SENIOR SECURED LOAN AGREEMENT
Dated as of January 11, 2001
by and among
UGLY DUCKLING CORPORATION,
a Delaware corporation
("Borrower")
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
BNY MIDWEST TRUST COMPANY,
as Collateral Agent
$35,000,000 Senior Secured Loan
ARTICLE I. DEFINITIONS 1
1.1 Defined Terms.................................................................................1
1.2 Other Interpretive Provisions................................................................17
1.3 Accounting Principles........................................................................18
1.4 Times........................................................................................19
ARTICLE II. THE LOAN 19
2.1 The Loan.....................................................................................19
2.2 Payment Upon Collection; Monthly Amortization................................................19
2.3 Payment Upon Maturity........................................................................19
2.4 Interest.....................................................................................19
2.5 Voluntary Prepayments; Deposits to Collateral Account........................................20
2.6 Application of Payments......................................................................21
2.7 Prepayment...................................................................................22
2.8 Fees.........................................................................................22
2.9 Fees and Interest............................................................................22
2.10 Payments by Borrower; Payments by Collateral Agent...........................................22
2.11 Taxes........................................................................................23
2.12 Sharing of Payments, Etc.....................................................................24
2.13 Suspension of LIBOR..........................................................................25
2.14 Increased Costs, Etc.........................................................................25
2.15 Promissory Notes.............................................................................26
ARTICLE III. SECURITY AGREEMENT AND COLLATERAL...................................................................26
3.1 Security for Obligations.....................................................................26
3.2 Security Documents...........................................................................27
3.3 Duties Regarding Collateral..................................................................27
3.4 Borrower's Duties Regarding Collateral.......................................................27
3.5 Power of Attorney............................................................................28
3.6 Collateral Inspections.......................................................................28
ARTICLE IV. CONDITIONS PRECEDENT; TERM OF AGREEMENT..............................................................28
4.1 Conditions Precedent.........................................................................29
4.2 Receipt of Documents.........................................................................29
4.3 Term.........................................................................................30
4.4 Effect of Termination........................................................................31
ARTICLE V. REPRESENTATIONS AND WARRANTIES........................................................................31
5.1 No Encumbrances..............................................................................31
5.2 Location of Chief Executive Office; FEIN.....................................................31
5.3 Due Organization and Qualification; Subsidiaries.............................................31
5.4 Due Authorization: No Conflict..............................................................32
5.5 Litigation...................................................................................33
5.6 Financial Statements; No Material Adverse Change.............................................33
5.7 Securitization Documents.....................................................................33
5.8 ERISA........................................................................................33
5.9 Environmental and Safety Matters.............................................................34
5.10 Tax Matters..................................................................................34
5.11 [Reserved]...................................................................................34
5.12 Ownership of Properties......................................................................34
5.13 Investment Company Status....................................................................34
5.14 Solvency.....................................................................................34
ARTICLE VI. AFFIRMATIVE COVENANTS................................................................................35
6.1 Financial Statements and Other Documents.....................................................35
6.2 Inspection of Property.......................................................................36
6.3 Default Disclosure...........................................................................36
6.4 Notices to Lenders and the Collateral Agent..................................................36
6.5 Books and Records............................................................................37
6.6 Compliance and Preservation..................................................................37
6.7 Perfection of Liens..........................................................................37
6.8 Cooperation..................................................................................37
6.9 Use of Proceeds..............................................................................37
6.10 Securitizations..............................................................................37
6.11 Compliance with Covenants....................................................................38
6.12 Payment of Indebtedness......................................................................38
6.13 Tangible Net Worth...........................................................................38
6.14 Consolidated EBITDA to Consolidated Interest Expense.........................................38
6.15 Consolidated Senior Debt to Consolidated Total Capitalization................................38
6.16 Minimum Residual Certificate Cash Flows......................................................38
6.17 Minimum Capital Base.........................................................................39
6.18 Minimum Other Interest Coverage..............................................................39
6.19 Cash Collateral..............................................................................39
6.20 Collateral Account...........................................................................39
6.21 Back-up Servicer.............................................................................39
6.22 Maintenance of Properties....................................................................39
6.23 Maintenance of Insurance.....................................................................39
6.24 Approved Replacement Warehouse Agreement.....................................................39
6.25 Designated Senior Indebtedness...............................................................40
ARTICLE VII. NEGATIVE COVENANTS..................................................................................40
7.1 Liens........................................................................................40
7.2 Indebtedness.................................................................................40
7.3 Restrictions on Fundamental Changes..........................................................40
7.4 Disposal of Collateral, Residual Certificates, Additional Residual Certificates..............40
7.5 Change Name..................................................................................41
7.6 Amendments...................................................................................41
7.7 Change of Control............................................................................41
7.8 Distributions; Prepayments of Subordinated Debt..............................................41
7.9 Standing Dividend Resolutions................................................................41
7.10 Change in Location of Chief Executive Office.................................................41
7.11 No Prohibited Transactions Under ERISA.......................................................41
7.12 Changes in Nature of Business................................................................42
7.13 Transactions with Affiliates.................................................................42
ARTICLE VIII. EVENTS OF DEFAULT/REMEDIES.........................................................................42
8.1 Event of Default.............................................................................42
8.2 Rights and Remedies..........................................................................44
ARTICLE IX. THE COLLATERAL AGENT.................................................................................45
9.1 Authorization and Action.....................................................................45
9.2 Collateral Agent's Reliance, Etc.............................................................46
9.3 BNY Midwest Trust Company and Affiliates.....................................................46
9.4 Lender Credit Decision.......................................................................46
9.5 Indemnification..............................................................................47
9.6 Successor Collateral Agents..................................................................47
9.7 Monthly Verification Duties of Collateral Agent..............................................47
ARTICLE X. MISCELLANEOUS.........................................................................................48
10.1 Amendments and Waivers.......................................................................48
10.2 Notices......................................................................................48
10.3 No Waiver: Cumulative Remedies..............................................................49
10.4 Costs and Expenses...........................................................................50
10.5 Indemnity....................................................................................50
10.6 Marshaling: Payments Set Aside..............................................................51
10.7 Successors and Assigns.......................................................................51
10.8 Set-off......................................................................................51
10.9 Counterparts.................................................................................52
10.10 Severability.................................................................................52
10.11 No Third Parties Benefited...................................................................52
10.12 Time.........................................................................................52
10.13 Governing Law and Jurisdiction...............................................................52
10.14 Entire Agreement.............................................................................53
10.15 Interpretation...............................................................................53
10.16 Assignment; Register.........................................................................54
10.17 Revival and Reinstatement of Obligations.....................................................54
10.18 Survival.....................................................................................55
10.19 Confidentiality..............................................................................55
10.20 Actions by Portfolio Advisor.................................................................55
SCHEDULES AND EXHIBITS
Schedule A Borrower's Subsidiaries
Schedule B Warrants, Options, etc.
Schedule C Litigation
Schedule D Exceptions to Financial Statements
Schedule E Permitted Liens
Schedule F Residual Certificates
Schedule G Subordinated Indebtedness
Schedule H Collateral Agent Fees
Schedule I Administrative Forms
Exhibit A UDRC II and UDRC III Securitization Documents
Exhibit B Form of Collateral Account Agreement
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Promissory Note
Exhibit E Form of Guaranty
SENIOR SECURED LOAN AGREEMENT
This SENIOR SECURED LOAN AGREEMENT (the "Agreement"), is entered into as of
January 11, 2001, among UGLY DUCKLING CORPORATION, a Delaware corporation
("Borrower"), with a place of business located at 0000 Xxxx Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, the Lenders party hereto (together with their
respective successors and assigns, "Lenders") and BNY MIDWEST TRUST COMPANY, as
Collateral Agent (together with its successors and assigns in such capacity,
"Collateral Agent").
Lenders have agreed to make to Borrower a senior secured loan (the "Loan") upon
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Defined Terms. In addition to the terms defined elsewhere in this Agreement,
the following terms have the following meanings:
"Additional Residual Certificates" shall mean all Class B Notes, Class C
Certificates (other than Excluded Class C Certificates) and Class D Certificates
or similar interests which both (i) are issued by a Securitization Trust or
other similar entity with respect to which UDRC II, UDRC III or any other
Affiliate of UDC or UDCC is the seller or issuer (or equivalent), and (ii)
represent the securitization of Ugly Duckling Collateral.
"Administrative Form" means an administrative details form delivered by the
Collateral Agent and any Lender to Collateral Agent and Borrower. The initial
Administrative Forms are attached hereto as Schedule I. The Collateral Agent and
each Lender may change its Administrative Form at any time by delivering a new
Administrative Form to the Collateral Agent and Borrower.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of twenty
percent (20%) or more of the equity of a Person shall for the purposes of this
Agreement, be deemed to control the other Person. In no event shall any Lender
be deemed an "Affiliate" of Borrower.
"Agreement" means this Senior Secured Loan Agreement, as amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Approved Replacement Warehouse Agreement" means one or more warehouse
financing agreements providing replacement financing for the indebtedness and
commitments outstanding under the GECC Agreement (and in any event providing for
financing in an amount not less than $75,000,000) on terms and conditions
satisfactory to the Required Lenders.
"Assignment and Acceptance" means an assignment and acceptance in
substantially the form of Exhibit C.
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external or internal counsel.
"Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the highest of: (a)
either (1) the "prime rate" published in the "Money Rates" section of the Wall
Street Journal, as such "prime rate" may change from time to time or, if such
rate ceases to be published, (2) the rate of interest announced publicly by The
Bank of New York from time to time as The Bank of New York's prime rate; and (b)
1/2 of one percent per annum above the Federal Funds Rate.
"Bankruptcy Code" means the United States Bankruptcy Code (11 X.X.X.xx. 101
et seq.), as amended, and any successor statute.
"Bond Insurance Policy" shall mean a financial guaranty or financial
insurance policy issued by MBIA or any of its Affiliates or any other financial
guarantor in respect of one or more classes of investor certificates or other
interests issued by a Securitization Trust.
"Borrower Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs, duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, intangible, ad valorem, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated or other tax or other governmental charge of any kind whatsoever,
including any interest, penalty or additions thereto.
"Borrower's Books" means all of Borrower's books and records including:
ledgers, records indicating, summarizing or evidencing Borrower's properties or
assets (including the Collateral and the assets of any Subsidiaries of Borrower)
or liabilities; all information relating to Borrower's business operations or
financial condition; and all computer programs, disk or tape files, printouts,
runs or other computer prepared information.
"Borrowing Base" means, as of any date of determination, the sum of the
products obtained by multiplying the Residual Certificate Value of each Residual
Certificate as of the most recent Calculation Date by the Advance Rate (as set
forth below) applicable to such Residual Certificate as of such Calculation
Date:
Complete Months of Seasoning
Since Securitization Cut-Off Date Advance Rate
-------------------------------------------------------- ------------
0 - 3 months 15%
4 - 5 months 30%
6 - 9 months 35%
10 - 12 months 40%
13 - 18 months 45%
19 - 23 months 55%
Greater than or equal to 24 months 60%
Notwithstanding the foregoing or any other provision hereof or of any other
Loan Document to the contrary, (i) no Additional Residual Certificates shall be
included in the calculation of the Borrowing Base unless and until the
provisions of Section 3.1 have been complied with with respect to such
Additional Residual Certificates, (ii) Lenders shall be entitled to exclude from
the Borrowing Base any Residual Certificate (or any portion thereof) as to which
(A) Required Lenders determine that the Collateral Agent does not have a
perfected first priority, valid and enforceable security interest either in such
Residual Certificate directly or in 100% of the capital stock of the holder of
such Residual Certificate, or (B) a Securitization Default exists and (iii) to
the extent that the Residual Certificates under any 3 Securitizations represent
in excess of 50% of the Borrowing Base, the amount of such excess shall be
excluded from the Borrowing Base.
"Business Day" means a day of the year on which banks are not required or
authorized by law to close in Los Angeles, California or Chicago, Illinois and,
if the applicable Business Day relates to any Eurodollar Rate Advances, on which
dealings are carried on in the London interbank market.
"Calculation Date" means the second Business Day prior to the 15th day of
each month.
"Capital Base" means, at any time of determination, the sum of (i)
Borrower's Tangible Net Worth at such time plus (ii) the aggregate outstanding
principal amount of all Subordinated Debt of Borrower and its Subsidiaries at
such time (other than any such Subordinated Debt that is due within 12 months
from such date of determination).
"Cash Collateral Release Date" means the first date on or after July 25,
2001 on which each of the following conditions is simultaneously satisfied: (i)
the Borrower has pre-tax income in excess of $7,000,000 in the aggregate for the
period commencing January 1, 2001 and ending June 30, 2001; (ii) the Borrower
has entered into an Approved Replacement Warehouse Agreement; (iii) the Borrower
has completed two securitizations of Ugly Duckling Collateral after the date
hereof and prior to December 31, 2001, each of which results in the creation of
Additional Residual Certificates; (iv) Xxxxxx X. Xxxxxx shall have executed in
favor of Collateral Agent and the Lenders a guaranty, in form and substance
reasonably satisfactory to the Required Lenders, guaranteeing payment of a
principal amount of the Loan equal to 33% of the aggregate principal amount
outstanding on the Cash Collateral Release Date; (v) Xxxxxx X. Xxxxxx shall have
provided evidence satisfactory to the Required Lenders of a personal net worth
of at least $20,000,000 and liquid assets of not less than $7,000,000; and (vi)
no Material Adverse Change has occurred or could, in the reasonable discretion
of the Required Lenders, be expected to occur.
"CERCLA" shall mean the Comprehensive Environmental Response, Compensation
and Liability Act (49 U.S.C. Section 9601, et seq.).
"Change of Control" shall be deemed to have occurred at such time as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) other than Xxxxxx X. Xxxxxx (or an entity under
the control of Xxxxxx X. Xxxxxx) becomes, after the date of this Agreement, the
"beneficial owner" (as defined in Rule 13(d)(3) under the Securities Exchange
Act of 1934), directly or indirectly, of more than 25% of the total voting power
of all classes of stock then outstanding of Borrower entitled to vote in the
election of directors or (ii) Xxxxxx X. Xxxxxx (or an entity under the control
of Xxxxxx X. Xxxxxx) shall cease to be the record and beneficial owner of at
least 15% of the capital stock of Borrower, entitled, in the absence of
contingencies (whether or not any of such contingencies has occurred), to vote
in the election of directors of Borrower or (iii) Borrower ceases to own 100% of
the capital stock of UDCSFC, or (iv) UDCSFC ceases to own 100% of the capital
stock of UDRC II and UDRC III. An entity shall be deemed to be under the control
of Xxxxxx X. Xxxxxx if Xxxxxx X. Xxxxxx possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of such
entity, whether through the ownership of voting securities, by contract or
otherwise.
"Closing Date" means the date on which all conditions precedent set forth
in Section 4.1 are either satisfied or waived by each Lender and each Lender
makes its ratable portion of the Loan.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Collateral" means all "Collateral" referred to in the Security Documents
and all other property that is subject to any Lien in favor of the Collateral
Agent or any Lender.
"Collateral Account" means the collateral account or accounts established
and maintained pursuant to Section 6.20 or pursuant to the Collateral Account
Agreement.
"Collateral Account Agreement" means the cash collateral account agreement
in substantially the form of Exhibit B.
"Collateral Agent" has the meaning set forth in the preamble to this
Agreement.
"Collateral Servicing Report" means a report of the Borrower with respect
to the Residual Certificate Values, Residual Certificate Cash Flows and
Borrowing Base and such other information as Required Lenders may request in
form and detail acceptable to Required Lenders.
