EXHIBIT 99.40 PORTFOLIO PURCHASE AGREEMENT
PORTFOLIO PURCHASE AGREEMENT
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This PORTFOLIO PURCHASE AGREEMENT is made as of March 9, 2001
("Agreement") by and between All American Acceptance Corporation, Inc., a
Florida corporation (the "Seller"), and AutoFund Servicing, Inc., a Nevada
corporation (the "Purchaser").
Preliminary Statement
Seller desires to sell to the Purchaser, and Purchaser desires to
purchase from the Seller, the Seller's portfolio of Deficiency Auto Loan
Receivables as detailed on Exhibit A annexed hereto (the "Portfolio") pursuant
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants set forth herein, the Seller and the
Purchaser hereby agree as follows: ARTICLE I Definitions
Section 1.1 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
" Portfolio" shall have the meaning given to it in the Preliminary
Statement.
"Closing" shall have the meaning given to it in Section 5.1.
"Closing Date" shall have the meaning given to it in Section 5. 1.
"Deficiency Auto Loan Receivables" shall mean those vehicle loans that
are in default, in arrears, or not current which are the property of
Seller.
"Lien" shall mean any lien, encumbrance or other charge of any kind.
"Person" shall mean any individual, partnership, corporation,
association, business trust, joint venture, governmental entity or
other entity of any nature.
"Transaction" shall mean the transactions described in and contemplated
by this Agreement.
"Transfer" shall have the meaning given to it in section 2. 1.
Section 1.2 Other Definitional Provisions. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document delivered pursuant hereto unless otherwise defined therein.
ARTICLE II
Purchase and Sale of Portfolio: Purchase Price
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Section 2.1 Purchase and Sale of Portfolio. Subject to the terms and
conditions of this Agreement and except as specifically set forth in this
Agreement, on the Closing Date, Seller shall sell, transfer, convey, quitclaim,
and assign the Portfolio in an "as is, where is" condition, without recourse,
representation or warranty of any kind and deliver same to the extent it is
capable of transfer by the Seller ("Transfer") to the Purchaser, free and clear
of any and all liens, and, subject to the terms and conditions of this
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Agreement, the Purchaser shall purchase, acquire and accept from Seller the
Portfolio and all lists, records and other information pertaining to the
accounts comprising the Portfolio.
Section 2.2 Purchase Price. The aggregate purchase price payable by the
Purchaser to Seller (the "Purchase") for the Portfolio shall be One Million One
Hundred Fifteen Thousand Dollars ($1,115,000). Purchaser shall pay Seller
$400,000 in cash at Closing and execute and deliver to Seller a promissory note
in the original principal amount of $715,000 in the form attached hereto as
Exhibit A (the "Promissory Note") and a Security Agreement in the form attached
hereto as Exhibit "B" (the "Security Agreement"). The Security Agreement will be
subordinated to a first lien for financing of up to $400,000 for funds to pay
the Seller at Closing. The Closing shall be contingent upon ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇ executing and delivering the Guaranty in the form attached as Exhibit "C"
to this Agreement (the "Guaranty").
Section 2.3 Instruments of Conveyance and Transfer, Assumption, etc.
(a) At the Closing, Seller will Transfer to the Purchaser the following
instruments (the "Transfer Instruments"):
(i) a quitclaim ▇▇▇▇ of sale, without representation, warranty
or recourse of any kind, transferring to the Purchaser the Portfolio;
and
(ii) executed originals (to the extent available to Seller) or
legible copies (to the extent available to Seller) of all contracts,
books, records and other data relating to the Portfolio that are in the
possession or control of the Seller. Purchaser acknowledges that a
portion of the Portfolio contracts, books, records and other data are
currently in the possession of Systems & Services Technologies, Inc.
("SST") and Seller agrees, immediately after Closing, to give written
notice to SST notifying it of the sale of the Portfolio to Purchaser
and directing SST to transfer the contracts, books, records and other
data relating to the Portfolio to the Purchaser. Seller agrees to pay
all costs of the transfer.
(iii) notification to SST and its subsidiary TRS that all
funds received after the Closing will be forwarded to Purchaser.
(b) At the Closing, the Purchaser shall:
(i) wire transfer to Seller $400,000 in immediately available
funds,
(ii) execute and deliver the Promissory Note,
(iii) execute and deliver the Security Agreement, and
(iv) deliver the fully executed Guaranty to the Seller.
Section 2.4 DISCLAIMER. EXCEPT TO THE EXTENT EXPRESSLY SET FORTH IN
SECTION 3.1, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND BY ANY ONE OR
MORE OF THE OTHER ACQUISITION DOCUMENTS ARE AND SHALL BE WITHOUT REPRESENTATION
OR WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, BY, OR RECOURSE AGAINST
SELLER. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING (BUT EXCEPT AS
EXPRESSLY SET FORTH IN SECTION 3.1) SELLER HEREBY DISCLAIMS ANY REPRESENTATION
OR WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR
CONDITION OF TITLE OR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND AND
NATURE AND AVERS THAT THE PORTFOLIO IS BEING SOLD "AS IS, WHERE IS", AND "WITH
ALL FAULTS", AND PURCHASER, BY CLOSING THE TRANSACTION, ACKNOWLEDGES AND AGREES
THAT IT PURCHASES THE PORTFOLIO ON THE FOREGOING BASIS. PURCHASER FURTHER HEREBY
ACKNOWLEDGES THAT PURCHASER IS NOT RELYING ON ANY REPRESENTATIONS OR STATEMENTS
MADE HEREIN OR OTHERWISE (EXCEPT TO THE EXTENT EXPRESSLY SET FORTH IN SECTION
3.1) BY SELLER IN CONNECTION WITH PURCHASER'S ENTRY INTO, EXECUTION, DELIVERY OR
PERFORMANCE OF THIS AGREEMENT OR CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND BY ANY ONE OR MORE OF THE OTHER ACQUISITION DOCUMENTS.
Section 2.5 Further Assurances. From time to time at Purchaser's
expense but without further consideration to Seller, each party will execute and
deliver to the other party such instruments of conveyance, assignment, transfer
and delivery and take such other action as the other party reasonably may
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request, but without representation, warranty, undertaking, or covenant of or by
or recourse against Seller of any kind whatsoever, to consummate the
transactions contemplated hereby.
ARTICLE III
Representations and Warranties of Seller
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Section 3.1 Representations and Warranties of Seller. Notwithstanding
the terms of any instruments delivered at closing Seller hereby represents and
warrants to Purchaser as follows:
(a) Authorization. etc. Seller has the requisite power and authority to
enter into this Agreement and the other Acquisition Documents, to perform its
obligations hereunder and thereunder, to Transfer the Portfolio and to carry out
the transactions contemplated hereby and thereby. No further actions on the part
of Seller will be required to authorize the execution and delivery of this
Agreement and the other Acquisition Documents, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby. This Agreement and the other Acquisition
Documents to which Seller is a party are valid and binding agreements of Seller,
enforceable against Seller in accordance with their respective terms, except
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding may be brought.
(b) Litigation. To the knowledge of Seller, no action, claim,
proceeding or investigation is pending or threatened against Seller which
challenges the validity of this Agreement or the other Acquisition Documents,
any action taken or proposed to be taken by Seller pursuant to this Agreement or
the other Acquisition Documents or the Transaction.
(c) Brokers. Seller has not retained any broker or finder or incurred
any obligation or liability for any brokerage or finder's fees or commissions
with respect to this Agreement or the Transaction.
Section 3.2 Due Diligence. Purchaser acknowledges that it has been
given full access to the Portfolio and documents related thereto and agrees that
it has completed all of its due diligence efforts regarding the Portfolio and
hereby waives further due diligence requirements.
