EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of March 14, 1997
Among
AEGIS AUTO FINANCE, INC.,
as Borrower
III FINANCE LTD.,
as a Lender
AND
III GLOBAL LTD.
as a Lender
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement
("Agreement") is made as of this 14th day
of March, 1997 among AEGIS AUTO FINANCE,
INC., a Delaware corporation (the
"Borrower"), III FINANCE LTD., a Cayman
Islands company ("Finance") and III GLOBAL
LTD., a Cayman Islands company ("Global",
and together with Finance, the "Lenders"
and each individually, a "Lender"); and
for purposes of Section 8.14 hereof only,
AEGIS CAPITAL MARKETS, INC., a Delaware
corporation ("Aegis Capital") and AEGIS
ACCEPTANCE CORP., a Delaware corporation
("AAC" and together with Aegis Capital and
the Borrower, the "Original Borrowers").
PRELIMINARY STATEMENT:
WHEREAS, the Original Borrowers
and Finance have previously entered into a
Loan and Security Agreement dated as of
November 8, 1993 (as amended or modified
from time to time through the date hereof,
the "Original Agreement") pursuant to
which Finance agreed, on the terms and
conditions set forth therein, to advance
to the Original Borrowers certain loans on
a revolving credit basis in order to
finance the Original Borrowers' purchase
of retail installment sales contracts for
the purchase and financing of new and used
automobiles, light trucks, vans and
minivans; and
WHEREAS, the Original Borrowers
and Finance desire to terminate the
Original Agreement as set forth in Section
8.14 hereof and replace the agreements set
forth therein with this Agreement;
NOW, THEREFORE, in consideration
of the terms and conditions contained
herein, and of any loans or extension of
credit now or hereafter made to or for the
benefit of the Borrower by the Lenders
hereunder, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 General Terms.
When used herein, the following terms
shall have the following meanings:
"AAC" shall have the meaning set
forth in the preamble hereto.
"Account Agreement" shall
mean an agreement executed by a
Servicer and the Borrower
substantially in the form of
Exhibit I attached hereto.
"Aegis Capital" shall have the
meaning set forth in the preamble
hereto.
"Affiliate" shall mean, as to
any Person, any other Person that,
directly or indirectly, controls, is
controlled by or is under common
control with such Person or is a
director or officer of such Person.
"Aging Receivable Report" shall
mean a monthly report delivered
pursuant to Section 5.1(c) in the
form attached hereto as Exhibit A.
"Applicable Advance Rate" shall
mean:
(i) with respect to
(x) any Nonconforming Receivable
(other than a Nonconforming
Insured Receivable) and (y) any
Eligible Receivable which is not
covered by an RDI Policy at the
applicable time of determination
(i.e., because it has been
outstanding for less than 14
days), a percentage equal to (a)
92% from the date of creation
thereof to the last Business Day
in any calendar month occurring
no less than five nor more than
six months after such date of
creation; (b) during each
succeeding calendar month, an
amount equal to the "Applicable
Advance Rate" during the
immediately preceding calendar
month minus one percent (1%);
(ii) with respect to
any Nonconforming Insured
Receivable or Eligible
Receivable which is a Delinquent
Receivable, a percentage equal
to ninety percent (90%);
(iii) with respect to
any Nonconforming Insured
Receivable and any Eligible
Receivable not described in
clauses (i) or (ii) above, 100%;
provided, however, that if at any
time the insurer with which the
Borrower maintains the applicable RDI
Policy or VSI Policy referred to in
Section 5.8 of this Agreement is
rated by A.M. Best Company ("Best")
at a level lower than "A", then the
Applicable Advance Rate with respect
to any Nonconforming Insured
Receivables or Eligible Receivables
described in clause (ii) above shall
be seventy percent (70%) and the
Applicable Advance Rate with respect
to any Nonconforming Insured
Receivables or Eligible Receivables
described in clause (iii) above shall
be eighty percent (80%).
"Automobile" shall mean the new
or used automobile, light truck, van
or minivan that is purchased by a Car
Buyer to which a particular
Receivable relates.
"Best" shall have the meaning
given such term in the definition of
"Applicable Advance Rate."
"Borrowing Base" shall mean, at
any time, the sum of:
(A) the Applicable Advance
Rate times the then aggregate
Outstanding Balance of the
Eligible Receivables (excluding
Delinquent Receivables); plus
(B) the lesser of (i) the
Applicable Advance Rates times
the then aggregate Outstanding
Balance of Delinquent
Receivables (excluding
Nonconforming Receivables) and
(ii) $1,000,000; plus
(C) with respect to
Nonconforming Receivables which
are Nonconforming Insured
Receivables, the lesser of (i)
the Applicable Advance Rate
times the then aggregate
Outstanding Balance of such
Nonconforming Insured
Receivables and (ii) one percent
(1.0%) of the Loans outstanding
at such time; plus
(D) with respect to
Nonconforming Receivables which
are not Nonconforming Insured
Receivables, the lesser of (i)
the Applicable Advance Rate
times the then aggregate
Outstanding Balance of such
Nonconforming Receivables and
(ii) one-fifth of one percent
(0.2%) of the Loans outstanding
at such time.
"Business Day" shall mean any
day other than a Saturday, Sunday,
legal holiday or other day under the
laws of Bermuda, the United States,
or the State of New York, on which
commercial banking institutions are
permitted by law or executive order
to be closed.
"Car Buyer" shall mean the
obligor under a Receivable.
"Certificates" shall mean any
pass-through certificates or similar
instruments evidencing a fractional
undivided interest in Receivables
originated by the Borrower and/or any
of its Affiliates.
"Change in Control" shall mean
any of the following: (i) the Parent
ceases to be the owner, directly or
indirectly, of 100% of the equity
interest in, and capital stock of the
Borrower; or (ii) any of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇▇▇ shall cease to hold their
current positions or cease to be
otherwise actively involved in the
management of the Borrower, provided
however, that should any one of the
foregoing individuals (and only one)
cease to hold his current office or
cease to be actively involved in
management of the Borrower and the
Parent as a result of death,
disability or discharge for cause,
then no "Change of Control" shall be
deemed to have occurred under this
definition unless and until another
of the foregoing individuals ceases
to hold his current office or ceases
to be actively involved in management
as described above.
"Closing Date" shall mean March
14, 1997, or such other date as all
of the conditions precedent set forth
in Article III hereof shall have been
satisfied.
"Collateral" shall have the
meaning ascribed to such term in
Section 6.1.
"Contract" shall mean, with
respect to each Receivable, the note,
retail sales installment contract or
other evidence of the Car Buyer's
obligation to repay the Receivable,
executed by such Car Buyer in
connection with the purchase of an
Automobile.
"Dealer" shall mean an
automobile dealer that enters into a
Dealer Agreement with the Borrower.
"Dealer Agreement" shall mean an
agreement between a Dealer and the
Borrower, in form and substance
substantially similar to one of the
agreements attached as Exhibit B
hereto, whereby the Borrower acquires
Contracts for its benefit.
"Default" shall mean any event
which, with the passage of time or
the giving of notice, or both, would
constitute an Event of Default.
"Defaulted Receivable"
shall mean any Receivable with
respect to which: (i) any
principal or interest payments
are past due for one hundred and
eighty (180) days or more or
(ii) the relevant Car Buyer has
filed for bankruptcy or (iii)
the Borrower or the Servicer has
taken, or caused to be taken,
enforcement or similar action to
repossess the relevant vehicle.
"Delinquent Receivable" shall
mean any Receivable, principal or
interest payments on which are more
than ninety (90) days and less than
one hundred eighty (180) days
delinquent, but which (i) otherwise
meets the criteria for an Eligible
Receivable or (ii) is a Nonconforming
Insured Receivable.
"Depository Account" shall mean
that certain concentration account
into which a Servicer shall, pursuant
to an Account Agreement or Servicing
Agreement, deposit collections from
Receivables as more fully described
in Section 6.7 hereof.
"Eligible Receivable" shall mean
a Receivable:
(a) which is not a
Defaulted Receivable;
(b) which, together with
its related Contract, was
created in compliance with all
applicable federal and state
laws and regulations, including
consumer credit laws and
regulations;
(c) which has been created
or acquired by the Borrower in
the ordinary course of the
Borrower's business and in
accordance with its Underwriting
Criteria;
(d) which is legally and
beneficially owned by the
Borrower free and clear of any
Lien except for the Lien in
favor of the Lenders created
pursuant to this Agreement;
(e) with respect to which
the Borrower is the lienholder
of record on the Title or shall
have filed with appropriate
state authorities all necessary
applications to be lienholder of
record on the Title;
(f) which, together with
the Contract related thereto, is
the legal, valid and binding
obligation of the maker thereof,
enforceable in accordance with
its terms, except as
enforceability may be limited by
bankruptcy, insolvency,
reorganization or other similar
laws affecting creditors rights
in general and by general
principles of equity;
(g) with respect to which
the Lenders have a perfected,
first-priority security interest
free and clear of all other
liens, security interests and
encumbrances except for a junior
lien thereon to secure the
Subordinated Debentures;
(h) which is denominated
and payable only in U.S.
dollars;
(i) the Car Buyer or other
obligor with respect to which is
(i) located in one of the 48
contiguous states in the United
States, (ii) not an Affiliate of
the Borrower and (iii) not a
governmental entity;
(j) which is secured by a
first priority perfected
security interest in a passenger
car, pick-up truck, sport
utility vehicle, minivan or van
rated at less than one ton;
(k) which, together with
its Contract, constitutes
"chattel paper" under the
Uniform Commercial Code as in
effect in the relevant state and
the sole original of which is
held by the Servicer together
with the original Title;
(l) the Servicer's File
with respect to which contains
proof of a policy of physical
damage insurance for the related
Automobile on standard forms,
naming or assigned to the
Borrower as the lien holder or
as a named insured, insuring
repair or replacement of such
Automobile subject to a
deductible not in excess of $500
or a legally enforceable binder
to furnish such a policy of
physical damage insurance within
three days of origination of
such Receivable;
(m) the origination and
collection practices used by the
Servicer with respect to which
have been, and are, in all
respects legal, proper, prudent
and customary in the automobile
loan servicing business;
(n) which is not (nor is
its related Contract) subject to
any set off, counterclaim or
defense, including the defense
of usury, nor will the operation
of any of the terms of any
Contract, or the exercise of any
right thereunder, render such
Receivable or Contract
unenforceable, in whole or in
part, or subject to any right of
rescission, set-off,
counterclaim or defense,
including the defense of usury
and no such right of rescission,
set-off, counterclaim or defense
has been asserted with respect
thereto;
(o) the Car Buyer with
respect to which had legal
capacity at the time to incur
the Receivable and to execute
and deliver the Contract, and
the Contract has been duly and
properly executed by such party;
(p) the Contract with
respect to which contains
customary and enforceable
provisions so as to render the
rights and remedies of the
holder thereof adequate for the
realization against the property
subject to the Contract of the
benefits of the security
provided thereby, including all
the rights of a secured party
under the Uniform Commercial
Code as in effect in the state
in which the Car Buyer resides
or the Contract was executed;
(q) which matures within
not less than twelve (12) months
nor more than sixty (60) months
from the time of origination, is
payable in monthly installments
of principal and interest, with
interest payable in arrears, has
a coupon of not less than 7 1/2%
and not more than 29% and
requires a monthly payment which
is sufficient to amortize the
original principal balance over
the original term, and the
Contract with respect to which
does not provide for any
extension of the original term
other than on terms which are
(but for final maturity)
consistent with the foregoing;
(r) the Automobile with
respect to which was at the time
of purchase, and to the best of
the Borrower's knowledge,
continues to be, free of
material damage and is in good
repair;
(s) the original
Outstanding Balance of which was
(i) with respect to Receivables
for which the Car User's finance
application was received by the
Borrower prior to January 15,
1997, not more than 120%, and
with respect to Receivables for
which the Car User's finance
application was received by the
Borrower on or after January 15,
1997, not more than 100%, of (A)
in the case of new Automobiles,
the manufacturer's suggested
retail price or (B) in the case
of used Automobiles, the retail
value of the Automobile at the
time of origination of the
Receivable as set forth in the
▇▇▇▇▇▇ "Blue Book" for the
appropriate region plus (ii) the
amount of taxes, title and other
fees and premiums for approved
service contracts related to
such Receivables;
(t) the principal balance
of which does not include
capitalized interest, physical
damage insurance and/or late
charges;
(u) which is being
serviced by the Servicer
pursuant to the Servicing
Agreement;
(v) which, unless
otherwise identified to the
Lenders as a Nonconforming
Insured Receivable or a
Nonconforming Receivable,
satisfies the conditions for
coverage under an RDI Policy and
which, except for any
Nonconforming Receivable not
constituting a Nonconforming
Insured Receivable, is insured
under such policy, provided
however, that any Receivables
which have been outstanding for
less than 14 days since their
origination and for which the
Borrower is in the process of
obtaining insurance under an RDI
Policy shall be deemed to be
Eligible Receivables under this
subclause (v);
(w) which satisfies the
conditions for coverage under
the VSI Policy and is insured
under such policy; and
(x) which otherwise
complies with the Borrower's
representations and warranties
as set forth in Section 6.4
hereof.