"Collections" means all proceeds of, payments or other distributions of
principal, interest or other amounts on, and other amounts received by or on
behalf of Borrower or any of its Affiliates in respect of any Residual
Certificate or any Collateral, including all amounts paid to Collateral Agent or
any Lender pursuant to any Dividend Direction Letter.
"Consolidated" refers to the consolidation of accounts in accordance with
GAAP.
"Consolidated EBITDA" means for any period, net income (or net loss) plus,
to the extent deducted in determining such net income (or net loss), the sum of
(a) interest expense, (b) income tax expense, (c) depreciation expense and (d)
amortization expense, in each case determined for the Borrower and its
Subsidiaries on a Consolidated basis for such period in conformity with GAAP.
"Consolidated Interest Expense" means, for any period, total interest
expense (including the interest component of capitalized leases) of the Borrower
and its Subsidiaries on a Consolidated basis for such period in conformity with
GAAP, including, without limitation, all commissions, discounts and other fees
and charges owed with respect to any financings or letters of credit and net
costs under hedge agreements.
"Consolidated Net Worth" means the excess of (i) the total assets of the
Borrower and its Subsidiaries determined on a Consolidated basis in conformity
with GAAP, over (ii) all liabilities of the Borrower and its Subsidiaries
determined on a Consolidated basis in conformity with GAAP.
"Consolidated Senior Debt" means, at any time of determination,
Consolidated Total Debt minus Subordinated Debt and Non-Recourse Debt.
"Consolidated Total Capitalization" means, at any time of determination,
the sum of (i) Consolidated Total Debt, and (ii) Consolidated Net Worth, in each
case, as of such time.
"Consolidated Total Debt" means, at any time of determination, all
indebtedness for borrowed money (including capitalized leases), in each case of
the Borrower and its Subsidiaries at such time determined on a Consolidated
basis.
"Debt" or "Indebtedness" means (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes, matured reimbursable
obligations under letters of credit or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services other
than trade payables incurred in the ordinary course of business, (iv)
obligations as lessee under leases that shall have been or should be, in
accordance with GAAP recorded as capital leases, (v) obligations under direct or
indirect guaranties in respect of, and obligations (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (iv), and (vi) liabilities in respect of unfunded vested
benefits under Pension Plans covered by Title IV of ERISA.
"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied)
constitute an Event of Default.
"Dividend Direction Letter" means (i) the UDRC II Dividend Direction
Letter, (ii) the UDRC III Dividend Direction Letter, and (iii) each letter
agreement or other agreement entered into after the date hereof with respect to
any Additional Residual Certificates providing for payment of distributions in
respect of such Additional Residual Certificates (or payments and distributions
in respect of the stock or other equity interests of the holder of such
Additional Residual Certificates) to be made directly to the Collateral Account
for application to the Obligations and/or release to Borrower in accordance with
the Collateral Account Agreement and Section 2.6.
"Dollars," "dollars" and "$" each mean lawful money of the United States.
"Environmental and Safety Laws" means all Federal, state and local laws,
regulations and ordinances, relating to the discharge, handling, disposition or
treatment of Hazardous Materials and other substances or the protection of the
environment or of employee health and safety, including CERCLA, the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801, et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 7401, et seq.), the Clean Air
Act (42 U.S.C. Section 7401, et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601, et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651, et seq.) and the Emergency Planning and Community Right-To-Know Act
(42 U.S.C. Section 11001, et seq.), each as the same may be amended and
supplemented.
"Environmental Liabilities and Costs" means, as to any Person, all
liabilities, obligations, responsibilities, remedial actions, losses, damages,
punitive damages, consequential damages, treble damages, contribution, cost
recovery, costs and expenses (including all fees, disbursements and expenses of
counsel, expert and consulting fees, and costs of investigation and feasibility
studies), fines, penalties, sanctions and interest incurred as a result of any
claim or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute, permit, order or
agreement with any Federal, state or local governmental authority or other
Person, arising from environmental, health or safety conditions, or the release
or threatened release of a contaminant, pollutant or Hazardous Material into the
environment, resulting from the operations of such Person or its subsidiaries,
or breach of any Environmental and Safety Law or for which such Person or its
subsidiaries is otherwise liable or responsible.
"Equity Interests" means, with respect to a Person, any common stock,
preferred stock, partnership interest (whether general or limited), membership
interest or other equity or participating interest in such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" of any Person means any other Person that for purposes of
Title IV of ERISA is a member of such Person's controlled group, or under common
control with such Person, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" with respect to any Person means (a) the occurrence of a
reportable event, within the meaning of Section 4043 of ERISA, with respect to
any Plan of such Person or any of its ERISA Affiliates unless the 30-day notice
requirement with respect to such event has been waived by the PBGC; (b) the
provision by the administrator of any Plan of such Person or any of its ERISA
Affiliates of a notice of intent to terminate such Plan, pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA); (c) the cessation of operations at a
facility of such Person or any of its ERISA Affiliates in the circumstances
described in Section 4062(e) of ERISA; (d) the withdrawal by such Person or any
of its ERISA Affiliates from a Multiple Employer Plan during a plan year for
which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;
(e) the failure by such Person or any of its ERISA Affiliates to make a payment
to a Plan required under Section 302(f)(1) of ERISA; (f) the adoption of an
amendment to a Plan of such Person or any of its ERISA Affiliates requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA; or (g) the
institution by the PBGC of proceedings to terminate a Plan of such Person or any
of its ERISA Affiliates, pursuant to Section 4042 of ERISA, or the occurrence of
any event or condition described in Section 4042 of ERISA that could constitute
grounds for the termination of, or the appointment of a trustee to administer,
such Plan.
"Event of Default" means any of the events or circumstances specified in
Section 8.1.
"Excluded Class C Certificate" means Class C Certificates issued to UDFC in
connection with any securitization of Ugly Duckling Collateral but only to the
extent the value of such Class C Certificates does not exceed 2% of the face
amount of all notes and certificates issued with respect to the applicable
securitization.
"Existing Loan Agreement" means the Senior Secured Loan Agreement dated as
of May 14, 1999 by and among the Borrower, the Collateral Agent (as successor to
Xxxxxx Trust and Savings Bank) and the Lenders party thereto as amended to the
date hereof.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve BNY Midwest Trust Company, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by Collateral Agent from three Federal funds brokers of
recognized standing selected by it.
"FEIN" means Federal Employer Identification Number.
"Financing Statements" means the Financing Statements on Form UCC-1
relating to and filed in connection with the Collateral and naming the
Collateral Agent as secured party.
"Fiscal Quarter" means a fiscal quarter of Borrower.
"Fiscal Year" means a fiscal year of Borrower.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GECC" means General Electric Capital Corporation, a New York corporation.
"GECC Agreement" shall mean the Amended and Restated Motor Vehicle
Installment Contract Loan and Security Agreement, dated as of August 15, 1997,
by and between Borrower, GECC and certain other parties thereto, as such
agreement may be amended from time to time.
"Governing Documents" means, with respect to Borrower, Borrower's
certificate of incorporation and bylaws.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity, body, authority, bureau, department
or instrumentality exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guaranty" means the guaranty executed by UDCSFC on the date hereof in
substantially the form of Exhibit E.
"Guarantor" means (i) UDCSFC and (ii) each other Subsidiary of the Borrower
that, after the date hereof, becomes a party to the Guaranty.
"Hazardous Materials" means (a) any material or substance defined as or
included in the definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of their deleterious properties,
(b) any oil, petroleum or petroleum derived substance, (c) any flammable
substances or explosives, (d) any radioactive materials, (e) asbestos in any
form, (f) electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of fifty parts per
million, (g) pesticides or (h) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or authority or which may or could pose a hazard to the health and safety of
persons in the vicinity thereof.
"Indebtedness" see "Debt".
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Indemnified Person" has the meaning specified in Section 10.5.
"Initial Funding Amount" means the amount of Thirty Four Million Thirty
Seven Thousand Five Hundred Dollars ($34,037,500).
"Initial Principal Amount" means the amount of Thirty Five Million Dollars
($35,000,000).
"Interest Accrual Period" shall mean the one-month period from and
including a Payment Date to the close of business on the day preceding the next
Payment Date, except that the first Interest Accrual Period shall commence on
the Closing Date and end at the close of business on the day preceding the
Payment Date.
"Lender Costs" or "Lender Expenses" means all: (a) costs or expenses
(including taxes and insurance premiums) required to be paid by Borrower under
any of the Loan Documents that are paid or incurred by Collateral Agent, any
Lender or any of their respective affiliates; (b) reasonable out-of-pocket fees
or charges paid or incurred by Collateral Agent or any Lender in connection with
Lenders' transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation and UCC searches and including
searches with the patent and trademark office, the copyright office or the
department of motor vehicles), filing, recording, publication, appraisals, due
diligence, actual out-of-pocket costs and expenses incurred by Collateral Agent
or any Lender in the disbursement of funds to Borrower (by wire transfer or
otherwise); (c) actual out-of-pocket charges paid or incurred by Collateral
Agent or any Lender resulting from the dishonor of checks; (d) reasonable
out-of-pocket costs and expenses paid or incurred by Collateral Agent or any
Lender to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated; (e) reasonable
costs and expenses paid or incurred by Collateral Agent or any Lender in
examining Borrower's Books; (f) reasonable out-of pocket costs and expenses of
third party claims or any other suit paid or incurred by Collateral Agent or any
Lender in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or Collateral Agent or any
Lender's relationship with Borrower; and (g) Collateral Agent's, any Lender's or
any of their respective Affiliate's reasonable Attorney Costs incurred in
advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing, defending, or concerning the Loan Documents,
irrespective of whether suit is brought (including, without limitation, any
negotiations in the nature of a work-out). For purposes of this definition, the
term "Lender" shall include any portfolio advisor or collateral manager
(including, without limitation, SunAmerica Investment Advisor, Inc.) acting on
behalf of any Lender or in connection with such Lender's Loan hereunder.
"LIBOR" shall mean, with respect to an Interest Accrual Period, the rate
per annum equal to the rate appearing at page 3750 of the Telerate Screen two
LIBOR Business Days prior to the beginning of such Interest Accrual Period, for
the one-month term corresponding to such Interest Accrual Period, or if such
rate shall not be so quoted then the applicable rate appearing on Bloomberg on
the day two LIBOR Business Days prior to the beginning of such Interest Accrual
Period, or if neither such rate shall be so quoted, the "London Interbank
Offered Rates (LIBOR)" (one month) published in the "Money Rates" section of the
Wall Street Journal two LIBOR Business Days prior to the beginning of such
Interest Accrual Period.
"LIBOR Business Day" shall mean any day which is a Business Day and which
is also a day on which dealings in U.S. Dollars are carried on in the London
interbank market.
"Lien or Encumbrance" or "Liens and Encumbrances" means any mortgage, deed
of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever (including
those created by, arising under or evidenced by any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease
obligation, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the UCC or any
comparable law) and any contingent or other agreement to provide any of the
foregoing.
"Loan Documents" means this Agreement, each Note, the Guaranty, the
Security Documents, the Stock Pledge Agreement, the Collateral Account
Agreement, each Dividend Direction Letter, the Financing Statements, and all
documents delivered to Collateral Agent or any Lender in connection therewith.
"Loan Party" means Borrower, UDCSFC and each other Affiliate of Borrower
that is a party to any Loan Document.
"Material Adverse Change" or "Material Adverse Effect" means a material
adverse change in, or a material adverse effect upon, any of (a) the operations,
performance, business, properties, condition (financial or otherwise) or
prospects of any Loan Party or of Borrower and its Subsidiaries taken as a
whole, (b) the ability of Borrower or any other Loan Party to perform under any
Loan Document and avoid any Event of Default, or (c) the legality, validity,
binding effect or enforceability of any Loan Document or the perfection or
priority of any Lien created or purported to be created thereunder.
"Maturity Date" shall mean February 11, 2003.
"MBIA" shall mean MBIA Insurance Corporation.
"Monthly Amortization Amount" means:
(i) with respect to any Payment Date occurring prior to October 15, 2002,
the greater of (A) $1,000,000.00, and (B) the amount, if any, by which
the then Outstanding Principal Amount of the Loan exceeds the
Borrowing Base as of such date as set forth in the Collateral
Servicing Report required to be delivered with respect to such Payment
Date; and
(ii) with respect to any Payment Date occurring on or after October 15,
2002, the greatest of (A) $3,000,000, (B) 50% of the aggregate
Residual Certificate Cash Flows for the then most recently ended
monthly period as set forth in the Collateral Servicing Report
required to be delivered with respect to such Payment Date, and (C)
the amount, if any, by which the then Outstanding Principal Amount of
the Loan exceeds the Borrowing Base as of such date as set forth in
the Collateral Servicing Report required to be delivered with respect
to such Payment Date.
"Multiemployer Plan" of any Person means a multiemployer plan, as defined
in Section 4001(a)(3) of ERISA, to which such Person or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding six plan years made or accrued an obligation to make
contributions.
"Multiple Employer Plan" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and at least one Person other than
such Person and its ERISA Affiliates or (b) was so maintained and in respect of
which such Person or any of its ERISA Affiliates could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Non-Recourse Debt" means (i) the Securitizations identified on Exhibit A,
(ii) Debt under one or more warehouse facilities or securitizations of a
Subsidiary of Borrower that is a bankruptcy remote or other similar special
purpose entity so long as such Debt satisfies each of the following
requirements: (a) the sole collateral for such Debt are loan receivables
purchased by such bankruptcy remote or other special purpose entity and the
recourse of the lenders under such warehouse facility is limited to such
collateral, (b) no Loan Party (1) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Debt), (2) is
directly or indirectly liable as a guarantor or otherwise, or (3) constitutes
the lender (provided that a Loan Party may be the Servicer of the collateral
securing such warehouse facility or securitization and in such capacity may
provide customary indemnification or incur customary repurchase obligations with
respect to breach of representations regarding such collateral); (b) the lenders
with respect to such Debt have been notified, and have acknowledged in writing
or pursuant to the terms of the instruments and agreements governing such Debt,
in each case prior to the incurrence of such Debt, that they will not have any
recourse to the stock or assets of any Loan Party, and (c) the Lenders have
received notice of the amount and principal terms of such Debt prior to its
incurrence, and (iii) other Debt approved by the Required Lenders as
Non-Recourse Debt.
"Note" means a promissory note of the Borrower in favor of a Lender in
substantially the form of Exhibit D evidencing the Borrower's obligations to
such Lender in respect of the principal amount of the Loan made by or otherwise
owing to such Lender.
"Obligations" means all Debt, advances, debts, liabilities, obligations,
covenants and duties owing by Borrower to Collateral Agent or any Lender, of any
kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, arising under this Agreement, any Note or under
any other Loan Document, absolute or contingent, due or to become due, now
existing or hereafter arising and however acquired.
"Outstanding Principal Amount" means the Initial Principal Amount minus all
amounts applied to the repayment of the Loan pursuant to Section 2.6(d).
"Payment Date" shall mean the 15th day of each month during the term of
this Agreement commencing on April 15, 2001.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (a) Liens held by Collateral Agent or any Lender
and (b) each lien existing at or prior to the date of this Agreement that is
identified on Schedule E to this Agreement.
"Permitted Subsidiary Indebtedness" means (a) Indebtedness outstanding
under the Principal Warehouse Agreement as such agreements may be amended,
supplemented or modified from time to time but without any increase in the
aggregate commitments or Indebtedness available to be borrowed (or other credit
available to be extended) thereunder, (b) Non-Recourse Debt, (c) other
Indebtedness in an aggregate principal amount not to exceed $15,000,000 at any
time outstanding and (d) indebtedness to finance the purchase of inventory in an
aggregate principal amount not to exceed $35,000,000 at any time outstanding.