ARTICLE IV
Representations and Warranties of Purchaser
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The Purchaser hereby represents and warrants to Seller as follows:
Section 4.1 Organization, etc. Purchaser is a corporation and has full
power and authority, to carry, on its business as it is now being conducted and
to own the properties and assets it now owns.
Section 4.2 Authorization, etc. Purchaser has full power and authority
to enter into this Agreement and the other Acquisition Documents, to perform its
obligations hereunder and thereunder, to carry out the transactions contemplated
hereby and thereby and to acquire and own the Transferred Portfolio. All
necessary corporate actions required to authorize and ratify the execution and
delivery by Purchaser of this Agreement and the other Acquisition Documents, the
performance by Purchaser of its obligations hereunder and thereunder and the
considerations of the transactions contemplated hereby and thereby have been
duly taken. This Agreement and the other Acquisition Documents are or will be
valid and binding agreements of Purchaser, enforceable against Purchaser in
accordance with their terms except (i) as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors' rights and (ii) that the remedy of specific
enforcement and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
Section 4.3 No Violation. To the knowledge of Purchaser, neither the
execution and delivery of this Agreement or the other Acquisition Documents to
which Purchaser is a party, the performance by Purchaser of its obligations
hereunder and thereunder nor the consummation of the transactions contemplated
hereby and thereby will (a) violate any provision of the Purchaser's certificate
of incorporation or bylaws; (b) violate, be in conflict with, permit the
termination of, constitute a default under or cause the acceleration of the
maturity of any debt or obligation of Purchaser, or (c) require the consent of
any other party to, constitute a breach of or result in the creation or
imposition of any lien upon any property or assets of Purchaser under any
agreement or commitment to which Purchaser is a party or by which Purchaser is
bound or to the knowledge of Purchaser and subject to obtaining any exemption or
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authorization required from any Regulatory Agency violate any statute or law or
any judgment, decree, order, regulation or rule of any court or governmental
authority to which Purchaser is subject or by which Purchaser or any of its
assets is or at Closing will be bound.
Section 4.4 Litigation. There is no action, proceeding or investigation
pending or, to the knowledge of Purchaser, threatened against Purchaser before
any court, arbitrator or administrative or governmental body which (a) if
adversely determined would materially and adversely affect the business,
operations, assets or condition, financial or otherwise, of Purchaser or (b)
challenges the validity of this Agreement or the other Acquisition Documents,
any action taken or to be taken by Purchaser pursuant to this Agreement or the
other Acquisition Documents or the Transaction, and Purchaser does not know of
any such action, proceeding or investigation which is probable of assertion.
Section 4.5 No Broker. There are no claims for brokerage or other
commissions or finders or other similar fees payable in connection with the
Transaction insofar as such claims shall be based on arrangements or agreements
made by Purchaser or on Purchaser's behalf.
Section 4.6 Purchaser Financing. Purchaser has all of the financing
required to consummate the Transaction at the Closing unconditionally committed.
Section 4.7 Indemnification of Seller. Purchaser hereby indemnifies
Seller, its officers, directors, and shareholders against any liability in
connection with the Portfolio Transferred to Purchaser at Closing. This
provision will survive Closing.
ARTICLE V
Closing
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Section 5.1 Closing. The parties hereto covenant and agree to
consummate the closing in accordance with Section 2.3 (the "Closing") of the
Transaction. At the Closing the documents and other items referred to in this
Agreement will be delivered by the parties and Purchaser will pay to Seller the
Purchase Price by wire transfer in immediately available funds in accordance
with wire instructions provided by Seller. The Closing shall take place on or
before March 28, 2001, no later than 5:00 P.M., Eastern Standard Time ("Closing
Date").
ARTICLE VI
Amendment. Termination. and Waiver
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Section 6.1 Amendment and Modification. This Agreement may be amended,
modified and supplemented only by written agreement signed by both parties
hereto.
Section 6.2 Termination.
(a) This Agreement may be terminated at any time prior to the Closing
Date by mutual written consent of Purchaser and Seller.
(b) This Agreement may be terminated by either Seller or Purchaser if
the Transaction has not been consummated by March 28, 2001 after 5:00 P.M.,
Eastern Standard Time, provided that neither Seller nor Purchaser will be
entitled to terminate this Agreement pursuant to this clause (b) if such
person's material breach of this Agreement has prevented the consummation of the
Transaction.
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Section 6.3 Effect of Termination.
(a) In the event of termination of this Agreement pursuant to Section
6.2, this Agreement shall forthwith become void (except for this Section 6.3 and
Sections 7.1, 7.4 and 7.5), there shall be no liability on the part of either
Seller or Purchaser or their officers, directors or Affiliates.
(b) In the event of the termination of this Agreement, Seller shall
return promptly, to Purchaser all documents, work papers and other material
furnished by or on behalf of Purchaser to Seller or its representatives or
agents, and all copies thereof, and no information received by Seller shall be
revealed to any third party, except as otherwise ordered by any court of
competent jurisdiction, or used for the advantage of Seller or any other party,
and Purchaser shall return promptly to Seller all documents, work papers and
other material furnished by or on behalf of Seller to Purchaser or its
representatives or agents, and all copies thereof, and no information received
by Purchaser shall be revealed to any third party or used for the advantage of
Purchaser or any other party.
Section 6.4 Extension: Waiver. At any time prior to the Closing Date,
each party hereto may:
(a) extend the time for the performance of any of the obligations or
other acts of the other party hereto,
(b) waive any inaccuracies in any Schedule or Exhibit hereto or in the
other party's representations and warranties contained herein or in any document
delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The waiver by any party hereto of a breach of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
ARTICLE VII
Miscellaneous Provisions
Section 7.1 Fees and Expenses. Except as otherwise expressly provided
in this Agreement, each of the parties hereto will pay its own fees and expenses
(including attorneys', and accountants' fees and expenses) incurred in
connection with the Transaction.
Section 7.2 Certain Taxes. Purchaser shall pay all state or local
sales, transfer, recording, filing or documentary stamp taxes or similar taxes
(not including income or gains taxes of Seller), fees or governmental charges
imposed on the sale or transfer of the Portfolio.
Section 7.3 Notices.
(a) All notices, demands and other communications to be given or
delivered to Purchaser or Seller under or by reason of the provisions of this
Agreement will be in writing and will be deemed to have been given when
personally delivered, sent by reputable overnight courier, transmitted by
facsimile or telecopy or mailed by first class mail, return receipt requested,
to the addresses indicated below (unless another address is so specified in
writing):
If to Seller: If to Purchaser:
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All American Acceptance Corporation AutoFund Servicing, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn. ▇▇▇▇ ▇▇▇▇▇▇▇ Attn. ▇▇▇ ▇▇▇▇▇▇▇
Section 7.4 Public Announcements. If mutually agreed upon, Seller and
Purchaser will cooperate to prepare a joint press release to be issued at the
time of the Closing, subject to compliance with applicable law.
Section 7.5 Confidentiality. Except for such documents, reports,
information and data (including financial statements) which are of a public
nature, pending the Closing (and, if this Agreement is terminated, at all times
after the date hereto, Purchaser shall treat as confidential and, except as
otherwise required by law or in connection with the consummation of the
Transaction, will not use, submit or disclose to, or file with, others, or
permit any person, firm, corporation or entity under their respective control to
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use, submit or disclose to, or file with others, any documents, reports,
information or data (including financial statements) concerning Seller or the
Portfolio which Purchaser may obtain or have obtained from Seller, and, except
for such documents, reports and other written materials (including financial
statements) which are of a public nature, if this Agreement is terminated,
Purchaser shall return to Seller any and all such documents, reports and other
written materials (including financial statements) concerning the Portfolio as
the Seller may reasonable request.
