[EXECUTION]
STRATEGIC ALLIANCE AGREEMENT
THIS STRATEGIC ALLIANCE AGREEMENT ("Agreement") dated August 23, 1999 is by
and between Bank of America, N.A., a national banking association, with its
principal place of business in Charlotte, North Carolina ("Bank"), Banc of
America Auto Finance Corp., a Delaware corporation, a wholly-owned subsidiary of
the Bank, with its principal place of business in Las Vegas, Nevada ("Bank
Subsidiary"), Electronic Vehicle Remarketing, Inc., a Delaware corporation, with
its principal place of business at Melville, New York ("EVRI") and E-Loan, Inc.,
a Delaware corporation, with its principal place of business at Dublin,
California ("Buyer").
A. Buyer is a financial services institution that, pursuant to a certain
Stock Purchase Agreement between Servicer and Buyer, purchased all of the
outstanding common stock of EVRI.
B. It is a condition of the Agreement and Plan of Reorganization that Bank
Subsidiary, Bank, EVRI and Buyer enter into this Agreement pursuant to which
EVRI will for a fee provide to Bank the names of applicants for auto loans that
meet Bank's underwriting criteria and perform a range of other services in
connection with the origination of such auto loans, all as more particularly set
forth below.
C. This Agreement shall, on the Closing Date, supersede and replace in its
entirety the Origination Agreement between Bank and EVRI dated June 30, 1999.
NOW, THEREFORE, in consideration of the promises and mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
EVRI DUTIES
SECTION 1.01. Program. EVRI and Bank shall establish a referral program
(the "Program") pursuant to which EVRI shall refer to Bank customers who visit
the EVRI Site and complete an application for a Bank Loan.
SECTION 1.02. Posting. EVRI shall transmit to Bank on a timely basis a file
containing the name of each consumer described in Section 1.01 above. Each such
consumer shall be referred to herein as an "Applicant." The file shall initially
be in substantially the same medium and format as used prior to the date hereof
and Bank may change such format and medium on reasonable advance notice to EVRI.
SECTION 1.03. Maintenance. EVRI shall maintain the EVRI Site,
▇▇▇▇▇▇▇▇▇▇.▇▇▇, in a manner that will enable consumers to complete an online
application in a form acceptable to and approved by Bank for a loan for the
purchase of a Vehicle or the refinance of a Vehicle Loan, Insurance Product, or
such other related products as EVRI may make available on behalf of the Bank on
the EVRI Site (referred to as the "Loan Products"). Bank acknowledges that the
application form currently in use is acceptable and Bank shall provide EVRI
timely notice of any changes to such form.
SECTION 1.04. New Car Finance Products.
(a) EVRI shall work with the Bank to support new Bank car finance products
and, in addition, will allow Bank the opportunity to participate in new products
and new programs that EVRI may develop and make available to third parties. Such
participation shall be on at least as favorable terms as EVRI makes available to
such third parties.
(b) EVRI, E-Loan, Inc. and the Bank will each designate a product
representative (the "Product Representative") for purposes of communicating and
developing new auto loan products to be offered by E-Loan, EVRI or the Bank, as
the case may be, through the EVRI Site, or offering auto loan products to be
offered by E-Loan, EVRI or the Bank at such other consumer finance sites that
the parties may mutually consider establishing and making subject to the terms
of this Agreement. The Product Representatives or their designees shall meet at
least quarterly to discuss possible joint product development and other matters
of mutual concern related to the successful implementation of the Program
contemplated by this Agreement. The Product Representatives will, at their
initial meeting, discuss the development of a process that will enable Bank loan
applicants to view information regarding their Bank auto loans by visiting a
secure portion of the EVRI Site. Such process shall be developed consistent with
the security and privacy standards of all parties.
(c) The parties agree that, with respect to the origination of auto loans,
and related car finance products, the terms and conditions, including pricing
and web site presentation features, shall be on a basis which represents the
most favorable terms available from EVRI, E-Loan or the Bank for such similar
direct auto loan products made available by the Bank. If a party shall enter
into an agreement with a third party regarding such products on terms which are
more favorable than those available to the parties hereto, the parties shall
amend the agreement or related agreement to provide such party hereto the
benefit of the more favorable provisions.
SECTION 1.05. Loan Approval.
(a) EVRI shall pass all applications for Bank Loans through the Bank's
proprietary scorecard and shall underwrite applications in accordance with the
Bank loan standards, as initially set forth on Exhibit A (the "Loan Standards").
Bank may change the Loan Standards on thirty (30) days written notice, and, to
the extent an application and Loan Application Package is received following the
effective date of the change, it shall be subject to the new Loan Standards.
EVRI shall perform requisite credit analysis and underwriting services on behalf
of the Bank in connection with each application in accordance with the existing
operation procedures and underwriting procedures in place at EVRI prior to
EVRI's purchase by Buyer, as more particularly set forth on Exhibit B (the
"Operations Procedures"). Bank may change the Operations Procedures at any time
on thirty (30) days prior written notice to EVRI. EVRI's obligation to perform
the Services may be performed by any employee, representative or agent of EVRI,
as EVRI shall designate; provided, that the selection of any subcontractor is
subject to the prior written consent of Bank.
(b) Bank represents that the Loan Standards in place from time to time
during the Term are not more restrictive than the standards applicable to auto
loans originated through the Bank's auto dealer or correspondent lending
channel.
(c) EVRI shall prepare a Loan Application Package and cause it to be
reviewed by EVRI's loan underwriting team on behalf of Bank. The Loan
Application Package shall be in such form as Bank shall prescribe from time to
time. EVRI shall retain records according to its standard records management
schedule and in accordance with regulatory guidelines.
(d) EVRI shall also be responsible for fraud detection as required by Bank
and, in that regard, shall follow the procedures set forth on Exhibit B. EVRI
shall consider taking reasonable steps to research additional fraud detection
measures and will work with Bank to implement improvements to the fraud
detection process.
SECTION 1.06. Denial of Loan. If an application for a Loan is denied, EVRI
will advise Bank and Bank shall send an adverse action letter to the rejected
applicant in accordance with applicable law. EVRI acknowledges and agrees that
Bank may use its automated letter writing system to send such adverse action
letters and EVRI agrees to cooperate in the manner in which it submits such
denials to enable use of such automated system.
SECTION 1.07. Documenting Loans. EVRI shall cause all Loans to be written
on such forms and documents as are approved in writing by Bank from time to
time. Bank specifically acknowledges and agrees that the forms identified on
Exhibit C to this Agreement are acceptable until such time as Bank notifies EVRI
in writing at least thirty (30) days in advance that a form or document is no
longer acceptable (the "Approved Forms"). EVRI shall complete the Approved Forms
properly and accurately and in accordance with applicable law and Bank's
Operations Procedures. Bank shall be solely responsible for the servicing,
administration, and collection for all such Loans.
EVRI shall cause Bank's security interest in the Vehicle to be perfected as
a first lien and, where required by law, to be notated on the certificate of
title related to the financed Vehicle. EVRI shall advise Applicants that they
are required to bring proof of insurance on the Vehicle at closing in amounts
and coverage as required in the Loan Standards, naming Bank as loss payee or
additional insured. EVRI shall present Bank with evidence (in the form of an
insurance card, binder or a fax from the insurance company) that the Applicant
has insurance coverage as a condition of booking a Loan. Bank shall track title
and insurance. If a certificate of title showing Bank as the secured party or
required insurance showing Bank as loss payee or additional insured is not
received within one hundred twenty (120) days following the closing of the Loan,
Bank will notify EVRI in writing of such situation and EVRI shall promptly take
all steps necessary and as appropriate to obtain an insurance policy showing
Bank as loss payee or certificate of title bearing Bank's name as the secured
party, in no event later than ninety (90) days following receipt of Bank's
written request.
In performing Services under this Section 1.07, EVRI shall follow the
Bank's Operations Procedures set forth in the Approval Package Preparation and
Shipping section more particularly set forth on Exhibit B hereto.
SECTION 1.08. Funding of Loans. EVRI shall, to the extent it requires item
processing, ACH, wire and other deposit related services for Bank loans, enter
into an arrangement with Bank's Cash Management area and pay for any customary
costs thereof. EVRI shall prepare on Bank's behalf certain documentary drafts
and checks that will be sent to approved Applicants, together with the Loan
Approval Package. In preparing such package, including the draft, EVRI shall
follow the Bank's Operations Procedures more particularly set forth on Exhibit
B. To the extent EVRI processes drafts or makes disbursements in a manner that
is either negligent or not consistent with the procedures set forth on Exhibit
B, it shall be responsible to reimburse the Bank for any damages it incurs as a
result of such error. Bank shall notify EVRI of any funding discrepancies within
a reasonable time following discovery by Bank. Such notice or lack thereof shall
not be deemed to waive any of EVRI's obligations under this Section 1.08.
SECTION 1.09. Document Tracking. EVRI shall be responsible for reviewing
all Loan Documents, as more particularly set forth on Exhibit B. To accomplish
this, EVRI shall provide sufficient instructions to customers so that the Loan
Documents will be sent to EVRI on a timely basis. EVRI shall review the Loan
Documents to ensure they have all been received and properly completed with all
required information and satisfy all of Bank's Loan Standards and Operations
Procedures, as well as the provisions of this Agreement. If any Loan Documents
are missing or are not in proper form, EVRI shall contact the customer to remedy
the discrepancy and obtain conforming Loan Documents. EVRI shall prepare and
maintain the document file in accordance with Bank's Operations Procedures and
documentation standards.
SECTION 1.10. Pre-booking Procedure. EVRI understands that it will only
initiate disbursement of funds or approve drafts on Bank's behalf after EVRI has
obtained all necessary documents set forth above and assure that the Loan is in
full compliance with Bank Loan Standards and Operations Procedures. Bank shall
notify EVRI of any funding discrepancies within a reasonable time following
discovery by Bank. Such notice or lack thereof shall not be deemed to waive any
of EVRI's obligations under this Section 1.10.
