Exhibit 10.11
EXECUTION COPY
CREDIT AND SECURITY AGREEMENT
By and Among
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.,
as Lender
LONG BEACH ACCEPTANCE RECEIVABLES CORP.,
as Borrower
and
LONG BEACH ACCEPTANCE CORP.,
as Guarantor
---------------------------
Dated as of November 25, 1998
---------------------------
TABLE OF CONTENTS
PAGE
----
1. Definitions....................................................... 2
2. The Loan.......................................................... 9
2.1. Agreement to Lend................................................. 9
2.2. [Reserved]........................................................ 9
2.3. Note. ......................................................... 9
2.4. Interest.......................................................... 9
2.5. Repayment of the Loan............................................. 10
2.6. Optional Prepayments.............................................. 10
2.7. Payment Procedures................................................ 10
2.8. Indemnity......................................................... 11
2.9. Limited Recourse.................................................. 11
3. Grant of Security Interest; Eligible Collateral................... 11
3.1. Valid Security Interest........................................... 11
3.2. Further Assurances................................................ 12
3.3. Data Reporting.................................................... 12
3.4. Powers............................................................ 13
3.5. No Duty on the Part of Lender..................................... 13
3.6. Performance by Lender of Borrower's Obligations................... 13
3.7. Limitation on Duties Regarding Preservation of Collateral......... 13
3.8. Powers Coupled with an Interest................................... 13
3.9. Termination....................................................... 13
3.10. Segregation of Funds.............................................. 14
3.11. Certain Accounts.................................................. 14
3.12. Advance Rate Maintenance; Release of Excess Collateral............ 14
3.13. Valuation Model................................................... 15
3.14. Exhibit G......................................................... 16
4. Representations and Warranties.................................... 16
4.1. Organization...................................................... 16
4.2. Power and Authority............................................... 16
4.3. Authorization of Borrowing........................................ 16
4.4. Agreement Binding................................................. 16
4.5. Compliance with Law............................................... 17
4.6. Consents.......................................................... 17
4.7. Litigation........................................................ 17
4.8. Financial Statements.............................................. 17
4.9. Other Obligations................................................. 17
4.10. Regulation G...................................................... 18
4.11. Investment Company Act............................................ 18
4.12. Chief Executive Office............................................ 18
4.13. Collateral Security............................................... 18
4.14. Ownership of Properties........................................... 18
4.15. Full Disclosure................................................... 19
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4.16. ERISA............................................................. 19
4.17. Basic Documents................................................... 19
5. Affirmative Covenants............................................. 19
5.1. Notice. ......................................................... 19
5.2. Taxes. ......................................................... 20
5.3. Separate Existence: No Commingling................................ 20
5.4. Financing Statements.............................................. 20
5.5. Books and Records; Other Information.............................. 20
5.6. Payment of Fees and Expenses...................................... 21
5.7. Continuity of Business and Compliance With Agreement.............. 21
5.8. Financial Statements and Access to Records........................ 21
5.9. Financial Condition............................................... 22
5.10. Litigation Matters................................................ 22
5.11. Fulfillment of Obligations........................................ 22
5.12. Notice of Change of Chief Executive Office........................ 22
5.13. Compliance with Laws, etc......................................... 22
5.14. Delivery of Collateral............................................ 23
5.15. Cross-Collateralization........................................... 23
6. Negative Covenants................................................ 23
6.1. Adverse Transactions.............................................. 23
6.2. Guaranties........................................................ 24
6.3. Corporate Documents............................................... 24
6.4. Investments; Dividends............................................ 24
6.5. Loans; Capital Structure; Affiliates.............................. 24
6.6. Liens. ......................................................... 25
6.7. VSI Policies...................................................... 25
7. Conditions Precedent.............................................. 25
7.1. Conditions Precedent to Agreement................................. 25
8. Events of Default................................................. 27
8.1. Events of Default................................................. 27
8.2. Remedies of Default............................................... 30
9. Miscellaneous..................................................... 32
9.1. Payment of Expenses, Indemnity, etc............................... 32
9.2. Set-off........................................................... 33
9.3. Amendments........................................................ 34
9.4. Waiver; Cumulative Rights......................................... 34
9.5. Nonpetition Covenant.............................................. 34
9.6. Non-affiliation................................................... 34
9.7. Binding Effect.................................................... 34
9.8. Survival.......................................................... 34
9.9. GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY...................... 34
9.10. Notice. ......................................................... 35
9.11. Severability...................................................... 37
9.12. Counterparts...................................................... 37
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9.13. Merger or Consolidation........................................... 37
9.14. Subsequent Actions................................................ 37
9.15. Assignability..................................................... 37
9.16. Certain Reimbursements............................................ 37
EXHIBIT A - Promissory Note................................................ A-1
EXHIBIT B - Form of LBAC Guaranty.......................................... B-1
EXHIBIT C - Form of AMC Guaranty........................................... C-1
EXHIBIT D - Compliance Certificate......................................... D-1
EXHIBIT E - Form of Opinion of Counsel..................................... E-1
EXHIBIT F - [Reserved]..................................................... F-1
EXHIBIT G - Other Residual Financing Agreements............................ G-1
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CREDIT AND SECURITY AGREEMENT
CREDIT AND SECURITY AGREEMENT, dated as of November 25, 1998 (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), by and
among (i) GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
(the "Lender"), (ii) LONG BEACH ACCEPTANCE RECEIVABLES CORP., a Delaware
corporation (the "Borrower"), and (iii) LONG BEACH ACCEPTANCE CORP., a Delaware
corporation (the "Guarantor").
R E C I T A L S
- - - - - - - -
WHEREAS, Borrower is a direct wholly-owned subsidiary of LBAC, which is in
the business of originating and acquiring Receivables (as hereinafter defined);
and
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Guarantor and Borrower are entering into a securitization transaction (the
"Securitization Transaction") providing for, among other things, (a) one of
Lender's affiliates to purchase certain securities issued thereunder and (b)
Borrower to retain the Excess Cash Flow Certificate (as defined herein) issued
thereunder; and
WHEREAS, in order to induce Lender to enter into this Agreement, Guarantor
is willing to provide the Guarantee (as defined herein) and Ameriquest Mortgage
Company, a Delaware corporation ("AMC") is willing to provide the AMC Guarantee
(as defined herein); and
WHEREAS, Lender is willing to provide Borrower with a secured loan in order
to induce Borrower and Guarantor to enter into the Securitization Transaction
and in consideration of the Guarantee, the AMC Guarantee, the pledge of the
Collateral (as defined herein) and on the terms and conditions set forth herein
and in the Guarantee and the AMC Guarantee; and
WHEREAS, Borrower and Guarantor have entered into and may from time to time
enter into Other Residual Financing Agreements (as hereinafter defined) with
Lender; and
WHEREAS, Borrower, Guarantor and Lender have agreed to secure the Other RF
Obligations (as hereinafter defined) with the Collateral pledged hereunder (in
addition to the collateral pledged under the Other Residual Financing
Agreements).