Section 7.6 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interest or obligations hereunder shall be assigned by either
party without the prior written consent of the other party, except that
Purchaser may assign its rights, interest and obligations hereunder to any of
its Affiliates, provided that Purchaser shall remain liable for its obligations
hereunder.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Florida, without
regard to conflicts of laws, rules and principles.
Section 7.8 Interpretation. The headings contained in this Agreement
are inserted for convenience only and shall not constitute a part hereof. The
language used in this Agreement is language developed and chosen by both parties
to express their mutual intent and no rule of strict construction shall be
applied against either party hereto. The use of the masculine, feminine or
neuter gender and the use of the singular and plural shall not be given the
effect of any exclusion or limitation herein.
Section 7.9 Entire Agreement. This Agreement, together with the
documents referred to herein which form a part hereof embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter hereof and supersede all prior agreements and understandings between the
parties with respect to such subject matter.
Section 7.10 Severability. Each term and provision of this Agreement
constitutes a separate and distinct undertaking, covenant, term and/or
provision. In the event that any term or provision of this Agreement shall be
determined to be unenforceable, invalid or illegal in any respect such
unenforceability, invalidity or illegality shall not affect any other term or
provision of this Agreement, but this Agreement shall be construed as if such
unenforceable, invalid or illegal term or provision had never been contained
herein.
Section 7.11 No Third Party Beneficiaries. It is not intended that this
Agreement benefit, and it shall not be construed that the provisions hereof
benefit or are enforceable by, any third parties.
Section 7.12 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original (including executed copies sent via facsimile) and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above stated.
SELLER
ALL AMERICAN ACCEPTANCE CORPORATION, INC.
By: _____________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
PURCHASER
AUTO FUND SERVICING, INC.
By: _____________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President
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EXHIBIT A
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FORM OF
PROMISSORY NOTE
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THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE TRANSFERRED, SOLD OR DISPOSED OF IN THE
ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE ACT.
$715,000 San Antonio, Texas March 9, 2001
FOR VALUE RECEIVED, the undersigned AUTOFUND SERVICING, INC., a Nevada
corporation (the "Borrower"), promises to pay to the order of ALL AMERICAN
ACCEPTANCE CORPORATION, INC., a Florida corporation (the "Lender"), whose
mailing address is ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or
at such other place as the Lender may from time to time designate, the principal
sum of Seven Hundred Fifteen Thousand Dollars ($715,000); plus interest at the
rate and in the manner as provided below.
A. Interest
The interest rate on the unpaid principal balance of this Promissory
Note shall be at a rate of Prime plus one percent per annum for the first six
months this Promissory Note remains outstanding, Prime plus two percent for the
second six months this Promissory Note remains outstanding, Prime plus three
percent for the third six months this Promissory Note remains outstanding, and
Prime plus four percent for the remaining term of this Promissory Note. For
these purposes, "Prime" shall mean the interest rate designated as its "prime
rate" by [Bank of America, Orlando, Florida branch] as in effect from time to
time. In the event that the Borrower is in default on this Promissory Note, then
the interest rate on the unpaid balance shall be 18% per annum.
B. Payments
1. The principal of the Note will be paid in twenty-four (24)
equal monthly installments with the first payment due on the day that
is 30 days from the date that the $400,000 Bank One promissory note of
the Maker is satisfied.
2. The interest payable on the Note will be paid quarterly,
with the first interest payment due on the first day following Bank One
approval of quarterly financials. Notwithstanding the foregoing,
interest on this Note shall accrue but not be payable so long as the
Bank One note is not current as to payments of interest or principal or
compliance issues.
3. Borrower's monthly payments will be applied to interest
before principal.
C. If a law which applies to this loan and which sets maximum loan
charges is finally interpreted so that the interest or other loan charges
collected or to be collected in connection with this loan exceed the permitted
limits, then: (a) any such loan charge shall be reduced by the amount necessary
to reduce the charge to the permitted limit; and (b) any sums already collected
from the undersigned which exceeded permitted limits will be refunded to the
undersigned. The Lender may choose to make this refund by reducing the principal
Borrower owes under this note or by making a direct payment to Borrower. If a
refund reduces principal, the reduction will be treated as a partial prepayment.
D. The Borrower agrees that the Lender may accept additional or
substitute security for this Note, or release any security for this Note, or
release any security or any party liable for this Note, or extend or renew this
Note by mutual written consent of Borrower and Lender.
E. All amounts payable under this Note are payable in lawful money of
the United States of America. Checks will constitute payment only when
collected. If the Lender has not received the full amount of any of Borrower's
monthly payments by the end of ten (10) calendar days after the date it is due,
Borrower will pay a late charge to the Lender. The amount of the charge will be
five percent (5%) of Borrower's overdue payment of principal and interest.
Borrower will pay this late charge promptly but only once on any late payment.
F. Upon any default under this Note or under the Guaranty Agreement or
the Security Agreement securing this Note, the Lender may, at its option and
without notice, declare immediately due and payable the entire unpaid principal
sum of this Note together with all accrued interest.
G. The Borrower agrees to pay all costs of collection when incurred,
including but not limited to reasonable attorneys' fees. If any suit or action
is instituted to enforce this Note, the undersigned promises to pay, in addition
to the costs and disbursements otherwise allowed by law, such sum as the court
may adjudge reasonable attorneys' fees in such suit or action.
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H. This Note will be governed by Florida law.
I. Borrower shall be permitted to prepay any of the amount due under
this Note without penalty. In the event that Borrower pays this Note in full on
or before 180 days after its dated date, then Borrower shall be entitled to a
One Hundred Thousand Dollar ($100,000) discount on the payoff amount.
J. This Note shall be considered in default when any payment required
to be made hereunder shall not have been made within thirty (30) days following
its due date.
K. In the event of sale, assignment or hypothecation (1) of a majority
of the stock of the Borrower, or (2) substantially all of the assets of the
Borrower, or (3) of all or any part of the security described in the Security
Agreement, without first obtaining written consent from the Lender, then the
entire principal and accrued interest shall become immediately due and payable
at the option of the Lender.
L. This Note is secured by a Security Agreement (the "Security
Agreement") on certain accounts purchased from the Lender by the Borrower, and
by a Continuing and Unconditional Guaranty executed by ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇
▇▇▇▇▇▇, (collectively, the "Guaranty") each dated the date hereof. The terms of
said Security Agreement and Guaranty are incorporated herein and made a part
hereof to the same extent and with the same force and effect as if fully set
forth herein. A default under any of the provisions of the Security Agreement or
Guaranty shall be a default hereunder and a default hereunder shall be a default
under the Security Agreement and the Guaranty .
M. Borrower represents and warrants to Lender that execution and
delivery of this Promissory Note and the Security Agreement, and compliance
therewith, have been duly authorized by corporate resolution and does not
constitute an event of default under or violate any other agreement or document
to which Borrower is a party or by which it is bound.
N. All co-signers, guarantors, and endorsers of this Note are to be
regarded as principals as to their respective joint and several liability to any
legal holder hereof and the Maker, and each of the guarantors, sureties and
endorsers, hereby expressly and severally waive grace, and all notices, demands,
presentments for payment, notice of nonpayment, protest and notice of protest,
notice of intent to accelerate, notice of acceleration of the indebtedness due
hereunder, and diligence in collecting this Note or enforcing any security
rights of the Holder under any document securing this Note, and agree (i) that
the Holder or other legal holder of this Note may, at any time, and from time to
time, on request of or by agreement with the Maker, extend the date of maturity
of all or any part hereof, without notifying or consulting with any Maker or
principal hereof, who shall remain fully obligated for the payment hereof; (ii)
that it will not be necessary for the Holder or any holder hereof, in order to
enforce payment of this Note, to first institute or exhaust its remedies against
the Maker or other party liable therefor or to enforce its rights against any
security for this Note; and (iii) to any substitution, exchange or release of
any security now or hereafter given for this Note or the release of any party
primarily or secondarily liable hereon.