"ERISA" shall mean the Employee
Retirement Income Security Act of
1974, as amended from time to time,
together with any regulations
promulgated and rulings issued
thereunder from time to time.
"Event of Default" shall mean
any one or more of the events
specified in Section 7.1.
"Finance" shall have the meaning
set forth in the preamble hereto.
"Financing Agreements" shall
mean all agreements, instruments and
documents, including, without
limitation, this Agreement, the
Dealer Agreement, the Servicing
Agreement, the Guaranty, the Pledge
Agreements, the Security Agreement,
the Contracts, the Titles, the Notes
and all other assignments, security
agreements, loan agreements, notes,
guarantees, certificates of title,
subordination agreements, pledges,
powers of attorney, consents,
assignments, contracts, notices,
leases, financing statements,
instruments, documents and all other
written matter whether heretofore,
now or hereafter executed by or on
behalf of the Borrower or a Dealer in
connection with the transactions
contemplated by this Agreement.
"Global" shall have the meaning
set forth in the preamble hereto.
"Governmental Authority" shall
mean any nation or government, any
federal, state, local or other
political subdivision thereof and any
entity exercising executive,
legislative, judicial, regulatory or
administrative functions of or
pertaining to government.
"Guaranty" shall mean that
certain Guaranty dated as of even
date herewith, executed by the Parent
pursuant to which the Parent
guaranties all of the Obligations of
the Borrower to the Lenders.
"Indebtedness" of any Person
shall mean (i) indebtedness of such
Person for borrowed money, (ii)
obligations of such Person evidenced
by bonds, debentures, notes or other
similar instruments, (iii)
obligations of such Person to pay the
deferred purchase price of property
or services (excluding trade payables
payable within 30 days of delivery of
goods or services), (iv) obligations
of such Person as lessee under leases
which shall have been or should be,
in accordance with generally accepted
accounting principles, recorded as a
capital lease, (v) obligations
secured by any Lien upon property or
assets owned by such Person, even
though such Person has not assumed or
become liable for the payment of such
obligations, and (vi) obligations of
such Person under direct or indirect
guaranties in respect of, and
obligations (contingent or otherwise)
to purchase or otherwise acquire, or
otherwise to assure a creditor
against loss in respect of,
indebtedness or obligations of others
of the kinds referred to in clause
(i) through (v) above.
"IRC" shall mean the Internal
Revenue Code of 1986, as amended.
"Lease Warehouse Facility"
shall mean the outstanding credit
facility made by Finance to AAC and
Aegis Consumer Finance, Inc., a
Delaware corporation, pursuant to the
Loan and Security Agreement, dated
February 28, 1994, as amended from
time to time.
"LIBOR" shall mean an interest
rate per annum equal to the rate of
interest per annum at which deposits
in U.S. dollars are offered for a
period of thirty (30) days or less,
as applicable, and which appears as
of 11:00 a.m., London time on the
date of determination (i) on the
Telerate page 3750 or (ii) if such
page on such service ceases to
display such information, such other
page as may replace it on that
service for the purpose of display of
such information; or (iii) if such
rate does not appear on the Telerate,
then the rate quoted on Reuters
Screen page "LIBO", or (iv) if such
page on such service ceases to
display such information, such other
page as may replace it on that
service for the purpose of displaying
such information, or (v) if that
service ceases to display such
information, the determination shall
be made on the basis of the rates
which are available.
"Lien" shall mean any security
interest, charge, pledge, option or
lien or other encumbrance of any
nature, whether arising under
contract or by operation of law.
"Loan Request Amount" shall have
the meaning set forth in Section
2.2(b) hereof.
"Loans" shall have the meaning
set forth in Section 2.1 hereof.
"Lock-box Account" shall have
the meaning ascribed to such term in
the Servicing Agreement.
"Master Amendment" shall have
the meaning set forth in Section 8.14
hereof.
"Master Certificate Purchase
Agreement" shall mean that certain
Master Certificate Purchase
Agreement, dated as of March 14, 1997
from the SPC and the Parent to
Finance and Global.
"Master Trust Agreement" shall
mean that certain Master Trust
Agreement, dated as of March 1, 1997
between the SPC and Norwest Bank
Minnesota, National Association, as
the Trustee.
"Maximum Loan Amount" shall
mean the lesser of (i)
$50,000,000 and (ii) the maximum
dollar amount of the Loans which
the Lenders could be requested
to make under Section 2.1.
"Maximum Rate" shall have the
meaning given to such term in Section
2.4(c) hereof.
"Nonconforming Insured
Receivable" shall mean a
Nonconforming Receivable with respect
to which the applicable Risk Default
Insurer has waived in writing such
Receivable's non-compliance with the
Underwriting Criteria and has agreed
to cover such Receivable under its
RDI Policy.
"Nonconforming Receivables"
shall mean any Receivables which
are generated outside of the
Underwriting Criteria but which
otherwise meet the criteria for
Eligible Receivables.
"Notes" shall mean the
promissory notes of the Borrower in
favor of the Lenders, one in favor of
Finance, the other in favor of
Global, each of which is
substantially in the form of Exhibit
C.
"Obligations" shall mean all of
the payment and performance
obligations and liabilities of the
Borrower to the Lenders under this
Agreement, the Original Agreement and
the other Financing Agreements.
"Original Agreement" shall have
the meaning set forth in the first
preliminary statement hereof.
"Original Borrowers" shall have
the meaning set forth in the first
preliminary statement hereof.
"Outstanding Balance" shall
mean, with respect to any Receivable
or Receivables at any time, the
outstanding principal amount of such
Receivable or Receivables at such
time, exclusive of any amounts
representing capitalized interest,
physical damage insurance or late
charges.
"Parent" shall mean The Aegis
Consumer Funding Group, Inc., a
Delaware corporation.
"Parent Pledge Agreement" shall
mean the Pledge Agreement, dated as
of March 14, 1997, among the Parent
and the Lenders.
"Payment Date" shall mean the
twentieth calendar day of each month,
provided, however, that, if any such
day is not a Business Day, then
Payment Date shall mean the
immediately succeeding Business Day.
"Payment Period" shall mean,
with respect to any Payment Date, the
calendar month immediately preceding
such Payment Date.
"Permitted Existing
Indebtedness" shall mean the
Indebtedness described on
Schedule 5.4 hereto.
"Permitted Existing Liens"
shall mean the Liens described
on Schedule 5.4 hereto.
"Person" shall mean any
individual, sole proprietorship,
partnership, joint venture, trust,
unincorporated organization,
association, corporation,
institution, entity, party or
government (whether national,
federal, state, provincial, county,
city, municipal or otherwise,
including without limitation, any
instrumentality, division, agency,
body or department thereof).
"Pledge Agreements" shall mean
each of (i) the Parent Pledge
Agreement (ii) the Pledge Agreement,
dated as of March 14, 1997, among
Aegis Consumer Finance, Inc. and the
Lenders, (iii) the Pledge Agreement,
dated as of March 14, 1997, among
Aegis Capital and the Lenders and
(iv) the Pledge Agreement, dated as
of March 14, 1997, between the
Borrower and III Finance.
"Proportionate Share" shall mean
(i) with respect to Finance, seventy
percent (70%) and (ii) with respect
to Global, thirty percent (30%).
"RDI Policy" shall mean one of
the risk default policies maintained
with a Risk Default Insurer with
respect to the Receivables, copies of
which policies are attached hereto as
Exhibit D.
"Receivables" shall mean all
indebtedness of a Car Buyer evidenced
by a Contract, whether such Contract
is originated by the Borrower or
purchased from a Dealer by the
Borrower pursuant to a Dealer
Agreement or Agreements, which
indebtedness is or has been reflected
in a Receivables Schedule furnished
to the Lenders by the Borrower or a
Servicer pursuant to Section 2.2(b)
or which has otherwise been included
in the calculation of the Borrowing
Base at any time. It is expressly
understood and agreed that the term
"Receivable" (x) does not include any
such indebtedness which has never
been listed in a Receivables Schedule
or otherwise included in the
calculation of the Borrowing Base at
any time and (y) includes all
Receivables so listed in any
Receivables Schedule or included in
the calculation of the Borrowing Base
at any time notwithstanding that such
Receivable has become a Defaulted
Receivable or Delinquent Receivable
or has (for any reason other than an
affirmative release by each of the
Lenders of its respective security
interest therein in connection with a
disposition of such Receivable)
ceased to be an Eligible Receivable.
"Receivables Sale
Documents" shall mean each of
(i) that certain Purchase
Agreement between the Borrower
and the SPC, dated as of March
14, 1997, pursuant to which the
Borrower sells Receivables to
the SPC, (ii) the Master Trust
Agreement, (iii) any Pooling and
Servicing Agreement entered into
in connection with the Master
Trust Agreement, (iv) the Master
Certificate Purchase Agreement,
(v) the Certificates and (vi)
any agreements, documents or
instruments relating to the
foregoing.
"Receivables Sale Program"
shall mean that certain program
contemplated under the
Receivables Sale Documents for
the sales, from time to time, by
the Borrower, of Receivables and
related intangible assets to the
SPC on the terms and conditions
set forth in the Receivables
Sale Documents and (ii) the
sale, assignment or transfer by
the SPC to a special-purpose
trust or trusts in connection
with the issuance of pass-
through trust certificates, the
net cash proceeds of which are
sufficient for the Borrower to
repay the Loans by an amount at
least equal to the reduction in
the Borrowing Base resulting
from such sale transaction or
series of transactions.
"Receivables Schedule" shall
mean the schedule of new Receivables
furnished to the Lenders pursuant to
Section 2.2(b).
"Registry" shall have the
meaning set forth in Section 8.8.
"Risk Default Insurer" shall
mean Connecticut Indemnity Insurance
Co., and/or Empire Fire & Marine
Insurance Co., a division of Zurich
Insurance Company, or such other
insurer reasonably acceptable to the
Lender and rated at least "A" by
Best.
"Secured Obligations" shall
mean, collectively, all of the
Obligations and all indebtedness
and other obligations under any
loan agreement or credit
agreement entered into by the
Borrower or any of its
Affiliates with the Lenders from
time to time.
"Security Agreement" shall mean
that certain Security Agreement,
dated as of March 14, 1997, from AAC
and Aegis Consumer Finance, Inc. to
the Lenders.
"Servicer" shall mean, (i)
System and Services Technology, Inc.,
a wholly owned subsidiary of the
Parent or (ii) such other Person
acceptable to the Lenders who,
pursuant to a Servicing Agreement,
has agreed to perform various
services on behalf of the Borrower
with respect to that particular
Receivable; provided, that, so long
as any of the Receivables continue to
be serviced by American Lenders
Facilities, Inc., a California
corporation ("ALFI"), then the term
Servicer, when used with respect to
such Receivables or when the context
also requires, shall mean and include
ALFI as well as the other Servicers
described above.
"Servicer's Confirmation" shall
have the meaning ascribed to such
term in Section 2.2(c).
"Servicer's File" shall mean,
with respect to each Receivable, the
original Contract, Title, all
original instruments modifying the
terms and conditions of such
Receivable, the original endorsements
or assignments of such Contract,
factory invoices and work orders
describing the Automobile, the ▇▇▇▇
of sale and guaranty of title,
insurance policies, tax receipts,
property and casualty insurance
policies or binders naming the
Servicer as loss payee or additional
named insured, as is appropriate,
insurance premium receipts, ledger
sheets, payment records, insurance
claim files and correspondence, all
documentation in connection with any
modification, release, accommodation,
co-signing or guaranty of the
Receivable and any other
documentation executed or otherwise
obtained in connection with any
Receivable which the Servicer is
required to hold under the terms of
the Servicing Agreement.
"Servicing Agreement" shall mean
either (i) that certain Servicing
Agreement dated as of
January 3,
1997
by and between the Borrower, certain
of its Affiliates, and System and
Services Technology, Inc., or (ii)
any other agreement, in form and
substance satisfactory to the
Lenders, between the Borrower and a
Servicer pursuant to which a Servicer
agrees to perform various services on
behalf of the Borrower with respect
to that Receivable.
"SPC" shall mean Aegis Auto
Funding Corp. IV, a Delaware
corporation.
"Subordinated Debentures"
shall mean the Borrower's
$21,333,333 12% Exchangeable
Subordinated Debentures
guaranteed by the Parent.
"Termination Date" shall mean
the earlier of (i) March 13, 1999 and
(ii) the date on which either Lender
terminates this Agreement pursuant to
Section 7.1(A).
