base Rate, Default
Rate or other rate, as applicable, shall not reduce such interest thereafter
payable hereunder below the amount computed on the basis of the Maximum Legal
Rate until the aggregate amount of such interest accrued and payable under this
Agreement equals the total amount of interest which would have accrued if such
interest had been at all times computed solely as provided in the Loan
Documents; and (ii) unless preempted by federal law, the Base Rate, Default Rate
or other rate, as applicable, from time to time in effect hereunder may not
exceed the "applicable weekly ceiling" from time to time in effect under Chapter
303 of the Texas Finance Code. If the applicable state or federal law is amended
in the future to allow a greater rate of interest to be charged under this
Agreement than is presently allowed by applicable state or federal law, then the
limitation of interest hereunder shall be increased to the maximum rate of
interest allowed by applicable state or federal law as amended, which increase
shall be effective hereunder on the effective date of such amendment, and all
interest charges owing to Lender by reason thereof shall be payable upon demand.
2.1.4 Excess Interest. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument, document or
agreement between Borrower and Lender or default of Borrower, or the exercise by
Lender of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in this Agreement or
any other Loan Document, or the arising of any contingency whatsoever, shall
entitle Lender to contract for, charge, or receive, in any event, interest
exceeding the Maximum Legal Rate. In no event shall Borrower be obligated to
pay interest exceeding such Maximum Legal Rate and all agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever operate
to bind, obligate or compel Borrower to pay a rate of interest exceeding the
Maximum Legal Rate, shall be without binding force or effect, at law or in
equity, to the extent only of the excess of interest over such Maximum Legal
Rate. In the event any interest is contracted for, charged or received in
excess of the Maximum Legal Rate (the "Excess"), Borrower acknowledges and
stipulates that any such contract, charge, or receipt shall be the result of an
accident and bona fide error, and that any Excess received by Lender shall be
applied, first, to reduce the principal then unpaid hereunder; second, to reduce
the other Obligations; and third, returned to Borrower, it being the intention
of the parties hereto not to enter at any time into a usurious or otherwise
illegal relationship. Borrower recognizes that, with fluctuations in the Base
Rate and the Maximum Legal Rate, such a result could inadvertently occur. By
the execution of this Agreement, Borrower covenants that the credit or return of
any Excess shall constitute the acceptance by Borrower of such Excess. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by Lender, all interest at any time contracted for, charged
or received by Lender in connection with the Loan Documents shall be amortized,
prorated, allocated and spread in equal parts during the entire term of this
Agreement and the Term Loan.
2.2 Computation of Interest. Interest hereunder shall be calculated daily
and shall be computed on the actual number of days elapsed over a year of 360
days.
2.3 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender incurs reasonable and
necessary legal or accounting expenses or any other costs or out-of-pocket
expenses (other than Lender's overhead expenses) in connection with the
negotiation and preparation of any amendment of or modification of this
Agreement or any of the other Loan Documents, then all such legal and accounting
expenses, other costs and out of pocket expenses of Lender (other than Lender's
overhead expenses) shall be charged to Borrower. For purposes of the immediately
preceding sentence, overhead expenses shall mean labor and material costs of
Lender not directly related to the negotiation, preparation and administration
of this Agreement, the other Loan Documents and/or any amendment thereto. If,
upon the occurrence and during the continuance of an Event of Default, Lender
incurs reasonable and necessary legal or accounting or any other costs or out-
of-pocket expenses in connection with (i) any litigation, contest, dispute,
suit, proceeding or action (whether instituted by Lender, Borrower or any other
Person) in any way relating to the Collateral, this Agreement or any of the
other Loan Documents or Borrower's affairs; (ii) any attempt to enforce any
rights of Lender against Borrower or any other Person which may be obligated to
Lender by virtue of this Agreement or any of the other Loan Documents,
including, without limitation, the Account Debtors; or (iii) any attempt to
inspect, verify, protect, preserve, restore, collect, sell, liquidate or
otherwise dispose of or realize upon the Collateral, then all such legal and
accounting expenses, other costs and out of pocket expenses of Lender shall be
charged to Borrower. To the extent not paid as required by Sections 3.1.3, 3.1.4
or 7.1.13, all amounts chargeable to Borrower under this Section 2.3 shall be
Obligations secured by all of the Collateral and shall be payable to Lender
within 30 days of Borrower's receipt of an invoice with respect to such charges.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 5 hereof.
2.4 Bank Charges. Borrower shall pay to Lender any and all fees, costs or
expenses which Lender pays to a bank or other similar institution arising out of
or in connection with the depositing for collection, by Lender, of any check or
item of payment received or delivered to Lender on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION
3.1 Payments. The Obligations shall be payable as follows:
3.1.1 Principal. From and after the Effective Date, principal
payable on account of the Term Loan shall be payable by Borrower to Lender in
installments, on the last day of each calendar month (except as to the payment
for the month of December, 1997, which shall be made on December 26, 1997), the
amount of which is due for any particular month being equal to the amount
specified for such month as set forth below and in accordance with the
Reorganization Plan:
PER MONTH
---------
MONTH: INSTALLMENT AMOUNT:
----- ------------------
October 1997 $1.0 million
November 1997 $2.5 million
December 1997 $3.0 million
January through June 1998 $3.0 million
July through August 1998 $3.5 million
All outstanding principal shall be due and payable on September 30, 1998 (the
"Maturity Date"). In addition, principal payable on account of the Term Loan
shall be payable by Borrower to Lender immediately upon the occurrence of an
Event of Default in consequence of which Lender elects to accelerate the
maturity and payment of the Obligations.
3.1.2 Interest. Interest accrued on the Term Loan shall be paid
monthly in arrears, due on (i) the last day of each month (except as to the
payment for the month of December, 1997, which shall be made on December 26,
1997) and (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the Obligations.
3.1.3 Allowed Fleet Expenses. The Allowed Fleet Expenses shall be
paid in accordance with the terms of the Reorganization Plan.
3.1.4 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement (other than those mentioned above in this Section 3
or addressed in Section 7.1.13, but including those described in Sections 2.3,
2.4, 5.1, 5.2.3, 5.2.4, 9.3.3 and 10.1), shall be payable by Borrower, to
Lender or to any other Person designated by Lender in writing, within 30 days
after the date of Lender's invoice or other written notice thereof to Borrower.
3.1.5 Other Obligations. The balance of the Obligations requiring
the payment of money, if any (other than those specifically mentioned above in
this Section 3), shall be payable by Borrower to Lender, within 30 days of the
date of Lender's invoice or other written notice thereof to Borrower.
3.2 Application of Payments and Collections. All payments to Lender are to
be made in United States currency and shall be effected by wire transfer in
immediately available funds to Lender. All items of payment received by Lender
by 1:00 p.m., Dallas, Texas time, on any Business Day shall be deemed received
on that Business Day. All items of payment received after 1:00 p.m., Dallas,
Texas time, on any Business Day shall be deemed received on the following
Business Day. Borrower irrevocably waives the right to direct the application of
any and all payments and Collections at any time or times received by Lender
from or on behalf of Borrower after the occurrence and during the continuance of
an Event of Default, and, subject to the provisions of Section 5.2.3 of this
Agreement, Borrower does hereby irrevocably agree that Lender shall have the
continuing exclusive right to apply and reapply any and all such payments and
Collections received at any time or times hereafter by Lender or its agent
against the Obligations,
in such manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records.
3.3 Loan Account. Lender shall record in the Loan Account all payments
made by Borrower on any Obligations and all proceeds of Collateral which are
finally paid to Lender, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrower.
3.4 Statements of Account. Lender will account to Borrower monthly with a
statement of the Term Loan, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower absent manifest error unless Lender is notified by
Borrower in writing to the contrary within 30 days of the date each accounting
is received by Borrower. Such notice shall only be deemed an objection to those
items specifically objected to therein.
SECTION 4. SECURITY INTERESTS
4.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender of the Obligations, Borrower hereby grants to Lender a
continuing Lien upon all of the following Property and interests in the
following Property of Borrower, whether now owned or existing or hereafter
created, acquired or arising and wheresoever located:
(i) Pledged Contracts, Other Accounts, and rights to payment in
connection therewith;
(ii) Equipment;
(iii) General Intangibles, including Borrower's tax refunds and
choses in action that do not relate to the Collateral;
(iv) the Contribution and Servicing Agreements, and rights to
payment in connection therewith;
(v) Investment Property (as defined in the Code) consisting of
all of Borrower's right, title, and interest in and to the Trust;
(vi) All monies now or at any time or times hereafter in the
possession or under the control of Lender or a bailee or Affiliate of Lender,
and Deposit Accounts;
(vii) All accessions to, substitutions for and all replacements,
products and cash and non-cash Proceeds of (i) through (vi) above, including,
without limitation, proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
(viii) All books and records (including, without limitation,
customer lists, credit files, computer programs, print-outs, and other computer
materials and records) of Borrower pertaining to any of (i) through (vii) above.
Notwithstanding the foregoing, the Collateral shall not include the Contributed
Non-Accrual Contracts existing as of August 31, 1997, pursuant to Section 5.3 of
the Reorganization Plan, and Lender shall be deemed to have released all of its
liens in such Contributed Non-Accrual Contracts.
4.2 Lien Perfection: Further Assurances. At Lender's request, Borrower
shall execute such UCC-1 financing statements as are required by Lender and such
other instruments, assignments or documents as Lender may deem necessary to
perfect or continue the perfection of Lender's Lien upon any of the Collateral.