AUTO FUND SERVICING, INC.
_________________________
By: ▇▇▇ ▇▇▇▇▇▇▇
Title: President
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EXHIBIT "B"
form of
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is dated as of March 9, 2001, and is made by
and among AUTOFUND SERVICING, INC., a Nevada corporation (the "Borrower"), and
ALL AMERICAN ACCEPTANCE CORPORATION, INC., a Florida corporation (the "Lender").
WITNESSETH THAT:
WHEREAS, pursuant to that certain Portfolio Purchase Agreement (as it
may hereafter be amended or otherwise modified from time to time, the "Portfolio
Agreement") of even date herewith among the Borrower and the Lender, the Lender
has made a loan to the Borrower;
WHEREAS, the obligations of the Lender to make Loan under the Portfolio
Agreement is subject to the condition, among others, that the Borrower secure
its obligations to the Lender under the Portfolio Agreement by the grant of
security interests in the Collateral, as defined and more fully set forth
herein; and
WHEREAS, the Borrower has agreed to grant a security interest in such
Collateral to the Lender on the terms and conditions set forth herein.
NOW, THEREFORE, intending to be legally bound hereby and for value received, the
parties hereto covenant and agree as follows:
1. Definitions. Terms which are defined in the Portfolio Agreement and
not otherwise defined herein are used herein as defined therein. In addition to
the words and terms defined elsewhere in this Security Agreement, the following
words and terms shall have the following meanings, respectively, unless the
context otherwise clearly requires:
(a) "Code" shall mean the Uniform Commercial Code of each state in
which any of the Collateral is located as enacted and in effect on the date
hereof in each applicable jurisdiction, and as the same may subsequently be
amended from time to time.
(b) "Collateral" shall mean all of Borrower's right, title and
interest in, to and under the Portfolio.
(c) "Permitted Liens" shall mean not to exceed $400,000 obligation
of Borrower so long as the proceeds of the loan were utilized to pay Lender
pursuant to the Portfolio Agreement.
(d) "Secured Indebtedness" shall mean (i) all obligations,
including all Indebtedness, whether of principal, interest, fees, expenses or
otherwise, of the Borrower incurred under the Portfolio Agreement, as any of the
same may from time to time be amended, modified or supplemented, together with
any and all extensions, renewals, refinancings or refundings thereof in whole or
in part by the Lender, and (ii) all out-of-pocket costs, expenses and
disbursements, including reasonable attorneys' fees and legal expenses, incurred
by the Lender, in the collection of any of the obligations referred to in clause
(i) above.
2. Assignment and Grant of Security Interests. As security for the due
and punctual payment and performance of the Secured Indebtedness in full, the
Borrower agrees that the Lender shall have, and the Borrower hereby grants to
and creates in favor of the Lender, for the benefit of the Lender, a continuing
first priority security interest in and to each Borrower's respective Collateral
subject only to Permitted Liens. Without limiting the generality of Section 4
below, the Borrower further agrees that with respect to each item of Collateral
as to which (i) the creation of a valid and enforceable security interest is not
governed exclusively by the Code or (ii) the perfection of a valid and
enforceable security interest therein under the Code cannot be accomplished
either by the Lender taking possession thereof or by the filing in appropriate
locations of appropriate Code financing statements executed by the Borrower,
such Borrower will at its expense execute and deliver to the Lender such
documents, agreements, notices, assignments and instruments and take such
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further actions as may be requested by the Lender from time to time for the
purpose of creating a valid and perfected first priority Lien on such item,
subject only to Permitted Liens, enforceable against the Borrower and all third
parties to secure the Secured Indebtedness.
3. Representations and Warranties. The Borrower represents, warrants
and covenants to the Lender that:
(a) Borrower is the legal and beneficial owner and holder of the
Collateral and Borrower has and will continue to have good and marketable title
to the Collateral which Borrower purports to own or which is reflected as owned
in its books and records.
(b) Borrower has received value from Lender for such Borrower's
grant of a security interest hereunder and, except for the security interest
granted to and created in favor of the Lender hereunder and any Permitted Liens,
all of such Collateral is and will continue to be free and clear of all Liens.
(c) Borrower has full power to enter into, execute, deliver and
carry out this Security Agreement and to perform its obligations hereunder and
all such actions have been duly authorized by all necessary proceedings on its
part. This Security Agreement has been duly and validly executed and delivered
by such Borrower. This Security Agreement constitutes the legal, valid and
binding obligations of such Borrower, enforceable against it in accordance with
its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforceability of creditors' rights generally or limiting the
right of specific performance.
(d) Neither the execution and delivery of this Security Agreement
nor compliance with the terms and provisions hereof (i) will conflict with or
result in any breach of the terms and conditions of the articles of
incorporation, by-laws, partnership agreement, limited liability company
agreement or equivalent documents of Borrower or of any Law or of any material
agreement or instrument to which such Borrower is a party or by which it is
bound or to which it is subject, (ii) will constitute a default thereunder or
(iii) will result in the creation or enforcement of any Lien whatsoever upon any
property (now or hereafter acquired) of Borrower.
4. Further Assurances. Borrower will, from time to time, at its
expense, faithfully preserve and protect the Lender's security interest in such
Borrower's Collateral as a continuing first priority perfected security
interest, subject only to Permitted Liens, and will do all such other acts and
things and will, upon request therefor by the Lender, execute, deliver, file and
record all such other documents and instruments, including financing statements,
security agreements, pledges, assignments, documents with respect to Borrower's
Collateral, and pay all filing fees and taxes related thereto as the Lender in
its sole discretion may deem necessary or advisable from time to time in order
to preserve, perfect or protect any security interest granted or purported to be
granted hereby or to enable the Lender to exercise and enforce its rights and
remedies hereunder with respect to any of the Collateral. Without limiting the
generality of the foregoing, to the extent Article 9 of the Code does not govern
the creation and/or perfection of the security interests intended to be created
hereunder, Borrower agrees to execute and deliver such further documents and
instruments and do such further acts as the Lender may from time to time
reasonably require to create and/or protect the security interests intended to
be created hereunder.
5. Covenants. The Borrower covenants and agrees that (a) it will
maintain in good condition and repair and shall protect and preserve its
Collateral; (b) it will not sell(with the exception of motor vehicles), assign
or otherwise dispose of any portion of its Collateral; (c) it will obtain and
maintain sole and exclusive possession of its Collateral; (d) it will keep
materially accurate and complete books and records concerning its Collateral;
(e) it will promptly furnish to Lender such information and documents relating
E-59
to its Collateral as the Lender may reasonably request in order to confirm the
status of the Lender's security interest in such Collateral; (f) it will not
take or omit to take any actions, the taking or the omission of which might
result in a material adverse alteration or impairment of its Collateral or in a
violation of this Security Agreement; (g) it will not, without the prior written
consent of the Lender, waive or release any material obligation of any party to
any material part of its Collateral, except in the ordinary course of Borrower's
business; (h) it will execute and deliver to the Lender and record such
supplements to this Security Agreement and additional assignments as the Lender
reasonably may request to evidence and confirm the security interest herein
contained; and (i) it will cause each of its subsidiaries which may hereafter be
created or acquired to enter into and become a party and signatory to this
Security Agreement and do all such acts and things and execute, deliver and file
all such documents and instruments as the Lender may deem necessary and
desirable to create and perfect a first priority perfected security interest in
the Collateral of such Subsidiary.