"Title" shall mean, with respect
to each Receivable, the original
certificate or other instrument or
registration evidencing ownership of
the related Automobile, which
certificate, other instrument or
registration shall have the lien of
the Borrower noted thereon and, if
applicable, a UCC financing statement
signed by the Car Buyer and filed in
the appropriate jurisdiction
evidencing the perfection of the lien
granted by the Car Buyer to the
Borrower as secured party.
"Underwriting Criteria" shall
mean the underwriting criteria in
place for the purchase and
origination of the Contracts and the
Receivables customarily adhered to by
the Borrower as more particularly
described on Exhibit E attached
hereto, or such other standards or
criteria subsequently developed by
the Borrower and approved of in
writing by each of the Lenders and
the Risk Default Insurers under the
RDI Policies.
"VSI Policy" shall mean the
vendors' single interest physical
damage insurance policy maintained
with respect to the Receivables, a
copy of which is attached as Exhibit
F.
Section 1.2 Terms Defined in
Uniform Commercial Code. All other terms
contained in this Agreement (and which are
not otherwise specifically defined herein)
shall have the meanings provided by the
Uniform Commercial Code as in effect from
time to time in the State of New York (the
"Code") to the extent the same are used or
defined therein.
Section 1.3 Accounting Terms.
All accounting terms not specifically
defined herein shall be construed in
accordance with generally accepted
accounting principles, consistently
applied.
Section 1.4 Other Terms. Any
references herein to exhibits, sections,
articles or schedules, unless otherwise
specified, are references to exhibits,
sections, articles or schedules of this
Agreement. The words "hereof", "herein",
and "hereunder" and words of similar
import when used in this Agreement shall
refer to this Agreement as a whole and not
to any particular provisions of this
Agreement. Wherever appropriate in
context, terms used herein in the singular
also include the plural, and vice-versa,
and each masculine, feminine or neuter
pronoun shall also include the other
gender. Unless otherwise specified, in
the computation of any time period, the
word "from" means "from and including" and
the words "to" or "until" mean "until but
not including."
Section 1.5 Preliminary
Statement. The Preliminary Statement is
incorporated herein by this reference
thereto.
ARTICLE II
LOANS AND INTEREST
Section 2.1 Loans. Subject to
the terms and conditions contained in this
Agreement, each of the Lenders severally
agrees that it will, from time to time on
or after the Closing Date and continuing
until the Termination Date, extend loans
(all such loans from each of the Lenders
hereinafter referred to as the "Loans") to
the Borrower in an amount equal to each
such Lender's Proportionate Share;
provided however, that (A) the aggregate
outstanding principal amount of the Loans
shall not exceed the lesser of (i) the
Maximum Loan Amount or (ii) the Borrowing
Base, and (B) if either Lender ceases
trading activities, dissolves or commences
distribution of a material portion of its
assets, then such Lender may, upon ninety
(90) days advance notice, stop extending
Loans to the Borrower and may demand
payment on all Loans then outstanding to
such Lender. All Loans shall be made
ratably by the Lenders in accordance with
their Proportionate Shares. The Borrower
shall set forth in the Aging Receivable
Report, delivered monthly pursuant to
Section 5.1(c), the amount of Receivables
which constitute Eligible Receivables,
with separate indications for which such
Receivables constitute Delinquent
Receivables, Nonconforming Receivables and
Nonconforming Insured Receivables. The
aggregate principal amount of the Loans
shall be evidenced by the Notes and shall
be payable in accordance with Section 2.5.
Notwithstanding the foregoing, the
Borrower shall not request, and no Lender
shall have any obligation to make, any
Loans under this Agreement if, as a result
thereof, the aggregate outstanding
principal amount of all Loans, loans under
the Lease Warehouse Facility, Certificates
and any other loans, advances and other
extensions of credit made or held by
either Lender to the Borrower and/or its
Affiliates) would exceed 25% of such
Lender's "net assets" as such term is
defined in such Lender's Articles of
Association, it being understood that,
with respect to Global, its investment in
Finance will not be included in "net
assets" for purposes of the foregoing
sentence.
Section 2.2 Making the Loans.
(a) No Loan shall be in an aggregate
amount of less than $100,000, nor shall it
be in an amount greater than the amount
set forth on the Receivables Schedule
submitted by the Borrower in accordance
with Section 2.2(b).
(b) On or before the date of
the initial borrowing hereunder, the
Borrower shall deliver to each of the
Lenders a schedule of all Receivables
included in the Collateral, setting forth
the total principal balance of each such
Receivable, the interest rate with respect
thereto, the monthly payment thereon, the
maturity date thereof and an indication of
the aggregate dollar amount of Receivables
scheduled thereon constituting Eligible
Receivables and separately indicating the
dollar amount of such Receivables
constituting Delinquent Receivables,
Nonconforming Receivables (other than
Nonconforming Insured Receivables) and
Nonconforming Insured Receivables (a
"Receivables Schedule"). Such Receivables
Schedule may, but is not required to, also
contain a written request for new Loans to
be advanced hereunder. Thereafter,
Borrower shall deliver a Receivables
Schedule to each Lender of all new
Receivables created since the date of the
last Receivables Schedule submitted to the
Lenders (i) on the date of each proposed
Loan hereunder and (ii) in any event no
less frequently than once each week. Upon
the Lenders' receipt of a Receivables
Schedule pursuant to clause (i) above,
Borrower shall be deemed to have (i)
requested a Loan from the Lenders in an
amount (the "Loan Request Amount") equal
to the least of (A) the Applicable Advance
Rate of all Receivables or new Receivables
described on such Receivables Schedule
since the previous schedule so delivered
multiplied by the Outstanding Balance of
such Receivables, (B) the amount by which
the Borrowing Base exceeds the aggregate
outstanding principal amount of all Loans
outstanding hereunder or (C) such lesser
amount which Borrower notes on the
applicable Receivables Schedule. By
delivery of any Receivables Schedule as
described in the immediately preceding
sentence, Borrower shall be deemed to have
represented and warranted to the Lenders
that on and as of such date, (x) all of
the conditions precedent set forth in
Section 3.2 have been met and (y) the
Borrower shall have sent to the Servicer
all documents necessary for the Servicer's
execution of the Servicer's Confirmation
(as described below).
(c) Upon receipt by each Lender
of a Receivables Schedule (which may be
transmitted by telecopy or telex), each
Lender shall, subject to the terms and
conditions contained in this Agreement,
make its Proportionate Share of a Loan in
the amount of eighty percent (80%) of the
Loan Request Amount by wire transfer to
such account as the Borrower may designate
to the Lenders from time to time in
writing. Within three (3) Business Days
of such Loan, the Servicer will transmit a
copy of the Servicer's confirmation (each
in the form of Exhibit G hereto, the
"Servicer's Confirmation") (which may be
transmitted by telecopy or telex)
confirming that the Servicer has in its
possession all documents necessary to
complete the Servicer's File with respect
to each Receivable itemized on the
Receivables Schedule submitted with the
relevant Servicer's Confirmation, and
subject to the terms and conditions
contained in this Agreement, each Lender
shall make its Proportionate Share of a
Loan in the amount of the remaining twenty
percent (20%) of the Loan Request Amount
by wire transfer to such account as the
Borrower may designate to the Lenders from
time to time in writing. Notwithstanding
the foregoing, to the extent a Servicer's
Confirmation accompanies or precedes
delivery of a Receivables Schedule, each
Lender shall, subject to the terms and
conditions contained in this Agreement,
make its Proportionate Share of a Loan in
the amount of one-hundred percent (100%)
of the Loan Request Amount by wire
transfer to such account as the Borrower
may designate to the Lenders from time to
time in writing. Funding of any Loan
requested as a result of delivery of a
Receivables Schedule or Servicer's
Confirmation shall (subject to the other
terms and conditions contained herein)
occur on the date the Lenders have
received such Receivables Schedule or
Servicer's Confirmation, as applicable, if
received no later than 1:00 p.m. (Eastern
time) on any Business Day. If such
Receivables Schedule or Servicer's
Confirmation, as applicable, is received
on or after 1:00 p.m. (Eastern time) on
any Business Day, funding shall (subject
to the other terms and conditions
contained herein) occur on the next
succeeding Business Day.
Section 2.3 Notes. On the
Closing Date, the Borrower shall execute
and deliver to the Lenders the Notes to
evidence the aggregate amount of all Loans
outstanding from time to time. The Notes
shall be dated the Closing Date and shall
mature on the Termination Date. Each
Lender is hereby authorized to endorse the
amount of its Loan, each repayment or
prepayment of principal thereof on the
schedule attached to and constituting a
part of its respective Note, which
endorsement shall constitute prima facie
evidence of the accuracy of the
information so endorsed; provided, that
failure by a Lender to make such
endorsement shall not affect the
obligations of the Borrower to such Lender
hereunder or under the relevant Note. In
lieu of endorsing such schedule, each
Lender is hereby authorized, at its
option, to record such Loans, repayments
or prepayments in its books and records,
such books and records constituting prima
facie evidence of the accuracy of the
information contained therein.
Section 2.4 Interest. (a) The
Borrower hereby promises to pay to the
Lenders interest, quarterly in arrears on
the first Payment Date following each
calendar quarter and on the date of any
principal prepayment hereunder pursuant to
Sections 2.5 and 7.1, on the unpaid
principal amount of each Loan for the
period commencing on the date such Loan
was made until, but not including, the
date such Loan shall be paid in full.
Except as otherwise provided in Section
2.4(b) below, all Loans shall bear
interest at a rate per annum equal to
LIBOR on the date such Loan was funded for
any Loan which has been outstanding less
than one calendar month, and LIBOR on the
first day of each calendar month for each
such Loan thereafter, plus three percent
(3.0%). Each interest payment shall be
computed on the basis of a 360-day year
for the actual number of days elapsed.
(b) After the occurrence and
during the continuance of an Event of
Default, the Loans shall bear interest at
a rate equal to the rate set forth in
Section 2.4(a) plus two percent (2.00%).
(c) Notwithstanding the
foregoing, nothing in this Agreement shall
require the Borrower to pay interest at a
rate exceeding the maximum rate (the
"Maximum Rate") permitted by applicable
law. If the interest rate provided for
hereunder on any date would exceed the
Maximum Rate, then the interest rate for
the period during which such interest
accrued shall be automatically reduced to
the Maximum Rate and the interest rate for
any subsequent period, to the extent less
than the Maximum Rate, shall be increased
to equal the Maximum Rate until such time
as the interest paid hereunder equals the
amount which would have been paid if the
interest otherwise payable hereunder had
at all times been permitted under
applicable law.
Section 2.5 Repayments;
Prepayments. (a) The Loans shall be
payable as follows:
(i) Mandatory partial
prepayments of principal shall be
made on each Payment Date, in an
amount equal to the excess, if any,
of (A) the principal amount of all
Loans outstanding over (B) the
Borrowing Base as calculated as of
the prior month end. All mandatory
prepayments of principal shall be
accompanied by payment of accrued and
unpaid interest on the principal so
prepaid as provided in Section 2.4.
(ii) Whenever the aggregate
principal amount of Loans outstanding
exceeds the sum of (A) the Borrowing
Base, as calculated pursuant to
Section 2.1 hereof and (B) all
amounts then held in the Depository
Account less the sum of any accrued
and unpaid interest on the Loans and
any accrued and unpaid servicing fee
due the Servicer (pursuant to the
terms of the Servicing Agreement), a
mandatory prepayment of principal
shall be made in the amount of such
excess. Such prepayments shall be
applied to the Obligations as set
forth in Section 2.5(c) and shall be
accompanied by a payment of all
interest accrued and unpaid on all
Loans through the date of such
mandatory prepayment and allocable to
the amount so prepaid.
(iii) Whenever any Receivables
are sold to the SPC pursuant to the
Receivables Sale Program, a mandatory
prepayment of principal shall be made
in an amount equal to the aggregate
outstanding principal balance of all
Loans advanced against or in respect
of the Receivables so sold. Such
prepayments shall be applied to the
Obligations as set forth in Section
2.5(c) and shall be accompanied by a
payment of all interest accrued and
unpaid on all Loans through the date
of such mandatory prepayment and
allocable to the amount so prepaid.
(iv) The entire remaining
outstanding principal balance of the
Loans, together with any accrued and
unpaid interest and any other
Obligations hereunder, shall be due
and payable on the Termination Date.
(b) The Borrower may
voluntarily prepay any portion of the
Loans in whole or in part; provided,
however, that, simultaneously with such
prepayment, the Borrower shall pay all
interest accrued and unpaid on such Loans
through the date of such prepayment.
(c) Subject to Section 7.2(d),
all payments of any amounts due under any
provision of this Agreement or any other
Financing Agreement, shall be applied in
the following order: first to payment of
interest due and owing; second to the then
outstanding principal balance of the Loans
in the order in which they were first
made; and third to the remaining balance
of the Obligations. If any payment
becomes due on a day other than a Business
Day, such payment shall be made on the
next succeeding Business Day, and, in the
case of a principal payment, interest on
such principal payment shall be payable
for such extension of time and shall be
included with such payment.