NOW THEREFORE in consideration of the premises and mutual agreements
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. Definitions. When used herein, the following terms shall have the
meanings set forth below:
"ADDITIONAL COLLATERAL RELEASE CONDITION" means, as of any date of
determination, if the Cumulative Actual Advance Rate for such date does not
exceed 75%.
"ADVANCE RATE" means, as of any Calculation Date, the percentage equivalent
of a fraction, the numerator of which shall equal the aggregate unpaid principal
balance of the Loan, and the denominator of which shall equal the Present Value
of the Collateral, in each case measured as of such Calculation Date. The
Advance Rate shall be determined in accordance with Section 3.12(a) (and (x) for
the calculation of the Advance Rate provided in Section 6.4, also as provided in
such Section and (y) for the calculation of the Advance Rate provided in Section
9.16 (a) and (b), also as provided in such subsections).
"AMC" has the meaning assigned thereto in the recitals hereto.
"AMC GUARANTEE" means the guarantee in the form attached hereto as
Exhibit C provided by AMC as an inducement to Lender to provide Borrower with
the Loan, as amended, supplemented or otherwise modified from time to time.
"APR" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"AVERAGE DEFAULT RATE" means, as of any Calculation Date, the lesser of
(i) the arithmetic average of the Default Rates for the most recent three months
as reported in the related Servicer's Certificates and (ii) the arithmetic
average of the Default Rates for the most recent six months as reported in the
related Servicer's Certificates.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time.
"BANKRUPTCY REMOTE ENTITY" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"BASIC DOCUMENTS" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"BORROWER" has the meaning assigned thereto in the heading hereto.
"BUSINESS DAY" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"CALCULATION DATE" has the meaning assigned thereto in Section 3.12(a).
"CERTIFICATE INSURER" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
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"CLOSING DATE" means November 25, 1998.
"CODE" means the Uniform Commercial Code as from time to time in effect in
the State of New York.
"COLLATERAL" has the meaning assigned thereto in Section 3.1 hereof.
"COLLECTION PERIOD" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"COMMONLY CONTROLLED ENTITY" means, as to any Person, an entity, whether or
not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended from time to time.
"CROSS-COLLATERALIZED SECURITY" means any excess cash flow certificate or
other residual interest issued in connection with any Cross-Collateralized
Subsequent Securitization.
"CROSS-COLLATERALIZED SUBSEQUENT SECURITIZATION" means any securitization
occurring after the Closing Date the spread account or similar account of which
is cross-collateralized with the Spread Account pursuant to the Spread Account
Agreement.
"CUMULATIVE ACTUAL ADVANCE RATE" means, as of any date, the percentage
equivalent of a fraction, (a) the numerator of which shall equal the sum of
(i) the aggregate unpaid principal balance of the Loan hereunder on such date
and (ii) the aggregate outstanding principal balance of all loans under each
Other Residual Financing Agreement as of such date and (b) the denominator of
which shall equal the sum of (i) the Present Value of the Collateral hereunder
(determined as of the most recent date calculated in accordance with Section
3.12(a)) and (ii) the aggregate present value of all collateral securing
Borrower's obligations to Lender under and as determined in each Other Residual
Financing Agreement (determined as of the most recent date specified in each
such Other Residual Financing Agreement; provided that, for purposes of this
definition, with respect to the determination of the present value of collateral
under any Other Residual Financing Agreement during the first six months of its
effectiveness, such determination shall be deemed to equal the initial
determination of the present value of the collateral under and as determined in
such Other Residual Financing Agreement in connection with the initial borrowing
thereunder.
"DEFAULT" means any condition, act or event, which, with notice or lapse of
time or both, would constitute an Event of Default.
"DEFAULT RATE" has the meaning assigned thereto in the Spread Account
Agreement.
"DISCOUNT RATE" means 15% per annum.
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"ELIGIBLE SECURITIES" means (i) the Excess Cash Flow Certificate,
(ii)direct obligations of, and obligations fully guaranteed as to the full and
timely payment by, the United States of America or any agency thereof, in each
case having a maturity not to exceed the maturity of the Loan and (iii) and such
other securities as are acceptable to Lender in its sole discretion.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" has the meaning assigned thereto in Section 8.1 hereof.
"EXCESS CASH FLOW CERTIFICATE" means the security evidenced by the Excess
Cash Flow Certificate issued pursuant to the Pooling and Servicing Agreement.
"EXCESS CASH FLOW CERTIFICATEHOLDER" has the meaning assigned thereto in
the Pooling and Servicing Agreement.
"GOVERNMENTAL AUTHORITY" means any nation, government, or State, or any
political subdivision thereof, or any court, stock exchange, entity or agency
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GUARANTEE" means the guarantee in the form attached hereto as Exhibit B
provided by Guarantor as an inducement to Lender to provide Borrower with the
Loan, as amended, supplemented or otherwise modified from time to time.
"GUARANTOR" has the meaning assigned thereto in the heading hereto.
"LENDER" has the meaning assigned thereto in the heading hereto.
"LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"LIQUIDATION PROCEEDS" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"LOAN" has the meaning assigned thereto in Section 2.1 hereof.
"MAINTENANCE ADVANCE RATE" means, as of any Calculation Date, the rate
which is 5% in excess of the Target Advance Rate with respect to such date.
"MATURITY DATE" means the date which occurs 364 days after the date hereof,
or, if such date is not a Business Day, the next preceding Business Day;
provided that if, prior to such date, the Pooling and Servicing Agreement is
terminated pursuant to Section 10.01 thereof or the Originator or Servicer
exercises its option to purchase the corpus of the Trust as provided in
4
Section 10.02 of the Pooling and Servicing Agreement, the Maturity Date shall be
the date of such termination or purchase, as the case may be; and provided,
further, that the Maturity Date may be extended upon the written consent of
Lender, Borrower and Guarantor, and thereafter the Maturity Date shall be the
Maturity Date as so extended.
"MONTHLY RECOVERY RATE" means, with respect to any Collection Period, a
fraction, the numerator of which shall equal the sum of all Liquidation Proceeds
and Recoveries for such Collection Period, and the denominator of which shall
equal the sum of the principal balances of all Receivables which were actually
liquidated during such Collection Period, in each case as reported in the
related Servicer's Certificate.
"MULTIEMPLOYER PLAN" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"NOTE" has the meaning assigned thereto in Section 2.3(a) hereof.