6. Preservation of Security Interests. Borrower assumes full
responsibility for taking and hereby agrees to take any and all necessary steps
to preserve and defend the Lender's right, title and security interest in and to
such Borrower's Collateral against the claims and demands of all persons. The
Lender shall be deemed to have exercised reasonable care in the custody and
preservation of a Borrower's Collateral in the Lender's possession if, prior to
the existence of an Event of Default, the Lender takes such action for that
purpose as such Borrower shall reasonably request in writing, provided that such
requested action will not, in the judgment of the Lender, impair the security
interest in such Borrower's Collateral created hereby or the Lender's rights in,
or the value of, such Collateral, and provided further that such written request
is received by the Lender in sufficient time to permit the Lender to take the
requested action.
7. Lender's Rights with Respect to the Collateral. At any time and from
time to time, whether or not an Event of Default shall have occurred, and
without consent of the Borrower, the Lender may do any or all of the following:
(a) do anything which the Borrower is required but fails to do hereunder, and in
particular the Lender may, if the Borrower fails to do so, (i) insure or take
any reasonable steps to protect the Collateral of any Borrower, (ii) pay any or
all taxes, levies, expenses and costs arising with respect to the Collateral of
any Borrower, or (iii) pay any or all premiums payable on any policy of
insurance required to be obtained or maintained hereunder, and add any amounts
paid under this Section 7 to the principal amount of any of the Notes and other
liabilities of the Borrower secured by this Security Agreement; (b) inspect the
Collateral of any Borrower at any reasonable time; and (c) pay any amounts which
the Borrower is required but fails to pay hereunder, and in particular the
Lender may, if any of the Borrower fail to do so, pay any amounts the Lender
reasonably elects to pay or advance hereunder on account of insurance, taxes or
other costs, fees or charges arising in connection with the Collateral of
Borrower, either directly to the payee(s) of such cost, fee or charge, directly
to the Borrower, or to such payee(s) and Borrower jointly. Lender shall give
written Notice to Borrower and 15 days Right to Cure from time Notice is given.
All notices, demands and other communications to be given or delivered to
Borrower under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered, sent by
reputable overnight courier, transmitted by facsimile or telecopy or mailed by
first class mail, return receipt requested, to the addresses indicated below
(unless another address is so specified in writing):
8. Remedies on Default. If there shall have occurred and be continuing
an Event of Default under the terms of the Portfolio Agreement or the Promissory
Note, then the Lender shall have such rights and remedies with respect to the
Collateral or any part thereof and the proceeds thereof as are provided by the
Code and such other rights and remedies with respect thereto which it may have
at law or in equity or under this Security Agreement, including to the extent
not inconsistent with the provisions of the Code, the right to take over and
collect all or any of Borrower's accounts and all or any of the other Collateral
which consists of amounts owing to Borrower. To this end, the Lender shall have
the right to (a) transfer all or any part of any of Borrower's Collateral into
the Lender's name or into the name of its nominee or nominees and thereafter
receive all cash, stock and other dividends or distributions paid or payable in
respect thereof, and otherwise act with respect thereto as the absolute owner
thereof; (b) notify the obligors on any of Borrower's Collateral, whether
accounts or otherwise, to make payment thereon directly to the Lender, whether
or not the Borrower was theretofore making collections thereon; (c) take control
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of and manage all or any Collateral of Borrower; (d) apply to the payment of the
Secured Indebtedness, whether it be due and payable or not, any moneys,
including cash dividends and income from any Collateral of Borrower, now or
hereafter in the hands of the Lender, on deposit or otherwise, belonging to
Borrower, in accordance with Section 9 hereof; (e) direct any insurer to make
payment of any insurance proceeds, directly to the Lender, and apply such moneys
to the payment of the Secured Indebtedness; (f) receive, open and dispose of all
mail addressed to any Borrower and notify postal authorities to change the
address for delivery thereof to such address as the Lender may designate; (g)
endorse the name of the Borrower upon any checks or other evidences of payment
or any document or instrument that may come into the possession of the Lender as
proceeds of or relating to such Borrower's Collateral; (h) demand, ▇▇▇ for,
collect, compromise and give acquittances for any and all Collateral of
Borrower; (i) prosecute, defend or compromise any action, claim or proceeding
with respect to any Collateral of Borrower; (j) notify the debtors of Borrower
of the assignment of their debts and direct them to make payment to the Lender;
and (k) take such other action as the Lender may deem appropriate, including
extending or modifying the terms of payment of the debtors of Borrower. In
addition, upon the occurrence and continuance of an Event of Default, Borrower,
at the request of the Lender, shall assemble all or any portion of such
Borrower's Collateral at such locations as the Lender shall designate which are
reasonably convenient to Borrower, and the Lender may sell, assign, give an
option or options to purchase or otherwise dispose of all or any part of the
Collateral at any public or private sale at such place or places and at such
time or times and upon such terms, whether for cash or on credit, and in such
manner, as the Lender may determine, and apply the proceeds so received in
accordance with Section 9 hereof. Written notice of sale mailed by certified
mail, return receipt requested, to the Borrower whose Collateral is to be sold,
at least fifteen (15) days prior to such sale shall be deemed reasonable notice.
In the event of a breach by the Borrower in the performance of any of
the terms of this Security Agreement, the Lender may demand specific performance
of this Security Agreement and seek injunctive relief and may exercise any other
remedy, available at law or in equity, it being recognized that the remedies of
the Lender at law may not fully compensate each of the Lender for the damages it
may suffer in the event of a breach hereof.
9. Application of Proceeds. Each of the rights, privileges and remedies
provided to the Lender hereunder or otherwise by law with respect to the
Collateral shall be exercised by the Lender for the benefit of the Lender and
any Collateral or proceeds thereof held or realized upon at any time by the
Lender shall inure to the benefit of the Lender and shall be applied after the
occurrence of an Event of Default as set forth in the Promissory Note. The
Borrower shall be liable for any deficiency if the proceeds of any sale,
assignment, giving of an option or options to purchase or other disposition of
the Collateral is insufficient to pay all amounts to which any of the Lender is
entitled.
10. Attorneys-in-Fact. Borrower hereby irrevocably appoints the Lender,
its officers, and employees, or any of them, as attorneys-in-fact, with full
power of substitution, for Borrower for the purpose of carrying out the
provisions of this Security Agreement and taking any action and executing,
delivering, filing and recording any instruments which the Lender may deem
necessary or advisable to accomplish the purposes hereof, which power of
attorney being given for security is coupled with an interest and irrevocable.
11. Indemnity and Expenses.
(a) The Borrower unconditionally agrees to indemnify each of the
Lender from and against any and all claims, losses and liabilities arising out
of or resulting from this Security Agreement (including enforcement of this
Security Agreement), except claims, losses or liabilities resulting from the
gross negligence or willful misconduct of the Lender.
E-61
(b) The Borrower unconditionally agrees upon demand to pay to the
Lender the amount of any and all reasonable and necessary out-of-pocket costs,
expenses and disbursements for which reimbursement is customarily obtained,
including reasonable fees and expenses of its counsel, which the Lender may
incur in connection with (i) the administration of this Security Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Lender hereunder or (iv) the failure by
the Borrower to perform or observe any of the provisions hereof.