(d) The Borrower shall make each
payment hereunder and under the Notes on
the day when due in lawful money of the
United States of America to (i) in the
case of Finance, The First National Bank
of Chicago, Chicago, Illinois, account
number
52-61333
and (ii) in the case of Global,
The First National Bank of Chicago,
Chicago, Illinois, account
number 52-39095
or (iii) in either case, such other
account which the applicable Lender may
hereafter designate to the Borrower in
writing.
(e) The obligation of the
Borrower to pay the Loans and other
Obligations shall be a general obligation
of the Borrower, absolute and
unconditional.
Section 2.6. Increased Costs,
Capital Adequacy.
(a) If, after the date hereof
due to either (i) the introduction of or
any change in or to the interpretation of
any law or regulation by a Governmental
Authority that promulgated or administers
compliance with such law or regulation or
(ii) the compliance with any guideline or
request from any central bank or other
fiscal, monetary or Governmental Authority
(whether or not having the force of law),
any reserve or deposit or similar
requirement shall be imposed, modified or
deemed applicable or, any basis of
taxation shall be changed or any other
condition shall be imposed, and there
shall be any increase in the cost to a
Lender of making, funding, or maintaining
its Loans or its commitments hereunder and
other commitments of this type, the
Borrower shall from time to time, upon
demand by such Lender, by the submission
of the certificate described below, pay to
such Lender additional amounts sufficient
to compensate such Lender for such
increased cost. A certificate setting
forth in reasonable detail the amount of
such increased cost submitted to the
Borrower by a Lender shall be conclusive
and binding for all purposes, absent
manifest error.
(b) If a Lender determines that
compliance with any law or regulation or
any guideline or request or any written
interpretation from any central bank or
other fiscal, monetary or Governmental
Authority (whether or not having the force
of law) which is introduced, implemented
or received by the Lender after the date
hereof, affects or would affect capital
adequacy or the amount of capital required
or expected to be maintained by such
Lender or any corporation controlling such
Lender and that the amount of such capital
is increased by or based upon the Loans or
the commitments under this Agreement and
other similar commitments of this type, or
has or would have the effect of reducing
such Lender's rate of return on capital,
then, upon demand by such Lender, by the
submission of the certificate described
below, the Borrower shall pay to such
Lender from time to time as specified by
such Lender, additional amounts sufficient
to compensate the Lender, in the light of
such circumstances, to the extent that
such Lender reasonably determines such
increase in capital to be allocable to the
Loans or the existence of this Agreement.
A certificate setting forth in reasonable
detail such amounts submitted to the
Borrower by a Lender shall be conclusive
and binding for all purposes, absent
manifest error.
Section 2.7 Taxes. (a) All
payments made by the Borrower under this
Agreement and the Notes shall be made free
and clear of, and without deduction or
withholding for or on account of, any
present or future taxes, levies, imposts,
duties, charges, fees, deductions or
withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by
any Governmental Authority having taxing
authority, excluding net income taxes and
franchise taxes (imposed in lieu of income
taxes) imposed on the Lenders as a result
of any present or former connection
between the jurisdiction of the government
or taxing authority imposing such tax or
any political subdivision or taxing
authority thereof or therein and the
Lenders (all such non-excluded taxes,
levies, imposts, duties, charges, fees,
deductions and withholdings being
hereinafter called "Taxes"). If any Taxes
are required to be withheld from any
amounts payable to or under the Notes,
(i) the sum payable shall be increased as
may be necessary so that, after making all
required deductions (including deductions
applicable to additional sums payable
under this Section 2.7), each Lender
receives an amount equal to the sum it
would have received had no such deductions
been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower
shall pay the full amount deducted to the
relevant taxation authority or other
authority in accordance with applicable
law.
(b) In addition, the Borrower
agrees to pay any present or future stamp
or documentary taxes or any other excise
or property taxes, charges, or similar
levies that arise from any payment made
hereunder or from the execution, delivery
or registration of, or otherwise with
respect to, this Agreement (hereinafter
"Other Taxes").
(c) The Borrower will indemnify
the Lenders for the full amount of Taxes
or Other Taxes (including, without
limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts
payable under this Section 2.7) paid by
the Lenders and any liability (including
penalties, interest and expenses) arising
therefrom or with respect thereto.
Whenever any Taxes are payable by the
Borrower, as promptly as possible
thereafter the Borrower shall send to each
Lender a certified copy of an original
official receipt received by the Borrower
showing payment thereof. If the Borrower
fails to pay any Taxes when due to the
appropriate taxing authority or fails to
remit to a Lender the required receipts or
other required documentary evidence, the
Borrower shall indemnify each of the
Lenders for any incremental Taxes,
interest or penalties that the Lender is
legally required to pay as a result of any
such failure. The agreements in this
subsection shall survive the termination
of this Agreement and the payment of the
Notes.
Section 2.8 Sharing of
Payments. Etc. Each repayment of Loans
and payment of Interest shall be allocated
between the Lenders in accordance with
each Lender's Proportionate Share. If any
Lender shall obtain any payment (whether
voluntary, involuntary, through the
exercise of any right of set-off, or
otherwise) on account of the Loans made by
it (other than pursuant to Section 8.6,
2.6 or 2.7) in excess of its Proportionate
Share of payments on account of all Loans
outstanding, such Lender shall forthwith
(i) notify the other Lender of such
receipt and (ii) purchase from the other
Lender such participation in the Loans
made by it as shall be necessary to cause
such purchasing Lender to share the excess
payment with the other Lender in
accordance with each Lender's
Proportionate Share; provided, however,
that, if all or any portion of such excess
payment is thereafter recovered from such
purchasing Lender, such purchase from the
other Lender shall be rescinded and such
Lender shall repay to the purchasing
Lender the purchase price to the extent of
such recovery. The Borrower agrees that
any Lender so purchasing a participation
from another Lender pursuant to this
Section 2.8 may, to the fullest extent
permitted by law, exercise all its rights
of payment (including the right of setoff)
with respect to such participation as
fully as if such Lender were the direct
creditor of the Borrower in the amount of
such participation.
ARTICLE III
CONDITIONS TO LENDING
Section 3.1 Conditions
Precedent to this Agreement. The
effectiveness of this Agreement is subject
to the satisfaction of all of the
following conditions precedent:
(a) Documents. The Lenders
shall have received, on or before the
Closing Date, this Agreement, the Notes,
the Dealer Agreement, the Servicing
Agreement, the Guaranty, the Pledge
Agreements, the Security Agreement and all
other agreements, documents, financing
statements and instruments described in
the List of Closing Documents attached
hereto as Exhibit H and made a part
hereof, each duly executed where
appropriate, dated the Closing Date or the
date hereof where appropriate and in form
and substance reasonably satisfactory to
the Lenders.
(b) Governmental and Other
Consents and Approvals. All notices to
and filings with all regulatory bodies and
other Persons required to be given or
made, and all consents or other approvals
therefrom shall have been obtained in
connection with the transactions
contemplated by this Agreement and the
other Financing Agreements.
(c) Receivables Sale Program.
The Receivables Sale Documents shall have
been executed and all conditions precedent
to the effectiveness of the Receivables
Sale Program shall have been satisfied,
including the use of the initial proceeds
to retire any outstanding loans made by
Finance to the Original Borrowers under
the Original Agreement.
(d) Reduction of Loans under
Original Agreement. The aggregate
principal amount of "Loans" outstanding
under the Original Agreement shall have
been reduced by $3,500,000, as more
particularly described in the Master
Amendment.
Section 3.2 Conditions
Precedent to All Loans. The obligation of
the Lenders to make any Loans hereunder
shall be subject to the further conditions
precedent that on each such date (a) the
following statements shall be true (and
the request for any Loans in the
applicable Receivables Schedule and the
acceptance by the Borrower of the proceeds
of such Loan, shall constitute a
representation and warranty by the
Borrower that on the date of making of
such Loan such statements are true):
(i) The representations and
warranties contained in Article IV
and Section 6.4 are true and correct
in all material respects on and as of
the date of such Loan, before and
after giving effect to such Loan, as
though made on and as of such date;
(ii) No event has occurred and
is continuing, or would result from
such Loan, which constitutes a
Default or an Event of Default;
(iii) There has been no
material adverse change in the
business operations or financial
condition of the Parent or the
Borrower since December 31, 1996; and
(iv) with respect to either
Lender, no law, regulation, order,
judgment or decree of any
Governmental Authority shall enjoin,
prohibit or restrain, or impose or
result in the imposition of any
material adverse condition upon, such
Lender's making of the requested
Loan; and
(b) the Lenders shall have
received such other approvals, opinions or
documents as each may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter
into this Agreement and make the Loans
provided for herein, the Borrower hereby
makes the following representations and
warranties to each Lender, as well as
those representations and warranties
contained in Section 6.4, each of which
shall survive the execution and delivery
of this Agreement or any other Financing
Agreement and shall be deemed remade as of
the date of each Loan:
Section 4.1 Corporate
Existence. The Borrower is duly
organized, validly existing and in good
standing under the laws of the State of
Delaware, and has authority to conduct
business and is in good standing in all
other states where the nature and extent
of the business transacted by it or the
ownership of its assets makes such
authorization necessary, including,
without limitation, under the laws of each
state in which any Car Buyer resides or
under which any Title is issued or is
otherwise exempt under applicable law from
such qualification. The Parent is duly
organized, validly existing and in good
standing under the laws of the State of
Delaware, and has authority to conduct
business and is in good standing in all
other states where the nature and extent
of the business transacted by it or the
ownership of its assets makes such
authorization necessary.
Section 4.2 Corporate
Authority; No Conflicts. The borrowings
hereunder and the execution, delivery and
performance by the Borrower of this
Agreement, the Notes and the other
Financing Agreements (i) are within the
Borrower's corporate powers, (ii) have
been duly authorized by all necessary
corporate and stockholder action, (iii) do
not contravene the Borrower's Certificate
of Incorporation or by-laws, and (iv) do
not contravene nor result in a default
under, nor result in the creation of a
Lien (other than the Liens in favor of the
Lenders created pursuant to the terms of
this Agreement) under, any law or any
contractual restriction binding on or
affecting the Borrower. No consent or
approval of any holder of any indebtedness
or obligation of the Borrower, and no
consent, permission, authorization, order
or license of any Governmental Authority,
is necessary in connection with the
execution, delivery and performance of the
Financing Agreements, including, without
limitation, the Servicing Agreement, this
Agreement and the Notes, or any
transaction contemplated hereby or
thereby. The execution, delivery and
performance by the Parent of the Guaranty
and the Parent Pledge Agreement (i) are
within the Parent's corporate powers, (ii)
have been duly authorized by all necessary
corporate and stockholder action, (iii) do
not contravene the Parent's Certificate of
Incorporation or by-laws, and (iv) do not
contravene nor result in a default under,
nor result in the creation of a Lien
(other than the Liens in favor of the
Lenders created pursuant to the terms of
the Parent Pledge Agreement) under, any
law or any contractual restriction binding
on or affecting the Parent. This
Agreement, the Notes and the other
Financing Agreements to which the Borrower
is a party have been duly executed and
delivered by the Borrower and constitute
valid, binding and legal obligations of
the Borrower enforceable in accordance
with their terms. Each of the Guaranty
and the Parent Pledge Agreement has been
duly executed and delivered by the Parent
and constitute valid, binding and legal
obligations of the Parent enforceable in
accordance with their terms.
Section 4.3 Financial
Condition. The audited consolidated and
consolidating financial statements of the
Parent and the Borrower dated as of June
30, 1996, and all interim financial
statements previously delivered to the
Lenders are complete and correct in all
material respects and such financial
statements have been prepared in
conformity with generally accepted
accounting principles and practices
consistently applied and fairly present
the financial condition and results of
operations of the Parent and the Borrower
as of the date thereof (and for the period
then ended) in conformity with such
accounting principles and practices
(subject, in the case of interim
statements, to normal year-end
adjustments). Since December 31, 1996,
there has been no material adverse change
in such financial condition or results of
operation for the Parent or the Borrower.
Section 4.4 Litigation. There
is no litigation, tax claim, proceeding or
dispute pending or, to the Borrower's
knowledge, threatened against the Borrower
or the Parent or affecting their
respective properties or assets, which, if
determined adversely to the Borrower or
the Parent, as the case may be, (a) could
reasonably be expected to adversely affect
(i) the execution, delivery or
enforceability of this Agreement or the
other Financing Agreements, or (ii) the
ability of the Borrower to perform its
obligations under this Agreement or any of
the other Financing Agreements, or (b)
could reasonably be expected to have a
material adverse effect on the financial
condition of the Borrower.
Section 4.5 Compliance with
Laws and Regulations. The Borrower and
the Parent are in compliance in all
material respects with all laws, orders,
regulations and ordinances of all
Governmental Authorities relating to their
business operations and assets.