"OBLIGATIONS" mean (i) the unpaid principal of and premiums, if any, and
interest (including interest accruing at the then applicable rate provided in
this Agreement after the maturity of the Loan and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceedings, relating to Borrower or Guarantor whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding) on the
Loan, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise and (ii) all other obligations and
liabilities of every nature of Borrower or Guarantor from time to time owing to
Lender, in each case whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), to the extent such obligations and liabilities
arise under, out of, or in connection with, this Agreement or the Guarantee or
under any other document made, delivered or given in connection with any of the
foregoing, in each case whether on account of principal, premium, if any,
interest, fees, indemnities, costs, expenses or otherwise (including all fees
and disbursements of counsel to Lender) that are required to be paid by Borrower
or Guarantor pursuant to the terms of this Agreement or the Guarantee.
"OTHER RESIDUAL FINANCING AGREEMENTS" means, collectively, (i) the Credit
and Security Agreement dated as of March 31, 1997 by and among the Lender, as
lender, Borrower, as borrower, and Guarantor, as guarantor, as amended pursuant
to Amendment No. 1 thereto dated as of January 30, 1998, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof, (ii) the Credit and Security Agreement dated as of August 29,
1997 by and among the Lender, as lender, Borrower, as borrower, and Guarantor,
as guarantor, as amended pursuant to Amendment No. 1 thereto, dated as of
January 30, 1998, and as otherwise may be amended, supplemented or otherwise
modified from time to time pursuant to the terms thereof, (iii) the Credit and
Security Agreement dated as of January 30,
5
1998 by and among the Lender, as lender, Borrower, as borrower, and Guarantor,
as guarantor, as may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof and (iv) each other credit and security
agreement among the Lender and Borrower secured by one or more excess cash flow
certificates or other residual interests in securitizations identified on
Exhibit G hereto (as such Exhibit G may be amended or supplemented from time to
time in accordance with Section 3.14 hereof), as each such other agreement may
be amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
"OTHER RF AMENDMENTS" means, collectively, Amendments No. 1 to the credit
and security agreements referred to in clauses (i) and (ii) of the definition of
Other RF Agreements.
"OTHER RF EVENT OF DEFAULT" means the occurrence of any Event of Default
under and as defined in any Other Residual Financing Agreement (after giving
effect to any grace or cure period applicable thereto).
"OTHER RF OBLIGATIONS" means all obligations and liabilities of every
nature of Borrower or Guarantor from time to time owing to Lender, in each case
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), to
the extent such obligations and liabilities arise under, out of, or in
connection with, any Other Residual Financing Agreement, any guarantees related
thereto or any other document made, delivered or given in connection therewith,
in each case whether on account of principal, premium, if any, interest, fees,
indemnities, costs, expenses or otherwise (including all fees and disbursements
of counsel to Lender).
"PERSON" means an individual, partnership, limited liability company,
corporation, business trust, joint venture or other entity of whatever nature.
"PLAN" means any Person that is (i) an "employee benefit plan" (as defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is subject to
Section 4975 of the Code or (iii) any entity whose underlying assets include
assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"PLEDGED SECURITIES" means Eligible Securities pledged and held as
Collateral hereunder pursuant to Section 3.1.
"POOLING AND SERVICING AGREEMENT" means the Pooling and Servicing
Agreement, dated as of November 1, 1998, among LBAC, Borrower and Chase Bank of
Texas, National Association, as amended, supplemented or otherwise modified from
time to time.
"PREPAYMENT RATE" means, as of any Calculation Date, the cumulative ABS
rate (calculated according to the Uniform Practices for the Clearance and
Settlement of Mortgage-Backed Securities and Other Related Securities of the
Public Securities Association) for the most
6
recent three months, calculated using the Principal Balance, APR, original term
to maturity and remaining term to maturity of the Receivables as reported in
the related Servicer's Certificates.
"PRESENT VALUE OF THE COLLATERAL" means, as of any Calculation Date, in the
case of the Excess Cash Flow Certificate, the then current present value
thereof, determined based upon the Valuation Rates and calculated in accordance
with Section 3.12(a), and in all other cases, the then current market value of
the Collateral.
"PRINCIPAL BALANCE" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"PROCEEDS" means all "proceeds" as defined in Section 9-306(1) of the
Uniform Commercial Code as in effect in the State of New York and, in any event,
in connection with the Collateral shall include without limitation, all
collections, distributions or other income from the Pledged Securities.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated as of November 1,
1998, among LBAC, AMC and Borrower, as amended, supplemented or otherwise
modified from time to time.
"RECEIVABLE" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"RECOURSE PROPERTY" has the meaning assigned thereto in Section 2.9.
"RECOVERIES" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"RECOVERY RATE" means, as of any Calculation Date, the arithmetic average
of the Monthly Recovery Rates for the most recent three months.
"REMITTANCE DATE" means the 19th day of each month or, if such day is not a
Business Day, the immediately succeeding Business Day, commencing December 21,
1998.
"REQUIREMENT OF LAW" means, as to any Person, any law, statute, rule,
treaty, regulation, or determination of an arbitrator, court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its properties or to which any such Person or any of its properties
may be bound or affected.
"RESPONSIBLE OFFICER" means the president, chief executive officer, chief
financial officer, any executive vice president, secretary, vice
president-finance, comptroller or treasurer of Borrower, Guarantor or AMC, as
applicable.
"SECURITIZATION TRANSACTION" has the meaning assigned thereto in the
recitals hereto.
"SECURITY AGREEMENT" means the Security Agreement dated as of January 30,
1998 made by Long Beach Acceptance Corp., as Pledgor, in favor of Greenwich
Capital Financial Products,
7
Inc., as Pledgee, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"SERVICER'S CERTIFICATE" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"SPREAD ACCOUNT" has the meaning assigned thereto in the Pooling and
Servicing Agreement.
"SPREAD ACCOUNT AGREEMENT" means the Master Spread Account Agreement dated
as of November 1, 1998, among Borrower, the Certificate Insurer, the Trustee and
the Collateral Agent (as defined in the Pooling and Servicing Agreement), as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"SPREAD ACCOUNT SUBSEQUENT DEPOSIT" has the meaning assigned thereto in the
Pooling and Servicing Agreement.
"SUBSEQUENT TRANSFER DATE" has the meaning assigned thereto in the Pooling
and Servicing Agreement.
"TARGET ADVANCE RATE" means, as of any Calculation Date, 60%.
"TRUST" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"TRUSTEE" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"VALUATION MODEL" means a proprietary cash flow valuation model in computer
spread sheet form to be used by Lender in calculating the Present Value of the
Collateral and making related calculations on each Calculation Date.
"VALUATION RATES" means, collectively, the Prepayment Rate, the Average
Default Rate, the Recovery Rate and the Discount Rate.
"VSI POLICY" has the meaning assigned thereto in the Pooling and Servicing
Agreement.
"WAREHOUSE LENDING AGREEMENT" means the Warehouse Lending Agreement dated
as of January 30, 1998 between Long Beach Acceptance Corp., as Borrower, and
Greenwich Capital Financial Products, Inc., as Lender, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"WAREHOUSE OBLIGATIONS" means the Obligations (as defined in the Warehouse
Lending Agreement) under the Warehouse Lending Agreement.
Capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Pooling and Servicing Agreement.
8
2. The Loan.
2.1. AGREEMENT TO LEND. Subject to the terms and conditions of this
Agreement, Lender agrees to lend to Borrower on the Closing Date, an aggregate
principal amount of $2,700,000.00 (TWO MILLION SEVEN HUNDRED THOUSAND DOLLARS)
(the "Loan"). The proceeds of the Loan shall be used by Borrower to (a) make the
initial deposits required to be made to the Spread Account (as defined in the
Pooling and Servicing Agreement) and the Capitalized Interest Account (as
defined in the Pooling and Servicing Agreement) pursuant to the Spread Account
Agreement and the Pooling and Servicing Agreement, and (b) prepay a portion of
the Other RF Obligations described in clause (i) of the definition of "Other
Residual Financing Agreements" herein, as applicable.
2.2. [Reserved]
2.3. NOTE. (a) Borrower's obligation to repay the Loan extended
pursuant hereto and interest thereon shall be evidenced by a single promissory
note of Borrower payable to the order of Lender, substantially in the form of
Exhibit A hereto (as amended, supplemented or otherwise modified from time to
time, the "Note").
(b) The date and amount of the Loan by Lender and the date and amount
of each payment of principal made by Borrower shall be evidenced by entries made
by Lender in its books and records kept by it in the normal course of its
business. Borrower agrees and acknowledges that such books and records of Lender
documenting actual amounts received from Borrower shall constitute PRIMA FACIE
evidence of Borrower's indebtedness outstanding hereunder.
2.4. INTEREST. (a) Borrower agrees to pay to Lender interest on the
unpaid principal amount of the Loan from and including the date the Loan is
extended to but not including the date on which the Loan is paid in full.
Interest shall accrue at a rate equal to eight (8) percent per annum. Accrued
interest shall be payable in arrears on each Remittance Date, and on the date of
repayment in full of the Loan.
(b) If Borrower shall fail to pay when due (whether at stated maturity,
by acceleration or otherwise) any principal, interest or other Obligation due
and owing to Lender under this Agreement or the Note, and such failure to pay
shall constitute an Event of Default, Borrower shall pay to Lender on demand
such principal, interest or other Obligation together with interest on such
principal, interest (to the extent permitted by applicable law) or other
Obligation in default from and including the date such payment became due until
payment thereof in full (after as well as before judgment) at a rate per annum
equal to ten and one-half (10.50) percent per annum.
(c) If, by the terms of this Agreement or the Note, Borrower at any time is
required or obligated to pay interest at a rate in excess of the maximum rate
permitted by applicable law, the rate of interest shall be deemed to be
immediately reduced to such maximum rate and the portion of all prior interest
payments in excess of such maximum rate shall be applied and shall be
9
deemed to have been payments made in reduction of the principal amount
due hereunder and under the Note.
(d) All interest payable hereunder shall be computed based on actual number
of days elapsed in a year of 360 days.
2.5. REPAYMENT OF THE LOAN. Subject to Section 8, (a) the outstanding
balance of the Loan shall be repaid in full on the Maturity Date, together with
accrued but unpaid interest thereon and (b) pursuant to the agreement described
in the last sentence of Section 2.7(a), Borrower shall cause the Trustee to
remit directly to Lender all distributions payable under the Pooling and
Servicing Agreement and the Spread Account Agreement to the Excess Cash Flow
Certificateholder until such time as the Loan and all other Obligations of
Borrower to Lender hereunder are paid in full.
2.6. OPTIONAL PREPAYMENTS. Borrower may at any time and from time to
time upon two (2) Business Days' prior written notice to Lender prepay any Loan
in whole or in part, without premium, together with accrued interest to the date
of such prepayment on the amount prepaid. Any amounts prepaid by Borrower
hereunder may not be reborrowed.
2.7. PAYMENT PROCEDURES. (a) Borrower agrees and acknowledges that
Borrower will, immediately upon an Event of Default or an Other RF Event of
Default (i) re-register any securities (other than the Excess Cash Flow
Certificate) delivered as Collateral hereunder into Lender's name and
(ii) subject to Section 5.5(d) of the Pooling and Servicing Agreement, upon
the request of Lender, re-register the Excess Cash Flow Certificate in the
name of a Bankruptcy Remote Entity designated by Lender.
(b) On or prior to the Closing Date, Borrower will provide Trustee under
the Pooling and Servicing Agreement with a notice providing for, among other
things, all remittances on the Excess Cash Flow Certificate to be paid to Lender
to the full extent of Borrower's Obligations to Lender hereunder and Borrower's
Other RF Obligations to Lender under the Other Residual Financing Agreements,
which notice to Trustee will be irrevocable for so long as any of the
Obligations or Other RF Obligations remain outstanding (unless otherwise
consented to in writing by Lender). All amounts received in respect of the
Excess Cash Flow Certificate or other Collateral will be applied first to
satisfy the Obligations and then to satisfy the Other RF Obligations. Any
amounts received by Lender in excess of the Obligations and Other RF Obligations
due and owing to Lender shall be remitted by Lender to Borrower.
(c) All payments to Lender hereunder or under the Note shall be made in
immediately available funds, and free and clear of and without deduction for any
taxes, levies, duties, charges, counterclaims, set-offs, fees or withholdings of
any nature hereafter imposed, assessed or collected, not later than the due date
for such payment through the Federal Reserve Fedwire System for credit to the
account of Lender (Account No. 140095961 at Chase Manhattan Bank, ABA
No. 000000000).
10
(d) Any payments made hereunder shall be applied first against costs and
expenses due hereunder pursuant to Section 9.1; then against default interest,
if any; then against interest due on the Loan; and thereafter against the unpaid
principal of the Loan.
2.8. INDEMNITY. Borrower agrees to indemnify Lender and to hold it
harmless from any cost, loss or expense which Lender may sustain or incur as a
consequence of any acceleration of the maturity of any Loan by Lender in
accordance with the terms of this Agreement, including, but not limited to, any
cost, loss or expense arising in liquidating the Loan and from interest or fees
payable by Lender to lenders of funds obtained by it in order to maintain the
Loan hereunder. In the event Borrower is required to make any payment pursuant
to this Section 2.8, Lender shall provide to Borrower in writing the basis upon
which such charges were calculated in reasonable detail.
2.9. LIMITED RECOURSE. The Obligations of Borrower hereunder shall be
limited in recourse to the property and assets of Borrower which Borrower
pledges on the date hereof, or may hereinafter from time to time pledge, as
Collateral pursuant to the terms of this Agreement (the "Recourse Property"). To
the extent that the Recourse Property is insufficient to satisfy the Obligations
of Borrower hereunder, Lender shall have no claim against Borrower or any
property or assets of Borrower that are not on the date hereof or have not been,
as of the applicable date, so pledged. Notwithstanding the foregoing, however,
the Obligations of the Guarantor hereunder and under the Guarantee shall be
fully recourse to Guarantor and all property and assets of Guarantor, whether
now owned or hereinafter acquired, and Guarantor shall remain liable for all
Obligations of Borrower pursuant to the terms of the Guarantee.