Unless prohibited by applicable law, Borrower hereby authorizes Lender to
execute and file any such financing statement on Borrower's behalf. The parties
agree that a carbon, photographic or other reproduction of this Agreement shall
be sufficient as a financing statement and may be filed in any appropriate
office in lieu thereof. At Lender's request, Borrower shall also promptly
execute or cause to be executed and shall deliver to Lender any and all
documents, instruments and agreements deemed necessary by Lender to give effect
to or carry out the terms or intent of the Loan Documents.
SECTION 5. COLLATERAL ADMINISTRATION
5.1 General
5.1.1 Location of Collateral. All Collateral will at all times be
kept by Borrower at one or more of the business locations set forth in Exhibit A
hereto (and the Deposit Accounts shall be kept at such locations listed in
Exhibit D hereto) and shall not, without the prior written approval of Lender,
be moved therefrom except, prior to an Event of Default and Lender's
acceleration of the maturity of the Obligations in consequence thereof, for
removals in connection with dispositions of Equipment that are authorized by
Section 7.2.4 hereof.
5.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral (other than Pledged Contracts and the Deposit
Accounts) wherever located and with respect to Borrower's business, covering
casualty, hazard, public liability and such other risks in such amounts and with
such insurance companies as are reasonably satisfactory to Lender. The
requirements for such insurance shall be consistent with the insurance that
Borrower previously maintained under the terms of the Prior Loan Agreement. In
addition, Borrower shall, at its own expense, obtain a security bond covering
all of its employees, which are designated by Borrower to deliver to the
Custodian and remove from the possession of the Custodian any Pledged Contracts
and Auto Titles, in such amounts and with such insurance companies as are
reasonably satisfactory to Lender. As with Borrower's insurance, the
requirements for a security bond shall be consistent with the security bond that
Borrower previously maintained under the terms of the Prior Loan Agreement.
Borrower shall deliver copies of the originals of such policies to Lender with
satisfactory lender's loss payable endorsements, naming Lender as loss payee,
assignee or additional insured, as appropriate, and as Lender's interests may
appear. Each policy of insurance or endorsement shall contain a clause requiring
the insurer to give not less than 30 days prior written notice to Lender in the
event of cancellation of the policy for any reason whatsoever and a clause
specifying that the interest of Lender shall not be impaired or invalidated by
any act or neglect of Borrower or the owner of the Property or by the occupation
of the premises for purposes more hazardous than are permitted by said policy.
If Borrower fails to provide and pay for such insurance, Lender may, at its
option, but shall not be required to, procure the same at competitive market
rates and charge Borrower therefor. Borrower agrees to deliver to Lender,
promptly as rendered, true copies of all reports made in any reporting forms to
insurance companies.
5.1.3 Protection of Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral, any and all excise, property, sales, and use taxes imposed by any
state, federal, or local authority on any of the Collateral or in respect of the
sale thereof shall be borne and paid by Borrower. If Borrower fails to promptly
pay any portion thereof when due, Lender may, at its option, but shall not be
required to, pay the same and charge Borrower therefor. Lender shall not be
liable or responsible in any way for the safekeeping of any of the Collateral or
for any loss or damage thereto (except for reasonable care in the custody
thereof while any Collateral is in Lender's actual possession) or for any
diminution in the value thereof, or for any act or default of any warehouseman,
carrier, forwarding agency, or other person whomsoever, but the same shall be at
Borrower's sole risk.
5.2 Administration of Contracts.
5.2.1 Records and Schedules of Pledged Contracts. Borrower shall
keep accurate and complete records of its Pledged Contracts and all payments and
Collections thereon and shall submit to Lender the following:
(i) on a monthly basis on or before the 15th day of
each month from and after the date hereof, or, during the existence of a Default
or Event of Default, upon Lender's request, and for such shorter period of time
as Lender may request, as the case may be, a summary of Collections and
dilutions of Pledged Contracts for the preceding month, in form satisfactory to
Lender;
(ii) on or before the 15th day of each month from and
after the date hereof, or, during the existence of a Default or Event of
Default, upon Lender's request, and for such shorter period of time as Lender
may request, as the case may be, in form acceptable to Lender, a summary of aged
Pledged Contracts balances (net of unearned finance charges) of all active
Pledged Contracts (i.e., Pledged Contracts not purged, accelerated or otherwise
terminated) existing as of the last day of the preceding month, as the case may
be; and
(iii) on or before the 15th day of each month from and
after the date hereof, or, during the existence of a Default or Event of
Default, upon Lender's request, and for such shorter period of time as Lender
may request, as the case may be, in form acceptable to Lender, a report setting
forth the following:
(A) the actual monthly Collections received during the
immediately preceding month, and compared to the forecasted
Collections for such months, as such forecast is set forth
in Exhibit D to the Disclosure Statement, and
(B) the actual monthly expenses of Borrower incurred
during the immediately preceding month, and compared to the
forecasted expenses of
Borrower for such month, as such forecast is set forth in
Exhibit D to the Disclosure Statement.
(iv) during the existence of a Default or Event of
Default, upon Lender's request therefor, copies of computer records pertaining
to repayment histories, showing performance by month, delinquencies and
Collections, and present status reports relating to the Pledged Contracts and
such other matters and information relating to the status of then existing
Pledged Contracts as Lender shall reasonably request.
5.2.2 Pledged Contract Verification. After the occurrence and
during the continuance of a Default or an Event of Default, any of Lender's
officers, employees or agents shall have the right, at any time or times
hereafter, in the name of Lender, any designee of Lender or Borrower, to verify
the validity, amount or any other matter relating to any Pledged Contracts by
mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude any such verification
process.
5.2.3 Maintenance of Clearing Account. Until payment in full of
all Obligations, Borrower shall establish and maintain a procedure for its
collections and cash management as follows:
(a) Clearing Account. Borrower shall maintain a
clearing account pursuant to a lockbox arrangement acceptable to Lender with the
Lockbox Bank. Borrower shall obtain the agreement by the Lockbox Bank in favor
of Lender to waive any offset rights against the funds deposited in such
account. Lender assumes no responsibility for such lockbox arrangement,
including any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder. Borrower agrees that withdrawals from
the Clearing Account are restricted, depending on the Property that generated
the funds deposited in the Clearing Account, and that withdrawals may be made
only by way of wire transfer initiated by Borrower and payable only as follows:
(i) to Lender, with respect to payments,
other remittances and funds constituting Collateral;
(ii) to the Trust, with respect to payments,
other remittances and funds constituting Property owned by
the Trust; and
(iii) to Borrower or to the Non-Accrual
Contract Trust (as defined in the Reorganization Plan), with
respect to payments, other remittances and funds on
Contributed. Non-Accrual Contracts pursuant to Section 5.3
of the Reorganization Plan and constituting Property other
than Property described in clauses (i) and (ii) above.
(b) Fleet Account. Borrower specifically agrees that
proceeds of the Collateral shall be deposited in the Clearing Account for wire
transfer to the Fleet Account, and that, by way of illustration but not in
limitation, the following are included within the meaning of proceeds of
Collateral: (1) Collections, (ii) distributions from the Trust; and (iii)
Servicing Fees. Borrower shall initiate by way of wire transfer to the Fleet
Account (as collateral for the Obligations) on the first Business Day following
Borrower's receipt thereof, all payments and other remittances constituting the
Collateral which are received in the lockbox; provided, however, that if
Borrower receives any payment or other remittance as to which Borrower
does not receive therewith, or otherwise have, sufficient information to verify
that such payment or other remittance relates to a Pledged Contract, a
distribution from the Trust, or a Servicing Fee, then Borrower shall deposit
such payment or other remittance in the Fleet Account no later than the second
Business Day after Borrower verifies that such payment or other remittance
relates to a Pledged Contract, a distribution from the Trust, or a Servicing
Fee.
(c) Operating Account. So long as no Event of Default
has occurred and is continuing, then Lender will initiate by way of wire
transfer, at Borrower's expense, to Borrower's operating account, for Borrower's
use, provided such use does not violate the terms of the Reorganization Plan or
this Agreement, on the next Business Day following Lender's receipt thereof, the
payments and other remittances constituting the Collateral that were received as
collected funds in the Fleet Account. If an Event of Default has occurred and is
continuing, then Lender will have no obligation to transfer any funds from the
Fleet Account to Borrower's operating account, and Lender may exercise Lender's
remedies in Section 9 with respect to any funds in the Fleet Account and the
Deposit Accounts.
5.2.4 Collection of Pledged Contracts: Proceeds of Collateral. To
expedite collection, Borrower shall endeavor in the first instance to make
collection of its Pledged Contracts for Lender. All remittances received by
Borrower on account of Pledged Contracts, together with the proceeds of any
other Collateral (excluding, for so long as no Event of Default exists, funds in
the Deposit Accounts) shall be held as Lender's property by Borrower as trustee
of an express trust for Lender's benefit and Borrower shall immediately deposit
same in kind in the Clearing Account. Lender retains the right at all times
after the occurrence of an Event of Default to notify Account Debtors that
Pledged Contracts have been assigned to Lender and to collect Pledged Contracts
directly in its own name and to charge the collection costs and expenses,
including attorneys' fees to Borrower.
5.3 Payment of Charges. All amounts chargeable to Borrower under Section 5
hereof shall be Obligations secured by all of the Collateral, shall be payable
and shall bear interest from the date such advance was made until paid in fall
at the rate applicable to the Term Loan from time to time.