SECTION 1.11. Booking of Loans. Bank will be responsible for booking Loans
to its servicing system. EVRI shall, however, in connection with booking,
perform all of the functions set forth in Sections 1.08, 1.09 and 1.10 above
and, in addition, shall submit on a daily basis completed Loan Document Packages
to the Bank. EVRI will send such documents to the Bank, along with a transmittal
form (in Bank's standard format) listing all Loans and including all account
detail corresponding to such Loan Documents. Loan Documents will be sent to the
Bank within ten (10) days of the effective date of the Loan so that Bank may
book the Loan in time for the customer to be billed for his first payment.
SECTION 1.12. Draft Processing. EVRI shall process the drafts presented
from each Dealer through the Bank's Item Processing Department. Prior to
funding, EVRI shall review a Presentment Detail Report, which shows all the
Dealer drafts presented to the Bank for payment on any given day. This report is
compared with the Dealer Documents actually received by EVRI and EVRI shall use
the report to verify customer draft and vehicle information. If these are all
acceptable and reconciled, EVRI shall, after it verifies draft information,
vehicle information, Loan contract information, together with any Insurance
Products, notify Bank's Cash Management area that the draft may be honored. If
EVRI cannot verify the draft and required Dealer Documents, it will follow the
return draft procedures set forth in Section 1.13 below. If the draft is
approved, EVRI will start the discounting process and send information to the
Bank's Cash Management area sufficient to generate a wire transfer in an amount
that will cover the amount of drafts presented that day.
SECTION 1.13. Draft Return. If EVRI cannot process a draft presented
through the Bank's Item Processing Department, it shall follow the return
procedures set forth on Exhibit B and attempt to remedy the discrepancy so that
the transaction may be funded. EVRI will be responsible for processing all draft
returns on a timely basis. EVRI shall have no liability to Bank for draft
processing losses, to the extent such loss was caused by the Bank's failure to
follow and apply its normal draft honoring routines.
SECTION 1.14. Accounting. EVRI shall keep detailed records of all drafts
and checks issued and outstanding and provide the Bank with a daily record
regarding funds disbursed and checks issued. EVRI shall reconcile its ledger to
the disbursement account records each day no later than 2:00 p.m. Eastern Time.
In preparing such records, EVRI shall, to the extent practicable, follow the
Bank's accounting procedures for keeping disbursement account records and
accounting for those funds. Standard accounting formats are set forth as Exhibit
D.
SECTION 1.15. Check Processing. For certain loan programs, EVRI will be
required by Bank Operation Procedures and Loan Standards to fund loans through
the use of a check rather than a documentary draft. In those cases, EVRI will
obtain all necessary information and Loan Documents in order to properly
evidence the customer's loan obligation and the Bank's security interest in the
vehicle (as set forth in the Operations Procedures and Loan Standards). Once all
necessary documents and information are obtained, EVRI shall properly distribute
all loan funds to customers, pay off other lenders, pay taxes or other titling
fees, as required by and in conformance with the Operating Procedures.
SECTION 1.16. Limited Obligations of EVRI. EVRI shall have no obligation to
service or otherwise act in any manner with respect to any Loan after such Loan
has been booked to Bank's billing and accounting system. In the event of
nonpayment by the obligor under a Loan, EVRI shall have no liability for the
payment thereof, but shall retain liability to Lender for breach of warranty as
set forth in this Agreement.
SECTION 1.17. Expenses. Except as otherwise provided in this Agreement,
EVRI shall be liable for any and all expenses incurred by it in connection with
the performance of the Services hereunder. Such expenses shall include, without
limitation, document preparation and completion, Internet services and customer
service and communications, marketing, underwriting, data entry, accounting and
similar expenses, and any EVRI Reserve or rate participation paid to any other
party in connection with the origination of any Loan.
SECTION 1.18. EVRI Compensation.
(a) As compensation for its performance of the Services on behalf of Bank,
EVRI will receive a fee ("Origination Fee") for each Loan booked by Bank as a
result of EVRI's Services hereunder. Said Origination Fee shall be an amount
equal to the excess of the Loan Rate over the Buy Rate and shall be calculated
as shown on Exhibit E and shall be divided into a portion for the account of
EVRI, subject to the Bank's right of offset set forth on Exhibit E and a portion
for the Bank, which Bank may use as it deems fit in its sole discretion. For the
purposes of this Section, the "Buy Rate" for any Loan shall be fixed for the
life of the Loan [*], as determined from time to time in accordance with Section
1.19, and in effect at the time the Loan is booked less the Applicable Subsidy,
as adjusted, if necessary, for EVRI's failure (i) to obtain lending licenses
where required, or (ii) to meet the Multi-Lender Requirement as shown on Exhibit
E. EVRI's portion of the Origination Fee for any Loan will be calculated and
paid to EVRI by Bank by the fifteenth (15th) day of the month following the
month in which such Loan is booked; subject, however, to Bank's right to net out
chargebacks which have not been cured, as set forth in Section 1.18(d) below.
EVRI shall be required to reimburse Bank for EVRI's portion of any Origination
Fee in the event that the Loan either prepays or is in default during the first
three (3) months following the closing of the Loan.
(b) The Origination Fee shall be shared between the Bank and EVRI as shown
on Exhibit E.
(c) The Applicable Subsidy shall be shown on Exhibit E and shall be
adjusted, if necessary, in the event EVRI fails to obtain necessary state
lending licenses or fails to meet the Multi-Lender Agreement, all as more
particularly set forth on Exhibit E.
(d) EVRI acknowledges and agrees that Bank may, at its option, net out the
amount of any Loss, as defined in Article VIII, from any Origination Fee that
Bank may owe to EVRI.
SECTION 1.19. Auto Loan Pricing. The Buy Rates transmitted to EVRI by Bank
from time to time shall be [*]. Such Buy Rates will be determined based on the
following factors:
(a) Criteria [*] will be based on characteristics of the Bank's overall
banking relationships with the dealer, and will be exclusive of pricing
characteristics described in item (c) below.
(b) Bank will make available at the time of each announced pricing change
by Bank and EVRI may elect to use [*] for one of the following options: [*].
If the State Buy Rate is selected, EVRI will use applicable State Buy Rates
as determined by the address of the borrower. If the National Buy Rate or
Weighted Average State Buy Rate is used, there will be one rate in effect for
the entire country. EVRI shall make its election promptly after the rate change
announcement by notifying Bank, in writing, which options it has selected.
(c) The structure of the Buy Rate Pricing Sheet will be in substantially
the form of Exhibit E and will be based on the Bank's current pricing practices
and may utilize credit, loan loss, long-term prepayment characteristics and such
other characteristics as the Bank, in its reasonable discretion, determines to
be relevant. Bank may change these characteristics in its sole discretion from
time to time. Bank and EVRI agree to adapt the structure of EVRI's Buy Rate
Pricing Sheet to the business practices and business mix of EVRI so long as the
distribution of EVRI's loan volume maintains the integrity of the Bank's current
pricing practices. EVRI understands that the Dealer pricing constitutes
confidential information and the names of the Dealer or proprietary pricing
algorithms will not be released to EVRI and constitute Bank's proprietary
information.
SECTION 1.20. Transition from Origination Agreement. This Agreement shall
take effect on the Closing Date and the terms and provisions hereof shall apply
to Loans that are booked and funded by the Bank on and after the Closing Date.
Such provisions shall include the Pricing Schedule set forth on Exhibit E
hereto.
Loans that are booked and funded by the Bank prior to the Closing Date,
shall be subject to the terms of the Origination Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EVRI
SECTION 2.01. Existence. EVRI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, has all
requisite corporate power to own its assets and carry on its business and is
duly qualified, licensed and in good standing as a foreign corporation to do
business in all jurisdictions wherein its ownership of property, the nature of
its business and the performance of this Agreement require such qualification or
licensing.
SECTION 2.02. Authority. EVRI has the legal power, is duly authorized and
has the right to execute, deliver and perform this Agreement and all of its
obligations hereunder.
SECTION 2.03. Enforceable Obligation. This Agreement has been duly and
validly executed and delivered by EVRI and constitutes a valid and legally
binding agreement of EVRI enforceable in accordance with its terms.
SECTION 2.04. Compliance with Laws. EVRI shall perform the Services
hereunder in a manner consistent with good business practices and in conformity
with all applicable federal and state laws, rules and regulations, including,
but not limited to, the Truth in Lending Act, the Fair Credit Reporting Act and
the Equal Credit Opportunity Act.
SECTION 2.05. Licensing. EVRI represents and warrants it has, or is exempt
from, any licensing requirements necessary to perform its functions set forth in
this Agreement.
SECTION 2.06. Warranties Relating to the Loans. EVRI warrants and
represents to Bank with respect to each Loan that, except as otherwise provided
herein:
(a) EVRI has performed all Document Preparation Services and closing and
funding services in accordance with the Loan Standards and Operations Procedures
and with applicable law;
(b) each Loan meets Bank's criteria set forth in the Loan Standards and any
additional terms and conditions specified by Bank for that particular Loan;
(c) the Loan documents evidencing the Loan are accurate, truthful, valid,
genuine and binding and are enforceable in accordance with its terms. The
obligor on the Loan has legal capacity to contract for the purchase of the
Vehicle that will serve as collateral for the Loan; it is acknowledged, however,
that EVRI shall be deemed in compliance with this Section 2.05(c) warranty to
the extent it has complied with fraud detection processing procedures specified
in Exhibits A and B as may be modified from time to time.