12. Security Interest Absolute; Waiver of Notices. All rights of the
Lender hereunder, all security interests hereunder, and all obligations of the
Borrower hereunder shall be absolute and unconditional, irrespective of: (a) any
lack of validity or enforceability of the Portfolio Agreement, the Promissory
Note or any of the other Loan Documents; (b) any change in the time, manner or
place or payment of, or in any other term of, all or any of the Secured
Indebtedness or any other amendment or waiver of or any consent to any departure
from the Portfolio Agreement, the Promissory Note or any of the other Loan
Documents; (c) any exchange, release or non-perfection of any other Collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Indebtedness; or (d) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, Borrower or any third party mortgagors, pledgors or grantors of
security interests. Borrower waives any presentment, demand, notice of dishonor
or nonpayment, protest, notice of protest and any other notice of any kind in
connection with the Secured Indebtedness.
13. Termination. Upon payment in full of the Secured Indebtedness and
termination of the Portfolio Agreement, this Security Agreement shall terminate
and be of no further force and effect, and the Lender, at the Borrowers'
expense, shall thereupon promptly return to Borrower such of its Collateral and
such other documents delivered by Borrower hereunder as may then be in the
Lender's possession. Upon any such termination, the Lender will, at the
Borrower's expense, execute and deliver to the Borrower such documents as that
Borrower shall reasonably request to evidence such termination.
14. Modifications, Amendments and Waivers. Any and all agreements
amending or changing any provision of this Security Agreement or the rights of
any of the Lender, or the Borrower hereunder, and any and all waivers or
consents to Events of Default or other departures from the due performance of
the Borrower hereunder shall be made only pursuant to a written document signed
by the Lender and the Borrower.
15. No Implied Waivers; Cumulative Remedies. No course of dealing and
no failure or delay on the part of the Lender in exercising any right, remedy,
power or privilege hereunder shall operate as a waiver thereof or of any other
right, remedy, power or privilege of the Lender hereunder; and no single or
partial exercise of any such right, remedy, power or privilege shall preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights and remedies of the Lender under this
Security Agreement are cumulative and not exclusive of any rights or remedies
which it may otherwise have.
16. Notices. All notices, statements, requests, demands and other
communications given to or made upon the Borrower, or the Lender in accordance
with the provisions of this Security Agreement shall be given or made as
provided in the Portfolio Agreement.
17. Severability.
(a) Borrower agrees that the provisions of this Agreement are
severable, and in an action or proceeding involving any state or federal
bankruptcy, insolvency or other law affecting the rights of creditors generally:
E-62
(i) if any clause or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction and shall not in any
manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Agreement in any jurisdiction;
and
(ii) if this Agreement would be held or determined to be void,
invalid or unenforceable on account of the amount of the aggregate
liability of Borrower under this Agreement, then, notwithstanding any
other provision of this Agreement to the contrary, the aggregate amount
of such liability shall, without any further action by any of the
Lender, Borrower or any other person, be automatically limited and
reduced to the highest amount which is valid and enforceable as
determined in such action or proceeding.
(b) If the grant of a security interest hereunder Borrower is held
or determined to be void, invalid or unenforceable, in whole or in part, such
holding or determination shall not impair or affect:
(i) the validity and enforceability of all other security
interests granted hereunder by Borrower, which shall continue in full
force and effect in accordance with its terms; or
(ii) the validity and enforceability of any clause or
provision not so held to be void, invalid or unenforceable.
18. Governing Law. This Security Agreement shall be deemed to be a
contract under the laws of the State of Florida, without reference to its
conflicts of law principles, except as required by mandatory provisions of law
and except to the extent that the validity or perfection of security interests
hereunder, or remedies hereunder with respect to any particular Collateral, is
governed by the laws of a jurisdiction other than the law of the State of
Florida.
19. Successors and Assigns. This Security Agreement shall be freely
assignable and transferable by the Lender in connection with the assignment or
transfer of the Secured Indebtedness; provided, however, the duties and
obligations of the Borrower may not be delegated or transferred by the Borrower,
without the written consent of the Lender. The rights and privileges of the
Lender shall inure to its benefit and the benefit of its respective successors
and assigns, and the duties and obligations of the Borrower shall bind the
Borrower and its respective successors and assigns. Lender shall give written
Notice to such action to Borrower and 15 days Right to of First Refusal and Cure
from time Notice is given.
20. Counterparts. This Security Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.
21. Consent to Jurisdiction; Waiver of Jury Trial. Each of the
Borrowers hereby irrevocably consents to the non-exclusive jurisdiction of the
Circuit Court of Jefferson County, Kentucky and the United States District Court
for the Western District of Kentucky, and waives personal service of any and all
process upon it and consents that all such service of process be made by
certified or registered mail directed to the Borrowers at the addresses set
forth or referred to in Section 16 hereof and service so made shall be deemed to
be completed upon actual receipt thereof. Each of the Borrowers waives any
objection to jurisdiction and venue of any action instituted against it as
provided herein and agrees not to assert any defense based on lack of
jurisdiction or venue, AND THE LENDER AND THE BANKS AND EACH OF THE BORROWERS
WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM WITH RESPECT
TO THIS SECURITY AGREEMENT TO THE FULL EXTENT PERMITTED BY LAW.
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WITNESS the due execution hereof as of the day and year first above
written.
ALL AMERICAN ACCEPTANCE CORPORATION, INC., as Lender
By:
____________________________________
Name: ▇▇▇ ▇▇▇▇▇▇
Title: President
AUTOFUND SERVICING, INC., as Borrower
By: ____________________________________
Name: ▇▇▇ ▇▇▇▇▇▇▇
Title: President
E-64
Exhibit "C"
-----------
CONTINUING AND UNCONDITIONAL GUARANTY
-------------------------------------
THIS CONTINUING AND UNCONDITIONAL GUARANTY dated as of March 9, 2001
("Guaranty"), is given by ▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇, (collectively,
"Guarantors"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, and is given to ALL AMERICAN ACCEPTANCE CORPORATION, INC., a
Florida corporation, ("Lender"), whose address is ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, for the benefit of AUTOFUND SERVICING, INC., (the
"Borrower").
RECITALS:
---------
1. Lender has agreed to make a loan (the "Loan") to Borrower pursuant to the
terms and conditions of, among other documents, the Promissory Note of even date
executed and delivered by Borrower in favor of the Lender (the "Note") which
Loan is secured by a Security Agreement of even date filed or to be filed in the
public records of Florida (the "Security Agreement"). The Security Agreement and
this Guaranty are hereinafter referred to collectively as the "Security
Documents".
2. Guarantors, upon closing of the transaction described herein, will be the
owners of a majority of all outstanding shares of Borrower.
3. Without this Guaranty, Lender would be unwilling to make the Loan to
Borrower.
4. Because of the direct benefit to Guarantors from the Loan to Borrower and as
an inducement to Lender to make the Loan to Borrower, Guarantors agree, jointly
and severally, to guarantee to Lender the obligations of Borrower as set forth
herein.
NOW, THEREFORE, in consideration of Lender making the Loan to Borrower,
and for other good and valuable consideration by Borrower to Guarantors, the
receipt and sufficiency of which are hereby acknowledged by Guarantors,
Guarantors hereby covenant and agree as follows:
1. Guaranty of Payment. Guarantors hereby jointly and severally unconditionally
guarantee to Lender, the payment, when due, by acceleration or otherwise, of the
Indebtedness. For the purposes hereof, the term "Indebtedness" shall include any
and all indebtedness and obligations of Borrower to the Lender, including
without limitation, all principal, interest, fees and expenses, including
attorneys' fees, evidenced by the Note or the Security Documents, whether
existing now or arising hereafter, as such Indebtedness may be modified,
increased, extended or renewed from time to time. The guaranty of Guarantors as
set forth in this section is a guaranty of payment and not of collection.
2. Guaranty of Performance. Guarantors additionally unconditionally guarantee
to Lender the timely performance of all other obligations of Borrower under the
Security Documents.