5.4 Permitted Liens on Servicing Collateral. Lender agrees to consent to a
Lien on all Equipment, General Intangibles, books and records, and related
Intellectual Property (collectively, the "Servicing Collateral") in favor of a
Person who hereafter extends credit to Borrower for the purpose of financing the
purchase of Contracts, loans or receivables, and who is not an Affiliate of
Borrower, subject to the following terms and conditions:
(a) each of Lender and such other Person shall have
equal access to the Servicing Collateral for purposes of obtaining information
regarding the Contracts, loans or receivables, in which such Person has a Lien;
(b) until the Obligations to Lender and the
Indebtedness to such other Person have been paid in full, neither Fleet nor such
Person may exercise any foreclosure remedies against the Servicing Collateral to
the extent such exercise would interfere with the ability of the other to
preserve its interest in the Servicing Collateral;
(c) Lender and such other Person shall have entered
into a mutually acceptable intercreditor agreement pertaining to their
respective security interests in the Servicing Collateral, which shall generally
provide for equal rights with respect to the Servicing Collateral;
(d) the priority of the Lien of such Person may be
junior to or equal in priority to, but not superior to, the priority of the Lien
in favor of Lender;
(e) no Default or Event of Default has occurred and is
continuing; and
(f) Lender shall receive all of the proceeds from any
disposition of the Servicing Collateral after an Event of Default for
application to the Obligations.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 General Representations and Warranties. To induce Lender to enter into
this Agreement Borrower warrants, represents and covenants to Lender that:
6.1.1 Organization and Qualification . As of the Closing Date,
Borrower is, and until the Obligations are repaid in full, Borrower will remain,
an entity duly organized, validly existing and in good standing under the laws
of Borrower's state of organization. Borrower is, and until the Obligations are
repaid in full, Borrower will remain, duly qualified and authorized to do
business and in good standing as a foreign corporation in each state or
jurisdiction in which the failure of Borrower to be so qualified would have a
material adverse effect on the financial condition, business or Properties of
Borrower.
6.1.2 Corporate Power and Authority. As of the Closing Date,
Borrower is duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of Borrower; (ii) contravene Borrower's, articles of incorporation or by-laws;
(iii) violate, or cause Borrower to be in default under, any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award in effect having applicability to Borrower; or (iv) result in, or
require, the creation or imposition of any Lien (other than Permitted Liens)
upon or with respect to any of the Properties now owned or hereafter acquired by
Borrower.
6.1.3 Legally Enforceable Agreement. As of the Closing Date, this
Agreement is, and each of the other Loan Documents when delivered under this
Agreement will be, a legal, valid and binding obligation of Borrower enforceable
against it in accordance with its respective terms.
6.1.4 Title to Properties, Priority of Liens. Borrower has and,
until the Obligations are repaid in full, Borrower will continue to have, good
title to all of the Collateral free and clear of all Liens except Permitted
Liens. Borrower has paid or discharged, and, until the Obligations are repaid in
full, Borrower will continue to pay and discharge, all lawful claims
which, if unpaid, might become a Lien against any of the Collateral that is not
a Permitted Lien. The Liens granted to Lender under Section 4 hereof are first
priority Liens, subject only to Permitted Liens.
6.1.5 Servicing Equipment. The Servicing Equipment is in good
operating condition and repair, and all necessary replacements of and repairs
thereto shall be made so that the value and operating efficiency of the
Servicing Equipment shall be maintained and preserved, reasonable wear and tear
excepted. Borrower will not permit any of the Servicing Equipment to become
affixed to any real Property leased to Borrower so that an interest arises
therein under the real estate laws of the applicable jurisdiction unless the
landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Lender, and Borrower will not
permit any of the Servicing Equipment to become an accession to any personal
Property other than Servicing Equipment that is subject to first priority
(except for Permitted Liens) Liens in favor of Lender.
6.1.6 Intellectual Property. Borrower owns or possesses all the
Intellectual Property necessary for the conduct of its business and all the
Intellectual Property related to or used in connection with Servicing Equipment,
in each case without any known conflict with the rights of others. All such
Intellectual Property is listed on Exhibit B hereto as of the date hereof.
6.1.7 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower and any Collection Agents or any
group of Collection Agents whose services individually or in the aggregate are
material to the business of Borrower; and there exists no present condition or
state of facts or circumstances which would materially affect adversely Borrower
or prevent Borrower from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted.
6.2 Continuous Nature of Representations and Warranties. Except with
regard to representations and warranties that, by their stated terms, are
limited by or designated as being applicable to a specific time or period of
time, each representation and warranty contained in this Agreement and the other
Loan Documents shall be continuous in nature and shall remain accurate, complete
and not misleading at all times during the term of this Agreement, except for
changes in Borrower's business or operations that would render the information
in any Exhibit attached hereto either inaccurate, incomplete or misleading, so
long as such changes have been disclosed confidentially to Lender or disclosed
publicly by Borrower or such changes are expressly permitted by this Agreement.
6.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 7. COVENANTS AND CONTINUING AGREEMENTS
7.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower shall:
7.1.1 Visits and Inspections. Permit representatives of Lender,
from time to time, as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of Borrower, inspect,
audit and make extracts from its books and records and discuss with its
officers, its employees and its independent accountants, Borrower's and each of
its Subsidiaries' business, assets, liabilities, financial condition, business
prospects and results of operations. Furthermore, and not in limitation of the
foregoing, Borrower shall permit Lender to visit Borrower's Properties and the
storage facility of the Custodian, from time to time, as often as may be
reasonably requested, but only during the normal business hours of Borrower and
Custodian, as the case may be, to conduct inspections and audits of Borrower's
Pledged Contracts and related Auto Titles, and the records relating thereto, in
order for Lender to test the segregation of the Collateral and the proper
allocation of cash Collections from Pledged Contracts.
7.1.2 Notices. Promptly notify Lender in writing of the occurrence
of any event or the existence of any fact which renders any representation or
warranty in this Agreement or any of the other Loan Documents inaccurate,
incomplete or misleading.
7.1.3 Financial Statements. Keep adequate records and books of
account with respect to its business activities in which proper entries are made
in accordance with GAAP reflecting all its financial transactions; and cause to
be prepared and furnished to Lender the following (all to be prepared in
accordance with GAAP applied on a consistent basis, unless Borrower's certified
public accountants concur in any change therein and such change is disclosed to
Lender and is consistent with GAAP):
(i) not later than 120 days after the close of each
fiscal year of Borrower, unqualified audited financial statements of Borrower
and its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by Ernst & Young, L.L.P. or by such other firm of
independent certified public accountants of recognized standing selected by
Borrower but acceptable to Lender (except for a qualification for a change in
accounting principles with which the accountant concurs);
(ii) not later than 45 days after the end of each month
hereafter, including the last month of Borrower's fiscal year, unaudited interim
financial statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's financial year then elapsed, on a
Consolidated and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly presenting
the Consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements, financial statements or reports
which Borrower has made available to its shareholders, and copies of any
regular, periodic and special reports or registration statements
which Borrower files with the Securities and Exchange Commission, including the
Securities and Exchange Commission's Form 10-K and Form 10-Q reports, or any
governmental authority which may be substituted therefor, or any national
securities exchange;
(iv) promptly after the filing thereof, copies of any
annual report to be filed with ERISA in connection with each Plan;
(v) promptly after the initiation thereof, copies of
materials relating to actions, suits, proceedings or investigations against or
affecting Borrower, or the business, operations, Properties, prospects, profits
or condition of Borrower in each case that exceed $100,000 as the amount in
controversy, or that could be reasonably expected to have a material adverse
effect on Borrower's financial condition or results of operations;
(vi) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request, bearing upon or
related to the Collateral or Borrower's financial condition or results of
operations.
Concurrently with the delivery of the financial statements described in clause
(i) of this Section 7.1.3, Borrower shall forward to Lender a copy of the
accountants' letter to Borrower's management, if any, that is prepared in
connection with such financial statements.
7.1.4 Landlord and Storage Agreements. Provide Lender with copies
of all agreements between Borrower and any landlord or warehouseman which owns
any premises at which any Pledged Contracts or related Auto Titles may, from
time to time, be kept.
7.1.5 Possession of Pledged Contracts and Auto Titles by
Custodian. The Custodian shall maintain possession of Pledged Contracts and
related Auto Titles according to the terms and conditions of the Custodial
Agreement.
7.1.6 Delivery of Pledged Contracts and Auto Titles. Upon the
occurrence and during the continuance of an Event of Default, upon Lender's
request Borrower shall at Borrower's own expense, (i) physically deliver to
Lender or its agent original Auto Titles in its possession for all vehicles
securing any of the Pledged Contracts and original copies of its Pledged
Contracts in its possession and all related documents and instruments, and all
files, certificates of title, correspondence, appraisals, computer programs,
tapes, discs, cards, accounting records and other information and data relating
to the Collateral and (ii) duly note or cause to be duly noted Lender's name on
each Auto Title securing a Pledged Contract pursuant to the proper certificate
of title act in the proper state, so that Lender will have a perfected security
interest in the motor vehicles purchased pursuant to any Pledged Contract.