(d) to the best of EVRI's knowledge, all signatures on all documents are
genuine. EVRI shall be deemed to have exercised due care and compliance with
this subsection 2.05(d) if it uses fraud detection and prevention procedures
that are at least as stringent as those set forth on Exhibit B;
(e) all amounts stated in the Loan and related documents are true and
correct and the description of the Vehicle will be true and correct, to the best
of EVRI's knowledge;
(f) EVRI has obtained from the obligor on the Loan the grant of a security
interest in the Vehicle purchased with the proceeds of the Loan. EVRI has
obtained or will have caused an application for title and registration of the
Vehicle to be submitted to the appropriate government agency no later than ten
(10) days after the closing of the Loan and has taken all necessary steps to
ensure that the Bank will have a security interest in the Vehicle prior to all
other security interests, liens or encumbrances;
(g) EVRI does not know or have any reason to know of any claims, setoffs or
defenses which can be or are being asserted against Bank, the dealer who sold
the Vehicle or EVRI which would render the Loan unenforceable in whole or in
part;
(h) EVRI does not know or have any reason to know that any portion of the
purchase price was rebated to the obligor;
(i) if there has been a trade-in, to the best of EVRI's knowledge and
belief, after making reasonable inquiry, any and all loans and outstanding liens
on the trade-in have been satisfied in full prior to or simultaneous with the
closing; and
(j) all required insurance on the Vehicle being purchased with the proceeds
of the Loan has been obtained for the benefit of Bank or its assigns as loss
payee or additional insured and EVRI has received evidence that such insurance
is in effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANK
SECTION 3.01. Existence. Bank is a national banking association duly
organized, validly existing and in good standing, under the laws of the United
States of America, has all requisite corporate power to own its assets and carry
on its business and is duly qualified, licensed, or is exempt from licensing
requirements, and in good standing as a foreign corporation to do business.
SECTION 3.02. Authority. Bank has the legal power, is duly authorized and
has the right to execute, deliver and perform this Agreement and all of its
obligations hereunder.
SECTION 3.03. Enforceable Obligation. This Agreement has been duly and
validly executed and delivered by Bank and constitutes a valid and legally
binding agreement of Bank enforceable in accordance with its terms.
SECTION 3.04. Compliance with Laws. Bank shall perform the functions it is
required to perform hereunder in compliance with all applicable laws and
regulations.
SECTION 3.05. Licenses. Bank represents and warrants it has, or is exempt
from, any licensing requirements necessary to perform the functions set forth in
this Agreement.
ARTICLE IV
EVRI'S AUTHORITY
In the performance of its duties hereunder, EVRI shall be an independent
contractor and shall have no authority, express or implied, to act in any manner
or by any means for or on behalf of Bank in any capacity other than that of an
independent contractor as herein expressly authorized or set forth. EVRI shall
designate certain representatives who will be appointed as employees and
officers of Bank for the sole purpose of performing certain specified activities
hereunder that may only be undertaken by Bank officers. EVRI understands and
acknowledges that this appointment notwithstanding such designated
representatives shall, for all compensation, employment and benefit purposes, be
deemed employees of EVRI and shall be entitled to no compensation or other
benefits whatsoever from the Bank.
ARTICLE V
RECORDS
SECTION 5.01. Bank's Right to Inspect. EVRI shall maintain accurate books
and records with respect to each Loan originated by Bank as a result of EVRI's
Services hereunder. EVRI shall permit the examination by Bank, including, but
not limited to, Bank's internal auditors and any governmental agencies having
jurisdiction over Bank, during normal business hours and upon at least
seventy-two (72) hours prior written notice, of all books, accounts,
correspondence and records of EVRI relating to any Loan or the related Vehicle.
Bank shall be permitted at its own expense to make photostatic or other copies
of such of these records as it may desire.
All records maintained by EVRI relating to any Bank Application and Loans
shall be and remain at all times the property of Bank and EVRI shall not acquire
any vested or property rights with respect to the Loan Records.
SECTION 5.02. EVRI's Right to Inspect. Bank shall permit the examination by
EVRI, including, but not limited to, EVRI's internal auditors and any
governmental agencies having jurisdiction over EVRI, during normal business
hours and upon at least seventy-two (72) hours prior written notice, of all
books, account, correspondence and records of Bank relating to Origination Fees
paid or payable to EVRI hereunder.
SECTION 5.03. Audit; Arbitration of Invoice Disputes. Each party may
schedule an audit or review with the other party for purposes of holding such
party accountable with respect to compliance under this Agreement, including
whether the invoices as presented and the charges paid are accurate, correct and
valid and are in accordance with the provisions of this Agreement. If Bank has a
question regarding an invoice, which cannot be resolved to its reasonable
satisfaction, Bank shall notify EVRI of its dispute. To the extent the parties
are unable to resolve a dispute, despite good faith face-to-face negotiations by
persons with decision making responsibility, Bank and EVRI shall submit the
dispute to arbitration in accordance with Article X.
ARTICLE VI
JOINT BUSINESS OPPORTUNITIES
SECTION 6.01. Joint Business Opportunities.
(a) Mortgage Lending Alliance. For a period of eighteen months from the
Closing Date (as defined in the Agreement and Plan of Reorganization between
E-Loan, Bank of America Auto Finance Corp. and the other parties signatory
thereto), Bank of America Mortgage shall provide E-Loan on a correspondent
loan-by-loan basis with mortgage lending programs, underwriting guidelines and
pricing terms [*] recognizing E-Loan's financial situation as an e-commerce
company. Subject to the other terms of this Section 6.01, the Parties agree to
continue to review the relationship between E-Loan and Bank of America Mortgage
to determine mutually advantageous adjustments to such mortgage lending
alliance.
Following the last day of such eighteen month period, such programs and
pricing terms discussed above shall remain in place as long as (i) E-Loan
maintains a positive performance trend satisfactory to Bank of America Mortgage
with regard to the quality, volume and financial condition, and (ii) the Bank
and/or its Affiliates retain an equity ownership stake in E-Loan, Inc.
(b) Additional Alliance Opportunities. The Parties agree to develop an
offering of appropriate parts of Bank of America's Affordable Mortgage program
through E-Loan and to use best efforts to effectuate these initiatives in the
six months following the Closing Date.
With regard to auto and mortgage loan products distributed only to the
Bank's internal retail network, the parties agree that, with the exception of
those products created with the intent to require substantial customer
consultation, the Parties will work together to develop a program whereby
products that can be reasonably offered to E-Loan for distribution on a private
label basis on terms and conditions that are reasonable and economically
satisfactory to both parties will be so offered. E-Loan will actively work with
the individuals identified by the task force created pursuant to Section 6.01(c)
below to identify these products and a plan of action.
The Parties agree to use best efforts to jointly develop electronic
offerings through E-Loan with real-time approval for other Bank of America loan
products beyond auto and mortgage loans (e.g., small business loans, home equity
loans, unsecured credit). The parties agree to use their best efforts to
implement these offerings as soon as practicable for both Parties.
(c) Task Force. The Parties agree to create a task force to meet on a
quarterly basis to discuss the strategic alliance and seek for ways to expand
the alliance in a mutually beneficial way. The initial members from Bank of
America are to include:
(i) ▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President, Corporate Strategy;
(ii) ▇▇▇▇ ▇▇▇▇▇▇▇, President, Consumer Finance Group;
(iii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., President, Mortgage; and
(iv) ▇▇▇▇▇ ▇▇▇▇▇, Group Executive Vice President, Direct Banking
-- or --
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Group Executive Vice President, Integrated E-Commerce
The initial task force members from E-Loan are to include:
(i) ▇▇▇▇▇ ▇▇▇▇▇▇, Chief Executive Officer
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
(iii) ▇▇▇▇ ▇▇▇▇▇, Vice President, Business Development
(iv) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President
(v) ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President, Capital Markets
(vi) ▇▇▇ ▇▇▇▇▇▇, Senior Vice President, Autos
Notwithstanding anything to the contrary above, with respect to initiatives
described in this Section 6.01 as well as further initiatives considered by the
strategic alliance, the Parties expressly acknowledge and agree that (i) to be
implemented, specific programs governed by contracts not yet written must be
developed, (ii) all such programs must satisfy applicable bank regulations, risk
policies and each Party's reasonable economic and profitability standards, and
(iii) with regard to Section 6.01(c) above, either party may subsequently
substitute an appropriate officer for members of the task force.
ARTICLE VII
TERMINATION
SECTION 7.01. Initial Term; Renewal. The initial term of this Agreement
shall commence on the date of this Agreement and shall continue through the
eighteenth (18) month hereafter; provided, however, that at the end of the
initial term of this Agreement, or of any renewal term hereof, the term of this
Agreement shall be automatically renewed for an additional one year period,
unless either party shall have notified the other party of its decision not to
renew this Agreement not less than thirty (30) nor more than ninety (90) days
prior to the end of such initial or renewal term. The initial and renewal terms
provided for by this Section 7.01 are referred to herein as the "Term" and are
subject to earlier termination as provided below.
SECTION 7.02. Reserved.
SECTION 7.03. Termination for Breach. In the event of a breach by either
party of any term, provision, representation, warranty or covenant applicable to
such party, the non-defaulting party may, by written notice to the defaulting
party, specifying in reasonable detail the nature of such breach and providing
thirty (30) business days following receipt of notice in which to cure a
non-monetary default and ten (10) business days in which to cure a monetary
default, terminate this Agreement. If the breach is not cured to the
non-defaulting party's reasonable satisfaction, the Agreement shall
automatically terminate upon lapse of the applicable cure period.
SECTION 7.04. Regulatory Change. Bank may, by written notice to EVRI,
terminate this Agreement if, in Bank's judgment, any applicable law, rule or
regulation, or any judicial or administrative order, decree, ruling, opinion or
interpretation, requires that this Agreement or either party's rights or
obligations under this Agreement be amended, modified, waived or suspended in
any respect. Such termination shall be effective thirty (30) days after receipt
of the notice referred to in the preceding sentence.
SECTION 7.05. Change in Control. In the event that substantially all of the
assets are sold to, or EVRI is dissolved, merged or consolidated with, any Major
Bank Competitor, EVRI shall provide Bank with written notice as promptly as
practicable after an agreement of merger or dissolution is reached with respect
to such transaction and, at Bank's reasonable discretion, Bank may (x) terminate
this Agreement, (y) modify the Agreement with EVRI's consent to reflect the
event mentioned above, or (z) continue the Agreement without regard to such
event. For purposes of this Section 7.05, a Major Bank Competitor shall be
deemed to be the top 20 bank holding companies, or any affiliate thereof, in the
United States in terms of asset size, as determined by the Federal Reserve Board
on the most recent date prior to the date hereof.
SECTION 7.06. Survival. Any commitments issued prior to the effective date
of termination shall survive such termination, provided that such commitment
shall not survive its related expiration date, as specified in the related Loan
Approval or thirty days, if none is specified.