3. Grant of Security Interest; Eligible Collateral.
3.1. VALID SECURITY INTEREST. As security for the prompt and complete
payment when due (whether at the Maturity Date, by acceleration or otherwise) of
the Obligations, Other RF Obligations and Warehouse Obligations, Borrower hereby
pledges, assigns and transfers to Lender and its successors, endorsees,
transferees and assigns and hereby grants to Lender and its successors,
endorsees, transferees and assigns a continuing, first priority security
interest in all of Borrower's right, title and interest in the following
property, whether now owned by Borrower or hereafter acquired and whether now
existing or hereafter coming into existence (all being collectively referred to
as "COLLATERAL"):
(a) the Excess Cash Flow Certificate delivered to and held by
Lender or its designee or agent and all rights to receive payments
payable under the Pooling and Servicing Agreement to the Excess Cash
Flow Certificateholder pursuant to the terms and provisions of the
Pooling and Servicing Agreement and the Spread Account Agreement;
(b) any Cross-Collateralized Security delivered to and held
by Lender or Lender's designee or agent and all rights to receive
payments payable in respect of such Cross-Collateralized Security to
the holder of such Cross-Collateralized Security pursuant to the terms
and provisions of the Spread
11
Account Agreement and the agreements entered into in connection with
the related Cross-Collateralized Subsequent Securitization;
(c) any other cash, Eligible Securities, or other property
acceptable to Lender in its sole discretion and transferred or
otherwise delivered to Lender or its agent from time to time and
designated by Borrower as Collateral hereunder; and
(d) all Proceeds of any of the foregoing, including, in any
event, all causes of action, claims and warranties now or hereafter
held by Borrower or its designee or agent in respect of any of the
foregoing, all shares, securities, moneys (including cash) or property
representing a current dividend or distribution on any of the Pledged
Securities or resulting from a split-up, revision, reclassification, or
other like change of any of the Pledged Securities or otherwise
received in exchange therefor, all current income and distributions
with respect to any of the foregoing and, to the extent related to any
of the foregoing, all books, correspondence, files, records and other
papers necessary to protect Lender's security interest hereunder.
3.2. FURTHER ASSURANCES. At any time and from time to time, upon the
written request of Lender and at the sole expense of Borrower, Borrower will
promptly and duly execute and deliver such further instruments and documents and
take any and all such further action required by Lender in order to ensure
Lender has a valid, first priority, perfected security interest in the
Collateral and for the purpose of preserving the full benefits of this Agreement
and of the rights and powers herein granted, including, without limitation,
filing any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby,
assigning or endorsing Collateral in blank or to Lender or its designee and
delivering Collateral to Lender or Lender's Custodian. Borrower also hereby
authorizes Lender to file any such financing or continuation statement in
respect of the Collateral without the signature of Borrower to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
3.3. DATA REPORTING. Borrower and Guarantor will deliver or cause to
be delivered to Lender: (a) copies of all reports, statements and certificates
required to be delivered by Borrower or Guarantor to Lender or any other party
pursuant to the Basic Documents; and prompt notice of: (i) any material adverse
developments with respect to pending or future litigation involving Borrower or
Guarantor, if any, upon obtaining knowledge thereof; (ii) any other developments
which might materially and adversely affect the financial condition of Borrower
or Guarantor, upon obtaining knowledge thereof; (iii) the acceleration of any
debt obligation or the termination of any credit facility of Borrower or
Guarantor, if any, and (iv) the amount and maturity of any debt assumed after
the date hereof, if any, by Borrower or Guarantor.
12
3.4. POWERS. (a) Borrower hereby irrevocably constitutes and appoints
Lender and any officer or agent of Lender with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of Borrower and in the name of Borrower or in its own
name, from time to time in Lender's discretion, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be reasonably necessary
to accomplish the purposes of this Agreement.
(b) Borrower also authorizes Lender, from time to time if an Event of
Default or Other RF Event of Default shall have occurred and be continuing, to
execute and/or file and record, in connection with any sale provided for herein,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.
3.5. NO DUTY ON THE PART OF LENDER. The powers conferred on Lender
and hereunder are solely to protect Lender's interests in the Collateral and
shall not impose any duty upon Lender to exercise any such powers. Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees, affiliates, agents or successors shall be responsible to Borrower for
any act or failure to act hereunder, except for their gross negligence or
willful misconduct.
3.6. PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If Borrower
fails to perform or comply with any of its agreements contained herein and
Lender, as provided for by the terms of this Agreement, shall perform or comply,
or otherwise cause performance or compliance, with such agreements, the
reasonable expenses of Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the
default rate applicable to the Loan as set forth in this Agreement, shall be
payable by Borrower to Lender on demand, and Borrower's obligations to make such
payments shall constitute Obligations secured hereby.
3.7. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as Lender deals
with similar property for its own account. Neither Lender nor any of its
directors, officers, employees, affiliates or agents shall be liable for failure
to demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of Borrower or any other Person.
3.8. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are powers coupled with an
interest and are irrevocable until the termination of the security interest
created by this Agreement in accordance with Section 3.9 hereof.
3.9. TERMINATION. The security interest created by this Agreement
shall not be released until the payment in full of the Obligations and Other
RF Obligations shall have
13
occurred, provided that if any payment, or any part thereof, of any of the
Obligations or Other RF Obligations is rescinded or must otherwise be restored
or returned by Lender upon the insolvency, bankruptcy, dissolution, liquidation
or reorganization of Borrower or Guarantor, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or a trustee or similar
officer for, Borrower or Guarantor or any substantial part of its property, or
otherwise, this Agreement, all rights hereunder and the Liens created hereby
shall continue to be effective, or be reinstated, as though such payments had
not been made.
3.10. SEGREGATION OF FUNDS. All payments which are received by
Borrower or Guarantor in connection with the Collateral contrary to any
provision of this Agreement, the Guarantee or the Basic Documents shall be held
by Borrower or Guarantor, as the case may be, in trust for Lender, segregated
from all other funds of Borrower or Guarantor, as the case may be, and shall
forthwith upon receipt by Borrower or Guarantor, as the case may be, be turned
over to Lender in the exact form received by Borrower or Guarantor, respectively
(duly endorsed by Borrower or Guarantor to Lender, if required), to be applied
to the Obligations and Other RF Obligations.