Failure to deliver any Pledged Contract or related Auto Title, or failure to
deliver physical possession of any instruments, documents or writings in respect
of any Pledged Contract as provided herein shall not invalidate Lender's lien
and security interest therein, except to the extent that possession may be
required by applicable law for the perfection of said lien or security interest,
in which latter case, the Pledged Contract shall be deemed to be held by the
Borrower as the custodial agent of Lender, for the benefit of Lender. Failure of
Lender to demand or require Borrower to include any Pledged Contract or related
Auto Title securing a Pledged Contract in any schedule, to execute any schedule,
to assign and deliver any schedule or to deliver
physical possession of any instruments, documents, or writings related to any
Pledged Contract shall not relieve Borrower of its duty so to do.
7.1.7 Landlord's Consent Letter. Borrower shall use its best
efforts to obtain for Lender for each leased location of Borrower, landlord
consent letters from each of the landlords from whom Borrower leases real
property, in form and substance satisfactory to Lender.
7.1.8 Licensor's Consent Letter. Borrower shall use its best
efforts to obtain for Lender consent letters from each of the licensors listed
in Exhibit E hereto from whom Borrower licenses Intellectual Property relating
to the servicing and administering of Pledged Contracts, in form and substance
satisfactory to Lender.
7.1.9 Taxes. Until the Obligations are repaid in full, Borrower
will continue to pay and make provision for the payment of, all taxes,
assessments, fees, levies and other governmental charges upon it, its income and
Properties as and when such taxes, assessments, fees, levies and charges that
are due and payable, unless and to the extent any thereof are being actively
contested in good faith and by appropriate proceedings and Borrower maintains
reasonable reserves on its books therefor.
7.1.10 Compliance with Laws. Until the Obligations are repaid in
full, Borrower will continue to comply with, and its Properties, business
operations and leaseholds will continue to be in compliance in all material
respects with, the provisions of all federal, state and local laws, rules and
regulations applicable to Borrower, its Properties or the conduct of its
business.
7.1.11 Amendments to Securitization Documents. Provide Lender with
prior written notice of any amendment or modification to the Securitization
Documents. Prior to entering into any amendment or modification to the
Securitization Documents, Borrower shall deliver to Lender true, correct and
complete drafts of such amendment or modification and copies of the executed
amendment or modification promptly upon execution.
7.1.12 Duties of Collection and Administration. Borrower shall
service, manage, administer, and make Collections on the Pledged Contracts and
shall do any and all things which it may deem necessary or desirable in
connection therewith which are consistent with this Agreement. Borrower shall
service and administer the Pledged Contracts by employing such procedures
(including collection procedures) and degree of care, in each cash consistent
with prudent industry standards, as are customarily employed by Borrower in
servicing and administering motor vehicle retain installment sales contracts and
notes owned or serviced by Borrower comparable to the Pledged Contracts. In
performing such duties, Borrower shall comply with Borrower's Credit and
Collection Policy. Payments by or on behalf of Account Debtors shall be
allocated by Borrower to scheduled payments, late fees, other charges, and
principal and interest in accordance with the terms of the Pledged Contracts and
Borrower's normal servicing practices and procedures (which shall be Borrower's
Credit and Collection Policy). Borrower's obligations to collect and administer
Pledged Contracts shall include, without limitation, collection and posting of
all payments, responding to inquiries of Account Debtors, investigating
delinquencies, sending payment coupons to Account Debtors, reporting any
required tax information to Account Debtors or to such other Persons as may be
required in connection with servicing the Pledged Contracts, monitoring the
collateral, and accounting for Collections. Borrower shall also (i) perform all
obligations of Borrower under the Pledged Contracts and (ii) administer and
enforce all rights of Borrower under the Dealer Agreements including, but not
limited to, the right to require Dealers to repurchase Pledged Contracts for
breaches of representations and warranties made by the Dealers.
7.1.13 Costs and Expenses. After Borrower's payment of that portion
of the Allowed Fleet Expenses to be paid under the Reorganization Plan on the
Effective Date of the Reorganization Plan, pay the balance of the Allowed Fleet
Expenses and any and all of TCB's costs, fees (including attorneys' and other
professionals' fees) and other expenses incurred in connection with the
Bankruptcy Proceedings and allowed by the Bankruptcy Court, without reduction,
in 6 equal, or substantially equal, monthly installments, commencing on October
31, 1997, and continuing on November 30, 1997, December 26, 1997, January 31,
1998, February 28, 1998 and March 31, 1998 until paid in full, without any
interest except interest at the Default Rate after the occurrence and during the
continuance of an Event of Default; provided, however, such costs, fees and
expenses represent actual out-of-pocket costs, fees and expenses incurred by
Lender and TCB and such attorneys' and other professionals' fees consist of fees
billed at the regular and normal hourly rates of such professionals, without any
allowance for premiums, surcharge or increase in such hourly rates that might
otherwise be applied given the complexity and demands of the Bankruptcy
Proceedings (other than increases charged to all clients of the firms) and that
are not otherwise unreasonable.
7.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that it
will not:
7.2.1 Limitation on and Deferral of Payment to Other Creditors.
Make any payments to holders of Unsecured Claims, Dealer Claims and the Jaymed
Claim prior to the Maturity Date, except as may be permitted under the
Reorganization Plan.
7.2.2 Mergers: Consolidations: Acquisitions. Merge or consolidate
with any Person; nor acquire all or any substantial part of the Properties of
any Person, provided that Borrower may acquire Properties of another Person.
7.2.3 Limitation on Liens. Create or suffer to exist, any Lien
upon any of the Collateral whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed
pursuant to any of the provisions of ERISA) not yet due, or being contested in
the manner described in Section 7.1.9 hereto, but only if in Lender's judgment
such Lien does not adversely affect Lender's rights or the priority of Lender's
Lien in the Collateral;
(iii) Liens arising in the ordinary course of Borrower's
business by operation of law or regulation, but only if payment in respect of
any such Lien is not at the time required and such Liens do not, in the
aggregate, materially detract from the value of the Property of Borrower or
materially impair the use thereof in the operation of Borrower's business;
(iv) such other Liens as appear on Exhibit C hereto;
(v) such other Liens as Lender may hereafter approve
in writing;
(vi) liens in favor of Prudential Securities Credit
Corporation but only to the extent that they secure Indebtedness to Prudential
Securities Credit Corporation as of the Petition Date or refinancings thereof
pursuant to the Reorganization Plan; and
(vii) Liens on Servicing Collateral, as contemplated and
permitted by Section 5.4.
7.2.4 Disposition of Assets. Sell, lease or otherwise dispose of
any of the Collateral, including any disposition of Collateral as part of a sale
and leaseback transaction, to or in favor of any Person, except (i) dispositions
expressly authorized by this Agreement, and (ii) sales or other dispositions of
Equipment in the ordinary course of its business, subject, however, to the
following proviso. Borrower will not sell, lease or otherwise dispose of or
transfer any of the Equipment or any part thereof without the prior written
consent of Lender; provided, however, that the foregoing restriction shall not
apply, for so long as no Default or Event of Default exists, and so long as
Borrower maintains adequate Servicing Equipment to service and administer the
Pledged Contracts in the ordinary course of Borrower's business.
7.2.5 Change of Locations. Borrower will not change the location
of its chief executive office or any other place of business from those listed
on Exhibit A hereto, without giving Lender at least 30 days prior written notice
of the new location of its chief executive office or other place of business, as
the case may be, and delivering to Lender UCC-1 financing statements or UCC-3
amendments, as appropriate, reflecting any new location prior to such change in
location.
7.2.6 Amendments to Securitization Documents. Amend or modify the
Securitization Documents in any manner that would have an adverse affect, as
determined by Lender in its discretion, on the Trust, the Collections that the
Trust would otherwise receive on the Series 1996A Notes or the Series 1996B
Notes (as such terms are defined in the Contribution and Servicing Agreements),
Lender's Lien on Borrower's interest in the Trust, or the timing or amount of
any distribution from the Trust to Borrower.
7.2.7 Amendments to Reorganization Plan. Amend or modify the
Reorganization Plan in any manner that would alter the treatment afforded the
Claims of Lender, alter the treatment afforded the Unsecured Claims, Dealer
Claims, or the Jaymed Claims, or otherwise have an adverse affect on Lender, as
determined by Lender in its discretion.
7.2.8 Amendments to Contribution and Servicing Agreements. Amend
or modify either of the Contribution and Servicing Agreements in any manner that
would have an adverse
affect, as determined by Lender in its discretion, on the timing or amount of
any fees or distributions therefrom to Borrower.
7.2.9 Money Borrowed. Incur any Indebtedness after the Closing
Date hereof for Money Borrowed.
SECTION 8. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other Loan
Documents, and without affecting in any manner the rights of Lender under the
other sections of this Agreement, this Agreement shall not be effective unless
and until each of the following conditions has been and continues to be
satisfied:
8.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel, including, but not limited to, the following
documents:
(a) copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Lender in the Collateral;
(b) the written opinions of Xxxxx & XxXxxxxx and Xxxx, Gotshal &
Xxxxxx, L.L.P., counsel to Borrower, regarding Borrower and the execution of
this Agreement and the Other Agreements executed in connection with this
Agreement, and the transactions contemplated hereby, to be in form and substance
satisfactory to Lender;
(c) the Trademark Security Agreement, the Trust Pledge
Agreement, the Guaranty, and the Releases shall have been executed, and shall be
in form and substance satisfactory to Lender, in its sole discretion, and true
and correct copies of such executed documents shall have been delivered to
Lender; and
(d) such other documents evidencing Borrower's pledge of its
Deposit Accounts in favor of Lender (including acknowledgment letters from the
Depositaries) shall have been executed, and shall have been in the form attached
as Exhibit F hereto.