For purposes of calculating the amount of Indebtedness outstanding under the
foregoing clause (c), obligations in respect of capitalized leases (as described
in clause (iv) of the definition of "Debt") shall be excluded to the extent the
aggregate principal amount of all such obligations (determined in accordance
with GAAP) does not exceed $4,000,000.
"Person" means a natural person, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, limited liability
company, joint venture or Governmental Authority.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Principal Warehouse Agreement" means (i) the GECC Agreement and (ii) each
Approved Replacement Warehouse Agreement.
"Required Cash Collateral Amount" means (i) as of any date of determination
on or prior to May 15, 2001, $7,000,000, and (ii) as of any date of
determination after May 15, 2001, $7,000,000 minus the product of (A) 0.20 and
(B) the sum of (1) all Monthly Amortization Amounts (but only to the extent
actually paid) for each Payment Date occurring on or after May 15, 2001 and (2)
all prepayments made pursuant to Section 2.5(a); provided that the Required Cash
Collateral Amount shall remain at $7,000,000 if there is a default in payment of
the Monthly Amortization Amount due with respect to the Payment Date occurring
on April 15, 2001.
"Ratings Completion Date" means the first date on which the Lenders have
received written confirmation from (i) Fitch IBCA, Inc. that the obligations
hereunder shall be rated by them no lower than B+, (ii) Standard & Poor's
Ratings Services that the obligations hereunder shall be rated by them no lower
than B- and (iii) Xxxxx'x Investors Service, Inc. that the obligations hereunder
shall be rated by them no lower than B3. "Repayment Date" means the earlier of
(i) the Maturity Date or (ii) the date that the Outstanding Principal Amount of
the Loan outstanding hereunder, together with all accrued interest in respect
thereof and all other Obligations, has been reduced to zero.
"Required Lenders" means Lenders holding greater than fifty percent (50%)
of the aggregate principal amount of the Loan.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Residual Certificate" means the UDRC II Residual Certificates, the UDRC
III Residual Certificates and all Additional Residual Certificates.
"Residual Certificate Cash Flows" means, for any period, all cash
distributions with respect to a Residual Certificate and Excluded Class C
Certificates together with all related spread account or reserve account
distributions, in each case to the extent received by the Collateral Agent and
deposited to the Collateral Account, during such period; provided, however, upon
termination of a Securitization Trust at recapture or the exercise of an
optional repurchase right, the Residual Certificate Cash Flows for such
Securitization Trust in the month of such termination shall be (i) the Residual
Certificate Value of such Securitization Trust as of the Calculation Date
immediately preceding the date of termination multiplied by (ii) the Advance
Rate (as set forth in the definition of "Borrowing Base") applicable to such
Securitization Trust on such preceding Calculation Date.
"Residual Certificate Value" means, as of any date of determination with
respect to the Residual Certificates for a securitization, the amount of the
entire cash balance in the spread account or reserve account relating to such
Residual Certificates plus the difference between (a) the outstanding principal
balance of auto loans in the pool of collateral securing such securitization and
(b) the outstanding principal balance of all certificates and other interests or
rights to payment in respect of such securitization senior in priority to such
Residual Certificates, in each case as set forth in the then most recently
delivered Collateral Servicing Report (subject to confirmation of the
calculations set forth in such Collateral Servicing Report by the Collateral
Agent).
"Responsible Officer" means the chief executive officer or the president of
Borrower, or any other officer having substantially the same authority and
responsibility or, with respect to financial matters, the chief financial
officer or the treasurer of Borrower, or any other officer having substantially
the same authority and responsibility.
"SAI" means SAI Investment Advisor, Inc., and its successors and assigns.
"Security Documents" means the writings described in Article III hereof
(including, without limitation, the Stock Pledge Agreement, the Collateral
Account Agreement and each other document, agreement or instrument creating, or
purporting to create a security interest in favor of the Collateral Agent in any
Residual Certificate or any other Collateral or proceeds thereof), as they may
hereafter be amended, modified and/or supplemented, and all other writings now
or hereafter executed to create, evidence and/or perfect any Lien(s) to secure
the Loan or any portion(s) thereof.
"Securitization Default" means any termination event, default or event of
default, or event or occurrence which, with the passage of time or the giving of
notice or both, would become a termination event, default or event of default
under any Securitization Document, which has not been cured within any
applicable period thereunder.
"Securitization Documents" shall mean (i) each UDRC II Securitization
Document, (ii) each UDRC III Securitization Document, (iii) each purchase
agreement and/or pooling and servicing agreement (or comparable document)
entered into or acknowledged by Borrower, UDCC, UDRC II, UDRC III or any
Affiliate of any of them after the date hereof with respect to any Additional
Residual Certificates, and (iv) the other agreements, instruments, certificates
and documents entered into or acknowledged by Borrower, UDCC, or any Affiliate
of any of them or by a Securitization Trust (or comparable vehicle) with respect
to any Additional Residual Certificates.
"Securitization Trust" shall mean any trust formed pursuant to a purchasing
agreement or a pooling and servicing agreement specified on Exhibit A hereto or
contemplated in clause iii of the definition of Securitization Documents.
"Single Employer Plan" of any Person means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of
such Person or any of its ERISA Affiliates and no Person other than such Person
and its ERISA Affiliates or (b) was so maintained and in respect of which such
Person or any of its ERISA Affiliates could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Standing Dividend Resolutions" shall mean (i) the UDRC II Standing
Dividend Resolution, (ii) the UDRC III Standing Dividend Resolution and (iii)
all other resolutions adopted by the board of directors of Borrower or any of
its Affiliates or Subsidiaries to the effect that any amounts received as
distributions on any Additional Residual Certificates or in respect of spread
accounts (or the like) will be promptly distributed to Collateral Agent for the
ratable account of the Lenders.
"Stock Pledge Agreement" means that certain Stock Pledge Agreement, dated
as of the date hereof, among UDCSFC as Pledgor, Borrower and Collateral Agent,
pursuant to which UDCSFC grants to Collateral Agent a security interest in one
hundred percent (100%) of the issued and outstanding capital stock of each of
UDRC II and UDRC III.
"Subordinated Debt" shall mean the Debt set forth on Schedule G and any
Debt incurred after the date hereof as to which the repayment of principal and
interest is subordinated to repayment of the Loan pursuant to subordination
provisions that have been approved in writing by Required Lenders.
"Subsidiary" of a Person means a corporation, partnership, limited
liability partnership, limited liability company or other entity in which that
Person directly or indirectly owns or controls the shares of stock or other
ownership interests having ordinary voting power to elect a majority of the
board of directors (or appoint other comparable managers) of such corporation,
partnership, limited liability partnership, limited liability company or other
entity.
"Tangible Net Worth" of Borrower shall mean the total of Borrower's and its
consolidated Subsidiaries' shareholders' equity (including capital stock,
additional paid-in capital and retained earnings), less (i) the total amount of
all Indebtedness owing to Borrower from its consolidated Subsidiaries,
Affiliates, shareholders, officers or employees, and (ii) the total amount of
any intangible assets of Borrower and its consolidated Subsidiaries, including
unamortized discounts, deferred charges and goodwill. For purposes of clause (i)
in the immediately preceding sentence, the $12,000,000 promissory note from
Cygnet Capital Corporation ("CCC") payable to Ugly Duckling Finance Corporation
in connection with the sale of 100% of the outstanding common stock of Cygnet
Dealer Finance, Inc. to CCC, shall not be considered Indebtedness owing to
Borrower from Affiliates, shareholders, officers or employees, and shall not be
deducted in determining Tangible Net Worth.
"Trustee" means BNY Midwest Trust Company, in its capacity as trustee under
the Securitization Documents and its successors and assigns in such capacity.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the State of New York, and in any and all other states in which Borrower and/or
any of its Subsidiaries conduct, or are authorized to conduct business.
"UDCC" means Ugly Duckling Credit Corp., an Arizona corporation formerly
known as Champion Acceptance Corporation.
"UDCSFC" means Ugly Duckling Car Sales and Finance Corporation, an Arizona
corporation formerly known as Duck Ventures, Inc.
"UDRC II" shall mean Ugly Duckling Receivables Corp. II, a Delaware
corporation.
"UDFC" means Ugly Duckling Finance Corporation an Arizona corporation.
"UDRC III" shall mean Ugly Duckling Receivables Corp. III, a Delaware
corporation.
"UDRC II Residual Certificates" shall mean the currently issued and
outstanding, and all further issued and then outstanding, Class B Certificates
or with respect to any securitization occurring after August 1, 1999, the issued
and outstanding Class B Notes, Class C Certificates (other than the Excluded
Class C Certificates) and the Class D Certificates issued by each Securitization
Trust with respect to which UDRC II or an owner trust is the seller, including
those set forth on Schedule F, which constitute all of the UDRC II Residual
Certificates in existence on the Closing Date.
"UDRC III Residual Certificates" shall mean the currently issued and
outstanding, and all further issued and then outstanding, the issued and
outstanding Class B Notes, Class C Certificates (other than the Excluded Class C
Certificates) and the Class D Certificates issued by each Securitization Trust
with respect to which UDRC III or an owner trust is the seller, including those
set forth on Schedule F, which constitute all of the UDRC III Residual
Certificates in existence on the Closing Date.
"UDRC II Dividend Direction Letter" means the letter dated January 11, 2001
in which Collateral Agent, Lender, UDRC II, UDCC and Trustee agree that Trustee
shall pay all distributions in respect of the UDRC II Residual Certificates and
Excluded Class C Certificates directly to the Collateral Account for application
to the Obligations and/or release to Borrower in accordance with the Collateral
Account Agreement and Section 2.6.
"UDRC III Dividend Direction Letter" means the letter dated January 11,
2001 in which Collateral Agent, Lender, UDRC III, UDCC and Trustee agree that
Trustee shall pay all distributions in respect of the UDRC III Residual
Certificates and Excluded Class C Certificates directly to the Collateral
Account for application to the Obligations and/or release to Borrower in
accordance with the Collateral Account Agreement and Section 2.6.
"UDRC II Securitization Documents" shall mean each of (i) the purchase
agreements listed on Exhibit A hereto, (ii) the pooling and servicing or sale
and servicing agreements listed on Exhibit A hereto, and (iii) the other
agreements, instruments, certificates and documents entered into or acknowledged
by Borrower, UDCC, UDRC II or any Affiliate of any of them or by a
Securitization Trust.
"UDRC III Securitization Documents" shall mean each of (i) the purchase
agreements listed on Exhibit A hereto, (ii) the pooling and servicing or sale
and servicing agreements listed on Exhibit A hereto, and (iii) the other
agreements, instruments, certificates and documents entered into or acknowledged
by Borrower, UDCC, UDRC III or any Affiliate of any of them or by a
Securitization Trust.
"UDRC II Standing Dividend Resolution" shall mean the resolution adopted on
September 30, 1999 by the board of directors of UDRC II (formerly Champion
Receivables Corp. II) to the effect that any amounts received as distributions
on the UDRC II Residual Certificates should be distributed as dividends to
UDCSFC or any other holder or assignee of the Common Stock of UDRC II.
"UDRC III Standing Dividend Resolution" shall mean the resolution adopted
on December 18, 2000 by the board of directors of UDRC III to the effect that
any amounts received as distributions on the UDRC III Residual Certificates
should be distributed as dividends to UDCSFC or any other holder or assignee of
the Common Stock of UDRC III.
"Ugly Duckling Collateral" shall mean any installment contracts or
conditional sales contracts, with any amendments thereto, originated by Borrower
or its Subsidiaries pursuant to which a person has: (i) purchased a new or used
motor vehicle, (ii) granted a security interest in the motor vehicle, and (iii)
agreed to pay the unpaid purchase price and a finance charge in periodic
installments.
"United States" and "U.S." each means the United States of America.
"Verde Loan Agreement" means the Loan Agreement dated as of January 11,
2001 between Borrower and Verde Investments, Inc., as amended, supplemented or
modified from time to time.
"Verde Stock Pledge Agreement" means the Stock Pledge Agreement dated as of
January 11, 2001 among UDCSF, UDRC II, UDRC III and Verde Investments, Inc., as
amended supplemented or modified from time to time.
"Verde Subordinated Debt Documents" means the Verde Loan Agreement, the
Verde Subordinated Note, the Verde Subordination Agreement, the Verde Stock
Pledge Agreement and all other instruments and agreements relating thereto.
"Verde Subordination Agreement" means the Subordination and Standstill
Agreement dated as of January 11, 2001 among Borrower, UDCSF, Verde Investments,
Inc., and Collateral Agent, as amended, supplemented or modified from time to
time.
"Verde Subordinated Note" means the Subordinated Promissory Note dated as
of January 11, 2001 issued by the Borrower to Verde Investments, Inc. in the
original principal amount of $7,000,000.
"Voidable Transfer" has the meaning set forth in Section 10.17.
1.2 Other Interpretive Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein, and that are defined in the UCC shall have the meanings therein
described.
(b) The Agreement. The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and section,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including without
limitation."
(iii)The term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or."
(d) Performance; Time. Whenever any performance obligation hereunder or
under any Note (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding"; and the word "through" means "to and including." If any
provision of this Agreement refers to any action taken or to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
interpreted to encompass any and all means, direct or indirect, of taking, or
not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein, references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(f) Laws. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(g) Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this Agreement
and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters, and that such limitations,
tests and measurements are cumulative and must each be performed, except as
expressly stated to the contrary in this Agreement.
1.3 Accounting Principles.
(a) Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied. In the event that GAAP changes during the term of this
Agreement such that the covenants contained in Article VI would then be
calculated in a different manner or with different components, (i) Borrower and
Lenders agree to amend this Agreement in such respects as are necessary to
conform those covenants as criteria for evaluating Borrower's financial
condition to substantially the same criteria as were effective prior to such
change in GAAP and (ii) Borrower shall be deemed to be in compliance with the
covenants contained in Article VI following any such change in GAAP if and to
the extent that Borrower would have been (and would continue to be) in
compliance therewith under GAAP as in effect immediately prior to such change.
(b) References herein to "fiscal year" and "fiscal quarter" refer to such
fiscal periods of Borrower.
1.4 Times. All times of the day herein are Los Angeles, California time.
ARTICLE II.
THE LOAN
2.1 The Loan. Each Lender, on the terms and conditions hereinafter set forth and
subject to the conditions precedent pursuant to Section 4.1 of this Agreement,
severally agrees to make the Loan to Borrower in the ratable portion of the
Initial Funding Amount set forth opposite such Lender's name on the signature
pages hereto. The Borrower acknowledges and agrees that the Loan is being funded
on a discounted basis and that immediately following the funding of the Initial
Funding Amount, the Loan shall be outstanding, and payable in accordance with
the terms hereof, in the full principal amount of the Initial Principal Amount.
2.2 Payment Upon Collection; Monthly Amortization. Upon receipt by Borrower or
any of its Affiliates of any Collections, Borrower shall promptly (and in any
event within one (1) Business Day) pay (or cause to be paid) such Collections to
Collateral Agent for deposit in the Collateral Account. Subject to Section 2.6,
Borrower shall, on each Payment Date, repay the Outstanding Principal Amount in
an amount equal to the Monthly Amortization Amount for such Payment Date. Each
Lender shall, upon receipt of any such Collections, apply such Collections and
any Collections paid directly to Lender by Trustee or Collateral Agent in
accordance with the procedures set forth in Section 2.6 (but subject to Section
2.12).