ARTICLE VIII
INDEMNIFICATION AND DAMAGES
SECTION 8.01.
(a) EVRI shall indemnify, defend, and hold harmless Bank and the Bank
Affiliates and their respective officers, directors, employees, agents,
successors and permitted assigns from and against any and all claims made, or
asserted, or threatened by any third party and all related Losses arising out of
or related to the following: (a) any act or omission by EVRI, its employees and
agents or any subcontractor engaged by EVRI in the performance of EVRI's
obligations under this Agreement or otherwise; (b) any material breach in a
representation, covenant or obligation of EVRI contained in this Agreement; (c)
any claims that, in using the Services provided to Bank under this Agreement,
Bank or an Bank Affiliate has infringed the proprietary rights of any third
party; or (d) EVRI's relationship with its employees, agents or subcontractors
or its capacity as an employer.
A Loss shall mean all losses, liabilities, damages, claims (including
taxes) and all related costs and expenses including any and all reasonable
attorney fees and reasonable cost of investigation, litigation, settlement,
judgment, interest and penalties.
(b) Bank shall indemnify, defend and hold harmless EVRI and EVRI Affiliates
and their respective officers, directors, employees, agents, successors and
permitted assigns from and against any and all claims made or asserted, or
threatened by any third party, and all related Losses arising out of or related
to the following:
(i) any act or omission by Bank, its employees and agents or any
subcontractor engaged by the Bank in the performance of Bank's
obligations under this Agreement or otherwise (other than EVRI's
performance);
(ii) any material breach in a representation, covenant or
obligation of Bank contained in this Agreement; or
(iii) Bank's relationship with its employees, agents or
subcontractors or its capacity as an employer.
SECTION 8.02. Certain Recoverable Damages. Damages recoverable under this
Agreement shall include, without limitation, costs, expenses, losses and
injuries incurred or suffered by an Indemnified Party as a result of an act,
omission, breach, breach of warranty, non-performance or misrepresentation of an
Indemnified Party, or an Indemnified Party, on account of claims made against an
Indemnified Party, or payment of claims made by an Indemnified Party, to the
extent that such claims or payments result (directly or indirectly) from an act,
omission, breach, breach of warranty, non-performance or misrepresentation of an
Indemnified Party.
SECTION 8.03. Consequential Damages. Neither EVRI nor Bank shall be liable
for those consequential damages which consist of lost profits or loss of
goodwill; provided, however, that the limitations set forth in this Section
shall not apply to or in any way limit (a) a party's indemnity obligations under
this Agreement, or (b) a party's liability to the other party for consequential
damages constituting lost profits or loss of goodwill which arise from such
party's gross negligence or willful misconduct.
SECTION 8.04. Enforcement Expenses. If either party employs an attorney or
commences legal or arbitral proceedings to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover from the other,
reasonable costs incurred in connection with such enforcement, including but not
limited to, attorney's fees and costs of investigation and
litigation/arbitration.
SECTION 8.05. Procedure for Claiming Damages. If either party claims
damages against the other, it shall provide the Indemnifying Party with a
written notice specifying in reasonable detail the nature of the breach of
warranty or other act that gives rise to the claim for indemnification and the
amount of the Loss. If the Indemnifying Party fails to cure the breach giving
rise to such Loss within thirty (30) days following receipt of such written
notice, the Indemnifying Party shall repurchase the Loan, in the case of EVRI's
breach of warranty, or in the case of Bank's breach of warranty, make EVRI whole
for such Loss.
SECTION 8.06. Indemnifying Procedures.
(a) If any lawsuit or enforcement action is filed against any party
entitled to the benefit of indemnity hereunder (the "Indemnified Party"),
written notice thereof shall be given to the party obligated to provide
indemnification hereunder (the "Indemnifying Party") as promptly as practicable.
After such notice, if the Indemnifying Party shall acknowledge in writing to
such Indemnified Party that this Agreement applies with respect to such lawsuit
or action, then the Indemnifying Party shall be entitled, if it so elects, to
take control of the defense and investigation of such lawsuit or action and to
employ and engage attorneys of its own choice to handle and defend the same, at
the Indemnifying Party's cost, risk and expense; and such Indemnified Party
shall upon request of the Indemnifying Party, cooperate in all reasonable
respects, at the Indemnifying Party's cost and expense, with the Indemnifying
Party and such attorneys in the investigation, trial and defense of such lawsuit
or action and any appeal arising therefrom; provided, however, that the
Indemnified Party may, at its own cost, participate in such investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom. No
settlement of a claim, investigation, suit, or other proceeding that involves a
remedy other than the payment of money by the Indemnifying Party shall be
entered into without the consent of the Indemnified Party, which consent will
not be unreasonably withheld; provided that EVRI shall have the right to settle
an infringement claim without the Bank's consent, but without prejudice to or
dilution of the Bank's right to indemnification under this Article VIII.
(b) Each party shall give the other party prompt written notice of any
event which could reasonably be expected to give rise to any claim for
indemnification hereunder.
ARTICLE IX
INSURANCE
SECTION 9.01. Requirements. EVRI shall, and shall require its
subcontractors to, secure and maintain, at its or their own expense, throughout
the entire term of this Agreement, the following insurance with companies
satisfactory and acceptable to Bank and shall furnish to Bank certificates
evidencing such insurance prior to commencing Services. Said certificates shall
contain a provision whereby the policy and/or policies shall not be canceled or
altered without at least thirty (30) calendar days prior written notice to Bank.
SECTION 9.02. Worker's Compensation/Employers' Liability. Worker's
Compensation Insurance which shall fully comply with the statutory requirements
of all applicable state and federal laws and Employers' Liability Insurance
which limit shall be $500,000 per accident for bodily injury and $500,000 per
employee/aggregate for disease. EVRI and its underwriter shall waive subrogation
against Bank.
(a) Commercial General Liability. Commercial General Liability Insurance
with a minimum combined single limit of liability of $1,000,000 per occurrence
per location and $2,000,000 aggregate for bodily injury and/or death and/or
property damage and/or personal injury. This shall include products/completed
operations coverage and shall also include Broad Form Contractual specifically
covering this Agreement. Further, Bank is to be added as an additional insured
on this policy with respect to operations covered under this Agreement.
(b) Business Automobile Liability. Business Automobile Liability Insurance
covering all owned, hired and non-owned vehicles and equipment used by EVRI with
a minimum combined single limit of liability of $1,000,000 for injury and/or
death and/or property damage.
(c) Excess coverage. Excess coverage with respect to (A), (B) and (C) above
with a minimum combined single limit of $5,000,000.
(d) Fidelity Bond. EVRI shall be responsible for loss to bank property and
customer property, directly or indirectly, and shall maintain Fidelity Bond
coverage for the dishonest acts of its employees in a minimum amount of
$1,000,000. Bank shall be named as "Loss Payee, As Their Interest May Appear,"
on this Fidelity Bond.
ARTICLE X
ARBITRATION
SECTION 10.01. Binding Arbitration. Any controversy or claim between or
among the parties hereto shall be determined by binding arbitration in
accordance with the Federal Arbitration Act (or if not applicable, the
applicable state law), the Rules of Practice and Procedure for the Arbitration
of Commercial Disputes of Judicial Arbitration and Mediation Services,
Inc./Endispute, Inc. ("J.A.M.S./Endispute"), and if J.A.M.S./Endispute is unable
or legally precluded from administering the arbitration, then the American
Arbitration Association ("AAA") will serve.
SECTION 10.02. Judgments. Judgment upon any arbitration award may be
entered in any court having jurisdiction. Any party to this Agreement may bring
an action, including a summary or expedited proceeding, to compel arbitration of
any controversy or claim to which this Agreement applies in any court having
jurisdiction over such action in the states set forth in Section 10.04.
SECTION 10.03. Procedures. Upon receipt of demand for arbitration from
either Bank or EVRI, J.A.M.S./Endispute or AAA as applicable shall use its best
efforts to appoint an arbitrator and notify Bank and EVRI of such appointment
within fifteen (15) calendar days and further to commence arbitration within
ninety (90) calendar days. Any Bank or EVRI demand for arbitration shall include
detail sufficient to establish the nature of the dispute and shall be delivered
to the other party concurrent with delivery to J.A.M.S./Endispute or AAA.
SECTION 10.04. Other Remedies. Nothing in this Section shall limit the
right of either EVRI or Bank to obtain from a court provisional or ancillary
remedies such as, but not limited to, injunctive relief, or the appointment of a
receiver, before, during or after the pendency of any arbitration proceeding
brought pursuant to this Agreement.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Headings. Section headings herein are used for convenience
only and shall not otherwise limit or affect the terms or conditions of this
Agreement or be considered for the purpose of determining the meaning or legal
effect of any provision of this Agreement.
SECTION 11.02. Effect of Waiver. No failure or delay on the part of either
party in the exercise of any power, right or privilege hereunder or to make
objection to the mode of any offered performance by the other party shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise of any other
right, power or privilege. All rights and remedies existing under this Agreement
are cumulative to, and not exclusive of, any rights or remedies otherwise
available at law or equity.
SECTION 11.03. Survival. Sections relating to Bank's monetary obligations
or the EVRI Obligations existing at the time of termination shall survive the
execution and termination of this Agreement.
SECTION 11.04. Applicable Law. This Agreement, and the rights and
obligations of the parties hereunder, shall be governed by and construed with
reference to the laws of the State of North Carolina without reference to its
principles of conflict of laws. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A
TRIAL BY JURY OF ANY CLAIM OR ACTION ARISING OUT OF THIS AGREEMENT.
SECTION 11.05. Severability. If any provision of this Agreement or any
remedy provided herein is found by a court of competent jurisdiction to be
invalid or unenforceable, such provision shall be inapplicable and deemed
omitted, but the remaining provisions of this Agreement shall be and remain
effective in accordance with their terms.
SECTION 11.06. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
SECTION 11.07. Notices. All correspondence and/or notices required or
permitted to be given shall be in writing, and may be personally served or sent
by United States certified mail, return receipt requested, and shall be deemed
to have been given five (5) business days after deposit in the United States
mail with postage prepaid and properly addressed. For the purposes hereof, the
address of the parties hereto (until notice of a change thereof is served as
provided in the preceding sentence) shall be as follows:
As to Bank: As to EVRI:
BANK OF AMERICA, N.A. ELECTRONIC VEHICLE
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇. REMARKETING, INC.