8.2 No Default. No Default or Event of Default shall exist.
8.3 Reorganization Plan. The Effective Date shall have occurred under the
Reorganization Plan and each of the "Implementing Actions" described in Section
11.1 of the Reorganization Plan shall have occurred unless waived in writing by
Lender.
SECTION 9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
9.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Events of Default":
9.1.1 Payment of Obligations. Borrower shall fail to pay all or
any portion of the obligations within ten (10) days after the due date thereof,
or Borrower shall fail to pay the entire accelerated amount of the Obligations
upon or after the occurrence of any Event of Default (the "Fleet Payment
Default").
9.1.2 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower in this
Agreement, any of the other Loan Documents or any instrument, certificate or
financial statement furnished in compliance with or in reference thereto proves
to have been false or misleading in any material respect when made or furnished
and the misrepresentation is not corrected to Lender's satisfaction within 30
days of the sooner to occur of Borrower's receipt of notice of such
misrepresentation from Lender or the date on which such misrepresentation first
becomes known to any officer of Borrower.
9.1.3 Breach of Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 9.1 hereof) on
the date that Borrower is required to perform, keep or observe such covenant;
and the breach or default of such other covenant is not cured to Lender's
satisfaction within 30 days after the sooner to occur of Borrower's receipt of
notice of such breach from Lender or the date on which such failure, neglect, or
default first becomes known to any officer of Borrower.
9.1.4 Default Under Security Documents/Other Agreements. Any event
of default shall occur under, or Borrower shall default in the performance or
observance of any Term, covenant, condition or agreement contained in, any of
the Security Documents or the Other Agreements and such default shall continue
beyond any applicable grace period.
9.1.5 Insolvency and Related Proceedings. Borrower shall dissolve,
merge, liquidate (other than as contemplated by the Reorganization Plan) suffer
the appointment of a receiver, trustee, custodian or similar fiduciary for any
of the Collateral or any material part of Borrower's Property, or shall make an
assignment for the benefit of creditors, or shall have its Bankruptcy
Proceedings converted to a case under Chapter 7 of the Bankruptcy Code, or any
petition for an order for relief shall be filed by or against Borrower under the
Bankruptcy Code (if against Borrower, the continuation of such proceeding for
more than 30 days), or Borrower shall make any offer of settlement, extension or
composition to its unsecured creditors generally.
9.1.6 Judgments. Any money judgment, writ of attachment or similar
process, which is not otherwise bonded against and stayed on appeal, (i) in
excess of $250,000 (net of any amounts satisfied by insurance) or (ii) which has
a material adverse effect on the business or properties of Borrower, is filed
against Borrower or any of its Property, and the breach or default of such
covenant is not cured to Lender's satisfaction within 30 days after the sooner
to occur of Borrower's receipt of notice of such breach or default from Lender
or the date on which such failure, neglect, or default first becomes known to
any officer of Borrower.
9.1.7 Default by Custodian. Default by Custodian under the
Custodial Agreement and the default is not cured to Lender's satisfaction within
30 days after the sooner to occur of Borrower's receipt of notice of such breach
or default from Lender or the date on which such failure, neglect, or default
first becomes known to any officer of Borrower.
9.1.8 Default Under Contribution and Servicing Agreements.
Borrower shall revoke, discontinue or terminate, or attempt to revoke,
discontinue or terminate its obligations as servicer under the Contribution and
Servicing Agreement or Borrower's obligations as servicer under the Contribution
and Servicing Agreement are otherwise terminated, and the breach or default of
such covenant is not cured to Lender's satisfaction within 30 days after the
sooner to occur of Borrower's receipt of notice of such breach or default from
Lender or the date on which such failure, neglect, or default first becomes
known to any officer of Borrower.
9.1.9 Default Under Reorganization Plan. Borrower fails to perform
its obligations under, or comply with the provisions of, either the
Reorganization Plan or the order of the Bankruptcy Court confirming Borrower's
Reorganization Plan in the Bankruptcy Proceedings (other than the obligations
and provisions relating to the Lender), as determined by the Bankruptcy Court,
and the Bankruptcy Court further determines that such failure has not been cured
or waived; provided that such failure shall not be an Event of Default under
this Section 9.1.9 if the Bankruptcy Court determines that such failure does not
warrant the exercise of available remedies against Borrower.
9.2 Acceleration of the Obligations. Without in any way limiting the right
of Lender to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.1 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Lender and without presentment, demand, protest notice of intent to
accelerate, notice of acceleration, or further notice by Lender except to the
extent notice is expressly provided for in this Agreement, become at once due
and payable and Borrower shall forthwith pay to Lender, the full amount of such
Obligations, provided, that upon the occurrence of an Event of Default specified
in Section 9.1,4 hereof, all of the Obligations shall become automatically due
and payable without declaration, notice or demand by Lender.
9.3 Other Remedies. Upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:
9.3.1 All of the rights and remedies of a secured party under the
Code or under other applicable law, and all other legal and equitable rights to
which Lender may be entitled, all of which rights and remedies shall be
cumulative and shall be in addition to any other rights or remedies contained in
this Agreement or any of the other Loan Documents, and none of which shall be
exclusive.
9.3.2 The right to take immediate possession of the Collateral,
and to (i) require Borrower to assemble the Collateral, at Borrower's expense,
and make it available to Lender at a place designated by Lender which is
reasonably convenient to both parties, (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof), and (iii) to take control of
all Collections on Pledged Contracts and to apply all payments and remittances
constituting the Collateral to the Obligations on as frequent a basis as Lender
deems desirable.
9.3.3 The right to take possession of the Collateral, and to
thereafter collect upon the Pledged Contracts and Other Accounts, settle and
adjust disputes and claims in relation to the Pledged Contracts and Other
Accounts directly with Account Debtors for amounts and upon terms which Lender
considers advisable, and in such cases, Lender will credit Borrower's Loan
Account with only the net amounts received by Lender in payment of such disputed
Pledged Contracts and Other Accounts, after deducting all of Lender's expenses
incurred or expended in connection therewith. In connection with the foregoing,
Lender is hereby granted a license and other right to use, without charge, all
of the Collateral to collect the Pledged Contracts and Other Accounts.
9.3.4 The right to sell or otherwise dispose of all or any
Collateral in its then condition, or after any further manufacturing or
processing thereof, at public or private sale or sales, with such notice as may
be required by law, in lots or in bulk, for cash or on credit, all as Lender, in
its sole discretion, may deem advisable. Borrower agrees that 10 days written
notice to Borrower of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such
locations as Lender may designate in said notice. Lender shall have the right to
conduct such sales on Borrower's premises, without charge therefor, and such
sales may be adjourned from time to time in accordance with applicable law.
Lender shall have the right to sell, lease or otherwise dispose of the
Collateral, or any part thereof, for cash, credit or any combination thereof,
and Lender may purchase all or any part of the Collateral at public or, if
permitted by law, private sale and, in lieu of actual payment of such purchase
price, may set off the amount of such price against the Obligations. The
proceeds realized from the sale of any Collateral may be applied, after allowing
2 Business Days for collection, first to the costs, expenses and attorneys' fees
incurred by Lender in collecting the Obligations, in enforcing the rights of
Lender under the Loan Documents and in collecting, retaking, completing,
protecting, removing, storing, advertising for sale, selling and delivering any
Collateral, second to the interest due upon any of the Obligations; and third,
to the principal of the Obligations. If any deficiency shall arise, Borrower
shall remain liable to Lender therefor.
9.3.5 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, tradenames, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral.
9.4 Remedies Cumulative: No Waiver All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule given to Lender or contained in any other agreement between Lender and
Borrower, heretofore, concurrently, or hereafter entered into, shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained. The failure
or delay of Lender to require strict performance by Borrower of any provision of
this Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until the Term Loan and all
other Obligations owing or to become owing from
Borrower to Lender shall have been fully satisfied. None of the undertakings,
agreements, warranties, covenants and representations of Borrower contained in
this Agreement or any of the other Loan Documents and no Event of Default by
Borrower under this Agreement or any other Loan Documents shall be deemed to
have been suspended or waived by Lender, unless such suspension or waiver is by
an instrument in writing specifying such suspension or waiver and is signed by a
duly authorized representative of Lender and directed to Borrower.
SECTION 10. MISCELLANEOUS
10.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
10.1.1 At such time or times upon or after the occurrence of a
Default or an Event of Default as Lender or said agent, in its sole discretion,
may determine, endorse Borrower's name on any checks, notes, acceptances,
drafts, money orders or any other evidence of payment or proceeds of the
Collateral which come into the possession of Lender or under Lender's control.