2.3 Payment Upon Maturity. On the Maturity Date, Borrower will pay to each
Lender an amount equal to the Outstanding Principal Amount of the Loan then
owing to such Lender, together with all accrued and unpaid interest on such
Outstanding Principal Amount and any other accrued and unpaid Obligations then
owing to such Lender.
2.4 Interest.
(a) Interest Rate. Interest shall accrue on the Outstanding Principal
Amount of the Loan during each Interest Accrual Period at a rate per annum equal
to LIBOR for such Interest Accrual Period plus (i) at all times prior to the
Ratings Completion Date, nine hundred (900) basis points, and (ii) at all times
on and after the Ratings Completion Date, six hundred (600) basis points. In
addition, after the occurrence of and during the continuance of any Event of
Default under Section 8.1 of this Agreement, the Outstanding Principal Amount of
the Loan together with all accrued and unpaid interest on the Loan and any other
accrued and unpaid Obligations due and payable to Lender under this Agreement
shall bear interest during each Interest Accrual Period at a rate per annum
equal to (I) LIBOR for such Interest Accrual Period plus (i) at all times prior
to the Ratings Completion Date, one thousand four hundred (1400) basis points,
and (ii) at all times on and after the Ratings Completion Date one thousand one
hundred (1,100) basis points or (II) if LIBOR pricing has been suspended
pursuant to Section 2.13(a), the Base Rate plus (i) at all times prior to the
Ratings Completion Date, one thousand three hundred (1300) basis points, and
(ii) at all times on and after the Ratings Completion Date, one thousand (1000)
basis points. Upon determining LIBOR for each Interest Accrual Period, the
Collateral Agent shall notify the Lenders and Borrower of such LIBOR
determination and the rate thereof.
(b) Limitation on Interest Rate. The obligations of Borrower hereunder and
under the Notes shall be subject to the limitation that payments of interest to
any Lender, plus any other amounts paid to such Lender in connection herewith
and therewith, shall not be required, to the extent (but only to the extent)
that contracting for or receiving such payment by such Lender would be contrary
to the provisions of any law applicable to such Lender limiting the highest rate
of interest which may be lawfully contracted for, charged or received by such
Lender, and in such event Borrower shall pay such Lender interest and other
amounts at the highest rate permitted by applicable law.
2.5 Voluntary Prepayments; Deposits to Collateral Account.
(a) Voluntary Prepayments. Borrower shall have the right, at its option, to
prepay its obligations under the Loan in whole or in part at any time (in a
minimum amount of $100,000 and an integral multiple of $10,000, or such lesser
amount as is then outstanding); provided, however, that (i) each such voluntary
prepayment shall be applied ratably among the Lenders and shall be accompanied
by payment of any amounts owing under Section 10.4(d) with respect to such
prepayment, (ii) except as set forth in the following clause (iii), any such
voluntary prepayment on or prior to January 11, 2002 shall be accompanied by a
prepayment premium in the amount of 1.0% of the amount prepaid, and (iii) no
prepayment premium under the foregoing clause (ii) shall be required (a) with
respect to the first $15,000,000 of principal prepayments or (b) in the event of
a prepayment in full of the Obligations within 30 days after the Required
Lenders have refused to consent (after a reasonable period for review) to
additional Indebtedness of a Subsidiary of the Borrower (to the extent such
consent is required under Section 7.2(b)) in respect of a bona fide proposal
from a non-affiliated third party financial institution to provide additional
Indebtedness that is otherwise permitted hereunder (and the proceeds of which
would not be used directly or indirectly to refinance amounts outstanding
hereunder) or in the event amounts outstanding hereunder are refinanced by the
Lenders. After January 11, 2002 there shall be no prepayment premium. Borrower
shall give each Lender at least ten Business Days prior notice of its intention
to prepay, specifying the date of payment, the total amount and portion of the
Loan of such Lender to be paid on such date and the amount of interest to be
paid with such prepayment.
(b) Deposits to Collateral Account. In the event the Outstanding Principal
Amount shall at any time exceed the sum of the Borrowing Base plus the amount
then on deposit in the Collateral Account, the Borrower shall immediately
deposit cash in the amount of such excess to the Collateral Account.
2.6 Application of Payments. All payments on the Loan shall be applied, without
duplication, in the following order:
(a) First, to Collateral Agent and each Lender for any and all sums
advanced by Collateral Agent or such Lender as are reasonably necessary in order
to preserve the Collateral or the security interests in the Collateral and all
reasonable expenses of taking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral or of any exercise by
Collateral Agent or any Lender (or any portfolio advisor for any Lender) of its
rights under this Agreement or any other Loan Document, together with reasonable
Attorney Costs and unpaid fees and expenses; and
(b) Second, ratably to each Lender for application to overdue interest on
the Obligations;
(c) Third, ratably to each Lender for application to accrued interest on
the Obligations;
(d) Fourth, ratably to each Lender for application to the Outstanding
Principal Amount in an amount equal to such Lender's ratable portion of any
Monthly Amortization Amount then due and payable;
(e) Fifth, ratably to each Lender in payment of all other accrued and
unpaid Obligations owing to such Lender.
Any provision hereof or of the Collateral Account Agreement to the contrary
notwithstanding, any amounts held by Collateral Agent pursuant to the Collateral
Account Agreement and not otherwise required to be applied to the Obligations
shall, at the written direction of Borrower, be applied to repay Obligations
hereunder (to be applied as set forth in this Section 2.6) or, if the Borrowing
Base plus such amount on deposit in the Collateral Account exceeds the sum of
(i) the Outstanding Principal Amount plus (ii) the Required Cash Collateral
Amount at such time and no Default has occurred and is continuing, such amounts
held in the Collateral Account shall, upon written request by Borrower to
Collateral Agent, be released to Borrower up to the amount of such excess;
provided, however, that (a) any release to Borrower of amounts on deposit in the
Collateral Account shall only be made on a Payment Date and only after giving
effect to the payment of all amounts due hereunder and under the other Loan
Documents on such Payment Date, and (b) no release shall result in the amount on
deposit in the Collateral Account being less than the Required Cash Collateral
Amount at such time.
2.7 Prepayment. Upon any prepayment of the Loan, Borrower shall pay to each
Lender such Lender's ratable share of the principal amount to be prepaid,
together with all accrued and unpaid interest thereon through the date of
prepayment and any applicable premium payable pursuant to Section 2.5. Notice of
prepayment having been given in accordance with Section 2.5, the amount
specified to be prepaid shall become due and payable on the date specified for
prepayment.
2.8 Fees.
(a) Reserved.
(b) Collateral Agent Fees. Borrower shall pay to the Collateral Agent, as
and when due, the non-refundable fees set forth on Schedule H.
2.9 Fees and Interest. All computations of fees and interest under this
Agreement shall be made on the basis of a 360-day year and actual days elapsed,
which results in more interest being paid than if computed on the basis of a
365-day year. Interest and fees shall accrue during each Interest Accrual Period
during which interest or such fees are computed from the first day thereof to
the last day thereof. Borrower shall pay to Lenders all accrued and unpaid
interest on February 15, 2001, March 15, 2001 and thereafter, on each Payment
Date.
2.10 Payments by Borrower; Payments by Collateral Agent.
(a) All payments (including prepayments) to be made by or on behalf of
Borrower on account of principal, interest, fees and other amounts required
hereunder or under any Note shall be made without set-off, deduction, recoupment
or counterclaim and shall, except as otherwise expressly provided herein, be
made to Collateral Agent at Collateral Agent's office as set forth on its
Administrative Form or as otherwise directed in writing by the Collateral Agent,
in dollars and in immediately available funds, no later than 11:00 a.m. on the
date specified herein. Any payment which is received by Collateral Agent later
than 11:00 a.m. shall be deemed to have been received on the immediately
succeeding Business Day and any applicable interest or fee shall continue to
accrue. The Collateral Agent will promptly after receipt of each payment cause
to be distributed like funds relating to the payment of principal and interest
ratably to each Lender, and like funds relating to the payment of any other
amount payable to any Lender to such Lender, in each case to be applied in
accordance with, and subject to, the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 10.16, from and after the
effective date specified in such Assignment and Acceptance, the Collateral Agent
shall make all payments hereunder, under any Note and under any other Loan
Document in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) Whenever any payment hereunder or under any Note shall be stated to be
due on a day, other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be.
2.11 Taxes.
(a) Withholding Taxes. Any and all payments by the Borrower hereunder and
under any Note shall be made free and clear of and without deduction for any and
all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender and the Collateral Agent, net income taxes that are imposed by
the United States and franchise taxes and net income taxes that are imposed on
such Lender or the Collateral Agent by the state or foreign jurisdiction under
the laws of which such Lender or the Collateral Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender,
franchise taxes and net income taxes that are imposed on such Lender by the
state or foreign jurisdiction of such Lender's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder (or under any Note) to any Lender or
the Collateral Agent, (i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.11(a)) such Lender Party or the
Collateral Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
(b) Other Taxes. In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under any Note or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Document (hereinafter referred to as "Other Taxes").
(c) Indemnification. The Borrower shall indemnify each Lender and the
Collateral Agent for the full amount of Taxes and Other Taxes, and for the full
amount of taxes imposed by any jurisdiction on amounts payable under this
Section 2.11 paid by such Lender or the Collateral Agent (as the case may be)
and any liability (including penalties, additions to tax, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender or the Collateral Agent (as the case
may be) makes written demand therefor.
(d) Evidence of Payment. Within 30 days after the date of any payment of
Taxes, the Borrower shall furnish to the each Lender the original receipt of
payment thereof or a certified copy of such receipt. In the case of any payment
hereunder or under any Note by the Borrower through an account or branch outside
the United States or on behalf of the Borrower by a payor that is not a United
States person, if the Borrower determines that no Taxes are payable in respect
thereof, the Borrower shall furnish, or shall cause such payor to furnish, to
each Lender an opinion of counsel acceptable to such Lender stating that such
payment is exempt from Taxes. For purposes of this subsection (d) and subsection
(e), the terms "United States" and "United States person" shall have the
meanings specified in Section 7701 of the Internal Revenue Code.
(e) Foreign Lenders and Issuing Banks. Each Lender organized under the laws
of a jurisdiction outside the United States shall, on or prior to the date of it
becomes a party to this Agreement, and from time to time thereafter upon the
reasonable request in writing by the Borrower or the Collateral Agent (but only
so long thereafter as such Lender remains lawfully able to do so), provide the
Collateral Agent and the Borrower with Internal Revenue Service Form 1001 or
4224 (or other appropriate form), as appropriate, or any successor form
prescribed by the Internal Revenue Service, certifying that such Lender is
exempt from or is entitled to a reduced rate of United States withholding tax on
payments under this Agreement. If the form provided by a Lender at the time such
Lender first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes unless and until such Lender provides
the appropriate form certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from Taxes
for periods governed by such form; provided, however, that, if at the date of
the assignment pursuant to which a Lender assignee becomes a party to this
Agreement, the Lender assignor was entitled to payments under subsection (a) in
respect of United States withholding tax with respect to interest paid at such
date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includable in Taxes) United States withholding tax, if any, applicable with
respect to the Lender assignee on such date.
(f) Failure to Provide Forms. For any period with respect to which a Lender
has failed to provide the Borrower with the appropriate form described in
Section 2.11(e) (other than if such failure is due to a change in law occurring
after the date on which a form originally was required to be provided or if such
form otherwise is not required under Section 2.11(e)), such Lender Party shall
not be entitled to indemnification under Section 2.11(a) or Section 2.11(c) with
respect to Taxes imposed by the United States; provided, however, that should a
Lender become subject to Taxes because of its failure to deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall reasonably
request to assist such Lender to recover such Taxes.
2.12 Sharing of Payments, Etc.. If any Lender shall obtain at any time any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) (a) on account of Obligations due and payable to such
Lender hereunder or under any Note at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations due and
payable to such Lender at such time to (ii) the aggregate amount of the
Obligations due and payable to all Lenders hereunder and under the Notes at such
time) of payments on account of the Obligations due and payable to all Lenders
hereunder and under the Notes at such time obtained by all the Lenders at such
time or (b) on account of Obligations owing (but not due and payable) to such
Lender hereunder or under any Note at such time in excess of its ratable share
(according to the proportion of (i) the amount of such Obligations owing to such
Lender at such time to (ii) the aggregate amount of the Obligations owing (but
not due and payable) to all Lenders hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lenders hereunder and under the Notes at such time obtained by all the Lenders
at such time, such Lender shall forthwith purchase from the other Lenders such
participations in the Obligations due and payable or owing to them, as the case
may be, as shall be necessary to cause such purchasing Lender to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each other Lender shall be rescinded and such other
Lender shall repay to the purchasing Lender the purchase price to the extent of
such other Lender's ratable share (according to the proportion of (i) the
purchase price paid to such Lender to (ii) the aggregate purchase price paid to
all Lenders) of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.12 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
2.13 Suspension of LIBOR.
(a) Illegality. Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender to perform its
obligations hereunder to make, fund or maintain its portion of the Loan as a
LIBOR based obligation, then, on notice thereof and demand therefor by such
Lender to the Borrower, the interest rate applicable to the Loan pursuant to
Section 2.4 shall thereafter be the Base Rate plus (i) at all times prior to the
Ratings Completion Date, eight hundred (800) basis points, and (ii) at all times
on and after the Ratings Completion Date, five hundred (500) basis points until
such Lender shall notify the Borrower that such Lender has determined that the
circumstances causing such suspension no longer exist.
(b) Other Circumstances. If any Lender shall determine in good faith (which
determination shall be conclusive) that (A) LIBOR cannot be determined in
accordance with the definition thereof, or (B) LIBOR for any Interest Accrual
Period will not adequately reflect the cost to such Lender of making, funding or
maintaining such Lender's ratable portion of the Loan for such Interest Period,
such Lender shall forthwith so notify the Borrower and the other Lenders,
whereupon the interest rate applicable to the Loan pursuant to Section 2.4 for
such Lender shall thereafter be the Base Rate plus 5.0%.
2.14 Increased Costs, Etc..
(a) Increased Costs. If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or of making, funding
or maintaining its portion of the Loan based on LIBOR, then the Borrower shall
from time to time, upon demand by such Lender pay to such Lender additional
amounts sufficient to compensate such Lender for such increased cost A
certificate as to the amount of such increased cost, submitted to the Borrower
by such Lender, shall be conclusive and binding for all purposes, absent
manifest error.
(b) Capital Requirements. If, due to either (i) the introduction of or any
change in or in the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the amount of capital required or expected to be maintained by
such Lender or any corporation controlling such Lender as a result of or based
upon the existence of such Lender's commitment to lend hereunder, then, upon
demand by such Lender, the Borrower shall pay to such Lender, from time to time
as specified by such Lender, additional amounts sufficient to compensate such
Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. A certificate as to such amounts
submitted to the Borrower by such Lender, shall be conclusive and binding for
all purposes, absent manifest error.
2.15 Promissory Notes. The Borrower hereby agrees that if, in the opinion of any
Lender, a promissory note or other evidence of debt is required, appropriate or
desirable to reflect or enforce the indebtedness of the Borrower resulting from
the Loan made by or otherwise owing to such Lender, then upon request of such
Lender, the Borrower shall (in the case of any such request by a Lender that is
not an initial party hereto, in accordance with Section 10.16) promptly execute
and deliver to such Lender, a promissory note substantially in the form of
Exhibit D, payable to the order of such Lender in an amount equal to the
principal amount of the Loan made by or otherwise owing to such Lender.
ARTICLE III.