3.11. CERTAIN ACCOUNTS. Lender acknowledges that pursuant to the
Pooling and Servicing Agreement and the Spread Account Agreement, Borrower, as
holder of the Excess Cash Flow Certificate, has pledged and created a security
interest in certain funds and property in accounts designated as the
"Capitalized Interest Account" and the "Spread Account" in the Pooling and
Servicing Agreement and the Spread Account Agreement, respectively. Lender
acknowledges that the pledge and grant of the security interest created herein
in no way impairs or affects Borrower's pledge of such funds and property.
3.12. ADVANCE RATE MAINTENANCE; RELEASE OF EXCESS COLLATERAL.
(a) Lender shall determine the Present Value of the Collateral and the
Advance Rate monthly within five Business Days following each Remittance Date
based upon the Valuation Rates (each such date of determination, a
"Calculation Date").
(b) After the first Calculation Date on which the Advance Rate exceeds
the Maintenance Advance Rate, in the event that as of any Calculation Date
(after such first Calculation Date) the Advance Rate exceeds the Maintenance
Advance Rate, (i) Borrower shall, within one Business Day of such Calculation
Date, pay down the Loan or pledge additional Collateral (and comply with the
provisions of Section 8.2(b)(ii) in respect thereof) in the amount necessary to
cause the Advance Rate not to exceed the Maintenance Advance Rate and (ii) until
such time as the Advance Rate equals or is less than the Maintenance Advance
Rate, all funds received by Borrower in respect of and Proceeds of all
Collateral shall be remitted by Borrower to Lender and applied in the manner set
forth in Section 2.7(c).
(c) After the first Calculation Date on which the Advance Rate exceeds the
Maintenance Advance Rate, in the event that at the determination of the
Advance Rate as contemplated in Section 3.12(a) (after such first Calculation
Date) the Advance Rate is less than the Target Advance Rate by an amount such
that, after giving effect to a release of a Pledged
14
Security (such released security, a "Designated Security") as Collateral
hereunder, the Advance Rate would continue to be less than the Target Advance
Rate, Borrower may request (subject to the conditions set forth in the next
sentence) that Lender release such Designated Security to Borrower. So long as
no Event of Default or Other RF Event of Default has occurred and is continuing
and so long as the Additional Collateral Release Condition is satisfied, Lender
will release and deliver such Designated Security to Borrower within five (5)
Business Days following such request, unless Lender reasonably determines that,
after giving effect to such release, the Advance Rate would no longer continue
to be less than the Target Advance Rate.
3.13. VALUATION MODEL. Lender hereby agrees to provide to Borrower a
copy of its Valuation Model on or before the Closing Date. In connection with
Lender's provision of the Valuation Model to Borrower, Borrower, Guarantor and
Lender each expressly acknowledge and agree as follows:
(a) Lender shall be entitled, in the case of any manifest error or
manifest inaccuracy contained in the Valuation Model, to revise or modify the
Valuation Model to correct any such error or inaccuracy and shall, as soon as
reasonably practicable, provide to Borrower a copy of such Valuation Model as
so revised or modified. Following the provision of such revised or modified
Valuation Model to Borrower, all calculations of the Present Value of the
Collateral and all related calculations shall be made on all subsequent
Calculation Dates in accordance with such Valuation Model as so revised or
modified.
(b) Borrower and Guarantor hereby acknowledge and agree that the Valuation
Model is proprietary to Lender, and that the Valuation Model shall not be used
by Borrower or Guarantor, or any of their respective affiliates, subsidiaries,
directors, officers, agents or employees, as applicable (collectively, the
"AMC Group"), for any purpose other than determining the Present Value of the
Collateral and making relating calculations in connection therewith, and shall
at all times be maintained by each member of the AMC Group as confidential.
(c) Borrower and Guarantor further acknowledge and agree that Lender is
furnishing the Valuation Model to Borrower solely as an accommodation in
connection with the transactions contemplated by this Agreement. Lender makes no
representation or warranty (whether express or implied, oral or written) as to
the accuracy or completeness, or fitness for a particular use, of the Valuation
Model, and assumes no responsibility whatsoever to any member of the AMC Group
in connection with any use of such Valuation Model and, consequently, no member
of the AMC Group is relying upon Lender or the Valuation Model in such regard.
(d) In consideration of Lender's providing the Valuation Model to Borrower,
for which Lender is not receiving any compensation, each member of the AMC Group
hereby unconditionally and irrevocably releases and discharges Lender and its
respective affiliates, directors, officers, agents, employees and
representatives from, and agrees to indemnify, hold harmless and reimburse any
such party or parties with respect to, any and all actions, liabilities, losses,
damages or claims of any kind or nature whatsoever (including, without
limitation,
15
reasonable attorney's fees and expenses), as incurred, that may be imposed on or
incurred by or asserted against any such party or parties in any way relating to
or arising out of Lender's release of such Valuation Model to Borrower.
3.14. EXHIBIT G. Exhibit G hereto may be amended or supplemented from
time to time by (i) written notice from Lender to Borrower of any such amendment
or supplement or (ii) delivery by Lender to Borrower of a copy of Exhibit G as
so amended or supplemented; provided that, Lender shall not amend or supplement
Exhibit G hereto to add any Other Residual Financing Agreement thereto unless
the excess cash flow certificate or residual interest securing such Other
Residual Financing Agreement is a Cross-Collateralized Security. In addition, if
Lender delivers changes to Exhibit G to any Other Residual Financing Agreement
as provided therein, Exhibit G hereto shall automatically and without further
action be amended by such changes, but only if such changes reflect the addition
of an Other Residual Financing Agreement secured by a Cross-Collateralized
Security. For all purposes of the Security Agreement, Exhibit G hereto will be
deemed to be designated as "Schedule G."
4. Representations and Warranties.
Each of Borrower and Guarantor hereby represents and warrants to Lender as
of the date of this Agreement and on an ongoing basis on each date that any Loan
is outstanding hereunder as follows:
4.1. ORGANIZATION. It is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and is duly
qualified to do business in each jurisdiction in which the failure to be so
qualified could reasonably be expected to have a material adverse effect on its
financial condition, operations, business or prospects.
4.2. POWER AND AUTHORITY. It has all requisite corporate power and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being conducted
(except as could not reasonably be expected to have a material adverse effect on
its financial condition, operations, business or prospects), and to execute and
deliver and perform its obligations under this Agreement, including the pledge
and delivery of Collateral hereunder, and, in the case of Borrower, the Note,
and, in the case of Guarantor, the Guarantee.
4.3. AUTHORIZATION OF BORROWING. All appropriate and necessary action
has been taken by it to authorize the execution and delivery of this Agreement
and, in the case of Borrower, the Note, and, in the case of Guarantor, the
Guarantee, and to authorize the performance and observance of the terms hereof
and thereof.