10.1.2 At such time or times upon or after the occurrence of an
Event of Default as Lender or its agent in its sole discretion may determine:
(i) demand payment of the Pledged Contracts from the Account Debtors, enforce
payment of the Pledged Contracts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with respect to the
collection of the Pledged Contracts; (ii) settle, adjust, compromise, discharge
or release any of the Pledged Contracts or other Collateral or any legal
proceedings brought to collect any of the Pledged Contracts or other Collateral;
(iii) sell or assign any of the Pledged Contracts and other Collateral upon such
terms, for such amounts and at such time or times as Lender deems advisable;
(iv) take control, in any manner, of any item of payment or proceeds relating to
any Collateral; (v) prepare, file and sign Borrower's name to a proof of claim
in bankruptcy or similar document against any Account Debtor or to any notice of
lien, assignment or satisfaction of lien or similar document in connection with
any of the Collateral; (vi) receive, open and dispose of all mail addressed to
Borrower and to notify postal authorities to change the address for delivery
thereof to such address as Lender may designate; (vii) endorse the name of
Borrower upon any of the items of payment or proceeds relating to any Collateral
and deposit the same to the account of Lender on account of the Obligations;
(viii) endorse the name of Borrower upon any chattel paper, document,
instrument, invoice, freight xxxx, xxxx of lading or similar document or
agreement relating to the Pledged Contracts and any other Collateral; (ix) use
Borrower's stationery and sign the name of Borrower to verifications of the
Pledged Contracts and notices thereof to Account Debtors; (x) use the
information recorded on or contained in any data processing equipment and
computer hardware and software relating to the Pledged Contracts, Equipment and
any other Collateral; (xi) make and adjust claims under policies of insurance;
and (xii) do all other acts and things necessary, in Lender's determination, to
fulfill Borrower's obligations under this Agreement.
10.2 INDEMNITY. BORROWER HEREBY INDEMNIFIES, HOLDS LENDER HARMLESS AND
SHALL DEFEND LENDER AND ITS DIRECTORS, OFFICERS, AGENTS, COUNSEL AND EMPLOYEES
("INDEMNIFIED PERSONS") FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS, CAUSES OF ACTION, AND PROCEEDINGS
CAUSED OR ASSERTED BY THIRD PARTIES ("LOSSES") EVER SUFFERED OR INCURRED BY ANY
INDEMNIFIED PERSON (INCLUDING REASONABLE ATTORNEYS FEES AND LEGAL EXPENSES)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION
CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, ANY LOSSES CAUSED BY THE
NEGLIGENCE OF SUCH INDEMNIFIED PERSON, BUT NOT INCLUDING ANY LOSSES CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON, AND
BORROWER SHALL REIMBURSE THE LENDER AND EACH OTHER INDEMNIFIED PERSON FOR ANY
EXPENSES (INCLUDING IN CONNECTION WITH THE INVESTIGATION OF, PREPARATION FOR OR
DEFENSE OF ANY ACTUAL OR THREATENED CLAIM, ACTION OR PROCEEDING ARISING
THEREFROM, INCLUDING ANY SUCH COSTS OF RESPONDING TO DISCOVERY REQUESTS OR
SUBPOENAS). IN ADDITION, BORROWER SHALL DEFEND LENDER AGAINST AND SAVE IT
HARMLESS FROM ALL CLAIMS OF ANY PERSON (OTHER THAN BORROWER) WITH RESPECT TO THE
COLLATERAL. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THESE INDEMNITIES
SHALL EXTEND TO ANY CLAIMS ASSERTED AGAINST LENDER OR ANY OTHER INDEMNIFIED
PERSON (OTHER THAN BORROWER) BY ANY PERSON UNDER ANY ENVIRONMENTAL LAWS OR
SIMILAR LAWS BY REASON OF BORROWER'S OR ANY OTHER PERSON'S FAILURE TO COMPLY
WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS OR OTHER TOXIC
SUBSTANCES. EACH INDEMNIFIED PERSON MAY SELECT ITS OWN COUNSEL WITH RESPECT TO
LOSSES, IN ADDITION TO ANY BORROWER'S COUNSEL, AND SHALL BE INDEMNIFIED THEREFOR
HEREUNDER. NOTWITHSTANDING ANY CONTRARY PROVISION IN THIS AGREEMENT, THE
OBLIGATION OF BORROWER UNDER THIS SECTION 10.2 SHALL SURVIVE THE PAYMENT IN FULL
OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
10.3 Modification of Agreement: Sale of Interest. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including, without limitation, Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder. Borrower hereby
consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement and any of the
other Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lender's rights, title, interests, remedies, powers, and duties
hereunder or thereunder. In the case of an assignment, the assignee shall have,
to the extent of such assignment, the same rights, benefits and obligations as
it would if it were "Lender" hereunder and shall be accorded all of the rights
of the Lender with respect to exercise of the right of set off against any
deposits, credit balances, or other funds of the Borrower which are or may be in
its possession. Lender shall be relieved of all obligations hereunder upon any
such assignments. Borrower agrees that it will use its best efforts to assist
and cooperate with Lender in any manner reasonably requested by Lender to effect
the sale of participations in or assignments of any of the Loan Documents or any
portion thereof or interest therein, including, without limitation, assisting in
the preparation of appropriate disclosure documents. Borrower further agrees
that Lender may disclose credit information regarding Borrower and its
Subsidiaries to any
potential participant or assignee. Without the prior consent of Borrower, which
consent shall not be unreasonably withheld, Lender shall not sell or assign its
interest in this Agreement, the Loan Documents and the Term Loan if after giving
effect to such sale or assignment, Lender will maintain less than a 51%
beneficial interest in this Agreement, the Loan Documents and the Term Loan;
provided, however, that the consent of Borrower shall not be required if such
sale, assignment, transfer or disposition is part of the transfer of all or a
substantial part of Lender's entire loan portfolio.
10.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
10.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 10.3
hereof.
10.6 Cumulative Effect: Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control. To the extent that the terms providing
for payment of the Obligations in the Reorganization Plan conflict with the
terms providing for payment of the Obligations in this Agreement or the Other
Agreements, the terms of the Reorganization Plan shall control.
10.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
10.8 Notice. Except as otherwise provided herein, all notices, requests and
demands to or upon a party hereto, to be effective, shall be in writing and
shall be sent by certified or registered mail, return receipt requested, by
personal delivery against receipt, by overnight courier or by facsimile and,
unless otherwise expressly provided herein, shall be deemed to have been validly
served, given or delivered immediately when delivered against receipt, one
Business Day after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile notice, when sent, addressed as follows:
If to Lender: Fleet Capital Corporation
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No: (000)000-0000
If to Borrower: Jayhawk Acceptance Corporation
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No: (000)000-0000
With a copy to: Xxxxx & XxXxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 10.8.
10.9 Lender's Consent. Whenever Lender's consent is required to be
obtained under this Agreement, any of the Other Agreements or any of the
Security Documents as a condition to any action, inaction, condition or event,
Lender shall be authorized to give or withhold such consent in its sole and
absolute discretion and to condition its consent upon the giving of additional
collateral security for the Obligations, the payment of money or any other
matter.
10.10 Credit Inquiries. Borrower hereby authorizes and permits Lender to
respond to usual and customary credit inquiries from third parties concerning
Borrower or any of its Subsidiaries.
10.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
10.12 Entire Agreement. This Agreement and the other Loan Documents,
together with all other instruments, agreements and certificates executed by the
parties in connection therewith or with reference thereto, embody the entire
understanding and agreement between the parties hereto and thereto with respect
to the subject matter hereof and thereof and supersede all prior agreements,
understandings and inducements, whether express or implied, oral or written. No
provision of this Agreement or any of the other Loan Documents shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or judicial authority by reason of such party having
or being deemed to have structured or dictated such provision.
10.13 Non-applicability of Chapter 346. Borrower and Lender hereby agree
that, except for Section 346.004 thereof, the provisions of Chapter 346 of the
Texas Finance Code (regulating certain revolving credit loans and revolving tri-
party accounts) shall not apply to this Agreement or any of the other Loan
Documents.
10.14 No Preservation or Marshaling. Borrower agrees that Lender has no
obligation to preserve rights to the Collateral against prior parties or to
marshal any Collateral for the benefit of any Person.
10.15 GOVERNING LAW, CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN DALLAS,
TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF ANY OF THE COLLATERAL
SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE LAWS OF SUCH
JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR FORECLOSURE OF
LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF LENDER'S OTHER
REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART
OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR LENDER, BORROWER
HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS, TEXAS, OR, AT
LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS, DALLAS DIVISION, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO THIS AGREEMENT
OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE
ADDRESS SET FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF LENDER TO SERVE LEGAL PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY LENDER
OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
10.16 WAIVERS BY BORROWER. BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL: (ii) PRESENTMENT, DEMAND, NOTICE OF INTENTION
TO ACCELERATE, NOTICE OF ACCELERATION, AND PROTEST AND NOTICE OF PRESENTMENT,
PROTEST, DEFAULT (EXCEPT TO THE EXTENT NOTICE IS EXPRESSLY PROVIDED FOR IN THIS
AGREEMENT), NON PAYMENT, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR
RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS CHATTEL PAPER AND GUARANTIES AT ANY
TIME HELD BY LENDER ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN THIS REGARD; (iii) NOTICE PRIOR
TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH
MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING LENDER TO EXERCISE ANY OF
LENDER'S REMEDIES; (iv) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION
LAWS; AND (v) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE
FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO LENDER'S ENTERING INTO THIS
AGREEMENT AND THAT LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE
DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY
WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
10.17 WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ALL PROVISIONS OF
THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT (TEX. BUS. & COM. CODE
XXX. (S)17.01 ET SEQ. (XXXXXX SUPP. 1987)), A LAW THAT GIVES CONSUMERS SPECIAL
RIGHTS AND PROTECTIONS, OTHER THAN SECTION 17.555 THEREOF PERTAINING TO
CONTRIBUTION AND INDEMNITY, AND EXPRESSLY WARRANTS AND REPRESENTS THAT AFTER
CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION, BORROWER VOLUNTARILY
CONSENTS TO THIS WAIVER.
10.18 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas, Texas,
on the day and year specified at the beginning of this Agreement.