Section 4.6 Title to
Receivables. (a) The Borrower is the
legal and beneficial owner of the
Receivables attributed to it in any
Receivables Schedule free and clear of any
Lien except for the Lien in favor of the
Lenders created pursuant to this
Agreement.
(b) Each Lender has a
perfected, first-priority security
interest in each Receivable and no further
action is required to perfect such
security interest, other than the
possession by the Servicer of the
Contracts and Titles relating to each
Receivable, which possession is evidenced
by the Servicer's Confirmations.
Section 4.7 No Defaults. No
event has occurred and is continuing or
would result from the making of a Loan
which constitutes a Default or an Event of
Default. Neither the Borrower nor the
Parent is in default under any loan or
credit agreement or any other material
agreement, lease or instrument to which
they are parties or by which it or any of
their properties are bound other than the
Defaults set forth on Schedule 4.7
attached hereto.
Section 4.8 Taxes. Each of the
Borrower and the Parent have filed all
required federal, state and other local
tax returns and paid all material taxes
due pursuant to said returns or any
assessments against the Borrower or the
Parent, as the case may be, except for
those taxes being contested in good faith
and for which adequate reserves have been
provided on the books and records of the
Borrower or the Parent, as the case may
be.
Section 4.9 Margin Stock. None
of the proceeds of any Loan will be used,
directly or indirectly, for the purpose,
whether immediate, incidental or ultimate,
of purchasing or carrying any "margin
stock" within the meaning of Regulation G
and Regulation X of the Board of Governors
of the Federal Reserve System. The
Borrower is not engaged in the business of
extending credit for the purpose of
purchasing or carrying any such margin
stock and no part of the proceeds of the
Loans will be used to purchase or carry
any such margin stock or for any other
purpose that violates or is inconsistent
with such Regulation G or Regulation X.
Section 4.10 Investment Company
Act. The Borrower is not an "investment
company" or a company "controlled" by an
"investment company," within the meaning
of the Investment Company Act of 1940, as
amended.
Section 4.11 Disclosure. No
representation or warranty of the Borrower
contained in this Agreement or any
certificate or similar instrument required
to be furnished to the Lenders by or on
behalf of the Borrower in connection with
the transactions contemplated by this
Agreement contains or will contain any
untrue statement of a material fact or
omits to state a material fact (known to
the Borrower, in the case of any document
not furnished by it) necessary in order to
make the statements contained herein or
therein not misleading.
Section 4.12 ERISA. The
Borrower and its Affiliates are in
material compliance with all provisions of
ERISA, no contribution failure has
occurred with respect to any "benefit
plan" under ERISA, nor does any such plan
have any accumulated or waived funding
deficiency.
Section 4.13 Dealer Agreements.
Each Dealer Agreement requires the Dealer
to repurchase from the Borrower any
Receivable the Contract with respect to
which knowingly contained misleading or
untruthful statements.
ARTICLE V
COVENANTS
The Borrower covenants and
agrees that, so long as any Obligations
remain outstanding, and (even if there
shall be no Obligations outstanding) so
long as this Agreement remains in effect:
Section 5.1 Reports/Financial
Information. The Borrower shall deliver
to each Lender:
(a) As soon as practicable, and
in any event within forty-five (45) days
after the end of each calendar month, the
consolidated balance sheet and income
statement of the Parent and the Borrower
as at the end of such month, which for
each month coinciding with the end of a
calendar quarter shall set forth
comparative figures for the related
periods in the prior fiscal year, all of
which shall be certified by the chief
financial officer, chief accounting
officer or chief executive officer of the
Borrower, subject to changes resulting
from audit and normal year-end
adjustments;
(b) As soon as practicable, and
in any event within one hundred twenty
(120) days after the end of each fiscal
year of the Borrower, the consolidated
balance sheet and income statement of the
Parent and the Borrower as at the end of
such year, certified by independent
certified public accountants of recognized
national standing whose certification
shall be without qualification as to the
scope of audit, together with a
certificate of such accounting firm
stating that in the course of its regular
audit of the business of the Parent and
the Borrower, which audit was conducted in
accordance with generally accepted
auditing standards, such accounting firm
has obtained no knowledge of any Default
or Event of Default under Sections 5.1(a),
(b), (f), 5.2(a), 5.6(a), 5.10, 5.11, 5.12
or 5.14 hereof which has occurred or is
continuing or, if in the opinion of such
accounting firm such a Default or Event of
Default under the above-referenced
Sections has occurred and is continuing, a
statement as to the nature thereof;
(c) On or before the twentieth
day of each calendar month, a schedule of
activity for each Receivable for the
preceding calendar month, which sets forth
(i) the aggregate Outstanding Balances of
the Receivables and the Eligible
Receivables (indicating separate balances
for Nonconforming Receivables and
Delinquent Receivables), (ii) an Aging
Receivable Report in the form attached
hereto as Exhibit A, setting forth the
aggregate principal amount of Receivables
which are delinquent and the number of
days payments on such Receivables are
delinquent, and (iii) any other pertinent
information reasonably requested by a
Lender;
(d) Promptly upon receipt
thereof, copies of any financial reports
or other information required to be
delivered to the Borrower by the Servicer
pursuant to the terms of the Servicing
Agreement;
(e) Promptly, such other
financial or portfolio information related
to this Agreement or the Financing
Agreements that a Lender may reasonably
request from time to time; and
(f) Promptly after the sending
or filing thereof, copies of all reports
that the Parent or the Borrower sends to
any of its security holders, and copies of
all reports and registration statements
that the Parent or any subsidiary files
with the Securities and Exchange
Commission or any national securities
exchange.
Section 5.2 Notices. The
Borrower shall give prompt written notice
to the Lenders of:
(a) Any litigation, including,
without limitation, adversary proceedings
or contested matters brought by the
Borrower or any other Person affecting the
Borrower (or any material change in such
litigation), where the amount in
controversy is $100,000 or more and all
litigation when the aggregate amounts in
controversy equal or exceed $500,000, or
any other litigation or proceeding which
the Borrower deems material or which could
materially and adversely affect the
operations, financial condition or
prospects of the Borrower, and, if
requested by either Lender, deliver to
such Lender copies of all pleadings with
respect to any such matters served on or
filed by the Borrower;
(b) Any Event of Default or
Default and Borrower's proposed cure
therefor; any such notice shall refer to
this Agreement, describe such Event of
Default or Default and state that such
notice is a "Notice of Default"; and
(c) Promptly upon becoming
aware thereof, the failure of any
Receivable previously constituting or
reported to be an Eligible Receivable to
continue to satisfy the criteria for
Eligible Receivables.
Section 5.3 Corporate
Existence; Compliance with Laws. The
Borrower shall (i) maintain and preserve
its corporate existence and all rights,
privileges and franchises now enjoyed, and
conduct its business in accordance with
the terms of, and otherwise comply with,
its formation documents and (ii) comply in
all material respects with all applicable
laws, rules, regulations and orders.
Section 5.4 Indebtedness;
Liens; Sales of Assets. The Borrower
shall not create, incur, assume or suffer
to exist any Indebtedness, or allow any of
its Subsidiaries to create, incur, assume
or suffer to exist any Indebtedness,
except for (i) Indebtedness incurred under
this Agreement, (ii) Indebtedness
evidenced by the Subordinated Debentures,
(iii) Indebtedness incurred under any
Receivables Sale Document and (iv)
Permitted Existing Indebtedness. The
Borrower shall not sell, assign (by
operation of law or otherwise) or
otherwise dispose of, or create or suffer
to exist, any Lien upon or with respect
to, any of its properties or assets,
except for (i) Permitted Existing Liens
and (ii) Liens incurred to evidence the
sales of Receivables pursuant to the
Receivables Sale Program.
Section 5.5 Compliance with
Financing Agreements. The Borrower shall
comply promptly with any and all covenants
and provisions of this Agreement, the
Notes and the other Financing Agreements.
Section 5.6 Books and Records;
Right of Inspection. (a) The Borrower
shall maintain adequate books, accounts
and records and prepare all financial
statements required hereunder in
accordance with generally accepted
accounting principles and, once per
calendar year after reasonable notice, and
at any time after the occurrence and
during the continuance of an Event of
Default, permit employees or agents of the
Lenders at any reasonable time to inspect
the properties of the Borrower and to
examine or audit its books, accounts and
records and make copies and memoranda
thereof.
(b) The Borrower shall
maintain, or shall cause the Servicer to
maintain pursuant to the terms of the
Servicing Agreement, all records necessary
for compliance with the exception to
withholding for portfolio interest under
Section 871(h) of the Internal Revenue
Code.
Section 5.7 Further Assurances.
(a) The Borrower shall furnish to a Lender
such periodic, special, or other reports
and information as reasonably requested by
such Lender.
(b) From time to time, at its
own expense, the Borrower will take
whatever action is reasonably requested by
a Lender or its legal counsel to preserve,
protect or perfect the security interest
in the Collateral granted pursuant to
Article VI, including, without limitation,
executing UCC financing statements,
endorsing notes, executing additional
security documents or delivering
possession of Collateral to the Servicer,
and shall perform such acts as a Lender
shall reasonably deem necessary or
appropriate to effectuate the purposes of
this Agreement. The Borrower will appear
in and defend at its own expense any
action or proceeding which may affect the
Borrower's title to the Collateral or the
security interest granted hereunder.
Section 5.8 Maintenance of
Insurance. (a) The Borrower shall
maintain and keep in force in adequate
amounts insurance with responsible and
reputable companies or implement and
maintain a reasonable program of self-
insurance, and accept no self-insurance
risks which are substantially greater than
those historically carried by the
Borrower.
(b) The Borrower shall pay or
cause to be paid all insurance premiums
with respect to the RDI Policies and the
VSI Policy and all charges and fees
relating thereto. The Borrower shall not
amend the terms of any RDI Policy or the
VSI Policy in any manner adverse to the
Borrower or the Lenders without the prior
written consent of the Lenders.
(c) The Borrower shall obtain
and maintain endorsements to the RDI
Policies and the VSI Policy in form and
substance satisfactory to the Lenders
naming the Lenders as additional insureds
and/or loss payee thereunder.
Section 5.9 Servicing
Agreement. The Borrower shall not permit
the Servicing Agreement to be amended,
modified, restated, supplemented, canceled
or terminated, waive any of its rights
under any provision thereof, consent to
any deviation from the terms thereof or
otherwise grant any consents provided for
thereunder, in each case without the prior
written consent of the Lenders, or default
in its obligations thereunder.
Section 5.10 Merger;
Consolidation, Etc. The Borrower shall
not liquidate, dissolve, merge into or
consolidate with another entity, or sell,
lease or otherwise dispose of all or a
substantial portion of its business or
assets, except for sales of Receivables
pursuant to the Receivables Sale Program.
Section 5.11 Use of Proceeds.
The Borrower shall not use the proceeds of
any Loan for any purpose other than the
purchase of Receivables, repayment of
other outstanding Loans, and the payment
of any transaction costs associated with
any of the foregoing.
Section 5.12 Actions with
Respect to Receivables. The Borrower
shall not, without the prior written
consent of each Lender:
(a) Compromise, extend, release
or adjust payments on any Contracts or
Receivables, accept a conveyance of an
Automobile in full or partial satisfaction
of any Contract or Receivable, or release
the lien noted on any Title to any
Automobile securing any Receivable except
upon full payment thereof; provided, that
the Borrower may, consistent with its
present business practices and subject to
the rights of the Lenders from and after
an Event of Default, compromise, extend,
release or adjust payments on, or
otherwise accept a conveyance of an
Automobile in respect of, a Delinquent
Receivable or other past-due Receivable in
an effort to maximize the collectibility
thereof, provided, that any Receivable so
adjusted or enforced shall not be an
Eligible Receivable;
(b) Transfer, sell or assign
any Receivable or Contract to any Person
other than a Lender, except to a Dealer as
permitted pursuant to the Dealer Agreement
or to the SPC in connection with the
Receivables Sale Program, or deliver or
permit delivery of any Contract or Title
to any Person other than a Lender or the
Servicer prior to the repayment in full of
the Receivable which is secured by the
lien noted on the relevant Title except
that the Borrower shall be allowed to
effect such delivery as may be necessary
to consummate a sale of Receivables under
the Receivables Sale Program; and
(c) Grant, create, incur, permit
or suffer to exist any Lien upon any
Collateral except for (i) the Liens
granted to the Lenders to secure the
Secured Obligations and (ii) the Liens
granted to the SPC or any successor
purchasers pursuant to the Receivables
Sale Program.
Section 5.13 Change of
Principal Office. The Borrower shall not
(a) change the location of its chief
executive office and principal place of
business from ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ or (b)
change its name, identity or corporate
structure to such an extent that any
financing statement filed in connection
with this Agreement would become seriously
misleading, unless the Borrower shall have
given the Lenders at least 30 days prior
written notice thereof and prior to
effecting any such change, taken such
steps as the Lenders may deem necessary or
desirable to continue the perfection and
priority of the Liens in favor of the
Lenders granted in connection herewith.