4.4. AGREEMENT BINDING. This Agreement constitutes, and the Note and
Guarantee, when executed and delivered for value will be duly executed and
delivered and will constitute, a legal, valid and binding obligation of Borrower
and Guarantor, as applicable, enforceable in accordance with their respective
terms, except as enforceability may be limited by laws governing insolvency or
creditors' rights generally and general equity principles. The
16
execution, delivery and performance of this Agreement, the Note and the
Guarantee does not and will not violate any provision of law, regulation, order
or other governmental directive, or conflict with, constitute a default under,
or result in the breach of any provision of any material agreement, ordinance,
decree, bond, indenture, order or judgment to which Borrower or Guarantor is a
party or by which it is bound.
4.5. COMPLIANCE WITH LAW. It is conducting its business and
operations in compliance with all applicable laws, regulations, ordinances and
directives of governmental authorities, except to the extent that any
noncompliance could not reasonably be expected to have a material adverse effect
on its financial condition, operation, business or prospects. It has filed all
tax returns required to be filed and has paid all taxes due in respect of the
ownership of its assets or the conduct of its operations except (a) to the
extent that the payment of such taxes is being contested in good faith by it in
appropriate proceedings and adequate reserves have been provided for the payment
thereof, or (b) with respect to such returns and/or taxes which are not material
in either nature or amount such that any failure to file such returns or pay
such taxes would not materially and adversely affect its financial condition,
operations, business or prospects.
4.6. CONSENTS. All licenses, consents and approvals required from and
all registrations and filings required to be made with any governmental or other
public body or authority for the making and performance by Borrower of this
Agreement and the Note and by Guarantor of this Agreement and the Guarantee have
been obtained and are in effect, except as could not reasonably be expected to
have a material adverse effect on its financial condition, operations, business
or prospects or on its ability to perform the Obligations.
4.7. LITIGATION. There is no action, suit or proceeding at law or in
equity by or before any court, governmental agency or authority or arbitral
tribunal now pending or, to the best of its knowledge, threatened against or
affecting it which, if determined adversely, may reasonably be expected to have
a material adverse effect on its business, operations or financial condition.
4.8. FINANCIAL STATEMENTS. The unaudited balance sheets of Guarantor
as at September 30, 1998, and the related statements of income for the fiscal
periods ended on such date, heretofore furnished to Lender, are complete and
correct in all material respects and fairly present the financial condition of
Guarantor as at said date (subject to normal year-end audit adjustments), all in
accordance with U.S. generally accepted accounting principles applied on a
consistent basis. On said dates, Guarantor had no material contingent
liabilities, liabilities for taxes, unusual or anticipated losses from any
unfavorable commitments, except as referred to or reflected in said balance
sheets as at said dates. Since September 30, 1998 there has been no material
adverse change in the operations, condition (financial or otherwise), business
or prospects of Guarantor from that set forth in said financial statements as at
said date.
4.9. OTHER OBLIGATIONS. It is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Basic Documents or in any
17
agreement or instrument to which it is a party or by which it is bound the
result of which could reasonably be expected to have a material adverse effect
on its business, operations or financial condition.
4.10. REGULATION G. No proceeds of any Loan will be used, directly or
indirectly, by Borrower for the purpose of purchasing or carrying any Margin
Stock (as defined in Regulation G of the Board of Governors of the Federal
Reserve System) or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry Margin Stock or for any other
purpose which might cause any Loan to be a "purpose credit" within the meaning
of Regulation G.
4.11. INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
4.12. CHIEF EXECUTIVE OFFICE. The chief executive office of Borrower
is located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000.
4.13. COLLATERAL SECURITY. (a) Except for the Liens granted to Lender
pursuant to this Agreement and Liens referred to in Section 3.11, Borrower owns
and will own each item which it pledges on the date hereof or may hereinafter
pledge as Collateral, free and clear of any and all Liens. No security
agreement, financing statement or other public notice similar in effect with
respect to all or any part of the Collateral is or will be on file or of record
in any public office, except such as have been or may hereinafter be filed in
favor of Lender pursuant to this Agreement, and except in connection with the
security interest referred to in Section 3.11.
(b) This Agreement is effective to create, as collateral security for the
Obligations and the Other RF Obligations, valid and enforceable Liens on the
Collateral in favor of Lender.
(c) Upon filing of the financing statement(s) delivered to Lender by
Borrower on the Closing Date with the Secretary of State of the State of New
Jersey (which financing statement(s) is in proper form for filing in such
jurisdiction) and the delivery to, and continuing possession by, Lender or its
nominee of the Pledged Securities, the Liens created pursuant to this Agreement
will constitute a first priority perfected security interest in the Collateral
in favor of Lender (except to the extent the Collateral may be deemed to
represent funds on deposit in the Spread Account or the Capitalized Interest
Account as referred to in Section 3.11), which Liens will be prior to all other
Liens of all other Persons and which Liens are enforceable as such as against
all other Persons.
4.14. OWNERSHIP OF PROPERTIES. Borrower has good and marketable title
to any and all of its properties and assets free and clear of Liens, except as
contemplated by this Agreement and the Basic Documents, and except for Liens as
may have been or may be created on property other than the Collateral in
connection with past or future securitizations of receivables.
18
4.15. FULL DISCLOSURE. No representation or warranty made by or on
behalf of Borrower or Guarantor contained in this Agreement or the Guarantee and
no written information or information in any certificate, financial statement or
report furnished or to be furnished by or on behalf of Borrower or Guarantor
hereunder or thereunder or in connection with the transactions contemplated
hereby or thereby contains or will contain an untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make the
statements herein or therein contained, in light of the circumstances in which
made, not misleading.
4.16. ERISA. Set forth on Schedule 4.16 hereto is a list of all Plans,
if any, maintained by Borrower or Guarantor or any of their respective
subsidiaries (as applicable). Except as may be set forth on such schedule,
neither Borrower nor Guarantor nor any of their respective subsidiaries (as
applicable) maintains any Plans, and each of Borrower and Guarantor agrees to
notify Lender in advance of forming any Plans. Neither Borrower nor Guarantor
nor any Commonly Controlled Entity has any obligations or liabilities with
respect to any employee pension benefit plans or Multiemployer Plans, nor have
any such Persons had any obligations or liabilities with respect to any such
Plans during the five-year period prior to the date this representation is made
or deemed made. Each of Borrower and Guarantor will give notice if at any time
it or any Commonly Controlled Entity has any obligations or liabilities with
respect to any employee pension benefit plan or Multiemployer Plan. All Plans
maintained by Borrower or Guarantor or any Commonly Controlled Entity are in
substantial compliance with all applicable laws (including ERISA). Neither
Borrower nor Guarantor is an employer under any Multiemployer Plan.
4.17. BASIC DOCUMENTS. Each of the representations and warranties made
by it in the Basic Documents to which it is a party is true and correct;
provided that this representation shall not be deemed to have been breached if
(i) Borrower or Guarantor, as the case may be, shall have breached a
representation or warranty contained in any Basic Document but such party shall
have cured such breach within the applicable cure period, if any, set forth in
the applicable Basic Document or (ii) Guarantor shall have breached the
representation set forth in Section 3.2(b) of the Purchase Agreement, so long as
(x) Guarantor complies with its obligations under Section 6.2 of the Purchase
Agreement with respect to such breach or (y) AMC complies with its obligations
under the AMC Guarantee in connection with Guarantor's obligations under Section
6.2 of the Purchase Agreement with respect to such breach.