SECURITY AGREEMENT AND COLLATERAL
3.1 Security for Obligations. As security for the payment and performance of the
Obligations under this Agreement and the other Loan Documents and all other
present and future debts, obligations and liabilities of any nature whatsoever
of Borrower to Collateral Agent or any Lender in respect of this Agreement and
the other Loan Documents, and all modifications, renewals, replacements and
extensions thereof, UDCSFC shall grant Collateral Agent (for Collateral Agent's
benefit and the ratable benefit of the Lenders) a security interest in the
Collateral pursuant to the Stock Pledge Agreement, the Collateral Account
Agreement and such other agreements, documents and instruments as Required
Lenders may reasonably require. Borrower shall cause UDCSFC to execute and
deliver the Stock Pledge Agreement and to perform its obligations thereunder.
Borrower will, prior to the creation of any Additional Residual Certificates,
take and cause its Affiliates and Subsidiaries to take, such actions and execute
such agreements, documents and instruments (and deliver such opinions of
counsel) as may be necessary or as Collateral Agent or Required Lenders may
reasonably request in order to create a perfected first priority security
interest securing the Obligations in favor of Collateral Agent (for Collateral
Agent's benefit and the ratable benefit of the Lenders) in such Additional
Residual Certificates or in 100% of the capital stock or other equity interests
of the entity owning such Additional Residual Certificates, including, without
limitation, compliance with Section 7(c) of the Stock Pledge Agreement. Borrower
will execute, and shall cause UDCSFC and Borrower's other Affiliates and
Subsidiaries, to execute, any security agreements, collateral assignments,
financing statements for filing and/or recording and any other agreements,
documents or instruments reasonably required by Collateral Agent or Required
Lenders to evidence and perfect the Liens and security interests of Collateral
Agent. A carbon, photographic or other reproduced copy of this Agreement and/or
any financing statement relating hereto shall be sufficient for filing and/or
recording as a financing statement.
3.2 Security Documents. The Financing Statements shall remain on file in the
appropriate jurisdictions and Borrower shall promptly execute or cause to be
executed any other financing statements and notices as are necessary to properly
perfect Collateral Agent's security interest in the Collateral.
3.3 Duties Regarding Collateral. Neither Collateral Agent nor any Lender (nor
any portfolio advisor for any Lender) shall have any duty or obligation to
protect, insure, collect or realize upon the Collateral or preserve rights in it
against prior parties. Borrower releases Collateral Agent and each Lender (and
each portfolio advisor) from, and shall indemnify Collateral Agent and each
Lender (and each portfolio advisor) against, any liability for any act or
omission relating to the Collateral, except with respect to any such Person for
any liability directly resulting from such Person's gross negligence or willful
misconduct.
3.4 Borrower's Duties Regarding Collateral. Borrower agrees as follows:
(a) General Maintenance of Collateral. Borrower: (i) shall keep the
Collateral free from all Liens (other than the Liens of ad valorem property
taxes which are not delinquent, any statutory landlords' liens which are covered
by lien waivers satisfactory to Required Lenders, mechanic's liens, Permitted
Liens, and any Liens in favor of Collateral Agent for the benefit of the
Lenders); (ii) shall defend the Collateral against all claims and legal
proceedings by persons other than Collateral Agent and Lenders; (iii) shall pay
and discharge when due all taxes, levies and other charges upon the Collateral;
(iv) shall cause UDCSFC and Borrower's other Affiliates and Subsidiaries not to
sell, lease or otherwise dispose of the Collateral; and (v) shall not permit the
Collateral to be used in violation of any Requirement of Law or any policy of
insurance.
(b) Perfection and Priority. Borrower shall pay all Lender's Expenses
necessary to, take all actions necessary to, and, upon Collateral Agent's or any
Lender's request, execute all writings and take and cause Borrower's Affiliates
and Subsidiaries to take all other actions reasonably deemed advisable by
Collateral Agent or any Lender to, preserve the Collateral or to establish, and
determine priority of, perfection, continued perfection or enforce Collateral
Agent's interest in the Collateral.
(c) Records and Inspections. Upon reasonable notice to Borrower, any Lender
may examine and conduct audits of the Collateral, and Borrower's and UDCSFC's
and Borrower's other Affiliates' and Subsidiaries' records concerning it,
wherever located, and make copies of such records, at any time during normal
business hours, and Borrower shall assist such Lender in so doing. Borrower
shall keep accurate, complete and current records respecting the Collateral. In
addition to the specific requirements of Section 6.1, Borrower shall, within ten
(10) Business Days of any request by any Lender, furnish to such Lender a
detailed statement, certified as being substantially accurate by a Responsible
Officer, setting forth the current status, value and location of all or any
portion of the Collateral.
3.5 Power of Attorney. Borrower hereby makes, constitutes and appoints
Collateral Agent and each Lender and its portfolio advisor the true and lawful
attorney-in-fact of Borrower, in the name, place and stead of Borrower, or
otherwise, upon the occurrence of any Event of Default which remains uncured
following the receipt of a notice pursuant to Section 10.2:
(a) To take all actions and to execute, acknowledge, obtain and deliver any
and all writings necessary or deemed advisable by Collateral Agent or such
Lender in order to exercise any rights of Borrower with respect to the
Collateral or to receive and enforce any payment or performance due to Borrower
with respect to the Collateral;
(b) To give any notices, instructions or other communications to any person
or entity in connection with the Collateral;
(c) To demand and receive all performances due under or with respect to the
Collateral and to take all lawful steps to enforce such performances and to
compromise and settle any claim or cause of action of Borrower arising from or
related to the Collateral and give acquittances and other discharges relating
thereto; and
(d) To file any claim or proceeding or to take any other action, in the
name of Collateral Agent or such Lender, Borrower or otherwise, to enforce
performances due under or related to the Collateral or to protect and preserve
the right, title and interest of Collateral Agent or such Lender thereunder.
The foregoing power of attorney is a power coupled with an interest and
shall be irrevocable and unaffected by the disability of the principal so long
as any portion of the Obligations remains contingent, unmatured, unliquidated,
unpaid or unperformed. Lender shall have no obligation to exercise any of the
foregoing rights and powers in any event.
3.6 Collateral Inspections. Collateral Agent and each Lender shall have the
right (but not the obligation) to do a physical on-site examination of the
Collateral. All costs and expenses associated therewith shall be included in
Lender Expenses.
ARTICLE IV.
CONDITIONS PRECEDENT; TERM OF AGREEMENT
4.1 Conditions Precedent. No Lender shall be required to make the Loan to be
made by it hereunder if Borrower has not fulfilled to the satisfaction of such
Lender and its counsel, each of the following conditions on or before the
Closing Date; provided, however, that each Lender, in its sole and absolute
discretion, may waive any of the following conditions.
4.2 Receipt of Documents. Each Lender shall have received each of the following
documents, duly executed, and each such document shall be in full force and
effect:
(a) This Agreement executed by Borrower, Collateral Agent and each Lender;
(b) The Notes duly executed, the Guaranty duly executed, the Collateral
Account Agreement duly executed and the Stock Pledge Agreement duly executed
together with the certificates representing 100% of the capital stock of UDRC II
and UDRC III and undated stock powers relating thereto duly endorsed in blank;
(c) the Lenders shall have received (i) evidence satisfactory to them that
Borrower has received not less than $7,000,000 in proceeds of the Verde
Subordinated Note, and (ii) a certified copy of the Verde Subordinated Note and
all documents and instruments relating thereto, each of which shall be on terms
and conditions satisfactory to the Lenders;
(d) The UDRC II Dividend Direction Letter;
(e) the UDRC III Dividend Direction Letter;
(f) The UDRC II Standing Dividend Resolution certified by UDRC II's
Secretary;
(g) the UDRC III Standing Dividend Resolution certified by UDRC III's
Secretary;
(h) A consent and subordination from GECC consenting to the execution,
delivery and performance by Borrower and UDCSFC of the Loan Documents and
subordinating to Collateral Agent GECC's Lien on any assets constituting
Collateral;
(i) A consent by MBIA to the pledge of the Collateral to Collateral Agent;
(j) Certified copies of the resolutions of the board of directors of
Borrower approving and authorizing the execution, delivery and performance by
Borrower of this Agreement and the other Loan Documents to be delivered
hereunder, and authorizing the Loan, certified as of the Closing Date by the
Secretary or an Assistant Secretary of Borrower;
(k) A certificate of the Secretary or Assistant Secretary of Borrower
certifying the names and true signatures of the officers of Borrower authorized
to execute, deliver and perform, as applicable, this Agreement, the Stock Pledge
Agreement and all other Loan Documents to be delivered hereunder;
(l) Certified copies of the resolutions of the board of directors of UDCSFC
approving and authorizing the execution, delivery and performance by UDCSFC of
the applicable Loan Documents to be delivered hereunder, certified as of the
Closing Date by the Secretary or an Assistant Secretary of UDCSFC;
(m) A certificate of the Secretary or Assistant Secretary of UDCSFC
certifying the names and true signatures of the officers of UDCSFC authorized to
execute, deliver and perform the Stock Pledge Agreement and all other applicable
Loan Documents to be delivered hereunder;
(n) Copies of each of Borrower's, UDCSFC's, UDRC II's and UDRC III's
certificate of incorporation certified by the Secretary of the State of their
respective jurisdictions of incorporation and bylaws certified by their
respective Secretaries or Assistant Secretaries;
(o) Good standing certificates for the jurisdiction of incorporation and
the jurisdiction in which the chief executive office is located for each of
Borrower, UDCSFC, UDRC II and UDRC III;
(p) A copy of lien searches, completed as of a recent date, against
Borrower and UDCSFC, UDRC II and UDRC III, in such jurisdictions as shall be
satisfactory to Lenders and its counsel;
(q) Legal opinions from counsel for Borrower with respect to the
transactions contemplated by the Loan Documents, which opinions shall be in form
and substance satisfactory to Lenders and from counsel satisfactory to Lenders;
and
(r) The obligations hereunder shall have been rated "B" or above by a
rating agency acceptable to the Required Lenders.
(s) There shall have occurred since December 31, 1999, no Material Adverse
Change. For purposes of this Section 4.2(r), the requirement to refinance the
GECC Agreement shall not constitute a Material Adverse Change.
(t) Lenders shall have received Borrower's audited financial statements for
the fiscal year ended December 31, 1999 and unaudited financial statements for
the 9 month period ended September 30, 2000.
(u) Officers Certificate as to no default and truth of representations and
warranties.
(v) Completion of December 0000 XXXX - wrapped securitization of Ugly
Duckling Collateral.
4.3 Term. This Agreement shall become effective upon the execution and delivery
hereof by Borrower, Collateral Agent and Lenders and shall continue in full
force and effect for a term ending on the earliest of (a) the Repayment Date, or
(b) the date of termination of this Agreement in accordance with its terms after
the occurrence and during the continuation of an Event of Default.
4.4 Effect of Termination. Upon termination of this Agreement, all Obligations
shall become due and payable immediately without notice or demand. No
termination of this Agreement, however, shall relieve or discharge Borrower of
Borrower's duties, Obligations, or covenants hereunder, and Collateral Agent's
continuing security interest in the Collateral shall remain in effect until all
Obligations have been fully and finally discharged.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and make the Loan,
Borrower makes the following representations and warranties which shall be true,
correct, and complete in all respects as of the date hereof, and shall be true,
correct, and complete in all respects as of the Closing Date (except to the
extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 No Encumbrances. UDCSFC has good and indefeasible title to the Collateral,
free and clear of Liens except for Permitted Liens.
5.2 Location of Chief Executive Office; FEIN. The chief executive office of
Borrower is located at the address indicated in the preamble to this Agreement
and Borrower's FEIN is 00-0000000. The chief executive office of UDCSFC is
located at the address of Borrower indicated in the preamble to this Agreement
and UDCSFC's FEIN is 00-0000000.
5.3 Due Organization and Qualification; Subsidiaries.
(a) Each Loan Party is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and qualified
and licensed to do business in, and in good standing in, any state where the
failure to be so licensed or qualified reasonably could be expected to have a
Material Adverse Effect.
(b) Set forth on Schedule A is a complete and accurate list of Borrower's
direct and indirect Subsidiaries, showing: (i) the jurisdiction of their
incorporation; (ii) the number of shares of each class of Equity Interests
authorized for each of such Subsidiaries; and (iii) the number and the
percentage of the outstanding shares of each such class owned directly or
indirectly by Borrower. All of the outstanding Equity Interests of each such
Subsidiary have been validly issued and are fully paid and non-assessable.
(c) Except as set forth on Schedule B, no Equity Interests (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for Equity Interests) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.
5.4 Due Authorization: No Conflict.
(a) The execution, delivery, and performance by each Loan Party of each of
the Loan Documents to which it is a party have been duly authorized by all
necessary corporate action.
(b) The execution, delivery, and performance by each Loan Party of each of
the Loan Documents to which it is a party do not and will not (i) violate any
provision of federal, state, or local law or regulation (including Regulations
T, U, and X of the Federal Reserve Board) applicable to such Loan Party, the
Governing Documents of such Loan Party, or any order, judgment, or decree of any
court or other Governmental Authority binding on any Loan Party, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation or material lease of
any Loan Party, (iii) result in or require the creation or imposition of any
Lien of any nature whatsoever upon any properties or assets of any Loan Party,
other than pursuant to the Security Documents, or (iv) require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of any Loan Party. No Loan Party or any of its
Subsidiaries is in violation of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which could have a Material Adverse
Effect.
(c) Other than the taking of any other action expressly required under this
Agreement or any of the other Loan Documents, the execution, delivery, and
performance by each Loan Party of this Agreement and the other Loan Documents to
which such Loan Party is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
federal, state, foreign, or other Governmental Authority or other Person.
(d) This Agreement, the other Loan Documents and all other documents
contemplated hereby and thereby, when executed and delivered by any Loan Party
party thereto, will be the legally valid and binding obligations of such Loan
Party, enforceable against such Loan Party in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) The Stock Pledge Agreement and the stock powers delivered in connection
therewith, and the Collateral Account Agreement when executed and delivered by
UDCSFC and UDC, will be the legally valid and binding obligations of UDCSFC and
UDC, enforceable against each of UDCSFC and UDC in accordance with their
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors' rights generally.
(f) The Lien granted by UDCSFC and UDC on the Collateral is a validly
created and perfected first priority Lien, and the Collateral is subject to no
other Liens other than Liens in favor of Collateral Agent and the Liens referred
to in item 1 on Schedule E.
5.5 Litigation. Except as set forth in Schedule C, there are no actions or
proceedings pending by or against Borrower before any court or administrative
agency and Borrower does not have knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving Borrower, except for: (a) ongoing
collection matters in which Borrower is the plaintiff, (b) matters that, if
decided adversely to Borrower, would not have a Material Adverse Effect and (c)
matters as to which Borrower has provided notice to the Lenders and which could
not reasonably be expected to be decided adversely to Borrower.
5.6 Financial Statements; No Material Adverse Change. All financial statements
relating to Borrower, UDRC II and UDRC III that have been delivered by Borrower
to Lenders have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present the financial condition as of the
date thereof and the results of operations for the period then ended for
Borrower and its consolidated Subsidiaries, except as disclosed on Schedule D.
No information, exhibit or report furnished by Borrower or any other Loan Party
to the Collateral Agent or any Lender in connection with the negotiation of the
Loan Documents or pursuant to the terms of the Loan Documents contained any
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements made therein not misleading. There has not been
a Material Adverse Change with respect to Borrower since December 31, 1999. For
purposes of this Section 5.6, so long as Borrower has not failed to comply with
Section 6.24 hereof, the requirement to refinance the GECC Agreement shall not
constitute a Material Adverse Change.