3. Guarantor Waivers. Guarantors hereby waive and agree not to assert or take
advantage of (a) any rights or claim of right to cause a marshalling of any of
Borrower's assets or the assets of any other party now or hereafter held as
security for the Indebtedness; (b) the defense of the statute of limitations in
any action hereunder or for the payment of the Indebtedness and performance of
any obligation hereby guaranteed; (c) any defense that may arise by reason of
the incapacity, lack of authority, death or disability of Guarantors or Borrower
or any other guarantor or any other person or entity, or the voluntary or
involuntary dissolution of Borrower, or the failure of Lender to file or enforce
a claim against the estate (either in administration, Bankruptcy, or any other
proceeding) of Borrower or any other person or entity; (d) any defense based on
any action or nonaction on the part of any person whomsoever, or any
modification of the terms of the Security Documents, or the Indebtedness, in
connection with any obligation hereby guaranteed; (e) any defense based upon an
election of remedies by Lender which destroys or otherwise impairs any
subrogation rights of Guarantors or the right of Guarantors to proceed against
Borrower or any other guarantor for reimbursement, or both; (f) any defense
based upon failure of Lender to commence an action against Borrower or any other
guarantor; (g) any defense based upon acceptance of this Guaranty by Lender; (h)
any defense based upon the invalidity or unenforceability of any Security
Document; (i) any defense based upon any limitation of liability contained in
any the Security Document; (j) any defense based upon any transfer by Borrower
of all or any part of the Security Agreement Property; (k) any defense based
upon the failure of Lender to perfect any security or to extend or renew the
perfection of any security; and (l) any defense based on setoff or waiver, and
(m) any other legal or equitable defenses whatsoever which Guarantors might
otherwise be entitled.
4. Consent to Lender's Actions or Inactions. Guarantors consent that Lender
may, at any time and from time to time, after any Default by Borrower, without
affecting the liability of Guarantors hereunder:
a. Either with or without consideration to Borrower or to any
Guarantor, exchange, release or surrender (in whole or in part), or
fail to protect or to preserve the value of any of the Security
Agreement Property, or waive, release or subordinate any lien or
security interest (in whole or in part) therein;
E-65
b. Waive or delay the exercise of any of its rights or remedies against
Borrower or any other person or entity, including without limitation,
any Guarantor; notwithstanding any waiver or delay, Lender shall not be
precluded from further exercise of any of its rights, powers or
privileges expressly provided for herein or otherwise available, it
being understood that all such rights and remedies are cumulative;
c. Waive or extend the time of Borrower's or any Guarantor's
performance of any and all terms, provisions and conditions of the
Security Documents;
d. Release Borrower or any other person or entity, including without
limitation any other Guarantor, from their obligations to repay all or
any portion of the Indebtedness;
e. Proceed against any or all Guarantors without first proceeding
against or joining Borrower or any other Guarantor, or any of the
Security Agreement Property;
f. Renew, extend or modify the terms of the Indebtedness or any
instrument or agreement evidencing, securing, or relating thereto; and
g. Generally deal with Borrower or other person or party or any of the
Security Agreement Property as Lender may see fit.
Guarantors shall remain bound under this Guaranty
notwithstanding any such exchange, release, surrender, subordination,
proceeding, renewal, extension, modification, act or failure to act, or
other dealings described in Subsections "a" through "g" above,
inclusive, even though done without notice to or consent form
Guarantor.
5. Waiver of Notice. Guarantors waive all notices whatsoever with respect to
the Security Documents, including without limitation, this Guaranty, and with
respect to the Indebtedness, including, but not limited to, notice of:
a. Lender's acceptance of this Guaranty or its intention to act,
or its action, in reliance hereon;
b. Presentment and demand for payment of any of the Promissory
Note or any portion thereof;
c. Protest and notice of dishonor or non-payment with respect to
the Indebtedness or any portion thereof;
d. Any Default by Borrower, or any other Guarantor;
e. Any other notices to which any of the Guarantors may otherwise
be entitled; and
f. Any demand for payment under this Guaranty.
6. Primary Liability of Guarantors. Guarantors agree that this Guaranty may be
enforced by the Lender without the necessity at any time of resorting to or
exhausting any other security and without the necessity at any time of having
resorted to recourse to any of the Note or the Security Agreement Property
through foreclosure proceedings or otherwise, and each of the Guarantors hereby
waives any rights to require Lender to proceed against Borrower or any other
Guarantor or to require Lender to pursue any other remedy or enforce any other
right. Guarantors further agree that Guarantors shall have no right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to
security for the Indebtedness, unless and until all of the Indebtedness has been
paid in full. Guarantors further agree that nothing contained herein shall
prevent Lender from suing on the Note or foreclosing the Security Agreement or
from exercising any other rights available to it, if neither Borrower nor any
Guarantor timely performs the obligations of Borrower thereunder, and the
exercise of any of the aforesaid rights and the completion of any foreclosure
proceedings shall not constitute a discharge of any of Guarantors' obligations
hereunder; it being the purpose and intent of Guarantors that Guarantors'
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances. Neither Guarantors' obligations under this Guaranty nor
any remedy for the enforcement hereof shall be impaired, modified, changed or
released in any manner whatsoever by an impairment, modification, change,
release or limitation of the liability of Borrower or any other guarantor or by
reason of Borrower's or any other guarantor's Bankruptcy, insolvency, death, or
dissolution.
7. Subrogation Rights. No Guarantor will assert any right to which it may be
or may become entitled, whether by subrogation, contribution or otherwise,
against Borrower or any other guarantor by reason of the performance by a
Guarantor of his obligations under this Guaranty, except after payment in full
of the Indebtedness in accordance with the Note.
8. Cost of Enforcement. In the event that the Note or this Guaranty are not
paid when due on any stated or accelerated maturity date, or should it be
necessary for Lender to enforce any other of their rights with respect to the
Indebtedness, Guarantors will pay to Lender, in addition to principal, interest
and other charges due, all costs of collection or enforcement, including
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reasonable attorney's fees, costs and expenses, whether incurred with respect to
collection, litigation, Bankruptcy proceedings, interpretation, dispute,
negotiation, trial, appeal, defense of actions instituted by a third party
against any Lender(s) arising out of or related to the Indebtedness, enforcement
of any judgment based on this Guaranty, or otherwise, whether or not a suit to
collect such amounts or to enforce such rights is brought or, if brought, is
prosecuted to judgment.
9. Term of Guaranty; Warranties. This Guaranty shall continue in full force and
effect until the Indebtedness is fully paid, and all obligations of Borrower and
Guarantors are performed and discharged. This Guaranty covers the Indebtedness
whether presently outstanding or arising subsequent to the date hereof. Each of
the Guarantors warrants and represents to Lender, (i) that this Guaranty is
binding upon and enforceable against Guarantor, personal representatives,
successors, and assigns in accordance with its terms, (ii) that the execution
and delivery of this Guaranty does not violate any applicable laws or constitute
a breach of any agreement to which such Guarantor is a party, (iii) that there
is no litigation, claim, action or proceeding pending, or, to the best knowledge
of Guarantor, threatened against Guarantor which would adversely affect the
financial condition of Guarantor or his ability to fulfill his obligations
hereunder. Each Guarantor agrees to promptly inform Lender of the adverse
determination of any litigation, claim, action or proceeding or the institution
of any litigation, claim, action or proceeding against Guarantor which does or
could adversely affect the financial condition of Guarantor or his ability to
fulfill his obligations hereunder.
10. Further Representations and Warranties. Guarantors further represent to
Lender that Guarantors have knowledge of Borrower's financial condition and
affairs and agree that they will keep so informed while this Guaranty is in
force. Guarantors agree that Lender has no present or future obligation to
investigate the financial condition or affairs of Borrower for the benefit of
Guarantors nor to advise Guarantors of any fact respecting, or any change in,
the financial condition or affairs of Borrower or any other guarantor of the
Loan which might come to the knowledge of Lender at any time.