JAYHAWK ACCEPTANCE CORPORATION
("Borrower")
By: /s/ Xxxx X. Xxxxx
-----------------------------------
Name: Xxxx X. Xxxxx
-----------------------------------
Title: President and C.O.O.
-----------------------------------
ACCEPTED IN DALLAS, TEXAS:
FLEET CAPITAL CORPORATION
("Lender")
By: /s/ H. Xxxxxxx Xxxxx
-----------------------------------
Name: H. Xxxxxxx Xxxxx
-----------------------------------
Title: Vice President
-----------------------------------
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated as of October 21, 1997,
by and between Fleet Capital Corporation and Jayhawk Acceptance Corporation the
following terms shall have the following meanings (terms defined in the singular
to have the same meaning when used in the plural and vice versa):
Account Debtor - any Person or Persons liable as an obligor or in respect
of any Pledged Contract.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled by, or
is under common control with, a Person; (ii) which beneficially owns or holds 5%
or more of any class of the Voting Stock of a Person; or (iii) 5% or more of the
Voting Stock (or in the case of a Person which is not a corporation, 5% or more
of the equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits thereto and this Appendix A as
renewed, extended, modified and restated from time to time.
Allowed Fleet Expenses - means all legal fees and other expenses incurred
by Lender during the pendency of the Bankruptcy Proceedings, to the extent they
are allowed by the Bankruptcy Court.
Auto Title - the certificate of title issued by the department of
transportation or other corresponding instrumentality or agency of any state
which relates to an automobile sold pursuant to a Contract.
Bank - Fleet National Bank.
Bankruptcy Court - the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division.
Bankruptcy Proceedings - the proceedings in Borrower's bankruptcy case, In
re: Jayhawk Acceptance Corporation, Debtor, Case No. 397-31261-SAF-11, in the
Bankruptcy Court.
Base Rate - the rate of interest generally announced or quoted by Bank from
time to time as its base rate for commercial loans, whether or not such rate is
the lowest rate charged by Bank to its most preferred borrowers; and, if such
base rate for commercial loans is discontinued by Bank as a standard, a
comparable reference rate designated by Bank as a substitute therefor shall be
the Base Rate.
Business Day - any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Texas or the State of Illinois or
is a day on which banking institutions located in either of such states are
closed.
Capitalized Lease Obligation - any Indebtedness represented by obligations
under a lease that is required to be capitalized for financial reporting
purposes in accordance with GAAP.
Cash Collateral Orders - mean the orders of the Bankruptcy Court governing
the use of Lender's cash collateral, including the Interim Order Authorizing the
Use of Cash Collateral and Providing for Adequate Protection, the Second Interim
Order Authorizing the Use of Cash Collateral and Providing for Adequate
Protection, the Third Interim Order Authorizing the Use of Cash Collateral and
Providing for Adequate Protection (and the Supplement thereto), the Final Order
Authorizing the Use of Cash Collateral and Providing for Adequate Protection
entered on May 23, 1997, the Second Final Order Authorizing the Use of Cash
Collateral and Providing for Adequate Protection, entered on July 29, 1997, and
any subsequent orders of the Bankruptcy Court governing the use of Lender's cash
collateral entered prior to the Effective Date.
Causes of Action - means without limitation, any and all claims, actions,
causes of action (including causes of action arising under any section of the
Bankruptcy Code), liabilities, obligations, rights, suits, debts, sums of money,
damages, judgments and demands whatsoever, whether known or unknown, disputed or
undisputed, legal or equitable, absolute or contingent.
Claim - has the meaning set forth in section 101(5) of the Bankruptcy Code.
Clearing Account - a deposit account of Borrower established by Borrower
pursuant to this Agreement at a bank selected by Borrower, but acceptable to
Lender in its reasonable discretion.
Closing Date - the date on which all of the conditions precedent in Section
8 of the Agreement are satisfied.
Code - the Uniform Commercial Code as adopted and in force in the State of
Texas, as from time to time in effect.
Collateral - all of the Property and interests in Property described in
Section 4 of the Agreement and all other Property and interests in Property that
now or hereafter secure the payment and performance of any of the Obligations.
Collections - all interest collections, all principal collections, all
other collections, and all Recoveries, in each case, from (i) the Borrower's
Pledged Contracts owned as of the Petition Date, or thereafter acquired, and
(ii) the Trust's Contracts owned as of the Petition Date.
Collection Agent - means any Person engaged by Borrower in connection with
Borrower's efforts to collect payments on a Pledged Contract or to repossess or
liquidate the automobile that secures payment of a Pledged Contract, including
independent repossession agents, auctioneers, remarketing firms, and
independent collection agencies, and any Person engaged in support of Borrower's
systems for administering and servicing the Pledged Contracts.
Consolidated - the consolidation in accordance with GAAP of the accounts or
other items as to which such term applies.
Contract - a written agreement pursuant to which a Person agrees to
purchase from a Dealer a new or used automobile and to pay for same on an
installment basis, with interest, over a period of months.
Confirmation Order - means the order of the Bankruptcy Court CONFIRMING the
Reorganization Plan pursuant to section 1129 of the Bankruptcy Code.
Contributed Non-Accrual Contracts - means those Non-Accrual Contracts that
are assigned and transferred by the Borrower to the Non-Accrual Contract Trust,
as described in Section 5.3 of the Reorganization Plan.
Contribution and Servicing Agreements - those certain Contribution and
Servicing Agreements dated March 15, 1996, and August 7, 1996, respectively, by
and among Borrower, in its individual capacity and in its capacity as servicer,
the Trust, Trustee, in its capacity as trustee, and Norwest Bank Minnesota,
National Association, in its capacity as back-up servicer, pursuant to which (i)
Borrower contributed to the capital of the Trust certain retail installment
contracts of Borrower and (ii) Borrower, on behalf of the Trust, will service
such contributed contracts.
Credit and Collection Policy - the Borrower's Credit and Collection Policy,
as presently in effect on the Closing Date.
Custodian - the Custodian as defined under the Custodial Agreement.
Custodial Agreement - the Custodial Agreement dated on or about the Closing
Date by and among Lender, Borrower and Custodian.
Dealer - a Person engaged in the business of selling new or used
automobiles pursuant to Contracts or any assignee of such a Person.
Dealer Agreement - an agreement governing the relationship between Borrower
and each Dealer from which Borrower purchases Pledged Contracts.
Dealer Claim - means a Claim of any kind or basis held by a Dealer,
including, without limitation, a Claim based upon enrollment fees paid by such
Dealer to Borrower, unused vouchers provided to such Dealer by Borrower, future
collections on Contracts purchased by Borrower from such Dealer, breach of a
Dealer Agreement, or a Dealer's relationship with Borrower.
Dealer Pool - all of the Pledged Contracts purchased from any Dealer
pursuant to a Dealer Agreement and owned by Borrower or the Trust.
Default - an event or condition the occurrence of which would, with the
lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate - as defined in Section 2.1.2, of the Agreement.
Deposit Accounts - means any and all deposit accounts, bank accounts or
investment accounts (exclusive of the Clearing Account now owned or hereafter
acquired or opened by Borrower), including, without limitation, those set forth
on Exhibit D hereto, and any account which is a replacement or substitute for
any of such accounts, together with all monies, other Accounts and other
property deposited therein, and all balances therein and all investments made
with funds deposited therein or otherwise held in connection therewith,
including, without limitation, indebtedness (howsoever evidenced) and/or
securities issued or guaranteed by the government of the United States of
America, certificates of deposit and all contract rights, General Intangibles,
Contracts, and Other Contracts now or hereafter existing with respect thereto,
including, but not limited to, any and all renewals, extensions, reissuances and
replacements and substitutions therefor with all earnings, profits or other
Proceeds therefrom in the form of interest or otherwise.
Disclosure Statement - means the Disclosure Statement Pursuant To Section
1125 Of The Bankruptcy Code with respect to Joint Plan of Reorganization, filed
by the Borrower and the Official Unsecured Creditors' Committee on August 19,
1997, in the Bankruptcy Court in connection with the Bankruptcy Proceedings.
Distribution - in respect of any corporation means and includes: (i) the
payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net proceeds of
the sale of Securities.
Effective Date - means the first Business Day that is ten (10) days after
the date on which the Confirmation Order becomes a Final Order (as defined in
the Reorganization Plan).
Environmental Laws - all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidances, orders and consent decrees relating to
health, safety and environmental matters.
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or owned
by Borrower or in which Borrower has an interest, whether now owned or hereafter
acquired by Borrower and wherever located, and all parts, accessories and
special tools and all increases and accessions thereto and substitutions and
replacements therefor.
Event of Default - as defined in Section 9.1 of the Agreement.
Fleet Account - a deposit account of Lender established by Lender in the
name of "Fleet Capital Corporation - Dallas, re: Jayhawk Acceptance Corporation"
at Xxxxxx Trust and Savings Bank (Chicago, Illinois), ABA No. 0000-0000-0,
Account No. 183-8549, or such other bank designated by Lender from time to time.
Fleet Payment Default - as defined in Section 9.1.1 of this Agreement.
Fleet Payment Default Condition - means a condition resulting from the
failure of Borrower to pay any installment of the Term Loan as provided herein,
but before ten (10) days have elapsed such that the failure becomes a Fleet
Payment Default.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
General Intangibles - as defined in the Code.
Guaranty - that certain unconditional guaranty of the Obligations, dated as
of the date hereof, executed by Guarantor in favor of Lender, limited in amount
to $10,000,000 of the Obligations, and including collection costs and interest
after demand for payment by Lender.