5.7 Securitization Documents. Borrower, UDRC II and UDRC III and each of their
Affiliates are in full compliance with their respective obligations under the
Securitization Documents, and no Securitization Default exists.
5.8 ERISA. No accumulated funding deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, exists with respect to any
plan (other than a multiemployer plan). No liability to the Pension Benefit
Guaranty Corporation has been or is expected by Borrower to be incurred with
respect to any plan (other than a multiemployer plan) by Borrower which is or
would have a Material Adverse Effect. Borrower has not incurred and does not
presently expect to incur any withdrawal liability under Title IV of ERISA with
respect to any multiemployer plan which is or would be materially adverse to
Borrower. The execution and delivery of this Agreement and the other Loan
Documents will not involve any transaction which is subject to the prohibitions
of Section 406 of ERISA or in connection with which a tax could be imposed
pursuant to section 4975 of the Code. For the purpose of this Section 5.8, the
term "plan" shall mean an "employee pension benefit plan" (as defined in section
3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by Borrower or by any trade or business,
whether or not incorporated, which, together with Borrower, is under common
control, as described in Section 414(b) or (c) of the Code; and the term
"multiemployer plan" shall mean any plan which is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA). No plan providing welfare
benefits to retired former employees of Borrower has been established or is
maintained for which the present value of future benefits payable, in excess of
irrevocably designated funds for such purpose, is or would have a Material
Adverse Effect.
5.9 Environmental and Safety Matters. Borrower (a) has complied in all material
respects with all applicable material Environmental and Safety Laws, and
Borrower has not received (i) notice of any material failure so to comply, (ii)
any letter or request for information under Section 104 of CERCLA or comparable
state laws or (iii) any information that would lead it to believe that it is the
subject of any Federal or state investigation concerning Environmental and
Safety Laws; (b) does not manage, generate, discharge or store any Hazardous
Materials in material violation of any material Environmental and Safety Laws;
(c) does not own, operate or maintain any underground storage tanks or surface
impoundments; and (d) except as disclosed to Lenders in writing prior to the
date hereof, is not aware of any conditions or circumstances associated with its
currently or previously owned or leased properties or operations (or those of
its tenants) which may give rise to any Environmental Liabilities and Costs
which could have a Material Adverse Effect.
5.10 Tax Matters. Each of Borrower and its Subsidiaries has filed all tax
returns that it was required to file. All such tax returns were correct and
complete in all material respects. All Borrower Taxes owed by any of Borrower
and its Subsidiaries have been paid.
5.11 [Reserved].
5.12 Ownership of Properties. Each Loan Party and its Subsidiaries has good,
marketable and insurable title in fee simple to, or a valid leasehold interest
in, all its real property, and good title to, or a valid leasehold interest in,
all its other Property.
5.13 Investment Company Status. Neither any Loan Party nor any of its
Subsidiaries is an "investment company," or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended. Neither the
making of the Loan nor the application of the proceeds or repayment thereof by
Borrower, nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
5.14 Solvency. Each Loan Party is, individually and together with its
Subsidiaries, Solvent. For purposes hereof, the term "Solvent" means, with
respect to any Person on a particular date, that on such date (a) the fair value
of the property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its
debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature and (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
ARTICLE VI.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, and unless
Required Lenders shall otherwise consent in writing, Borrower shall do all of
the following:
6.1 Financial Statements and Other Documents. Borrower shall deliver to Lenders
in form and detail satisfactory to Required Lenders:
(a) Within 45 days of the end of each fiscal quarter (except the last
fiscal quarter of each fiscal year), Borrower's consolidated unaudited financial
statements for such quarter, and, within 90 days of the end of Borrower's fiscal
year, Borrower's consolidated audited financial statements for such period,
certified by Borrower's Chief Financial Officer or Treasurer as fairly
presenting in all material respects, in accordance with GAAP (subject, in the
case of unaudited financial statements, to ordinary, good faith year-end
adjustments and to the absence of footnote disclosure), the financial position
and results of operations of Borrower and together, in each case, with a
certificate of the Chief Financial Officer of Borrower stating that the
representations and warranties herein are true and correct in all material
respects as of the date of such certificate and that no Default has occurred and
is continuing or, if a default has occurred and is continuing, a statement as to
the nature thereof and the action that Borrower has taken and proposes to take
with respect thereto and setting forth in reasonable detail satisfactory to
Required Lenders the calculations demonstrating compliance with Sections 6.13
through 6.16;
(b) Promptly upon receipt thereof, any financial statements of Borrower
distributed to other lenders or financing parties;
(c) On or prior to each Calculation Date, a Collateral Servicing Report
certified as true and correct by an officer of Borrower and including the
calculation of the Borrowing Base as of such Calculation Date and certifying
such calculation as true and correct.
(d) Promptly upon preparation thereof, a copy of each other report, if any,
submitted to Borrower by independent accountants in connection with any annual,
interim or special audit made by them of the books of Borrower;
(e) Promptly after its submission, copies of any other information or
documents regularly provided by Borrower to any of its other lenders or holders
of Borrower's Debt;
(f) Promptly upon receipt thereof, copies of any other information or
documents received by Borrower pursuant to any Securitization Document
(including, without limitation, monthly servicing reports with respect to each
Securitization);
(g) With reasonable promptness, such other financial data and information
as any Lender may reasonably request; and
(h) Promptly upon receipt thereof, (i) copies of any federal revenue
agent's reports (so called "thirty-day letter") issued by the IRS, and copies of
any equivalent documents from state or local tax authorities; (ii) copies of any
federal notice of deficiency (so-called "ninety-day letters") issued by the IRS,
and copies of any equivalent documents from state or local tax authorities; and
(iii) copies of any information requests or document requests received from
federal, state or local tax authorities that are not in the ordinary course of
business.
6.2 Inspection of Property. Borrower shall permit any Person designated by any
Lender in writing, to visit and inspect any of the properties of Borrower, to
examine the corporate books and financial records of Borrower and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any of such corporations with the principal officers of Borrower and its
independent public accountants, all at such reasonable times and as often as any
Lender may reasonably request.
6.3 Default Disclosure.
(a) Borrower shall forthwith, upon a Responsible Officer of Borrower
obtaining knowledge of an Event of Default or Default, promptly deliver to each
Lender a certificate of a Responsible Officer specifying the nature and period
of existence thereof and what action Borrower proposes to take with respect
thereto.
(b) Borrower shall forthwith, upon a Responsible Officer of Borrower
obtaining knowledge of a Securitization Default, deliver to each Lender a
certificate of a Responsible Officer specifying the nature and period of
existence thereof, what action the defaulting party proposes to take with
respect thereto, and what action Borrower proposes to take with respect thereto.
6.4 Notices to Lenders and the Collateral Agent. Borrower shall promptly notify
each Lender and the Collateral Agent in writing of:
(a) Any lawsuit over Five Hundred Thousand Dollars ($500,000) against
Borrower or any of its Subsidiaries;
(b) Any substantial dispute between Borrower or any of its subsidiaries and
any Governmental Authority; or
(c) Any change in any Loan Party's name, address, or legal structure.
6.5 Books and Records. Borrower shall maintain adequate books and records in
accordance with generally accepted accounting principles.
6.6 Compliance and Preservation. Borrower shall and shall cause its Subsidiaries
to:
(a) Comply with the laws (including any fictitious name statute),
regulations and orders of any government body with authority over its business;
(b) Maintain and preserve all privileges and franchises such Person now has
provided, however, that neither the Borrower nor any of its Subsidiaries shall
be required to preserve any privilege or franchise (other than the corporate
existence of each Loan Party, UDCC, UDRC II and UDRC III) if the Board of
Directors of the Borrower shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to the Borrower, such Subsidiary or the Lenders; and
(c) Make any repairs, renewals, or replacements reasonably necessary to
keep such Person's properties in good working condition.
6.7 Perfection of Liens. Borrower shall take such actions as may be necessary or
as Collateral Agent or any Lender may request in order to perfect and protect
Collateral Agent's security interests and liens.
6.8 Cooperation. Borrower shall take any reasonable action requested by
Collateral Agent or any Lender to carry out the intent of this Agreement.
6.9 Use of Proceeds. Borrower shall use the proceeds of the Loan for (i)
repayment of all amounts outstanding under the Existing Loan Agreement (and
Borrower agrees that a net funding of the Initial Funding Amount may be used to
effect such repayment) and repayment of other indebtedness of the Borrower
(other than Subordinated Debt), (ii) general working capital to facilitate
ongoing growth in Borrower's core operations and (iii)to the extent permitted by
Section 7.8 and by the documents and instruments governing other indebtedness of
the Borrower, the repurchase of common stock of the Borrower.
6.10 Securitizations. Any securitizations of Ugly Duckling Collateral shall be
executed through UDRC II, UDRC III or a New Issuer (as defined in the Stock
Pledge Agreement) that meets the requirements of Section 7(c) of the Stock
Pledge Agreement (and Borrower shall ensure that Pledgor performs its
obligations pursuant to the Stock Pledge Agreement) or by a person or entity
otherwise able to satisfy the requirements of Section 3.1 with respect to the
related Additional Residual Certificates. Borrower shall continue to execute
periodic securitizations (in an amount of not less than $75,000,000 in any
period of six consecutive months) of the Ugly Duckling Collateral and each such
securitization shall include Residual Certificates constituting Additional
Residual Certificates which grant an affiliate of UDCC acceptable to the
Required Lenders a 100% interest in all securitization assets (other than
Excluded Class C Certificates and Class A interests sold to senior third party
investors) and with respect to which the provisions of Section 3.1 have been
complied with. The Borrowing Base shall at all times include no less than 7
separate securitizations. Compliance with Covenants. Borrower shall perform,
keep and observe each term, provision, condition or covenant or agreement
contained in each Bond Insurance Policy, the Principal Warehouse Agreement and
any other agreement evidencing Indebtedness.
6.11 Payment of Indebtedness. Borrower shall timely pay and shall cause its
Subsidiaries to timely pay all Indebtedness which, if not paid, could result in
the imposition of a Lien on any of the assets of UDRC II or UDRC III or any
holder of Additional Residual Certificates.
6.12 Tangible Net Worth. Borrower shall maintain a consolidated Tangible Net
Worth of not less than the sum of (i) $130,000,000, plus (ii) 75% of the
cumulative net earnings (but only to the extent positive) after taxes of the
Borrower and its Subsidiaries on a consolidated basis determined in accordance
with generally accepted accounting principles for each period ending on or after
December 31, 2000 plus (iii) 60% of the cumulative net proceeds of the issuance
of any additional shares of capital stock of Borrower after February 15, 2000,
and minus (iv) the cumulative amount of payments received by Borrower pursuant
to that Promissory Note, dated December 30, 1999 made by Cygnet Capital
Corporation to Ugly Duckling Finance Corporation in the original principal
amount of $12,000,000 through the retirement of stock in Borrower held by Xxxxxx
X. Xxxxxx XX. As used in this Section 6.13, "net proceeds" of the issuance of
capital stock shall mean the gross cash proceeds of such issuance less
reasonable and customary fees and expenses actually incurred in connection
therewith, including, without limitation, underwriting fees, investment banking
fees, attorneys' and accountant's fees, regulatory and listing fees and due
diligence costs and expenses.
6.13 Consolidated EBITDA to Consolidated Interest Expense. Maintain a ratio of
Consolidated EBITDA to Consolidated Interest Expense of not less than 1.25 to
1.0.
6.14 Consolidated Senior Debt to Consolidated Total Capitalization. Not permit
at any time Consolidated Senior Debt of the Borrower and its Subsidiaries on a
consolidated basis to exceed 40% of Consolidated Total Capitalization less
Non-Recourse Debt.
6.15 Minimum Residual Certificate Cash Flows. Not permit aggregate Residual
Certificate Cash Flows deposited to the Collateral Account with respect to any
month to be less than the following amounts determined as of the applicable
Payment Date or other date specified below (it being understood that for
purposes of determining compliance with this Section 6.16 the amount deemed
deposited with respect to any Residual Certificate may not exceed the Residual
Certificate Cash Flow with respect to such Residual Certificate):
(a) For the one month periods ending February 15, 2001 and March 15, 2001
(which represent Residual Certificate Cash Flows with respect to months of
January 2001 and February 2001, respectively), $900,000.
(b) For the Payment Date on April 15, 2001, and for each Payment Date
thereafter, $2,000,000.
6.16 Minimum Capital Base. Borrower shall maintain a Capital Base of not less
than $165,000,000.
6.17 Minimum Other Interest Coverage. Maintain a ratio of operating income to
"interest expense, other" (as set forth on Borrower's publicly filed financial
statements for each fiscal quarter) of not less than 2.50 to 1.0.
6.18 Cash Collateral. At all times prior to the Cash Collateral Release Date,
the Borrower shall (i) maintain with the Collateral Agent pursuant to the Cash
Collateral Agreement, or with such other institution and pursuant to such other
cash collateral arrangements as may be satisfactory to the Required Lenders,
cash collateral in an amount not less than the Required Cash Collateral Amount
to secure the obligations hereunder, and (ii) cause the Lenders to have a first
priority perfected security interest in such cash collateral. The approval by
the Required Lenders of such other cash collateral arrangements will not be
unreasonably withheld so long as the Lenders continue to receive a perfected
first priority lien in such amounts and investments of such amounts is limited
to cash equivalents substantially similar to those permitted pursuant to the
Cash Collateral Agreement.
6.19 Collateral Account. Borrower shall establish and maintain one or more
collateral accounts as may be requested by the Collateral Agent or the Required
Lenders. Each such collateral account shall be free and clear of all liens other
than liens in favor of the Collateral Agent pursuant to the Loan Documents and
shall be on terms and conditions satisfactory to the Collateral Agent and the
Required Lenders.
6.20 Back-up Servicer. At all times on and after March 1, 2001, Borrower shall
maintain back-up service arrangements with respect to each securitization of
Ugly Duckling Collateral, on terms and conditions satisfactory to the Required
Lenders, and with OSI or another back-up servicer satisfactory to the Required
Lenders.
6.21 Maintenance of Properties. Borrower shall maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties that
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted and excepting replacement in the
ordinary course of business.
6.22 Maintenance of Insurance. Borrower shall maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by prudent companies engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower or such Subsidiary
operates.
6.23 Approved Replacement Warehouse Agreement. Not later than March 31, 2001,
Borrower shall have entered into a binding commitment with a Lender or Lenders
acceptable to the Required Lenders with respect to an Approved Replacement
Warehouse Agreement and not later than April 15, 2001 such Agreement shall have
been entered into and in full force and effect on terms and conditions
satisfactory to the Required Lenders (including, without limitation, terms and
conditions relating to intercreditor and subordination provisions).
6.24 Designated Senior Indebtedness. Borrower hereby designates the Loan as
"Designated Senior Indebtedness" pursuant to the Indenture, dated October 15,
1998 (the "Indenture"), from Borrower to BNY Midwest Trust Company, as successor
in interest to Xxxxxx Trust and Savings Bank, as trustee (pursuant to which
existing Subordinated Debt described on Exhibit G was issued and agrees to
maintain such designation at all times. Borrower will promptly notify the
trustee under the Indenture of such designation and in connection with each
supplemental indenture hereafter entered into in connection with the Indenture,
Borrower will cause such supplemental indenture to provide that the Loan is
included as "Designated Senior Indebtedness."
ARTICLE VII.
NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrower will not
do any of the following without Required Lender's prior written consent:
7.1 Liens. Create, incur, assume, or permit to exist, directly or indirectly,
any lien on or with respect to any of the assets of UDRC II or UDRC III or any
holder of Additional Residual Certificates, including the UDRC II Residual
Certificates, the UDRC III Residual Certificates or any Additional Residual
Certificates, or any income or profits from any of the foregoing, except for
Permitted Liens listed on Schedule E or liens of Collateral Agent for the
benefit of Lenders.