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ P. O. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
With a copy to General Counsel:
BANK OF AMERICA, N.A.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
As to E-Loan, Inc.:
E-LOAN, INC.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: President
SECTION 11.08. Entire Agreement; No Oral Modifications. This Agreement
constitutes the entire understanding of the parties hereto with respect to the
subject matter hereof. THIS AGREEMENT MAY ONLY BE AMENDED OR MODIFIED BY AN
INSTRUMENT IN WRITING SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF BANK AND
EVRI. The parties hereto agree to review the pricing, fees and scope of duties
contained herein from time to time and to make such adjustments therein as the
parties shall agree.
SECTION 11.09. Assignment. This Agreement is not assignable by either party
without the prior written consent of the other, which consent shall not be
unreasonably withheld.
SECTION 11.10. Confidentiality.
(a) Definition. When used in this Agreement, the term "Confidential
Information" shall mean this Agreement, all Proprietary Information (as defined
below) and all data, trade secrets, business information and other information
of any kind whatsoever which (a) has been disclosed to either party, or to which
either party has access, in connection with the negotiation and performance of
this Agreement, and (b) relates to (i) the other party, (ii) in the case of
EVRI, the Bank Affiliates and their customers, or (iii) third party vendors or
licensors which have made confidential or proprietary information available to
Bank or a Bank Affiliate.
(b) Proprietary Information. When used in this Agreement, the term
"Proprietary Information" shall mean all work performed under this Agreement and
all work product resulting from such work, including, without limitation, all
data, designs, software, programs, card decks, tapes, ideas, concepts,
techniques, inventions, proprietary rights, modifications and enhancements,
together with all applicable rights to patents, copyrights, trademarks and
tradesecrets and dealer pricing relating to Buy Rates and any application
information relating to an Applicant or any Bank customer list. For purposes of
this Agreement, an Applicant shall be deemed to be a Bank customer.
(c) Non-Disclosure. Each of the parties on behalf of itself and its
employees, officers, directors, affiliates and agents, hereby agrees that
Confidential Information will not be disclosed or made available to any third
party, agent or employee for any reason whatsoever, other than with respect to:
(a) its employees on a "need to know" basis; (b) subcontractors and other third
parties specifically permitted under this Agreement, on a "need to know" basis,
provided that all such parties are subject to a confidentiality agreement which
shall be no less restrictive than the provisions of this Section (in favor of
Bank and Bank Affiliates and in form and substance satisfactory to Bank); (c)
independent contractors, agents, and consultants hired by Bank, provided that
Bank uses reasonable efforts to cause such parties to maintain the
confidentiality of EVRI's Confidential Information; and (d) as required by law
or as otherwise permitted by this Agreement, either during the term of this
Agreement or after the termination of this Agreement, provided that, prior to
any disclosure of either party's Confidential Information as required by law,
the party subject to the requirement shall (i) notify the other party of all, if
any, actual or threatened legal compulsion of disclosure, and any actual legal
obligation of disclosure immediately upon becoming so obligated, and (ii)
cooperate with the other party's reasonable, lawful efforts to resist, limit or
delay disclosure.
(d) Exceptions. Nothing in this Section shall prohibit or limit either
party's use of information or data (a) that can be demonstrated to have been
previously known to it, other than through its relationship with the other
party, without a confidentiality restriction on the use of such information, (b)
independently developed by it, as established by written evidence, (c)
rightfully acquired by it from a third party with full legal right to disclose
such information, (d) disclosed without similar restrictions by the party that
disclosed such Confidential Information pursuant to this Agreement to a third
party, (e) approved for disclosure by the affected party pursuant to this
Agreement, or (f) which becomes part of the public domain through no breach of
this Agreement.
(e) Return of Confidential Information. Upon the termination of this
Agreement, or at any time upon the request of the other party, each party shall
return all Confidential Information in the possession of such party or in the
possession of a third party (over which such party has or may exercise control).
(f) Injunctive Relief. In the event of any breach of the obligations under
this Section, each party acknowledges that the other party would have no
adequate remedy at law, since the harm caused by such a breach would not be
easily measured and compensated for in damages, and that in addition to such
other remedies as may be available to the other party, the other party may
obtain injunctive relief including, but not limited to, specific performance.
(g) Publicity. All media releases, public announcements and public
disclosures by either party, or their employees or agents, relating to this
Agreement or the name of Bank, any Bank Affiliate or EVRI, including, without
limitation, promotional or marketing material, but not including any
announcement intended solely for internal distribution by the releasing party or
any disclosure required by legal, accounting or regulatory requirements beyond
the reasonable control of the releasing party, shall be coordinated with and
approved by the other party prior to the release thereof.
(h) Survival. The provisions of this Section shall survive the term or
termination of this Agreement for any reason.
SECTION 11.11. Force Majeure. In the event EVRI is unable to timely perform
the Services hereunder due to causes that are beyond its control, including,
without limitation, unauthorized strikes, riots, earthquakes, epidemics, war,
fire, or any other catastrophe rendering it wholly or partially inoperable, EVRI
shall not be liable for any loss or damage which results to Bank or its
customers; provided, that EVRI has and maintains a reasonable Disaster
Protection Plan and proceeds with reasonable diligence promptly to restore
Services.
SECTION 11.12. Burden and Benefit. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
SECTION 11.13. Definitions. Words and terms defined in the singular may be
referred to in the plural, and vice versa.
SECTION 11.14. No Partnership. Bank and EVRI are not partners or joint
venturers with each other and nothing in this Agreement shall be construed so as
to make them such partners or joint venturers or impose any liability as such on
either of them.
SECTION 11.15. No Third Party Beneficiaries. No person not a party to this
Agreement shall have any rights hereunder and all third party beneficiary rights
are hereby negated.
SECTION 11.16. Trademarks; Trade Names. Neither party shall obtain any
right to use the tradename, trademark, logo, brand or other intellectual
property of the other party, except to the extent expressly provided for in
writing in a co-branded web site agreement or other appropriate document signed
by both Bank and EVRI.
SECTION 11.17. Security.
(a) Definition. EVRI understands that Bank and Bank Affiliates operate
under various laws and federal regulatory agencies that are unique to the
security sensitive banking industry. As such, persons engaged by EVRI to provide
services under this Agreement are held to a higher standard of conduct and
scrutiny than in other industries or business enterprises. EVRI understands and
acknowledges that its employee(s) ("Employee(s)") shall possess appropriate
character, disposition and honesty conducive to the environment where services
are provided under this Agreement. EVRI shall, to the extent permitted by law,
exercise reasonable and prudent efforts to comply with the Security provisions
of this Agreement.
(b) Access. EVRI shall not knowingly permit an Employee(s) to have access
to the premises, records or data, or to engage in the conduct of the banking
affairs of Bank or Bank Affiliates when such Employee(s): (a) has been convicted
of a crime or has agreed to or entered into a pretrial diversion or similar
program in connection with (i) a dishonest act or a breach of trust, as
stipulated under Section 19 of the Federal Deposit Insurance Act, 12 U.S.C.
1829(a); and/or (ii) a felony; (b) uses illegal drugs.
(c) Compliance. Upon written request from Bank, EVRI shall provide evidence
of EVRI's actions to comply with the above provisions for its Employee(s).
(d) Notification. Bank shall notify EVRI of any act of dishonesty or breach
of trust committed against Bank or Bank Affiliates which may involve an
Employee(s) and EVRI shall notify Bank if it becomes aware of any such offense.
Following such notice, at the request of Bank and to the extent permitted by
law, EVRI shall cooperate with investigations conducted by or on behalf of Bank
or Bank Affiliates. Such cooperation may include access to EVRI's Employee(s)
for personal interviews related to such investigations. In addition, at the
request of Bank, EVRI shall conduct its own investigations into the activities
of said Employee(s), which may include polygraph examinations when permitted by
law and not specifically prohibited by existing collective bargaining (Union)
agreements or state statutes, with the results of such investigations and all
files and records related thereto being made available to Bank.
(e) Internal Controls. EVRI shall cooperate with the internal operating
controls and security processes of Bank and Bank Affiliates where products
and/or services are provided under this Agreement.
(f) Privacy. EVRI shall take all possible security measures to protect
confidential credit data on Bank Loan Applicants so that their information may
not be accessed over the Internet or via a telecommunications line on an
unauthorized basis or by a person other than the Bank.
SECTION 11.18. Year 2000 Compliance. All of EVRI's computer functions will
record, store, process and calculate and present calendar dates on or after
December 31, 1999 and will calculate any information dependent on or relating to
such dates in the same manner and with the same functionality, data integrity
and performance as dates before December 31, 1999. All of EVRI's Intellectual
Property will operate without material error caused by date data that represents
or references different centuries. To EVRI's knowledge, EVRI's business is not
expected to be materially adversely affected by the advent of the year 2000 or
the transition to the twenty-first century or to incur material expenses in this
regard.
SECTION 11.19. Public Announcement. EVRI and Bank each agree to consult
with each other prior to any public announcement relating to this Strategic
Alliance and/or the business relationship created hereby and will mutually
approve the timing, content and method of any dissemination of any public
announcement.
SECTION 11.20. Definitions.
"Approved Documents" shall mean the forms of loan documents attached hereto
as Exhibit C which shall be used by EVRI to document Loans between the Bank and
consumers and which will be contained in a Loan file prepared by EVRI for the
Bank. From time to time, EVRI may submit new forms of Loan Documents for the
Bank for its approval, which approval, if forthcoming, in Bank's sole
discretion, shall, with respect to such Loan Documents, to the extent so
approved, become approved forms for purposes of this Agreement.
"Bank Affiliates" shall mean any entity now or hereafter controlling,
controlled by, or under, in control, directly or indirectly, of the Bank or
Bank's parent, BankAmerica Corporation.