Section 5.14 Net Worth. The
sum of the Parent's consolidated total
assets minus the Parent's consolidated
total liabilities (each determined in
conformity with generally accepted
accounting principles, consistently
applied and without duplication) shall not
be less than the greater of (i)$10,000,000
and (ii) ten percent (10%) of the Parent's
consolidated assets (without duplication)
on any subsequent date; provided, however
that for purposes of this Section, any
Collateral shall constitute an asset of
its applicable owner, and any assets which
have been sold by any Person in a non-
recourse sale to an unaffiliated third
party in a securitization transaction
shall not constitute assets of any such
Person.
ARTICLE VI
COLLATERAL
Section 6.1 Security Interest.
To secure the prompt and complete payment,
observance and performance of all of the
Secured Obligations, the Borrower hereby
grants to the Lenders a security interest
in all of the Borrower's rights, title and
interest in and to the following property
and interests in property, whether now
owned or existing or hereafter arising or
acquired and wheresoever located and
whether the same comprise accounts,
instruments, chattel paper or general
intangibles (the "Collateral"):
(a) All of the Borrower's
right, title and interest in and to the
Receivables, the related Contracts, the
Titles evidencing the liens securing the
Receivables and the Automobiles securing
such Receivables;
(b) All documents and
instruments, including all books, records,
files, tapes, correspondence, and other
information or materials relating to the
Receivables, the Contracts, the Titles,
the Automobiles and the Dealer Agreements,
whether now or hereafter delivered to, or
in the possession, custody or control of,
the Borrower, the Servicer, any
subservicer, any Dealer and/or a Lender;
(c) All rights of the Borrower
under any Dealer Agreement, including all
amounts received or receivable by the
Borrower from any Dealer pursuant to the
terms of any Dealer Agreement, and all
amounts received or receivable by the
Borrower from the Servicer pursuant to the
terms of the Servicing Agreement,
including, without limitation, on account
of principal and interest payments on the
Receivables or the Contracts, all net
proceeds received by virtue of liquidation
of any Receivables, any retained proceeds
received under any property damage,
casualty or other insurance policy with
respect to any Receivable, all proceeds
received under the RDI Policies and the
VSI Policy with respect to claims made
under the RDI Policies and the VSI Policy
and any and all interest of the Borrower
in any property damage, casualty or other
insurance policies as the same relate to
the Automobiles securing the Receivables;
(d) All right, title and
interest of the Borrower in and to the
Depository Account, and any and all cash
deposited by the Borrower, or by any
Dealer in the Depository Account, and all
investments held in and all rights with
respect to the Depository Account;
(e) Any and all interest of the
Borrower (i) in and under the Servicing
Agreement and (ii) in, to and under any
tax refunds receivable by the Borrower on
account of any defaults under the
Receivables;
(f) All cash and non-cash
proceeds of the foregoing items (a) - (e)
and the documents pertaining thereto,
together with whatever is receivable or
received when any of items (a) through (e)
or the proceeds thereof are sold,
collected or exchanged or otherwise
disposed of, whether such disposition is
voluntary or involuntary and also
includes, without limitation, all rights
to payment with respect to any cause of
action affecting or relating to the
foregoing and all additions thereto,
substitutions therefor and replacements
thereof.
Section 6.2 Release of Security
Interest. Notwithstanding the foregoing
Section 6.1, upon the sale of any
Receivables to the SPC pursuant to or in
connection with the Receivables Sale
Program and upon prepayment of the Loans
in accordance with Section 2.5(a)(iii)
hereof, the Lenders' lien on the
Receivables so sold shall be automatically
released from the security interest
granted to the Lenders under Section 6.1
hereof.
Section 6.3 Power of Attorney.
Subject to the terms and provisions of
this Agreement, at any time, without
notice and at the expense of the Borrower,
either Lender may, and the Borrower hereby
appoints each Lender its true attorney-in-
fact (such agency being coupled with an
interest) for such purposes:
(a) Upon the occurrence of
an Event of Default, perform any
obligation of the Borrower
hereunder in the Borrower's name
or otherwise;
(b) Upon the occurrence of
any Event of Default, notify any
Person obligated on any
Collateral of the rights of the
Lenders hereunder;
(c) Upon the occurrence of
any Event of Default, enter into
any extension, settlement or
compromise agreement relating to
or affecting the Collateral and,
in connection therewith, to
sell, transfer or dispose of any
of the Collateral including,
without limitation, the
Depository Account and all
amounts contained therein, and
take such action as such Lender
may deem proper and apply any
money or property received in
exchange for any of such
Collateral to any of the Secured
Obligations, including, without
limitation, directing the
Servicer to remit to the Lenders
all funds in the Depository
Account;
(d) Upon the occurrence of
an Event of Default, release any
of the Collateral (and, prior to
an Event of Default, release any
Receivable in accordance with
the terms of Section 6.6);
(e) Upon the occurrence of
any Event of Default, endorse,
deliver evidence of title,
enforce and collect by legal
action or otherwise any of the
Collateral including, without
limitation, the Depository
Account and all amounts
contained therein;
(f) Upon the occurrence of
any Event of Default, receive
payment or performance in
connection with any insurance
claims, claims for breach of
warranty or any other claims
concerning any of the
Collateral; and
(g) Upon the occurrence of
any Event of Default, protect,
defend and preserve the
Collateral including, without
limitation, the Depository
Account, or any rights or
interests of the Lenders with
regard thereto, including,
without limitation, filing or
prosecution of any third party
claim or other legal action or
proceeding which a Lender deems
necessary to protect any of the
rights, interests or priorities
of such Lender with respect to
any of the Collateral.
Section 6.4 Representations and
Warranties with Respect to Collateral.
The Borrower hereby represents and
warrants to the Lenders that:
(a) Each Receivable securing
the Loans and contributing to the
calculation of the Borrowing Base is an
Eligible Receivable.
(b) The Servicer currently has
in effect (i) a blanket fidelity bond
protecting such Servicer and the Borrower
against losses, including, without
limitation, forgery, theft, embezzlement
and fraud, by all officers, employees, or
other Persons acting in any capacity with
regard to the Receivables and the handling
of any funds, money, documents and papers
relating to the Receivables, and (ii)
errors and omissions insurance, with broad
coverage from responsible companies (with
a rating of "A" or better from Best) on
all officers, employees, or other Persons
acting in any capacity with regard to the
Receivables and the handling of any funds,
money, documents and papers relating to
the Receivables. The fidelity bond
provides minimum coverage of $1,000,000
and the insurance policy is for
$1,000,000. The insurance policy names
the Borrower as an additional insured
party. The Borrower has assigned to the
Lender all of its rights and benefits
under the insurance policy, as such rights
and benefits relate to (i) the
Receivables, (ii) the handling of any
funds, monies, documents and/or papers
relating to the Receivables or (iii) any
of the other Collateral hereunder.
(c) The Borrower's chief
executive office and principal place of
business are located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
and the Servicer's chief executive office
and principal place of business is located
at the address set forth in the Servicing
Agreement.
(d) No Receivable or Contract
has been assigned or pledged except
pursuant to the terms of the Dealer
Agreement and this Agreement, the Borrower
has good and marketable title thereto, and
the Borrower is the sole legal and
beneficial owner thereof and has full
right to transfer, sell and encumber the
same free and clear of any encumbrance,
equity, lien, pledge, charge, claim or
security interest, except as created in
favor of the Lenders pursuant to the terms
of this Agreement.
(e) To the best of the
Borrower's knowledge, after diligent
inquiry, there is no default, breach,
violation or event of acceleration
existing under any Contract, and there is
no event which, with the passage of time,
or with notice and the expiration of any
grace or cure period, would constitute a
default, breach, violation or event of
acceleration, and the Borrower has not
waived any default, breach, violation or
event of acceleration;
(f) No Contract is secured by
any collateral except the Lien with
respect to the corresponding Automobile as
noted on the relevant Title. The
outstanding principal balance of each
Receivable is secured by the related
Automobile; and
(g) The transfer, assignment
and conveyance of the Contracts by each
Dealer to the Borrower pursuant to the
Dealer Agreement are not subject to any
bulk transfer or similar statutory
provisions in effect in any applicable
jurisdiction. The Borrower is a holder in
due course with respect to each Receivable
acquired by it under the Dealer Agreement.
Section 6.5 Covenants with
Respect to Collateral.
(a) The Borrower shall comply,
and shall cause the Servicer to comply,
with any and all requirements of any
federal, state or local law applicable to
the Contracts, including, without
limitation, all consumer laws and the
Underwriting Criteria.
(b) The Borrower shall keep the
Collateral, or cause the Collateral to be
kept, in accordance with safe and sound
business practices.
Section 6.6 Release of
Receivables and Liens with Respect to
Automobiles. (a) Whether or not an Event
of Default exists, in the event that any
Receivable is paid or prepaid in full and
the proceeds of such payment or prepayment
have been deposited into the Depository
Account or paid or prepaid to the Lenders,
then the Servicer shall release the
corresponding Contract and Title to the
Car Buyer.
(b) In the event that any Loan
is prepaid in full prior to the
Termination Date with the proceeds
received from a sale of Receivables under
the Receivables Sale Program in accordance
with the provisions of Section
2.5(a)(iii), then, in such event, the
security interest in the Receivables
relating to such prepaid Loan shall be
released.
Section 6.7 Depository Account.
(a) All principal and interest payments
on the Contracts made by the Car Buyers,
all net proceeds received by virtue of
liquidation of any Receivables, any
retained proceeds received under any
property damage, casualty or other
insurance policy with respect to any
Receivable and all proceeds received under
the RDI Policies and VSI Policy shall be
deposited by the Servicer into the
Depository Account. No other funds shall
be allowed to be deposited into the
Depository Account. The Borrower shall
deposit, or shall cause the Servicer to
deposit, all funds received in any Lock-
box Account and allocable to the
Receivables into the Depository Account
within three (3) Business Days of receipt
thereof and in any event whenever the
funds in the Lock-box Account exceed
$35,000 at any one time.
(b) The financial institution
which maintains the Depository Account
shall acknowledge in writing that the
Depository Account has been pledged to the
Lenders as security for the Loans, that
the Lenders have exclusive dominion and
control over the Depository Account and
that neither the Borrower nor the Servicer
shall be entitled to make withdrawals from
the Depository Account except as otherwise
provided in Section 6.7(c).
(c) The Borrower shall be
permitted to withdraw the following
amounts from the Depository Account solely
under the following circumstances and for
the following purposes:
(i) on any Payment Date, (A) all
principal payments made on the
Contracts during the related Payment
Period, (B) any interest payments
then due pursuant to Section 2.4, (C)
payment of any other Obligations then
due, (D) all net proceeds received by
virtue of liquidation of any
Receivables during such Payment
Period, (E) any retained proceeds
received under any property damage,
casualty or other insurance policy
with respect to any Receivable during
such Payment Period and (F) all
proceeds received under the RDI
Policies or the VSI Policy during
such Payment Period; provided,
however, that such amounts are
directly transferred, in proportion
to each Lender's Proportionate Share,
to the Lenders' accounts, described
in Section 2.5(d), or at such other
accounts which the Lenders may
hereafter designate to the Borrower
in writing, and shall not be
transferred into any other accounts.
(ii) whenever the Borrower is
making a voluntary prepayment on the
Loans pursuant to Section 2.5(b), an
amount equal to any accrued and
unpaid interest on such Loans being
prepaid pursuant to Section 2.5(b).
(iii) So long as no Event of
Default has occurred and is
continuing, any servicing fees to the
Servicer pursuant to the Servicing
Agreement may be withdrawn on the
applicable Payment Date for fees
earned during the preceding month.
(iv) Upon any sale of
Receivables pursuant to the
Receivables Sale Program and
prepayment of the Loans in accordance
with Section 2.5(a)(iii), amounts on
deposit in the Depository Account
which constitute collections received
in respect to the Receivables so sold
or prepaid, shall be either (i) paid
to the Lenders (to the extent of
amounts owed hereunder in respect of
principal or interest on such prepaid
Loans) or (ii) transferred to the
collection account maintained for the
applicable "Trust" to which such
Receivables have been transferred.
Section 6.8 Pledge of Stock.
To secure the prompt and complete payment,
observance and performance of all of the
Secured Obligations, in addition to the
Borrower's granting of a security interest
in the Collateral pursuant to Section
6.17, the Parent hereby agrees to pledge
100% of the issued and outstanding shares
of all of its direct and indirect
subsidiaries, as more fully described in
the Pledge Agreements.
ARTICLE VII
DEFAULT; REMEDIES
Section 7.1 Events of Default.