7.2 Indebtedness.
(a) Permit UDRC II or UDRC III or any holder of Additional Residual
Certificates to incur, assume, or permit to exist, directly or indirectly any
Indebtedness; or
(b) permit any other Subsidiary of the Borrower to incur, assume, or permit
to exist, directly or indirectly any Indebtedness other than Permitted
Subsidiary Indebtedness without the prior written consent of the Required
Lenders.
7.3 Restrictions on Fundamental Changes. Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its capital stock, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its property or assets or permit UDCSFC, UDCC, UDRC II or UDRC III to do any of
the foregoing).
7.4 Disposal of Collateral, Residual Certificates, Additional Residual
Certificates. Except as expressly consented to by Required Lenders in writing,
sell, lease, assign, transfer, or otherwise dispose of any of the Collateral or
permit any of its Affiliates to do any of the foregoing or permit UDRC II to
sell, lease, assign, transfer or otherwise dispose of any UDRC II Residual
Certificates, or permit UDRC III to sell, lease, assign, transfer or otherwise
dispose of any UDRC III Residual Certificates, or permit the Person or entity
that is the holder of any Additional Residual Certificates at the time such
Additional Residual Certificates are first included in the Borrowing Base to
sell, lease, assign, transfer or otherwise dispose of any such Additional
Residual Certificates.
7.5 Change Name. Without giving thirty (30) days prior written notification to
Collateral Agent and each Lender, change Borrower's or any other Loan Party's
name, FEIN, corporate structure (within the meaning of Section 9402(7) of the
Code), or identity, or add any new fictitious name.
7.6 Amendments. Except as expressly consented to by Required Lenders in writing,
directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any Securitization Document or any Verde Subordinated
Debt Document; provided, however, the provisions of Warrant Agreement issued in
connection with the Verde Subordinated Debt Documents may be amended without the
consent of the Lenders provided that such amendment does not affect the terms of
the Verde Subordination Agreement.
7.7 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.
7.8 Distributions; Prepayments of Subordinated Debt. Make any distribution or
declare or pay any dividends (in cash or other property, other than capital
stock) on, or purchase, acquire, redeem, or retire any of Borrower's capital
stock, of any class, whether now or hereafter outstanding, for cash or prepay,
redeem or otherwise retire any amount in respect of any obligation under the
Verde Subordinated Debt Documents except (i) regularly scheduled payments of
interest to the extent expressly permitted by the Verde Subordination Agreement,
(ii) Borrower may make payments and prepayments of principal outstanding under
the Verde Subordinated Debt Documents to the extent of, and in the same amount
as, reductions of the Required Cash Collateral Amount and corresponding releases
of cash from the Collateral Account, and (iii) the obligations under the Verde
Subordinated Debt Documents may be paid in full upon the Cash Collateral Release
Date.
7.9 Standing Dividend Resolutions. Permit any Standing Dividend Resolution to be
rescinded, amended, modified, revoked or altered in any manner.
7.10 Change in Location of Chief Executive Office. Relocate, or permit any other
Loan Party to relocate, any Loan Party's chief executive office to a new
location without providing 30 days prior written notification thereof to
Collateral Agent and each Lender and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Collateral Agent's security
interests and also provides to Collateral Agent a Collateral access agreement
with respect to such new location.
7.11 No Prohibited Transactions Under ERISA. Directly or indirectly:
(a) Engage, or permit any Subsidiary of Borrower to engage, in any
prohibited transaction which is reasonably likely to result in a civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the Code for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the Department of Labor;
(b) Permit to exist with respect to any Plan any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the Code), whether or
not waived;
(c) Fail, or permit any Subsidiary of Borrower to fail, to pay timely
required contributions or annual installments due with respect to any waived
funding deficiency to any Plan;
(d) Terminate, or permit any Subsidiary of Borrower to terminate, any Plan
where such event would result in any liability of Borrower or any of its
Subsidiaries under Title IV of ERISA;
(e) Fail, or permit any Subsidiary of Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;
(f) Fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the Code on or
before the due date for such installment or other payment;
(g) Amend, or permit any Subsidiary of Borrower to amend, a retirement plan
resulting in an increase in current liability for the plan year such that either
of Borrower or any Subsidiary of Borrower is required to provide security to
such retirement plan under Section 401 (a)(29) of the Code; or
(h) Withdraw, or permit any Subsidiary of Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA.
7.12 Changes in Nature of Business. Make, or permit any of its Subsidiaries to
make, any material change in the nature of its business as carried on at the
date hereof.
7.13 Transactions with Affiliates. Not engage, and not permit any of its
Subsidiaries to engage, in any transaction with any Affiliate of Borrower or
such Subsidiary except on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate (it being
understood that the foregoing shall not prohibit any transaction otherwise
permitted hereunder among the Borrower and any of its wholly owned
Subsidiaries).
ARTICLE VIII.
EVENTS OF DEFAULT/REMEDIES
8.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest, fees
and charges due Collateral Agent or any Lender, reimbursement of Lender Costs,
or other amounts constituting Obligations) or if Borrower fails to make when due
any deposit to the Collateral Account required pursuant to Section 2.5(b);
(b) If Borrower fails to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in this Agreement, in any of the
Loan Documents, or in any other future agreement between Borrower and any
Lender;
(c) If there is a Material Adverse Change with respect to Borrower, UDCSFC,
UDRC II or UDRC III or any holder of Additional Residual Certificates (the
occurrence or non-occurrence of which shall be determined by the Required
Lenders in the exercise of reasonable discretion);
(d) If Borrower is enjoined or restrained, by court order from continuing
to conduct all or any material part of its business affairs, unless such order
is stayed;
(e) If notices of any Lien, levy, or assessment in excess of $250,000 other
than of Permitted Liens are filed of record with respect to any of Borrower's
properties or assets which have not been cured within ten (10) days after the
Lien has been filed;
(f) Any judgment or order for the payment of money in excess of $1,000,000
not covered by insurance as to which the insurer has acknowledged liability
shall be rendered against any Loan Party or UDRC II or UDRC III and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order and are not stayed or dismissed within 45 days or (ii) there
shall be any period of 45 consecutive days during which such judgment remains
unpaid or unbonded and a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect;
(g) If Borrower makes any payment on account of Indebtedness that is
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;
(h) If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or report (including,
without limitation, any Collateral Servicing Report) made to Collateral Agent,
any Lender by Borrower or any officer, employee, agent, or director of Borrower,
or if any such warranty or representation is withdrawn;
(i) If any Standing Dividend Resolution is rescinded, amended, altered,
revoked or modified in any manner;
(j) If a default or event of default occurs under the Principal Warehouse
Agreement or under the terms of any other Indebtedness aggregating in excess of
$3,000,000 (with respect to any particular item of Indebtedness or in the
aggregate and in each case after any applicable cure or grace period) or there
is a termination event under the terms of any Bond Insurance Policy (or the
policy of another bond insurer), regardless of whether such default or
termination event is waived or amended;
(k) If Borrower or any of its Subsidiaries makes a general assignment for
the benefit of creditors, or an order, judgment or decree is entered
adjudicating the Borrower or any of its Subsidiaries bankrupt or insolvent, or
any order for relief with respect to the Borrower or any of its Subsidiaries is
entered under the Federal Bankruptcy Code, or Borrower or any of its
Subsidiaries petitions or applies to any tribunal for the appointment of a
custodian, trustee, receiver or liquidator of Borrower or any of its
Subsidiaries or of any substantial part of the assets of the Borrower or any of
its Subsidiaries, or commences any proceeding relating to the Borrower or any of
its Subsidiaries under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction, or any
such petition or application is filed, or any such proceeding is commenced
against the Borrower or any of its Subsidiaries; or
(l) Any ERISA Event shall have occurred with respect to a Plan of any Loan
Party or any of its ERISA Affiliates and the liability of the Loan Parties and
their ERISA Affiliates related to such ERISA Event and any and all other ERISA
Events which shall have occurred and then exist with respect to any Plans of the
Loan Parties and their ERISA Affiliates exceeds $1,000,000; or
(m) any provision of any Loan Document shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to it, or any
such Loan Party shall so state in writing; or
(n) any Security Document shall for any reason (other than pursuant to the
terms thereof) cease to create a valid and perfected first priority Lien on the
Collateral purported to be covered thereby.
8.2 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, Required Lenders may (and may direct the Collateral Agent to,
and upon such direction the Collateral Agent shall), at their sole and absolute
discretion, without further notice, do any one or more of the following, all of
which are authorized by Borrower:
(a) declare all Obligations, whether evidenced by this Agreement, by any of
the other Loan Documents, or otherwise, immediately due and payable (and upon
the occurrence of any Event of Default described in Section 8.1(k) all
Obligations shall automatically and without action by Collateral Agent or any
Lender be and become immediately due and payable);
(b) terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of each Lender, but without affecting any
Lender's or the Collateral Agent's rights and security interests in the
Collateral and without affecting the Obligations;
(c) without notice to or demand upon Borrower, make such payments and do
such acts as Required Lenders consider necessary or reasonable to protect the
security interests of the Collateral Agent in the Collateral; (d) without notice
to Borrower (such notice being expressly waived), and without constituting a
retention of any collateral in satisfaction of an obligation (within the meaning
of Section 9-505 of the UCC) (or any successor provision), set off and apply to
the Obligations any and all (i) balances and deposits of Borrower held by any
Lender, or (ii) indebtedness at any time owing to or for the credit or the
account of Borrower held by any Lender; or
(e) direct the Collateral Agent to collect, receive, appropriate and
realize upon the Collateral, on such terms as Required Lenders, in their sole
and absolute discretion, deem appropriate without any liability for any loss due
to a decrease in the market value of the Collateral during the period held,
without demand of performance or other demand, advertisement or notice of any
kind, except as specified below, to or upon Borrower or any other person (all
and each of which demands, advertisements and/or notices are hereby expressly
waived to the extent permitted by law). If any notification to Borrower of
intended disposition of the Collateral is required by law, such notification
shall be deemed reasonable and properly given if mailed to Borrower, postage
prepaid, at least ten (10) days before any such disposition at the address
indicated by Borrower's signature. Any disposition of the Collateral or any part
thereof shall be free of any equity or right of redemption in Borrower, which
right of equity is, to the extent permitted by applicable law, hereby expressly
waived or released by Borrower. Borrower further agrees that such sale or sales
made under the foregoing circumstances shall be deemed to have been made in a
commercially reasonable manner. Neither Collateral Agent nor any Lender shall be
obligated to make any sale or other disposition of the Collateral permitted
under this Loan Agreement, unless the terms thereof shall be satisfactory to
Required Lenders.
The rights and remedies of Collateral Agent and each Lender under this
Agreement, the Loan Documents, and all other agreements shall be cumulative. No
exercise by Collateral Agent or any Lender of one right or remedy shall be
deemed an election, and no waiver by Collateral Agent or any Lender of any Event
of Default shall be deemed a continuing waiver. No delay by Collateral Agent or
any Lender shall constitute a waiver, election, or acquiescence by it.
ARTICLE IX.
THE COLLATERAL AGENT
9.1 Authorization and Action. Each Lender hereby appoints and authorizes the
Collateral Agent to take such action as agent on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are delegated to the
Collateral Agent by the terms hereof and thereof, together with such powers as
are reasonably incidental thereto. Except as specifically provided for by the
Loan Documents, the Collateral Agent shall not be required to exercise any
discretion or take any action under any of the Loan Documents, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Required Lenders,
and such instructions shall be binding upon all Lenders and the Collateral Agent
shall not be liable to the Borrower or any Lender for any action taken or
omitted at the direction of the Required Lenders; provided, however, that the
Collateral Agent shall not be required to take any action that exposes the
Collateral Agent, in its sole judgment, to personal liability or that is
contrary to this Agreement or applicable law. The Collateral Agent agrees to
give to each Lender prompt notice of each notice given to it by the Borrower
pursuant to the terms of this Agreement.
9.2 Collateral Agent's Reliance, Etc.. Neither the Collateral Agent nor any of
its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct.
Without limitation of the generality of the foregoing, the Collateral Agent: (i)
may treat the Lender that made any portion of the Loan as the holder of the debt
resulting therefrom until the Collateral Agent receives notice of an assignment
by such Lender; (ii) may consult with legal counsel (including counsel for any
Loan Party), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (iii)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made by any
Person other than the Collateral Agent in or in connection with the Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto or thereto; and (vi)
shall incur no liability under or in respect of any Loan Document by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telegram, telecopy, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.3 BNY Midwest Trust Company and Affiliates.. BNY Midwest Trust Company and its
affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if BNY Midwest Trust Company were not the Collateral Agent
and without any duty to account therefor to the Lender Parties.
9.4 Lender Credit Decision. Each Lender acknowledges that it has, independently
and without reliance upon the Collateral Agent or any other Lender and based on
the financial statements referred to herein and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Collateral Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.
9.5 Indemnification. Each Lender severally agrees to indemnify the Collateral
Agent (to the extent not promptly reimbursed by the Borrower) from and against
such Lender's ratable share of any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever that may be imposed on, incurred by, or
asserted against the Collateral Agent in any way relating to or arising out of
the Loan Documents or any action taken or omitted by the Collateral Agent under
the Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Collateral
Agent's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Collateral Agent promptly upon
demand for its ratable share of any costs and expenses payable by the Borrower
under Section 10.4, to the extent that the Collateral Agent is not promptly
reimbursed for such costs and expenses by the Borrower.
9.6 Successor Collateral Agents. The Collateral Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders shall have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment, within 30
days after the retiring Collateral Agent's giving of notice of resignation or
the Required Lenders' removal of the retiring Collateral Agent, then the
retiring Collateral Agent may, on behalf of the Lender Parties, appoint a
successor Collateral Agent, which shall be a commercial bank organized under the
laws of the United States or of any State thereof and having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the liens granted or purported to be granted by the Security
Documents, such successor Collateral Agent shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall be discharged from its
duties and obligations under the Loan Documents. After any retiring Collateral
Agent's resignation or removal hereunder as Collateral Agent, the provisions of
this Article IX shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under this Agreement.
9.7 Monthly Verification Duties of Collateral Agent. Upon receipt of each
Collateral Servicing Report and in no event later than the Calculation Date in
respect thereof, the Collateral Agent shall verify the following items in such
Collateral Servicing Report against the monthly servicing reports with respect
to each Securitization:
(a) the outstanding principal balance of auto loans in the pool of
collateral securing the related securitization;
(b) the outstanding principal balance of all certificates and other
interests or rights to payment in respect of such securitization senior in
priority to such Residual Certificate;
(c) the amount of the cash balance in the spread account relating to such
Residual Certificate; and
(d) the Residual Certificate Cash Flows.
The Collateral Agent shall also verify the following rates and amounts on
the Collateral Servicing Report:
(y) LIBOR; and
(z) the pro rata payments of interest and Monthly Amortization Amount made
to each Lender.
ARTICLE X.
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective unless the same shall be in
writing and signed by Required Lenders and Borrower, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all the Lenders, do any of the
following at any time: (i) change the percentage of the aggregate unpaid
principal amount of the Loan that shall be required for the Lenders or any of
them to take any action hereunder, (ii) permit the creation, incurrence,
assumption or existence of any Lien on any item of Collateral to secure any
obligations other than Obligations owing to the Lenders and Collateral Agent
under the Loan Documents, (iii) amend this Section 10.1, (iv) increase the
outstanding principal amount of the Loan, (v) reduce the principal of, or
interest on, the Loan or any fees or other amounts payable hereunder or (vi)
postpone any date fixed for any payment of principal of, or interest on, the
Loan or any fees or other amounts payable hereunder; and provided further that
no amendment, waiver or consent shall, unless in writing and signed by the
Collateral Agent in addition to the Lenders required above to take such action,
affect the rights or duties of the Collateral Agent under this Agreement or any
other Loan Document.