"Bank's Rate Sheet" shall mean the communication distributed by Bank from
time to time that communicates to EVRI how the Bank will price its loans from
the date of such Rate Sheet until the next published Bank Rate Sheet. The
initial Bank Rate Sheet shall be substantially in the form of Exhibit E hereto.
"Dealer Documents" means the documents prepared by the Dealer in connection
with a Loan, which will be faxed to EVRI by the Dealer, including completed lien
perfection showing Bank of America as lienholder.
-▇▇▇▇ of Sale for the Vehicle, or if refinance deal, the value
determined by recognized pricing service
-Factory Invoice, if new Vehicle
-Proof of Insurance
-Proof of Income (W2 or paystub), if required by Lending Standards
-Any backend or Insurance Product Enrollment Form
"Dealers" shall mean a dealer which has sold a Vehicle to an Obligor which
has been financed by the Bank pursuant to a Loan.
"Disaster Protection Plan" shall mean the plan developed by EVRI and
reviewed by the Bank which provides an alternate means of EVRI performing
Services for the Bank in the even of a disaster or in the event that any of the
occurrences set forth in Section 10.11 hereof should occur.
"Document Preparation Services" shall mean the preparation of all Loan
documents and Dealer Documents on behalf of the Bank.
"EVRI Site" shall mean the worldwide web site, the URL of which is
▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇▇.▇▇▇ or ▇▇▇▇://▇▇▇.▇▇▇▇▇.▇▇▇..
"Loan" shall mean an extension of credit from the Bank to a consumer
referred to the Bank through the EVRI Site, the proceeds of which shall be used
to purchase a Vehicle or refinance an existing Vehicle Loan.
"Loan Application Package" shall mean the documents required by Bank in
order to make a decision of whether or not to extend credit to an Obligor for a
Loan, which package shall be prepared by EVRI and submitted to the Bank.
"Loan Approval" shall mean Bank's decision to make an extension of credit
to an Obligor.
"Loan Rate" shall mean the rate of interest that shall accrue against the
outstanding balance of a Loan.
"Loan Standards" See Exhibit A.
"Monthly Finance Charge" shall mean the annualized interest rate divided by
12.
"Operations Procedures" See Exhibit B.
"Presentment Detail Report" shall mean the report in Bank's standard format
which shows all of the drafts prepared by EVRI which are scheduled to be
presented on any given business day.
"Services" means the document preparation, booking, dealer tracking,
reconcilement, maintenance, posting and referral services performed by EVRI on
behalf of Bank, all as more particularly set forth in Section 1 hereof.
"Vehicle" means any new or used motor vehicle, including any equipment sold
and financed in conjunction therewith intended principally for personal or
family use by consumers, the purchase of which is financed or refinanced
pursuant to a Loan.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above.
BANK OF AMERICA, N.A.
By:/s/
---------------------------------
Name:
Title:
BANK OF AMERICA AUTO FINANCE CORP.
By:/s/
---------------------------------
Name:
Title:
ELECTRONIC VEHICLE REMARKETING, INC.
By:/s/
---------------------------------
Name:
Title:
E-LOAN, INC.
By:/s/
----------------------------------
Name:
Title:
Exhibit A
Loan Standards
[*]
Exhibit B
Table of Contents
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Table of Contents..........................................................1
▇▇▇▇▇▇▇▇▇▇.▇▇▇................................................................2
Introduction...............................................................2
Auto Financing Products....................................................3
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations.....................................................5
Introduction...............................................................5
Operations Systems............................................................6
Introduction...............................................................6
BackOffice System Procedures...............................................7
CMSI System Procedures.....................................................8
Operations Procedures.........................................................9
Approval Package Preparation and Shipping..................................9
Receive, Review and File Dealer Documents.................................10
Verification Prior to Funding and Booking.................................11
Booking and Funding Loan on BackOffice System.............................14
Draft Processing..........................................................15
Draft Returns.............................................................15
Refinance Processing.........................................................16
Check Procedures - Payoff and DMV.........................................16
Credit Policy and Review.....................................................16
General Policies..........................................................16
Credit Tools..............................................................18
Credit Bureau Selection...................................................19
Credit Investigation......................................................19
Loan Fraud Investigation.....................................................20
Introduction..............................................................20
Common Types of Loan Fraud................................................21
Red Flags for Loan Fraud..................................................22
Risks in Cyberspace.......................................................22
Verification of Suspected Fraud...........................................23
▇▇▇▇▇▇▇▇▇▇.▇▇▇
Introduction
------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇.▇▇▇ ▇▇▇▇▇▇▇▇▇▇.▇▇▇ was created and is maintained by
Electronic Vehicle Remarketing, Inc. (EVRI).
EVRI is a subsidiary of NationsBank Corporation.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ supplies qualified consumers with
competitive automotive finance products, offering the
following unique advantages:
o low interest rates,
o check-in-hand shopping,
o improved negotiating position for the
consumer, and
o full contract disclosure.
------------------------------------------------------------------------
Process Consumers complete and submit an application
Overview for credit on the ▇▇▇▇▇▇▇▇▇▇.▇▇▇ web site. A credit
report is ordered and the application is reviewed. A
decision regarding the extension of credit is made and
the consumer is notified by e-mail within two business
days.
------------------------------------------------------------------------
Credit If the application is approved, the consumer is notified
Approved via e-mail and an approval package is prepared and
shipped to the consumer which includes:
o an acceptance letter and instructions;
o loan check draft payable for the maximum
amount approved,
o sample contract, and
o list of frequently asked questions
The consumer may take the loan check draft to any
franchised dealer to purchase the vehicle of their
choice. Dealers deposit the loan check drafts as
they would any checks at their local bank.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations verifies loan information,
processes and books the loan upon presentment of the
loan draft check.
------------------------------------------------------------------------
Credit If the application is declined, the consumer is notified
Declined via e-mail. Consumers may question the decision by
sending an e-mail to ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
------------------------------------------------------------------------
Auto Financing Products
------------------------------------------------------------------------
New/Used Vehicle To finance vehicle purchases, ▇▇▇▇▇▇▇▇▇▇.▇▇▇ offers the
Purchases traditional new/used car installment loan and "Easy Own"
new/used car balloon loan.
-----------------------------------------------------------------------
Installment Installment loans allow the consumer to purchase the
Loan vehicle entirely. Monthly payments are applied to the
actual purchase of the vehicle. After all payments are
made, the consumer owns the vehicle outright.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ offers low rates on 36, 48, 60, 66 and 72
month Installment Loans.
Benefits of the traditional installment loan include:
o No Down Payment Required (based on vehicle
and borrower credit history)
o No Hidden Fees or Charges
o No Penalties for Pre-Payment
o Low Interest Rates for Internet-users
o Many Terms to choose from up to 72 months
------------------------------------------------------------------------
[*]
-----------------------------------------------------------------------
Continued on next page
Auto Financing Products, Continued
------------------------------------------------------------------------
Vehicle Refinance programs offer the consumer the opportunity
Refinance to reduce their monthly payment.
------------------------------------------------------------------------
End of Lease End of Lease Purchase programs provide an excellent
opportunity for the acquisition of new business by
offering a service to the thousands of consumers who are
interested in buying their vehicle at the end of the
lease term.
------------------------------------------------------------------------
Rates and Consumers can obtain rate and payment quotes for
Payments specific vehicles or loan amounts by completing the
instant rate and payment analysis available on the
▇▇▇▇▇▇▇▇▇▇.▇▇▇ web site.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations
Introduction
------------------------------------------------------------------------
Overview ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations in Melville, New York perform
back office and operational functions to process
▇▇▇▇▇▇▇▇▇▇.▇▇▇ applications and process approved loans.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Personnel in ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations consist of the
Operations following positions:
o Operations Manager
o Operations Supervisor
o Funding Specialist
o Packaging Clerk
------------------------------------------------------------------------
Operations The ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations Manager is responsible
for:
Manager o management of the Discounting Department
o management of the Packaging Department, and
o maintaining relationships with the Call Center
and Credit Departments
------------------------------------------------------------------------
Operations The ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations Supervisor is responsible
Supervisor for:
o daily supervision of the Discounting
Department,
o authorization for wire transfers, and
o transfer of loan documents to NationsBank.
------------------------------------------------------------------------
Processing The ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Funding Specialist is responsible
Specialist for:
o collection of documents required to honor a
presented draft,
o validation of information on those documents,
and
o booking and funding the validated loan on the
BackOffice system.
------------------------------------------------------------------------
Packaging The ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Packaging Clerk is responsible for:
Clerk o printing, assembling and mailing approval
packages and final disclosures,
o upload and download of Airborne information,
and
o submitting Airborne charges to Accounts
Payable daily.
------------------------------------------------------------------------
Operations Systems
Introduction
------------------------------------------------------------------------
Overview ▇▇▇▇▇▇▇▇▇▇.▇▇▇ uses two systems to process applications
and approved loans, the BackOffice system and the CMSI
▇▇▇▇▇ processing system.
------------------------------------------------------------------------
BackOffice The BackOffice system is a comprehensive backoffice
System application that supports operations, customer service,
underwriting and management reporting. It has the
following capabilities:
o e-mail approvals back to consumers,
o automated affiliate billing system,
o electronic credit card processing via ICVerify
software,
o lease and residual calculations,
o advanced search and sorting capability, and
o comprehensive reporting subsystem for
business, marketing and performance metrics.
------------------------------------------------------------------------
CMSI The CMSI/CreditRevue system is used for the following:
o application review,
o credit processing, and
o loan administration.
------------------------------------------------------------------------
BackOffice System Procedures
-----------------------------------------------------------------------
Log On To log on to the BackOffice system, complete the
following:
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
Customer To display consumer information and applications,
Search complete the following:
------------------------------------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 o [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 o [*]
------------ ---------------------------------------------
-----------------------------------------------------------------------
CMSI System Procedures
------------------------------------------------------------------------
Log On To log on the CMSI system, complete the following:
------------ --------------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
7 [*]
------------ ----------------------------------------------
Look Up To display customer information, complete the following:
------------------------------------------------------------------------
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 o [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
Operations Procedures
Approval Package Preparation and Shipping
------------------------------------------------------------------------
Overview Upon approval of a consumer application, applicant
information is routed to Print Manager software in
▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations where approval package
documents are printed, packaged and shipped to the
consumer.