Upon the occurrence of any of the
following events (each an "Event of
Default"):
(a) The Borrower fails to make
any payment of principal of or interest on
the Notes, or payment of any other
Obligation due hereunder, under the Notes
or under any other Financing Agreement on
or before the date such payment is due;
(b) Any breach by the Borrower
in the due observance or performance of
any covenant set forth in Sections 5.1 to
5.3, 5.5, 5.6, 5.8 to 5.14, and such
breach continues unremedied for ten (10)
Business Days after any officer of the
Borrower obtains knowledge thereof;
(c) Any breach by the Borrower
of any covenant, other than those
covenants enumerated in Section 7.1 (a) or
(b) of this Agreement, which remains
unremedied for thirty (30) days after the
earlier of (i) an officer of the Borrower
obtaining knowledge thereof or (ii) notice
thereof having been made to the Borrower;
(d) Any representation or
warranty made by the Borrower under this
Agreement or by the Borrower or the Parent
under any other Financing Agreement or in
any certificate, report, financial
statement or other agreement, instrument
or document furnished in connection with
this Agreement or any other Financing
Agreement shall prove to have been false
or misleading in any material respect when
made;
(e) Default in, or breach of,
any provision of any Dealer Agreement by
any Dealer or default in, or breach of,
any provision of the Servicing Agreement
by the Servicer which such default or
breach is not cured within the specified
cure period therefor in the Dealer
Agreement or Servicing Agreement, as the
case may be;
(f) Failure by the Servicer for
any reason, to remain a party to, or be
bound by the terms of, the Servicing
Agreement;
(g) The occurrence of a default,
breach or failure of condition by the
Borrower, any guarantor of the Obligations
or the Parent under any other Financing
Agreement which (unless such default
otherwise constitutes an Event of Default
pursuant to the other provisions of this
Section 7.1) is not remedied within the
applicable cure period contained therein,
if any;
(h) Any default by the
Borrower, any guarantor of the Obligations
or the Parent after any applicable notice
and cure period, shall occur under any
Indebtedness with respect to which the
Borrower or the Parent, as applicable, is
a party as borrower or guarantor,
provided, that any such default by the
Parent described in this subsection
7.01(h) shall not constitute an Event of
Default unless the aggregate Indebtedness
owed under such agreement is greater than
or equal to $100,000;
(i) The Borrower, any guarantor
of the Obligations or the Parent shall
generally not pay its debts as they become
due or shall admit in writing its
inability to pay its debts, or shall make
a general assignment for the benefit of
creditors;
(j) The Borrower, any guarantor
of the Obligations, the Parent or any
Servicer shall (i) apply for or consent to
the appointment of a receiver, trustee,
custodian, intervenor or liquidator of it,
or of all or a substantial part of its
assets, (ii) file a voluntary petition in
bankruptcy, (iii) file a petition or
answer seeking reorganization or an
arrangement with creditors, or to take
advantage of any applicable liquidation,
conservatorship bankruptcy, moratorium,
arrangement, receivership, insolvency,
reorganization or similar laws affecting
the rights of creditors generally, (iv)
file an answer admitting the material
allegations of, or consent to, or default
in answering, a petition filed against it
in any bankruptcy, reorganization or
insolvency proceeding, or (v) take
corporate action for the purpose of
effecting any of the foregoing; provided,
that, to the extent American Lender
Facilities, Inc. is the Servicer, any such
event with respect to the Servicer shall
not be an Event of Default hereunder
unless such event has occurred and is
continuing for at least thirty (30) days
and shall not be an Event of Default
thereafter if the court having
jurisdiction over such proceeding shall
have determined that the Receivables are
not property of American Lender
Facilities, Inc.'s bankruptcy estate;
(k) An involuntary petition or
complaint shall be filed against the
Borrower, any guarantor of the
Obligations, the Parent or any Servicer
seeking bankruptcy or reorganization of
such Person or the appointment of a
receiver, custodian, trustee, intervenor
or liquidator of such Person, or all or
substantially all of its assets, and such
petition or complaint shall not have been
dismissed within sixty (60) days of the
filing thereof; or an order, order for
relief, judgment or decree shall be
entered by any court of competent
jurisdiction or other competent authority
approving a petition or complaint seeking
reorganization of such Person or
appointing a receiver, custodian, trustee,
intervenor or liquidator of such Person,
or of all or substantially all of its
assets; provided, that any such event with
respect to any Servicer shall not be an
Event of Default hereunder unless such
event has occurred and is continuing for
at least thirty (30) days and shall not be
an Event of Default thereafter if the
court having jurisdiction over such
proceeding shall have determined that the
Receivables are not property of such
Servicer's bankruptcy estate;
(l) Any final judgment or order
for the payment of money in excess of
$100,000 shall be rendered against the
Borrower and either (i) enforcement
proceedings shall have been commenced by
any creditor upon such judgment or order
or (ii) the same remains undischarged or
unpaid for a period of sixty (60) days,
during which period the execution of such
judgment is not effectively stayed;
(m) (i) Any of the Financing
Agreements, or any Lien or priority claim
granted thereunder shall terminate, cease
to be effective or cease to be the legal,
valid, binding and enforceable obligation
of the Borrower, the Parent, any guarantor
of the Obligations, any Dealer or any
Servicer thereunder; (ii) the Borrower
shall, directly or indirectly, contest in
any manner such effectiveness, validity,
binding nature or enforceability (it being
understood that the Borrower may, in good
faith, question the accuracy of any
mathematical calculation of an amount owed
hereunder); or (iii) any Lien or priority
claim securing the Secured Obligations
shall cease to be effective and to be of
first priority;
(n) any Person shall levy on,
seize or attach all or any material
portion of the assets of the Borrower and
within thirty (30) days thereafter the
Borrower shall not have dissolved such
levy or attachment, as the case may be,
and, if applicable, regained possession of
such seized assets;
(o) the occurrence of a Change
in Control;
(p) either RDI Policy or the
VSI Policy shall cease to be in full force
and effect, unless replaced by a
substitute RDI Policy or VSI Policy
acceptable to the Lenders;
(r) the Servicer shall cease to
be qualified to do business as a foreign
corporation in each jurisdiction in which
such qualification is or shall be
necessary to protect the validity and
enforceability of any of the Receivables,
the Dealer Agreements or the Servicing
Agreement, as the case may be, or the
ability of the Servicer to perform its
duties under the Servicing Agreement;
(s) This Agreement, the Notes
or any other Financing Agreement shall for
any reason cease to be in full force and
effect, or be declared null and void or
unenforceable in whole or in part as the
result of any action initiated by any
Person other than a Lender;
(t) There shall have been an
"Event of Backup Servicing Default" under
the Master Trust Agreement or an "Event of
Termination" under the Master Certificate
Purchase Agreement.
then, and in every such event and at any
time thereafter during the continuance of
such event, either Lender may, at the same
or different times, take one or more of
the following actions:
(A) By notice to the Borrower
(which may be telephonic notice con-
firmed in writing) declare such
Lender's obligation to make any
future Loans hereunder terminated
and/or declare the occurrence of the
Termination Date, whereupon, in each
case, such obligations shall be
terminated and/or the Termination
Date shall have occurred;
(B) By notice to the
Borrower, declare the unpaid
principal amount and interest of
the Loans and all other amounts
payable by the Borrower here-
under to be forthwith due and
payable, whereupon such amounts
shall become forthwith due and
payable, both as to principal
and interest, without
presentment, demand, protest or
any other notice of any kind,
all of which are hereby
expressly waived, anything
contained herein or in the
Financing Agreements to the
contrary notwithstanding;
(C) Retain and require the
Servicer to retain any or all of
the Collateral in the possession
or under the control of the
Servicer.
Notwithstanding the foregoing,
upon the occurrence of an Event of Default
described in paragraph (j) or (k) of this
Section 7.1, with respect to the Parent or
the Borrower the actions described in
paragraphs (A) and (B) above shall occur
automatically without the requirement of
giving of any notice to the Borrower.
Notwithstanding anything to the
contrary in this Section 7.1, if (i) an
Event of Default or Default described in
paragraph (b), (c) or (d) of this Section
7.1 has arisen as a result of the failure
of a Receivable to constitute an Eligible
Receivable, and (ii) the Borrower shall
have made a mandatory prepayment in an
amount equal to the Applicable Advance
Rate times the Outstanding Balance of such
Receivable which no longer constitutes an
Eligible Receivable, then, in such event,
such Event of Default or Default shall be
deemed to have been cured for all purposes
under this Article VII.
Section 7.2 Remedies. (a) The
Lenders shall have all rights and remedies
provided to the Lenders at law, in equity,
under the Financing Agreements and under
the Uniform Commercial Code as in effect
in the State of New York (the "Code"), all
of which rights and remedies shall be
cumulative, and, in addition, upon the
occurrence of any Event of Default, either
Lender may exercise any one or more of the
following rights and remedies:
(i) Exercise all the
rights and remedies available to
secured parties under the
provisions of the Code.
(ii) Institute legal
proceedings to foreclose upon
and against the Lien granted by
the Financing Agreements to
recover judgment for the Secured
Obligations and to collect the
same out of any of the Collat-
eral or the proceeds of any sale
thereof.
(iii) Without being
responsible for loss or damage
to such Collateral beyond the
responsibility to use reasonable
care with respect to the
Collateral, require delivery to
the Servicer or the Lenders of
any Collateral then being held
by the Borrower or the Servicer,
sell and dispose of, or cause to
be sold and disposed of, all or
any part of the Collateral at
one or more public or private
sales, or other dispositions, at
such places and times and on
such terms and conditions and in
such order as the Lenders may
deem fit, without any previous
demand or advertisement but with
reasonable notification to the
Borrower of any such sale or
other disposal. Written or
telephonic notice at least ten
(10) days prior to such public
or private sale shall be deemed
to constitute reasonable
notification pursuant to this
Section 7.2(a)(iii).
(b) Any notice of sale or other
disposition, advertisement and other
notice or demand, any right or equity of
redemption and any obligation of a
prospective purchaser to inquire as to the
power and authority of a Lender to sell or
otherwise dispose of the Collateral or as
to the application of the proceeds of sale
or otherwise, which would otherwise be
required by, or available to the Borrower
under, applicable law are hereby expressly
waived by the Borrower to the fullest
extent permitted by such law.
(c) The Lenders may notify any
Car Buyer under the Receivables of the
Lenders' Liens therein, may direct the
Servicer or any such Car Buyer to make
payment directly to the Lenders and may
take control of any proceeds to which the
Lenders may be entitled hereunder.
(d) All moneys received or
collected by the Lenders pursuant to this
Agreement from and after an Event of
Default shall be applied, at Lenders'
discretion, first to the payment of all
costs incurred in the collection of such
moneys (including reasonable attorneys'
fees and legal expenses). All remaining
amounts shall be applied pursuant to
Section 2.5(c). The balance, if any, of
such moneys remaining after payment in
full of the Secured Obligations shall be
remitted to the Borrower or as otherwise
directed by a court of competent
jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc.
No amendment or waiver of any provision of
this Agreement or the Notes, nor consent
to any departure by the Borrower
therefrom, shall be effective unless the
same shall be in writing and signed by
each Lender, and then such waiver or
consent shall be effective only in the
specific instance and for the specific
purpose for which given.
Section 8.2 Notices. All
notices and other communications provided
for hereunder shall be in writing
(including telegraphic or facsimile
transmission) and mailed by registered
mail, return receipt requested, or
telexed, telecopied or hand delivered,
(a) as to Finance or Global:
III Finance Ltd.
III Global Ltd.
c/o Admiral Administration, Ltd.
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▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
B.W.I.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Bree
with a copy, in either case to:
III Offshore Advisors
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
and
▇▇▇▇▇ River Capital
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
(b) as to Borrower:
Aegis Auto Finance, Inc.
Newport Tower
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
or (c) at such other address as shall be
designated by such party in a written
notice to the other party. All such
notices and communications shall be
effective and deemed delivered only when
received by the party to which it is sent;
provided, however, that a telecopy
transmission shall be deemed to be
received when transmitted so long as the
transmitting machine has provided an
electronic confirmation of such
transmission.
Section 8.3 Survival of
Representations and Warranties. All
representations and warranties made herein
shall survive the execution, delivery and
acceptance of this Agreement, the Notes
and the other Financing Agreements.
Section 8.4 No Waiver;
Remedies. No failure on the part of a
Lender to exercise, and no delay in
exercising any right hereunder or under
the Notes or any other Financing Agreement
shall operate as a waiver thereof with
respect to such Lender; nor shall any
single or partial exercise of any right
hereunder or under the Notes preclude any
other or further exercise thereof or the
exercise of any other right. The remedies
herein provided are cumulative and not
exclusive of any remedies provided by law.
Section 8.5 Costs and Expenses.