Guarantor - Xxxx X. Xxxxxxxx.
Indebtedness - as applied to a Person means, without duplication
(i) other than contingent obligations owed by Borrower to a
Dealer under any Dealer Pool, all other items which in accordance with GAAP
would be included in determining Total Liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including, without limitation, Capitalized Lease
Obligations,
(ii) all obligations of other Persons which such Person has
guaranteed,
(iii) all reimbursement obligations in connection with letters of
credit or letter of credit guaranties issued for the account of such Person, and
(iv) in the case of Borrower (without duplication), the
Obligations.
Intellectual Property - patents, trademarks, service marks, tradenames,
copyrights, licenses (including, software licenses), computer software, source
codes, use codes, and other similar rights.
Inventory - all of Borrower's inventory, whether now owned or hereafter
acquired including, but not limited to, all goods in operable or repairable
condition, new or used, of whatever kind or nature, wherever located, and all
returns, repossessions, exchanges, substitutions, replacements, attachments,
parts, accessories and accessions thereto and thereof, and all other
goods intended to be used in connection therewith, held for sale or lease by
Borrower, or for display or demonstration; all materials and supplies of every
nature and description used or which might be used in connection with the
printing, packing, shipping, advertising, selling, leasing or furnishing of such
goods or otherwise used or consumed in Borrower's business; and all documents
evidencing and General Intangibles relating to any of the foregoing, whether now
owned or hereafter acquired by Borrower.
Jaymed Claim - means the Claim of Jayhawk Medical Acceptance Corporation, a
wholly-owned subsidiary of Borrower, against the Borrower in the principal
amount of $7.1 million, exclusive of interest, as of the Petition Date.
Knowledge - means the actual knowledge of the existence or absence of
certain facts after due inquiry by Borrower and such investigation by Borrower
as is prudent under current industry practices.
Lien - any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on common law, statute or contract.
Loan Account - the loan account established on the books of Lender pursuant
to Section 3.3 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Lockbox Bank - Texas Commerce Bank National Association or Bank One, or
such other bank as may be selected by Borrower and be acceptable to Lender.
Losses - as defined in Section 10.2 of this Agreement.
Maturity Date - as defined in Section 3.1.1 of the Agreement.
Maximum Legal Rate - as defined in Section 2.1.3, of this Agreement.
Money Borrowed - means (i) Indebtedness arising from the lending of money
by any Person to Borrower; (ii) Indebtedness, whether or not in any such case
arising from the lending by any Person of money to Borrower, (A) which is
represented by notes payable or drafts accepted that evidence extensions of
credit, (B) which constitutes obligations evidenced by bonds, debentures, notes
or similar instruments, or (C) upon which interest charges are customarily paid
(other than accounts payable) or that was issued or assumed as full or partial
payment for Property; (iii) Indebtedness that constitutes a Capitalized Lease
Obligation; (iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit; and (v) Indebtedness of Borrower under any
guaranty of obligations that would constitute Indebtedness for Money Borrowed
under clauses (i) through (iii) hereof, if owed directly by Borrower.
Non-Accrual Contract - means a Contract that is categorized in Borrower's
collection records, maintained in the ordinary course of business and in a
manner that is consistent with past practices existing as of June 30, 1997, as
"Non-Accrual," specifically including any Contract that is identified in such
collection records as "Collection," "Insurance," "Repo Posted," "Bankruptcy,"
and "Other," but excluding any Contract that is categorized as "Repo-Auction Not
Posted."
Obligations - the Term Loan and all other debts, liabilities, obligations,
covenants and duties, together with all interest, fees and other charges thereon
(including all Allowed Fleet Expenses), owing, arising, due or payable from
Borrower to Lender of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, whether arising under the
Agreement or any of the other Loan Documents or otherwise whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however acquired.
Other Accounts - all accounts, contract rights, chattel paper, instruments
and documents, other than Contracts, whether now owned or hereafter created or
acquired by Borrower or in which Borrower now has or hereafter acquired any
interest, including specifically, but without limitation, Servicing Fees.
Other Agreements - any and all agreements, instruments and documents (other
than the Agreement and the Security Documents), heretofore, now or hereafter
executed by Borrower, any Subsidiary of Borrower or any other third party and
delivered to Lender in respect of the transactions contemplated by the
Agreement.
Permitted Liens - any Lien of a kind specified in Section 7.2.3. of the
Agreement.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Petition Date - the date of Borrower's filing of its petition in the
Bankruptcy Proceedings (i.e., February 7, 1997), and the specific time of filing
on such date.
Pledged Contract - any Contract that Borrower owned as of the Petition Date
or thereafter acquired during or after the Bankruptcy Proceedings, exclusive of
the Contributed Non-Accrual Contracts.
Prior Loan Agreement - the Loan and Security Agreement dated as of April 4,
1995, by and between Borrower and Lender, including all amendments thereto.
Proceeds - means any "proceeds," as such term is defined in Article or
Chapter 9 of the Code and, in any event, shall include, but not be limited to,
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Borrower from time to time with respect to any of the Collateral, (b)
any and all payments (in any form whatsoever) made or due and payable to
Borrower from time to time in connection with requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any Person acting, or purporting to act, for or on
behalf of any governmental authority), and (c) any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral.
Property - any interest in any kind of property or assets whether real,
personal or mixed, or tangible or intangible.
Purchase Money Indebtedness - means and includes (i) Indebtedness (other
than the Obligations) for the payment of all or any part of the purchase price
of any fixed assets, (ii) any Indebtedness (other than the Obligations) incurred
at the time of or within 10 days prior to or after the acquisition of any fixed
assets for the purpose of financing all or any part of the purchase price
thereof, and (iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Recoveries - the remainder of (i) all cash received by Borrower in
connection with the liquidation of Pledged Contracts, whether from the Account
Debtor, through sale of any financed automobile, or otherwise, less (ii) all
out-of-pocket expenses associated with the liquidation of Pledged Contracts in
accordance with Borrower's normal servicing procedures.
Releases - (a) a release by Guarantor of all claims, if any, against
Lender, TCB, and their respective officers and agents in form and substance
acceptable to Guarantor and Lender, and (b) a release by Borrower of all claims,
if any, whether arising before or after the Petition Date (including any Causes
of Action arising under the Bankruptcy Code), against Lender, TCB, and their
respective officers and agents.
Reorganization Plan - the joint plan of reorganization filed by Borrower
and the Official Unsecured Creditors' Committee of Jayhawk Acceptance
Corporation with the Bankruptcy Court on August 19, 1997.
Securitization Documents - the Contribution and Servicing Agreement and
each of the other instruments, documents or agreements referred to therein and
executed in connection therewith.
Security - shall have the same meaning as in Section 2(l) of the Securities
Act of 1933, as amended.
Security Documents - the Trademark Security Agreement, the Trust Pledge
Agreement, the Guaranty, and all other instruments and agreements now or at any
time hereafter securing the whole or any part of the Obligations as the same may
be renewed, extended, modified and restated from time to time.
Servicing Collateral - as defined in Section 5.4 of the Agreement.
Servicing Equipment - all Equipment used in the servicing and/or
administering of Contracts, including specifically, but without limitation,
Equipment consisting of computers, computer hardware, and office furniture,
fixtures and equipment.
Servicing Fee - any fee payable to Borrower by any Person as compensation
to Borrower under the Contribution and Servicing Agreements for the servicing
and/or administering of Contracts and other installment or similar obligations.
Subsidiary - any corporation of which a Person owns, directly or indirectly
through one or more intermediaries, more than 50% of the Voting Stock at the
time of determination.
TCB - Texas Commerce Bank National Association, a national banking
association.
Total Liabilities - at any date means all amounts properly classified as
liabilities on a balance sheet at such date in accordance with GAAP, plus all
reserves for contingencies and all other potential liabilities for which no
reserves have previously been established on such balance sheet, to the extent
such amounts are not already classified as liabilities in accordance with GAAP.
Trademark Security Agreement - that certain Trademark Security Agreement,
dated as of the date hereof, executed by Borrower and Lender, and as the same
may be further amended, modified, renewed and restated from time to time.
Trust - Jayhawk Funding Trust I, a special purpose Delaware business trust.
Trustee - Norwest Bank Texas, N.A., a national banking association, or such
other financial institution which may serve in the capacity as a trustee under
the Contribution and Servicing Agreement.
Trust Pledge Agreement - that certain Pledge and Security Agreement
(Beneficial Interests), dated as of the date hereof, executed by Borrower in
favor of Lender, covering Borrower's interest in the Trust, as the same may be
further amended, modified, renewed and restated from time to time.
Unsecured Claim - shall have the meaning given such term in the
Reorganization Plan.
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof' and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. The section titles, table of contents and
list of exhibits appear as a matter of convenience only and shall not affect the
interpretation of the Agreement. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any of the Loan Documents shall include any and
all modifications thereto and any and all extensions or renewals thereof.
Accounting terms not otherwise specifically defined herein shall be construed in
accordance with GAAP consistently applied. The words "include" and "including"
mean "include without limitation" and "including without limitation",
respectively.
LIST OF EXHIBITS
----------------
Exhibit A Borrower's Business Locations
Exhibit B Intellectual Property
Exhibit C Permitted Liens
Exhibit D List of Deposit Accounts
Exhibit E Licensors
Exhibit F Deposit Account Pledge Agreements