------------------------------------------------------------------------
Approval Approval packages sent to consumers approved for credit
Package include:
o approval letter and instructions to consumer,
o loan check draft payable for maximum amount of
approved credit,
o sample contract, and
o list of frequently asked questions and answers
------------------------------------------------------------------------
Package To prepare approval packages, Packaging Clerks complete
Preparation the following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
Receive, Review and File Dealer Documents
------------------------------------------------------------------------
Overview Customers who are approved for a vehicle installment
loan through ▇▇▇▇▇▇▇▇▇▇.▇▇▇ receive an approval package,
which includes a loan check draft. This check draft is
used to purchase the vehicle of their choice from any
franchised dealer.
Once the purchase is complete, the dealer deposits the
check draft and faxes dealer documents to ▇▇▇▇▇▇▇▇▇▇.▇▇▇
Operations. These documents must be presented before the
check draft can be paid.
------------------------------------------------------------------------
Dealer The following documents must be faxed to ▇▇▇▇▇▇▇▇▇▇.▇▇▇
Documents Operations at ▇-▇▇▇-▇▇▇-▇▇▇▇ by the dealer:
o Completed lien perfection
(Lien holder: NATIONSBANK, N.A.,
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇)
o ▇▇▇▇ of sale
o Factory invoice (if new vehicle)
o Driver license(s)
o Proof of Insurance
o Proof of Income (W-2 or pay stub)
o Back end product enrollment form
------------------------------------------------------------------------
Document Funding Specialists review dealer documents upon receipt
Review from the dealer to ensure all required documents are
received and completed with the required information
If documents or information is missing, Funding
Specialists contact the dealer to obtain proper
documentation.
------------------------------------------------------------------------
Document Funding Specialists file completed dealer documents in
File alphabetical order by customer name. Documents in the
file are accessed and used to verify customer
information prior to funding and booking the loan.
------------------------------------------------------------------------
Verification Prior to Funding and Booking
------------------------------------------------------------------------
Overview The dealer deposits check drafts used by customers to
purchase vehicles at their local bank.
A Presentment Detail Report, which details the draft
number and the amount of the draft, is generated and
forwarded to ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations. The report and
dealer documents are used to verify customer, draft and
vehicle information prior to funding and booking the
loan.
------------------------------------------------------------------------
Customer To verify customer information, Funding Specialists
Information complete the following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 o [*]
------------ ----------------------------------------------
--------------------------------------- --------
If... Then...
--------------------------------------- --------
[*] [*]
--------------------------------------- --------
------------------------------------------------------------------------
Continued on next page
Verification Prior to Funding and Booking, Continued
------------------------------------------------------------------------
Draft To verify draft information, Funding Specialists use
Information a copy or image of the draft to Information complete the
following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
--------------------------------------- --------
If... Then...
--------------------------------------- --------
[*] [*]
--------------------------------------- --------
------------------------------------------------------------------------
Vehicle To verify vehicle information Funding Specialists
Information complete the following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
--------------------------------------- --------
If... Then...
--------------------------------------- --------
[*] [*]
--------------------------------------- --------
------------------------------------------------------------------------
Continued on next page
Verification Prior to Funding and Booking, Continued
------------------------------------------------------------------------
Back End If other products were sold with the vehicle, such as
warranty, credit life/AH, Gap, Products Funding
Specialists complete the following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
Booking and Funding Loan on BackOffice System
------------------------------------------------------------------------
Overview After verifying that draft and dealer document
information is correct, Funding Specialists "book" the
loan on the BackOffice system.
------------------------------------------------------------------------
Booking To book the loan on the BackOffice system, complete the
and Funding following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
-------------------------------------------------
If... Then...
-------------------------------------------------
[*] [*]
--------------------
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
-------------------------------------------------
If... Then...
-------------------------------------------------
[*] o [*]
--------------------
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
7 [*]
------------ ----------------------------------------------
8 [*]
------------ ----------------------------------------------
9 [*]
------------ ----------------------------------------------
10 [*]
------------ ----------------------------------------------
11 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
Draft Processing
------------------------------------------------------------------------
Draft To process drafts presented from dealers through
Processing Item Processing, ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations complete
the following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
Draft Returns
--------------------------------------------------------------------------------
Draft To return drafts presented by dealer through Item
Returns Processing, ▇▇▇▇▇▇▇▇▇▇.▇▇▇ Operations completes the
following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
7 [*]
------------ ----------------------------------------------
Refinance Processing
Check Procedures - Payoff and DMV
------------------------------------------------------------------------
Assumptions Refinance check procedures for both payoff and DMV
checks are based on the following assumptions:
o Use existing VSI functionality within
CreditRevue interfacing to D4000 and the GL
to hold DMV title fees.
o Server houses specific fields containing
lender name and state appropriate DMV name.
o Check printer exists in ▇▇▇▇▇▇▇▇▇▇.▇▇▇
Operations.
------------------------------------------------------------------------
Payoff To process a payoff check for refinance, complete the
Check following:
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 o [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
7 [*]
------------ ----------------------------------------------
8 [*]
------------ ----------------------------------------------
------------------------------------------------------------------------
DMV To process a DMV check for refinance, complete the following:
Check
------------ ----------------------------------------------
Step Action
------------ ----------------------------------------------
1 [*]
------------ ----------------------------------------------
2 o [*]
------------ ----------------------------------------------
3 [*]
------------ ----------------------------------------------
4 [*]
------------ ----------------------------------------------
5 [*]
------------ ----------------------------------------------
6 [*]
------------ ----------------------------------------------
7 [*]
------------ ----------------------------------------------
8 [*]
------------ ----------------------------------------------
Credit Policy and Review
General Policies
------------------------------------------------------------------------
Credit The credit approval process is used to determine
Philosophy the borrower's ability and willingness to repay
debt. The ongoing philosophy is to book all
credits that represent an acceptable degree of risk to
the bank.
In general, all transactions must conform to written
terms and conditions set by bank policy. Exceptions to
policy will be considered when appropriate and require
approval from an officer with delegated exception
authority. Exceptions should be considered based on an
overall evaluation of risk and recommended and approved
if the risk is warranted. This includes transactions
over product maximum and outside of normal guidelines.
------------------------------------------------------------------------
Notification of The bank must notify applicants of adverse action taken
Adverse Action within 30 days of receiving sufficient information on
Requirements which to base a credit decision. A written NOAA must
be sent if any of the following forms of adverse action
are taken:
o All outright denails of credit,
o All counter offers, and
o All denials of incomplete applications.
------------------------------------------------------------------------
Consumer The bank is required to report all criminal acts to the
Fraud Office of the Comptroller of Currency (OCC) and to the
Reserve Board and other federal authorities within 30
days of discovery. This includes suspected fraudulent
information on an indirect loan and lease application,
whether or not the bank sustains a loss. All incidences
must be immediately reported to Corporate Security.
Under no circumstances should the dealer or the
applicant be notified of confirmed or suspected fraud,
as such notification could jeopardize investigations.
------------------------------------------------------------------------
Insurance All-risk physical or damage coverage or collision and
Requirements comprehensive coverage is required for the full
insurable value of the vehicle. The buyer must provide
an acceptable loss payable endorsement naming the bank
as lienholder. A properly executed binder or cover
note on the insurance company's printed form may be
accepted as proof of insurance coverage, pending receipt
of a valid endorsement policy or certificate.
------------------------------------------------------------------------
Credit Tools
------------------------------------------------------------------------
Credit Scoring The bank uses empirically derived, statistically sound
scoring models (custom models) as the primary tool in
assessing applicant creditworthiness. Alternative
tools, such as generic cards may be used with the
approval of the National Consumer Credit executive and
Consumer Credit Risk Management.
------------------------------------------------------------------------
Bureau Scoring Bureau scores such as Equifax's Beacon, Trans Union's
Empirica and Experian's FICO Model are used to
supplement custom scoring models. As these bureau-
scoring systems are developed from each credit bureau's
database, they extend to a considerably larger
population than the custom credit scoring models that
are developed by the bank.
------------------------------------------------------------------------
Risk Matrix Applicants are assigned a credit grade on a matrix,
which combines the effects of the custom credit scores,
bureau score and aspects of the transaction. Generally,
matrices assign "score-qualified" grades of "P" for the
best credit applicants through "D" for those just above
the cut-off. "E" and "F" grades are assigned to
non-score qualified applicants. Higher cut-offs may be
established for specific products, dealers or delivery
channels. The cut-off score, above which the system
recommends approval, is established to achieve corporate
profit objectives.
------------------------------------------------------------------------
CreditRevue CreditRevue is a credit management system which assists
the underwriter by:
o Displaying application and collateral
information,
o Displaying and analyzing credit bureau data,
o Calculating credit scoree, credit grade and
debt ratios, and
o Displaying the system decision and rationale.
CreditRevue also produces adverse action letters
automatically and provides the underwriter and
management with valuable MIS.
------------------------------------------------------------------------
Credit Bureau Selection
------------------------------------------------------------------------
Credit Bureau The following bureau selection criteria is used in
Selection establishing the bureau or record for score and
Criteria decisions:
o CreditRevue selects a primary bureau based
on the zip code of the applicant. This
primary bureau should most often be the
bureau of choice in making a credit
decision.
o CreditRevue will pull a second bureau whenever
there is a "short file" on the primary
bureau. The definition of a short file
is determined and set by management, generally
based on a minimum number of trades.
o Where there is a question of adequacy of
information, conflicting or otherwise
questionable information, the underwriter
should pull an alternative bureau.
o The underwriter should select the most
appropriate bureau to make the credit
decision. Characteristics such as percent of
revolving line usage, number of recent trades,
average time in file and inquires can be
highly predictive. Look for recency of data
reported as well as content.
o While the system scores the transaction based
on the primary applicant, it is prudent to
generate a bureau for any co-applicant.
Bureaus must be generated for any
co-signer/guarantor.