Except as otherwise provided in the
immediately subsequent sentence, each
party hereto agrees to pay its own costs
and expenses (including attorneys' and
paralegals' fees and expenses) in
connection with the execution and delivery
of this Agreement, the Notes and the other
Financing Agreements. The Borrower agrees
to pay (a) all costs and expenses incurred
by the Lenders in maintaining, preserving
or insuring any Collateral and (b) all
costs and expenses of the Lenders
(including reasonable attorneys' and
paralegals' fees and expenses) in
connection with the enforcement of this
Agreement, the Notes, the other Financing
Agreements and/or the Lien on any of the
Collateral. All of the costs, fees and
expenses enumerated in the immediately
preceding sentence shall constitute
Obligations and shall be secured by the
Collateral.
Section 8.6 Relationship;
Indemnity. (a) The relationship of the
Borrower to each Lender under the
Financing Agreements is, and shall at all
times remain, solely that of borrower and
lender; other than as set forth in Section
7.2(a)(iii), neither Lender undertakes or
assumes any responsibility or duty to the
Borrower or to any third party with
respect to the Collateral.
(b) The Borrower hereby
indemnifies and agrees to hold harmless
each Lender and its respective officers,
directors, employees, attorneys and agents
(collectively, the "Indemnified Parties")
from any and all losses, damages (whether
general, punitive or otherwise),
liabilities, claims, causes of action and
other costs and expenses, including
reasonable attorneys' fees, which any
Indemnified Party may suffer or incur by
or as a result of claims by third parties
in any manner relating to or arising out
of this Agreement or the other Financing
Agreements, or any act, event or
transaction related thereto, the making of
Loans, the use or intended use of the
proceeds of the Loans, or any of the other
transactions contemplated by the Financing
Agreements, including any Dealer Agreement
or Contract.
(c) Promptly after any
Indemnified Party is served with process
in connection with the commencement of any
action, such Indemnified Party shall, if a
claim against the Borrower in respect
thereof is to be made pursuant to this
indemnification, notify the Borrower of
the commencement thereof. The Borrower
shall pay any Obligations arising under
this indemnity to such Indemnified Party
immediately upon demand. The duty of the
Borrower to indemnify the Lenders shall
survive the release and cancellation of
this Agreement or any of the other
Financing Agreements.
Section 8.7 Successors and
Assigns; Assignment. This Agreement shall
be binding upon and inure to the benefit
of the Borrower and the Lenders and their
respective successors and assigns, except
that the Borrower shall not have the right
to assign its rights hereunder or any
interest herein without the prior written
consent of the Lenders. Either Lender, at
its sole option, shall have the right to
assign this Agreement, its Note and any of
its rights and interest hereunder and
thereunder.
Section 8.8 Registered
Obligations. The Loans (including the
Notes evidencing the Loans) are registered
obligations and the right, title and
interest of the Lenders and their assigns
(and of a Person who takes a participation
in a Loan directly from a Lender) in and
to such Loan shall be transferrable only
upon notation of such transfer in a
registry (the "Registry") maintained to
record the interest of each Lender and its
respective assigns (and such direct
participants). A Note shall only evidence
a Lender's, or its assigns', right, title
and interest in and to the related Loans,
and in no event is any such Note to be
considered a bearer instrument or
obligation. This Section 8.8 shall be
construed so that the Loans are at all
times maintained in "registered form"
within the meaning of Section 163(f),
871(h)(2) and 881(c)(2) of the IRC and any
related regulations (or any successor
provisions of the IRC or such
regulations). The Borrower shall maintain
the Registry in which the Borrower will
register the Loans. No transfer by a
Lender or any of its assigns of (or direct
participant with respect to) any of the
Loans shall be permitted or effective
unless and until recorded on the Registry.
Any such transfer shall be made only by
written application by the transferring
Lender, its assigns, or participants to
the Borrower stating the name of the
proposed transferee. The Borrower agrees
that within five (5) Business Days after
its receipt of such written notice, the
Borrower shall, at its own expense, record
such transfer on the Registry and shall,
if requested by a Lender or the
transferee, execute new Notes to the order
of such Lender and/or the transferee, as
applicable, in exchange for the
surrendered Note or Notes. Such new Note
or Notes shall be in an aggregate
principal amount equal to the unpaid
aggregate principal amount of such
surrendered Note or Notes, shall be dated
the effective date of the assignment and
shall otherwise be in substantially the
form of Exhibit C.
Section 8.9 Binding Effect;
Governing Law. This Agreement constitutes
the complete and final expression of the
parties' agreement with respect to the
matters set forth herein and supersedes
all oral negotiations and prior writings
in respect of such matters. This
Agreement and the Notes shall be governed
by, and construed in accordance with, the
laws and decisions of the State of New
York. Whenever 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 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.
Section 8.10 WAIVER OF TRIAL
BY JURY; SUBMISSION TO JURISDICTION. THE
BORROWER AND EACH LENDER EACH HEREBY
AGREES TO WAIVE ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY FINANCING AGREEMENT,
WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE. THE BORROWER HEREBY CONSENTS
TO THE JURISDICTION OF ANY LOCAL OR
FEDERAL COURT LOCATED WITHIN THE STATE OF
NEW YORK AND WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED ON IMPROPER VENUE
OR FORUM NON CONVENIENS TO THE CONDUCT OF
ANY PROCEEDING IN ANY SUCH COURT; NOTHING
IN THIS SECTION 8.10 SHALL AFFECT EITHER
LENDER'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
Section 8.11 Term. This
Agreement shall become effective when
executed and delivered by the parties
hereto and shall expire upon that date
occurring on or after the Termination Date
when each Lender has received indefeasible
payment in full in cash of the Obligations
owed to it. Notwithstanding the
foregoing, the Borrower's agreement to
indemnify the Lenders under Section 8.6
shall survive the termination of this
Agreement.
Section 8.12 Headings.
Article and Section headings in this
Agreement are included for convenience of
reference only and shall not affect any
construction or interpretation of this
Agreement.
Section 8.13 Counterparts.
This Agreement may be executed by the
parties hereto in separate counterparts,
each of which when so executed shall be
deemed to be an original and both of which
taken together shall constitute one and
the same agreement.
Section 8.14 Termination of
Original Agreement. The Borrower, Aegis
Capital, AAC and the Lenders all hereby
agree that, upon the execution, delivery
and effectiveness of that certain Master
Amendment to the Retained Yield Loan
Agreements, dated as of the date hereof
(the "Master Amendment"), among III
Finance, the Borrower and Aegis Consumer
Finance, Inc., the provisions of the
Original Agreement not expressly
incorporated by reference in the Master
Amendment shall terminate and be of no
further force or effect and the provisions
of the Original Agreement expressly
incorporated by reference in the Master
Amendment shall continue in full force and
effect thereunder.
Section 8.15 Physical Damage
Insurance. The Lenders hereby acknowledge
that the Borrower may, subject to further
business and legal analysis, commence
offering financing to its Car Buyers for
physical damage insurance charges, which
financing would be offered on an elective
and not forced basis. In such event, if
the Borrower so requests, and so long as
no Default or Event of Default has
occurred and is then continuing, the
Lenders agree to negotiate in good faith
with respect to modifying this Agreement
in order to accommodate such business
plan, including a possible modification of
the definition of "Outstanding Balance" to
include such physical damage insurance
charges; provided, however, that (x) no
party hereto shall have any liability for
failing to reach a final agreement on such
issues and (y) the Lenders shall have no
obligation to negotiate with respect to
such issues unless the Borrower shall have
first demonstrated to the Lenders'
reasonable satisfaction that the financing
of such insurance charges and the
inclusion of such charges in the amounts
financed under this Agreement (i) will be
permitted under all applicable state laws,
(ii) will not have any material impact on
the payment and performance of the
Receivables by the Car Buyers, (iii) will
be permitted under the Underwriting
Criteria and (iv) will not adversely
affect the obligations of the Risk Default
Insurers or the rights of the Lenders with
respect to the RDI Policies.
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be
executed by their respective officers
thereunto duly authorized, as of the date
first written above.
III FINANCE
LTD.
By______________________________
Name:
Title:
III GLOBAL
LTD.
By______________________________
Name:
Title:
AEGIS AUTO FINANCE, INC.
By______________________________
Name:
Title:
AEGIS CAPITAL MARKETS, INC.,
for purposes
of Section 8.16 hereof
By______________________________
Name:
Title:
AEGIS ACCEPTANCE CORP.,
for purposes
of Section 8.16 hereof
By______________________________
Name:
Title:
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . .2
Section 1.1 General Terms. . . . . . .2
Section 1.2 Terms Defined in Uniform
Commercial Code. . . . . . . . . 15
Section 1.3 Accounting Terms . . . . 15
Section 1.4 Other Terms. . . . . . . 15
Section 1.5 Preliminary Statement . . 15
ARTICLE II
LOANS AND INTEREST. . . . . . . . . . 15
Section 2.1 Loans. . . . . . . . . . 15
Section 2.2 Making the Loans . . . . 16
Section 2.3 Notes. . . . . . . . . . 17
Section 2.4 Interest . . . . . . . . 18
Section 2.5 Repayments; Prepayments. 18
Section 2.6. Increased Costs, Capital
Adequacy . . . . . . . . . . . . 20
Section 2.7 Taxes. . . . . . . . . . 21
Section 2.8 Sharing of Payments.
Etc. . . . . . . . . . . . . . . 22
ARTICLE III
CONDITIONS TO LENDING . . . . . . . . 22
Section 3.1 Conditions Precedent to
this Agreement . . . . . . . . . 22
Section 3.2 Conditions Precedent to
All Loans. . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . 24
Section 4.1 Corporate Existence. . . 24
Section 4.2 Corporate Authority; No
Conflicts. . . . . . . . . . . . 24
Section 4.3 Financial Condition. . . 25
Section 4.4 Litigation . . . . . . . 25
Section 4.5 Compliance with Laws and
Regulations. . . . . . . . . . . 25
Section 4.6 Title to Receivables . . 25
Section 4.7 No Defaults. . . . . . . 26
Section 4.8 Taxes. . . . . . . . . . 26
Section 4.9 Margin Stock . . . . . . 26
Section 4.10 Investment Company Act. 26
Section 4.11 Disclosure. . . . . . . 26
Section 4.12 ERISA . . . . . . . . . 27
Section 4.13 Dealer Agreements . . . 27
ARTICLE V
COVENANTS . . . . . . . . . . . . . . 27
Section 5.1 Reports/Financial
Information. . . . . . . . . . . 27
Section 5.2 Notices. . . . . . . . . 28
Section 5.3 Corporate Existence;
Compliance with Laws . . . . . . 29
Section 5.4 Indebtedness; Liens;
Sales of Assets. . . . . . . . . 29
Section 5.5 Compliance with
Financing Agreements . . . . . . 29
Section 5.6 Books and Records; Right
of Inspection. . . . . . . . . . 29
Section 5.7 Further Assurances . . . 30
Section 5.8 Maintenance of Insurance 30
Section 5.9 Servicing Agreement. . . 30
Section 5.10 Merger; Consolidation,
Etc. . . . . . . . . . . . . . . 31
Section 5.11 Use of Proceeds . . . . 31
Section 5.12 Actions with Respect to
Receivables. . . . . . . . . . . 31
Section 5.13 Change of Principal
Office . . . . . . . . . . . . . 32
Section 5.14 Net Worth . . . . . . . 32
ARTICLE VI
COLLATERAL. . . . . . . . . . . . . . 32
Section 6.1 Security Interest. . . . 32
Section 6.2 Release of Security
Interest . . . . . . . . . . . . 33
Section 6.3 Power of Attorney. . . . 34
Section 6.4 Representations and
Warranties with Respect to
Collateral . . . . . . . . . . . 35
Section 6.5 Covenants with Respect
to Collateral. . . . . . . . . . 36
Section 6.6 Release of Receivables
and Liens with Respect to
Automobiles. . . . . . . . . . . 36
Section 6.7 Depository Account . . . 36
Section 6.8 Pledge of Stock. . . . . 38
ARTICLE VII
DEFAULT; REMEDIES . . . . . . . . . . 38
Section 7.1 Events of Default. . . . 38
Section 7.2 Remedies . . . . . . . . 42
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . 43
Section 8.1 Amendments, etc. . . . . 43
Section 8.2 Notices. . . . . . . . . 43
Section 8.3 Survival of
Representations and Warranties . 45
Section 8.4 No Waiver; Remedies. . . 45
Section 8.5 Costs and Expenses . . . 45
Section 8.6 Relationship; Indemnity. 46
Section 8.7 Successors and Assigns;
Assignment . . . . . . . . . . . 46
Section 8.8 Registered Obligations 46
Section 8.9 Binding Effect;
Governing Law. . . . . . . . . . 47
Section 8.10 WAIVER OF TRIAL BY
JURY; SUBMISSION TO
JURISDICTION . . . . . . . . . . 47
Section 8.11 Term . . . . . . . . . 48
Section 8.12 Headings . . . . . . . 48
Section 8.13 Counterparts. . . . . . 48
Section 8.14 Termination of Original
Agreement. . . . . . . . . . . . 48
Section 8.15 Physical Damage
Insurance. . . . . . . . . . . . 48