10.2 Notices.
(a) All notices, requests and other communications provided for hereunder
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission, provided, that, any matter transmitted by facsimile
(i) shall be immediately confirmed by a telephone call to the recipient, and
(ii) shall be followed promptly by a hard copy original thereof by over-night
courier to the address set forth below; or to such other address as shall be
designated by such party in a written notice to the other party, and as directed
to each other party, at such other address as shall be designated by Lender or
Borrower in a written notice to Borrower and Lender.
If to Borrower: Ugly Duckling Corporation
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxx & Xxxxxx L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
If to any Lender: As set forth on the Administrative
Form of such Lender
If to Collateral Agent: BNY Midwest Trust Company
0 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) All such notices, requests and communications shall, when transmitted
by overnight delivery or faxed, be effective when delivered for overnight (next
day) delivery, transmitted by facsimile machine, respectively, or if delivered,
upon delivery, except that notices pursuant to Article II shall not be effective
until actually received by each Lender.
(c) Borrower acknowledges and agrees that any agreement of Collateral Agent
or any Lender to receive certain notices by telephone and facsimile is solely
for the convenience and at the request of Borrower. Each of Collateral Agent and
each Lender shall be entitled to rely on the authority of any Person purporting
to be a Person authorized by Borrower to give such notice and neither Collateral
Agent nor any Lender shall have any liability to Borrower or to other Person on
account of any action taken or not taken by Collateral Agent or any Lender in
reliance upon such telephonic or facsimile notice. The obligations of Borrower
hereunder shall not be affected in any way or to any extent by any failure by
Collateral Agent or any Lender to receive written confirmation of any telephonic
or facsimile notice or the receipt by Collateral Agent or any Lender of a
confirmation which is at variance with the terms understood by Collateral Agent
or such Lender to be contained in the telephonic or facsimile notice.
10.3 No Waiver: Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of Collateral Agent or Lender, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.4 Costs and Expenses. Borrower shall, whether or not the transactions
contemplated hereby shall be consummated:
(a) pay or reimburse Collateral Agent and each Lender and each portfolio
advisor within ten (10) Business Days after demand for all Lender Costs incurred
by Collateral Agent or such Lender or such portfolio advisor in connection with
the development, preparation, delivery, administration and execution of (and any
amendment, supplement, waiver or modification to (in each case whether or not
consummated)), this Agreement, any other Loan Document and any other documents
prepared in connection herewith, or therewith, and the consummation of the
transactions contemplated hereby and thereby, including the reasonable Attorney
Costs incurred by Collateral Agent or any Lender or any portfolio advisor with
respect thereto;
(b) pay or reimburse Collateral Agent and each Lender and each portfolio
advisor within ten (10) Business Days after demand for all Lender Costs incurred
by Collateral Agent or such Lender or such portfolio advisor in connection with
the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement, any other Loan Document, and any such other
documents, including reasonable Attorney Costs incurred by Collateral Agent or
any Lender or any portfolio advisor; and
(c) pay or reimburse Collateral Agent and each Lender and each portfolio
advisor within ten (10) Business Days after demand for all reasonable appraisal
(including the allocated cost of internal appraisal services), audit, due
diligence, monitoring review, syndication, environmental inspection and review
(including the allocated cost of such internal services and the allocated costs
of services of SAI or its Affiliates and Trustee), search and filing costs, fees
and expenses, rating agency costs, fees and expenses, transportation costs and
other out-of-pocket expenses incurred or sustained by Collateral Agent, any
Lender or any portfolio advisor, SAI or any of their respective affiliates in
connection with the Loan, the Loan Documents, any of the Obligations and the
matters referred to under (a) and (b) of this Section 10.4.
(d) In addition to the foregoing, if any payment of principal on the Loan
is made by the Borrower to or for the account of a Lender other than on the last
day of the then current Interest Accrual Period, as a result of a payment,
acceleration or for any other reason, Borrower shall, upon demand by such
Lender, pay to such Lender any amounts required to compensate such Lender for
any additional losses, costs or expenses that it may reasonably incur as a
result of such payment, including, without limitation, any loss, cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain the Loan or any portion thereof.
10.5 Indemnity. Borrower shall pay, indemnify, and hold Collateral Agent, each
Lender, SAI, Trustee and each of their respective Affiliates and Subsidiaries,
and each of their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
environmental liabilities and obligations of Borrower, any of its Subsidiaries
or any of their properties and from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs) of any kind or
nature whatsoever with respect to or in connection with the execution, delivery,
enforcement, performance and administration of this Agreement and any other Loan
Documents, or the transactions contemplated hereby and thereby, and with respect
to any investigation, litigation or proceeding related to this Agreement or the
use of the proceeds thereof or any Residual Certificate, Securitization Document
or Securitization Trust, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, however, Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person or the breach
by such Indemnified Person of its obligations hereunder. The agreements in this
Section 10.5 shall survive payment of all other Obligations and the termination
of this Agreement.
10.6 Marshaling: Payments Set Aside. Neither Collateral Agent nor any Lender
shall be under any obligation to marshal any assets in favor of Borrower or any
other Person or against or in payment of any or all of the Obligations. To the
extent that Borrower makes a payment or payments to Collateral Agent or any
Lender, or to the extent Collateral Agent or any Lender enforces its Liens or
exercises its rights of set-off, and such payment or payments or the proceeds of
such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, receiver or any other party in connection with any bankruptcy, or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or set-off
had not occurred.
10.7 Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or delegate obligations under this Agreement or any of the Loan
Documents without the prior written consent of each Lender.
10.8 Set-off. In addition to any rights and remedies of Lenders provided by law,
if an Event of Default exists, each Lender is authorized at any time and from
time to time, without prior notice to Borrower, any such notice being waived by
Borrower to the fullest extent permitted by law, to set off and apply any and
all monies or deposits at any time held by, and other indebtedness at any time
owing by, such Lender to or for the credit or the account of Borrower against
any and all Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not such Lender shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify Borrower after any such
set-off and application made by such Lender; provided, however, that, the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender under this Section 10.8 are in addition
to the other rights and remedies (including other rights of set-off) which such
Lender may have.
10.9 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument.
10.10 Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way
affect or impair the legality or enforceability of the remaining provisions of
this Agreement or any instrument or agreement required hereunder.
10.11 No Third Parties Benefited. This Agreement is made and entered into for
the sole protection and legal benefit of Borrower, Collateral Agent and each
Lender (and its portfolio advisor), and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither Collateral Agent nor any
Lender shall have any obligation to any Person not a party to this Agreement or
other Loan Documents.
10.12 Time. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.
10.13 Governing Law and Jurisdiction.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER
OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, IT BEING
THE INTENT OF THE PARTIES THAT THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE
RIGHTS AND DUTIES OF THE PARTIES HERETO WITHOUT REGARD TO CHOICE OR CONFLICTS OF
LAW PRINCIPLES; EXCEPT THAT THE PROVISIONS HEREIN THAT PERTAIN TO THE PERFECTION
OR THE EFFECT OF PERFECTION OF SECURITY INTERESTS IN COLLATERAL SHALL BE
GOVERNED BY THE LAWS OF SUCH STATE AS ARE SPECIFIED IN SECTION 9103 OF THE UCC.
THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE
BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT ANY PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN THE COURTS OF ANY JURISDICTION.
THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. THE BORROWER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER AND LENDER REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
10.14 Entire Agreement. This Agreement, together with the other Loan Documents,
embodies the entire Agreement and understanding among Borrower, Collateral Agent
and Lenders and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof and any prior arrangements made with respect to the
payment by Borrower (or any indemnification for) any Lender Costs incurred (or
to be incurred) by or on behalf of Collateral Agent or any Lender.
10.15 Interpretation. This Agreement is the result of negotiations between and
has been reviewed by counsel to Collateral Agent, Lenders, Borrower and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against Collateral Agent or
any Lender merely because of Lenders' involvement in the preparation of such
documents and agreements.
10.16 Assignment; Register. Each Lender may assign, sell participations in or
pledge its rights hereunder and under the Loan Documents without the consent of
Borrower; provided, however, that no such assignment shall be effective until
the parties thereto shall have executed and delivered to the Collateral Agent
for acceptance and recording in the Register (as defined below) an Assignment
and Acceptance. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in such Assignment and Acceptance, (x)
the assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender hereunder and (y)
the Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto). Borrower may not assign or
delegate any of its rights, interest or obligations hereunder or under any of
the Loan Documents.
The Collateral Agent, on behalf of the Borrower, shall maintain at the
Collateral Agent's address referred to in Section 9.02 a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the principal amount
of the Loan owing to each Lender from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Collateral Agent and the Lenders may treat
each Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee, the Collateral Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower. Within five Business Days after its receipt of written request
therefor, the Borrower, at its own expense, shall execute and deliver to the
Collateral Agent in exchange for any Note surrendered in connection with an
assignment hereunder, a new Note to the order of the assignee in an amount equal
to the principal amount of the Loan assumed by it and, if the assigning Lender
has retained a portion of the Loan hereunder, a new Note to the order of the
assigning Lender in an amount equal to such portion retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note, shall be dated the
effective date of the applicable Assignment and Acceptance and shall otherwise
be in substantially the form of Exhibit D.
10.17 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by Borrower or the transfer by Borrower to Collateral Agent or
any Lender of any property of either or both of such parties should for any
reason subsequently be declared to be void or voidable under any state or
federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, and other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Collateral Agent or any Lender is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that Lender is required or elects
to repay or restore, and as to all reasonable costs, expenses, and Attorney
Costs of Lender related thereto, the liability of Borrower automatically shall
be revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
10.18 Survival. Notwithstanding any provision of this agreement or any other
Loan Document to the contrary, the provisions of Sections 2.11, 2.12, 2.13,
2.14, 9.4, 9.5, 10.4 and 10.5 shall survive payment of all other Obligations and
the termination of this Agreement.
10.19 Confidentiality. Each Lender and Collateral Agent agrees to hold any
confidential information that it may receive from Borrower pursuant to this
Agreement in confidence, except for disclosure: (a) to other Lenders, rating
agencies, trustees, reference lenders, portfolio advisors, any direct or
indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor, and any other parties relevant to any
investment vehicle managed by SAI Investment Adviser, Inc.; (b) to legal counsel
and accountants for Borrower, Collateral Agent or any Lender or prospective
Lender; (c) to other professional advisors to Borrower, Collateral Agent or any
Lender or prospective Lender; (d) to regulatory officials; (e) as required by
law or legal process; and (f) to another proposed Lender in connection with a
proposed assignment permitted hereunder provided that the recipient has accepted
such information subject to a confidentiality agreement substantially similar to
this Section 10.19. For purposes of the foregoing "confidential information"
shall mean any information respecting Borrower, its Subsidiaries or Affiliates
delivered to Lenders and marked confidential, other than (i) information
previously filed with any governmental agency and available to the public, (ii)
information previously published in any public medium from a source other than
directly or indirectly, that Lender, (iii) information previously disclosed by
Borrower to any Person not associated with Borrower without a confidentiality
agreement or obligation substantially similar to this Section 10.19, and (iv)
any such information that is or becomes generally available to the public other
than as a result of a breach by Collateral Agent or any Lender of its
obligations hereunder or that is or becomes available to Collateral Agent or
such Lender from a source other than Borrower.
10.20 Actions by Portfolio Advisor. Any rights of a Lender hereunder or under
any other Loan Document may be exercised by such Lender's portfolio advisor or
collateral manager upon delivery to the Collateral Agent of evidence in writing,
reasonably satisfactory to the Collateral Agent, setting forth such authority
(which may be in the form of a written confirmation of such authority from the
applicable Lender).
* * * * *
[Signature Page to Loan Agreement]
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed as of the date first written above.
UGLY DUCKLING CORPORATION,
a Delaware corporation
By:
Name:
Title:
Lenders:
GALAXY CLO 1999-1, LTD.
By: SAI Investment Advisers, Inc.
its Collateral Manager
By:
Name:
Title:
Portion of Initial Principal Amount :$17,000,000
Ratable Share: 48.571429%
Address for notices in respect of payment:
------------------------------
------------------------------
Xxx Xxxxxxx, XX 00000-0000
Attn: ________________________
Facsimile: ___________________
Address for all other notices:
------------------------------
------------------------------
Xxx Xxxxxxx, XX 00000-0000
Attn: ________________________
Facsimile: ___________________
SUNAMERICA LIFE INSURANCE COMPANY
By:
Name:
Title:
Portion of Initial Principal Amount :$6,000,000
Ratable Share: 17.142857%
Address for notices in respect of payment:
SunAmerica Investments
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Investment Accounting, 36th Floor
Facsimile: (000) 000-0000
Address for all other notices:
SunAmerica Corporate Finance
0 XxxXxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxxx
Facsimile: (000) 000-0000
KZH SOLEIL-2 LLC
By:
Name:
Title:
Portion of Initial Principal Amount:$12,000,000
Ratable Share: 34.285714%
Address for Notice:
x/x Xxx Xxxxx Xxxxxxxxx Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxx Xxxxxx
Collateral Agent:
BNY MIDWEST TRUST COMPANY, as Collateral Agent
By:
Name:
Title:
SCHEDULE H
BNY MIDWEST TRUST COMPANY
SCHEDULE OF FEES
AS
COLLATERAL AGENT
FOR
UGLY DUCKLING CORPORATION
$38 MILLION SENIOR SECURED LOAN FACILITY
1. Acceptance Fees.........................................................................$[1,500]
To include: - examination and administrative review of the Senior
Secured Loan Agreement and all related documents
- establishment of all appropriate accounts
- participation in pre-closing and closing
2. Annual Administration Fee...............................................................$[6,000 per annum]
To include: - administration of covenants of the Senior Secured Loan Agreement and all related documents
- compliance monitoring
- collection and application (investment) of collected funds
- payment of principal and interest to Lenders
- maintenance of certificateholder records (maximum of 5 Lenders)
- transfer and assignment of Lender's beneficial interest
(maximum 2 transfers per life of facility)
- safekeeping of pledged stock certificates
Additional Lender - $[1,000 per annum per Lender]
Additional Transfer - $[3,500 per transfer]
3. Miscellaneous Fees:
I. Wires...............................................................................$[20.00]
II. Investment Charges (each)...........................................................$[35.00]*
*If balances are invested in selected mutual funds, the above investment fees
will be waived.
BNY MIDWEST TRUST COMPANY
SCHEDULE OF FEES
AS
COLLATERAL AGENT
FOR
UGLY DUCKLING CORPORATION
$38 MILLION SENIOR SECURED LOAN FACILITY
(continued)
NOTE:
Additionally, the cost of extraordinary items that can be directly allocated,
such as legal fees and expenses (if any), travel expenses, etc., will be billed
separately. The foregoing schedule has been designed to apply to collateral
agent duties requiring the usual amount of responsibility, time and attention.
All fees are subject to our review and acceptance of the governing
documentation, and to reasonable adjustment as changes in laws, procedures or
costs of doing business demand.
Fees for services not specifically covered in this schedule will be assessed in
an amount commensurate with the services rendered.
The acceptance fee will be billed upon acceptance. The annual administration fee
will be billed annually in advance. All other activity-based fees will be billed
annually, as incurred.
December [___], 2000