11. Cumulative Rights. All rights of Lender hereunder or otherwise arising
under any documents executed in connection with or as security for the
Indebtedness are separate and cumulative and may be pursued separately,
successively or concurrently, or not pursued without affected, reducing or
limited any other right of Lender and without affecting, reducing or impairing
the liability of Guarantors.
12. Multiple Counterparts; Pronouns; Captions. This Guaranty may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which shall constitute but one and the same document. The pronouns used in this
instrument shall be construed as masculine, feminine or neuter as the occasion
may require. Use of the singular includes the plural and vice versa. Captions
are for reference only and in no way limit the terms of this Guaranty.
Invalidation of any one or more of the provisions of this Guaranty shall in no
way affect any of the other provisions hereof, which shall remain in full force
and effect. Use of the term "include" or "including" is always without
limitation. "Person" or "party" means any natural person or artificial entity
having legal capacity.
13. Lender Assigns. This Guaranty is intended for and shall inure to the
benefit of Lender and each and every person who shall from time to time be or
become the owner or holder of any document evidencing or securing the
Indebtedness, and each and every reference herein to Lender shall include and
refer to each and every successor or assignee of Lender at any time holding or
owning any part of or interest in any part of the Indebtedness. This Guaranty
shall be transferable and negotiable with the same force and effect, and to the
same extent, that any document evidencing or securing all or any portion of the
Indebtedness is transferable and negotiable, it being understood and stipulated
that upon assignment or transfer by Lender of any of the Indebtedness, the legal
holder or owner of said Indebtedness (or a part thereof or interest therein thus
transferred or assigned by Lender) shall (except as otherwise stipulated by a
Lender in its assignment) have and may exercise all of the rights granted to
Lender under this Guaranty to the extent of that part of or interest in the
Indebtedness thus assigned or transferred to said person. Guarantors expressly
waive notice of transfer or assignment of the Indebtedness, or any part thereof,
or of the rights of Lender hereunder. Failure to give notice will not affect the
liabilities of Guarantors hereunder.
14. Application of Payments. Lender may apply any payments received by it from
any source against that portion of the Indebtedness (principal, interest, court
costs, attorneys' fees or other) in such priority and fashion as it may deem
appropriate.
15. Notices. Unless otherwise provided, all notices required to be given
hereunder shall be in writing and shall be deemed served on the earlier of (i)
receipt or (ii) seventy-two (72) hours after deposit in registered, certified or
first-class United States mail, postage prepaid, and addressed to the parties at
the addresses set forth on the first page hereof, or such other addresses as may
from time to time be designated by written notice.
Personal delivery to a party or to any officer, partner, agent or employee of
such party, or if a proper person, to a member of his family, at its address
herein shall constitute receipt. Rejection or other refusal to accept or
inability to deliver because of changed address of which no notice has been
received shall also constitute receipt. Notwithstanding the foregoing, no notice
of change of address shall be effective until the date of receipt thereof. This
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section shall not be construed in any way to affect or impair any waiver of
notice or demand herein provided or to require giving of notice or demand to or
upon Guarantor in any situation for any reason.
16. Conflict of law. This Guaranty shall be construed, interpreted, enforced
and governed by and in accordance with the laws of the State of Florida.
17. Oral Modification Ineffective. This Guaranty may not be changed orally,
and no obligation of Guarantors can be released or waived by Lender, except by
written notice thereof signed by Lender. This Guaranty shall be irrevocable by
Guarantors until the Indebtedness has been completely repaid and all obligations
and undertakings of Borrower under, by reason of, or pursuant to the Security
Documents have been completely performed, at which time Lender will terminate
this Guaranty. This Guaranty shall continue in full force and effect unless and
until discharged or released by Lender pursuant to a written instrument properly
executed by Lender.
18. Reference to Other Loan Documents. BY EXECUTION HEREOF, GUARANTORS AND
LENDER AGREE THAT NEITHER GUARANTORS OR LENDER, NOR ANY ASSIGNEE, SUCCESSOR, OR
LEGAL REPRESENTATIVE OF ANY OF THE GUARANTORS (ALL OF WHOM ARE HEREINAFTER
REFERRED TO AS THE "PARTIES") SHALL SEEK A JURY TRIAL IN ANY LAWSUIT,
PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR
ARISING OUT OF THIS GUARANTY, OR THE SECURITY DOCUMENTS, OR ANY INSTRUMENT
EVIDENCING, SECURING, OR RELATING TO THE INDEBTEDNESS AND OTHER OBLIGATIONS
EVIDENCED HEREBY, ANY RELATED AGREEMENT OR INSTRUMENT, ANY OTHER COLLATERAL FOR
THE INDEBTEDNESS EVIDENCED HEREBY OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR
AMONG THE PARTIES, OR ANY OF THEM. NONE OF THE PARTIES WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL HAS NOT BEEN WAIVED.
19. Severability; Modification to Conform to Law.
(a) It is the intention of the parties that this Agreement be
enforceable to the fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such Law) of any provision or
provisions hereof shall not render unenforceable, or impair, the remainder
hereof. If any provision in this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, this Agreement shall, as
to such jurisdiction, be deemed amended to modify or delete, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to
render it or them valid and enforceable to the maximum extent permitted by
applicable Law, without in any matter affecting the validity or enforceability
of such provision or provisions in any other jurisdiction or the remaining
provisions hereof in any jurisdiction.
(b) Without limitation of the preceding subsection (a), to the extent
that mandatory applicable law (including but not limited to applicable laws
pertaining to fraudulent conveyance or fraudulent transfer) otherwise would
render the full amount of the Guarantor's obligations hereunder invalid or
unenforceable, the Guarantor's obligations hereunder shall be limited to the
maximum amount which does not result in such invalidity or unenforceability.
(c) Notwithstanding anything to the contrary in this Section or
elsewhere in this Agreement, this Agreement shall be presumptively valid and
enforceable to its full extent in accordance with its terms, as if this Section
(and references elsewhere in this Agreement to enforceability to the fullest
extent permitted by Law) were not a part of this Agreement, and in any related
litigation the burden of proof shall be on the party asserting the invalidity or
unenforceability of any provision hereof or asserting any limitation on any
Guarantor's obligations hereunder as to each element of such assertion.
20. Prior Understandings. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous understandings and agreements.
21. No Conditions Precedent. There are no conditions precedent to the
effectiveness of this Guaranty that have not been satisfied or waived.
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Signed, sealed and delivered in the presence of: GUARANTORS
__________________________________
______________________________________ ▇▇▇ ▇▇▇▇▇▇▇
Witness Name:
______________________________________
Witness Name:
STATE OF TEXAS
COUNTY OF __________
The foregoing instrument was acknowledged before me this 9th day of
March, 2001, by ▇▇▇ ▇▇▇▇▇▇▇. He is personally known to me (or has produced
_______________ as identification).
NOTARY PUBLIC
___________________________________
Name_______________________________
State of Texas at Large
My Commission Expires:_____________
(Seal)
____________________________
______________________________ ▇▇▇▇ ▇▇▇▇▇▇
Witness Name:
______________________________
Witness Name:_________________
STATE OF TEXAS
COUNTY OF _________
The foregoing instrument was acknowledged before me this 9th day of
March, 2001, by ▇▇▇▇ ▇▇▇▇▇▇. He is personally known to me (or has produced
_______________ as identification).
NOTARY PUBLIC
___________________________________
Name_______________________________
State of Texas at Large
My Commission Expires:_____________
(Seal)
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