------------------------------------------------------------------------
Credit Investigation
------------------------------------------------------------------------
Investigation Due to industry driven requirements for turn-around
Criteria time, lending strategy and the heavy dependence on
bureau vs. application data, investigation is generally
not required. Underwriters initiate an investigation
when:
o There are apparent inconsistencies,
inaccuracies or likely misrepresentations in
the application,
o The income listed on the application does not
appear reasonable, or
o Bureau fraud indicators, social security
number variations, duplicate trades, bureau
inconsistencies bureau files with limited
trades or not bureau score exist.
------------------------------------------------------------------------
Loan Fraud Investigation
Introduction
------------------------------------------------------------------------
Overview It is estimated by law enforcement and the financial
industry that loan fraud losses generate the highest
losses among all frauds committed against financial
institutions in the United States. Losses from bad
loans occur every year and they are on the rise. Most
often, these losses are charged to a reserve for loan
losses without too much investigation into the
circumstances of the loss.
Some of the major reasons contributing to loan losses
include:
o Over aggressive management geared toward loan
growth,
o Making the loan supersedes securing the loan,
o Poor system for identifying fraudulent loans,
and
o Inadequate system to ensure compliance with
bank policy and law.
------------------------------------------------------------------------
Federal The following are some of the federal statutes under
Statutes which loan Statutes frauds are prosecuted:
o Title 18 U.S.C. 1344 - bank fraud statute, a
scheme or artifice to defraud a federally
insured institution or take money, credits,
assets, securities or other property by
misrepresentation.
o Title 18 U.S.C. 1001 - general false
statements statute, knowingly and wilfully
falsifying or concealing a material fact, or
making a false statement, or making a false
writing, knowing it to be false.
o Title 18 ▇.▇▇. 1014 - false statement (oral or
written), for example, a loan application made
knowingly for the purpose of influencing any
bank whose deposits are federally insured.
The following statutes may be used when a fraud is
commited using a computer, mail system or wire
transmission:
o Title 18 U.S.C. 1030 - computer fraud,
knowingly accessing a protected computer with
the intent to defraud and by means of such
conduct, furthering the fraud and obtaining
anything of value such as financial records
of a financial institution.
o Title 18 U.S.C. 1341 - mail fraud, a scheme or
artifice to defraud that makes use of the
postal service.
o Title 18 U.S.C. 1343 - wire fraud, a scheme or
artifice to defraud using transmission by wire
for the purpose of carrying out the scheme.
------------------------------------------------------------------------
Common Types of Loan Fraud
------------------------------------------------------------------------
Types of Loan Some of the common types of loan fraud include:
Fraud
o Customer Impersonator/Identity Fraud - A person who
uses another person's identity (social security
number, credit information, and personal information)
to obtain a loan. Usually they provide false
documents. This is the most common type of loan
fraud.
o Fictitious Person Fraud - A person creates an identify
using false information and presents fictitious
identification when obtaining a loan. This person
created does not exist.
o False Statement Fraud - A person gives false
information to obtain a loan. This information can be
an overstatement of income and assets, an
understatement of liabilities, place of employment of
residence, time at employment or residence. This
person is attempting to be more credit worthy than
they actually are.
o Straw Purchase Fraud - A person with good credit
obtains a loan on the behalf of another person that
has poor or non-existent credit. The true borrower's
identity is unknown. The person obtaining the loan
will not have possession of the collateral and another
person will make the payments.
o Dealer Fraud - A dishonest dealer with sell defective
goods or sell them substantially higher than they are
worth. Other types of dealer fraud include title
fraud and non-delivery of goods.
o Refinancing Schemes - Property is refinanced for the
purpose of skimming off the equity with no intentions
of repaying the loan.
o Cyberlending Fraud - Loans made through the Internet
and the World Wide Web.
------------------------------------------------------------------------
Red Flags for Loan Fraud
------------------------------------------------------------------------
Red Flags Loan fraud can be identified by thoroughly reading and
reviewing a credit file. The following are red flags to
watch for when reviewing a credit file.
o Incomplete, missing or vague borrower information,
o Numerous credit inquiries, bad credit, slow credit or
no credit,
o Address on application does not match the borrower's
credit file,
o Misrepresentations as to the borrower's identity such
as incorrect social security number or date of birth,
o Invalid social security number,
o Address of borrower is a post office box,
o Address of employer is a post office box,
o Omitted, disconnected or out of service telephone
numbers on the application, and/or
o Applicant's age does not match credit file.
------------------------------------------------------------------------
Risks in Cyberspace
Internet Fraud Today more banks are offering financial services via the
Internet than ever before. The vast majority of these
transactions are entirely legitimate, however, there are
many unscrupulous people who are taking advantage of
being anonymous on the Internet to perpetuate fraud.
Hackers, spies, saboteurs, virus creators and financial
criminals constantly roam cyberspace.
Associates should be aware that there are Internet
surfers who are constantly trying to invade restricted
web sites looking for confidential information such as
credit card numbers, bank accounts, social security
numbers, and driver's license information. Identity
thefts using the Internet are on the rise. Thieves will
attempt to gain access to networks posing as friendly
users.
Be aware that viruses can be attached to e-mail
messages. E-mail on the Internet is as public as a
newspaper. In most cases of Internet fraud, all
communication is done by e-mail. A free e-mail service
does not verify a customer's identity and it is often
used to conceal the real IP address of the sender. Be
particularly cautious of e-mails directing loan drafts
and documents to be sent to a different address that
what appears on the loan application and credit file of
the customer. Customer impersonators will often conceal
the loan from the real customer by misdirecting the loan
draft to a different address. Drafts should only be
sent to the verified address of the customer.
------------------------------------------------------------
Verification of Suspected Fraud
------------------------------------------------------------------------
Suspected Fraud If you suspect fraud you should proceed to verify the
authenticity of the information given. This
verification should be done before granting credit, not
after the fact. The following are several steps that can
be taken:
o Review all available loan documents.
o Check the credit file and/or obtain an additional file
to verify the information.
o Check with directory assistance to verify published
information regarding phone numbers and addresses for
individuals or businesses.
o Check online searches available through the Internet
i.e. People Finder on Netscape.
o Verify employment and income with employer.
o Perform customer interview.
o Verify and document all fraud alerts in files.
o YOU MAY NOT REQUEST A COPY OF A DRIVERS LICENSE. You
may request the state where issued and drivers license
number. You may then attempt to verify the
authenticity through the state.
------------------------------------------------------------------------
Contacts Fraud notification contacts for each department are
listed below:
----------------------------- -----------------------------
Department Contact
----------------------------- -----------------------------
Credit [*]
----------------------------- -----------------------------
Customer Service [*]
----------------------------- -----------------------------
Operations [*]
----------------------------- -----------------------------
Security [*]
----------------------------- -----------------------------
------------------------------------------------------------------------
Exhibit C
-----------------------
-----------------------
-----------------------
Dear _________________:
You've been approved for a new or used vehicle Installment Loan up to a
_________________.
Financing is available for _________________.
You're eligible for special Internet-user interest rates of _________________.
We provide the following items to assist in your purchase:
1. Loan Check Draft - Works like your own personal check, simply fill in
amount up to the approved limit and present to dealer as payment.
2. [*]Car Loan Agreements - select the appropriate one and carefully
review the terms. Agreements are completed as if you were to use the
entire approved amount.
3. Loan Worksheet - Since you are likely to use only a portion of your
approved amount, please visit http: //www.CarFinance
.com/_________________to view what your exact borrowing costs and
monthly payments would be at various loan amounts and for virtually
any car or truck.
Please bring _________________. If you have any questions, please do not
hesitate to e-mail us at fininfo@carfinance,com or call us toll-free at
▇-▇▇▇-▇▇▇-▇▇▇▇ Monday - Friday 8:30 am -11pm, Saturday - Sunday 10am - 6pm ET.
If, for any reason, the dealer is reluctant to accept Check Drafts or is
hesitant to release your car until the Draft clears, please call ▇-▇▇▇-▇▇▇-▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇.▇▇▇ will make direct payment to the dealer in these rare occasions
(same day if possible).
Sincerely,
▇▇▇▇▇▇▇▇▇▇.▇▇▇ - a subsidiary of NationsBank
Exhibit D
Bank's Standard Accounting Formats
[*]
Exhibit E
Proposed EVRI Loan Pricing Schedule
DRAFT
Methodology
-----------
EVRI will be compensated for Loans it originates for Bank based on the
difference between the stated interest rate on the Loan and the Bank's Buy Rate
for that Loan.
Buy Rate Calculation
--------------------
The Buy Rate will [*] determined from time to time in accordance with Section
1.19, less the Applicable Subsidy set forth in Section 1.18 of the Agreement.
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[*]
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Applicable Subsidy and Adjustments to Applicable Subsidy
--------------------------------------------------------
The Applicable Subsidy may be adjusted commencing March 1, 2000, and each month
thereafter, in the event EVRI has not been able to place Loan with lenders other
than the Bank at least the minimum multi-lender requirement percentage of its
prime lending volume, measured by principal balances outstanding on the last day
of the month preceding such measurement, all as shown in the following chart.
The Applicable Subsidy may be further adjusted commencing June 1, 2000, with
respect to loans originated in states where EVRI has been unable to obtain the
license necessary to originate loans, all as shown in the following chart:
--------------- ------------ ------------- ------------------------------------
Applicable No License Multi-Lender Multi-Lender
Subsidy Deduction Requirement Deduction
------------- -------------- ------------- ----------------- ------------------
0-3 months [*]
------------- -------------- ------------- ----------------- ----------------
4-6 months [*]
------------- -------------- ------------- ----------------- ----------------
7-9 months [*] [*] [*]
------------- -------------- ------------- ----------------- ----------------
10-12 months [*] [*] [*] [*]
------------- -------------- ------------- ------------------ ----------------
13-15 months [*] [*] [*] [*]
------------- -------------- ------------- ------------------ ----------------
16-18 months [*] [*] [*] [*]
------------- --------------- ------------ ---------------- -----------------
Effective Date of Buy Rate
--------------------------
The Buy Rate will be based on the date of the initial approval for the Loan.
Minimum Rate
------------
Buy Rate established for that Loan.
Maximum Rate
------------
[*] above the Buy Rate.
[*]