5. Affirmative Covenants.
Each of Borrower and Guarantor (where indicated) hereby covenants to
Lender that, until the payment in full and final performance of all of
Borrower's and Guarantor's obligations to Lender under this Agreement, the Note
and the Guarantee, it shall perform the following obligations:
5.1. NOTICE. (a) Each of Borrower and Guarantor shall promptly give
notice to Lender and the Certificate Insurer of the occurrence of (i) any
Default, Event of Default or Other RF Event of Default, specifying the event and
the action which Borrower proposes to take with
19
respect thereto, (ii) any event or occurrence which will or could reasonably be
expected to adversely affect the collectibility of any of the Receivables or the
ability of Borrower to service such Receivables or the ability of Borrower or
Guarantor to perform its respective obligations under any related documents or
(iii) any other event or occurrence which individually or in the aggregate could
reasonably be expected to materially and adversely affect Borrower's or
Guarantor's financial condition, operations, business or prospects. Each of
Borrower and Guarantor agrees to provide contemporaneously to AMC a copy of any
notice provided to Lender pursuant to the preceding sentence; PROVIDED that
failure of Borrower or Guarantor to deliver such notice to AMC shall not in any
way affect (i) the obligations or liabilities of AMC under the AMC Guarantee,
(ii) any rights of Lender with respect to AMC or (iii) any other provisions or
any interpretation of this Agreement, the Guarantee, the AMC Guarantee or any
document related thereto.
(b) Borrower shall provide Lender promptly with copies of all notices which
it is required to deliver to the Trustee pursuant to the terms of the Pooling
and Servicing Agreement.
5.2. TAXES. Each of Borrower and Guarantor shall pay and discharge
all taxes and governmental charges upon it or against any of its properties or
assets or its income prior to the date after which penalties attach for failure
to pay, except (a) to the extent that Borrower or Guarantor shall be contesting
in good faith in appropriate proceedings its obligation to pay such taxes or
charges, adequate reserves having been set aside for the payment thereof, or
(b) with respect to such taxes and charges which are not material in either
nature or amount such that any failure to pay or discharge them, and any
resulting penalties, either in any one instance or in the aggregate, would not
materially and adversely affect the financial condition, operations, business or
prospects of Borrower or Guarantor, respectively.
5.3. SEPARATE EXISTENCE: NO COMMINGLING. Borrower shall maintain
separate books and records and accounts in order to maintain a separate and
distinct corporate identity from any other entity, including Guarantor and AMC
and any of Borrower's other affiliates. Borrower shall not commingle any of its
funds with the funds of any other such entity.
5.4. FINANCING STATEMENTS. At the request of Lender, each of Borrower
and Guarantor shall execute such financing statements as Lender determines may
be required by law to perfect, maintain and protect the interest of Lender in
the Collateral and in the Proceeds thereof.
5.5. BOOKS AND RECORDS; OTHER INFORMATION. (a) Borrower shall
maintain accurate and complete books and records with respect to the Collateral
and Borrower's business. All accounting books and records shall be maintained in
accordance with generally accepted accounting principles consistently applied.
(b) Only to the extent reasonably necessary to protect Lender's interest
hereunder, each of Borrower and Guarantor shall, and shall (as applicable) cause
each of its respective subsidiaries to, permit any representative of Lender to
visit and inspect any of the properties of Borrower or Guarantor to examine the
books and records of Borrower or Guarantor and to make
20
copies and take extracts therefrom, and to discuss the business, operations,
properties, condition (financial or otherwise) or prospects of Borrower or
Guarantor and each such subsidiary or any of the Collateral with the officers
and independent public accountants thereof and as often as Lender may reasonably
request, and so long as no Default or Event of Default shall have occurred and
be continuing, all at such reasonable times during normal business hours upon
reasonable notice. In connection with the matters described in this Section
5.5(b), Lender shall not at any time use or disclose to any Person, except to
any professional adviser who needs to know such information in connection with
the transactions contemplated hereby, or except in connection with any
litigation or arbitral proceedings commenced by or against Lender or any of its
affiliates, any information that may be within or may come to its or their
knowledge if such information is of a type that would generally be expected to
be held as confidential; provided that the foregoing shall not apply to the
extent that such information was (i) previously known by Lender from sources
other than Borrower or Guarantor or their respective directors, officers or
agents, (ii) in the public domain through no fault of Lender, (iii) lawfully
acquired by Lender on a non-confidential basis from other sources who are not
known by Lender to be bound by a confidentiality agreement with Borrower or
Guarantor or (iv) required to be disclosed by judicial or administrative process
or by any other Requirement of Law.
(c) Each of Borrower and Guarantor shall provide to Lender all information
regarding their respective operations and practices as Lender shall reasonably
request in writing.
(d) Borrower shall provide to Lender all remittance reports (and any other
similar reports) relating to each Cross-Collateralized Security as and when such
reports are provided to the trustee for the related securitization.
5.6. PAYMENT OF FEES AND EXPENSES. Each of Borrower and Guarantor
shall pay to Lender, on demand, any and all fees, costs or expenses which Lender
pays to a bank or other similar institution arising out of or in connection with
the return of payments deposited from Borrower or Guarantor, as applicable, for
collection by Lender.
5.7. CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT. Each of
Borrower and Guarantor shall continue in business in a prudent, reasonable and
lawful manner with all licenses, permits, and qualifications necessary to
perform its respective obligations under this Agreement and the Guarantee,
except where failure to do so could not reasonably be expected to materially and
adversely affect such performance or the enforceability of Lender's security
interest in the Collateral.
5.8. FINANCIAL STATEMENTS AND ACCESS TO RECORDS. Each of Borrower and
Guarantor shall provide Lender with quarterly unaudited financial statements
within sixty (60) days of the end of each of Guarantor's and Borrower's first
three fiscal quarters, and Guarantor will provide Lender with audited annual
financial statements within one hundred twenty (120) days of each of Guarantor's
and Borrower's fiscal year-end audited by a nationally recognized independent
certified public accounting firm. Upon request of Lender, each of Borrower and
Guarantor shall provide Lender with unaudited monthly financial statements. Each
of Borrower
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and Guarantor shall deliver to Lender with each financial statement a
certificate by each of Borrower's and Guarantor's chief financial officer,
certifying that such financial statements are complete and correct in all
material respects and that, except as noted in such certificate, such chief
financial officer has no knowledge of any Default or Event of Default
5.9. FINANCIAL CONDITION. Guarantor shall maintain on a consolidated
basis a net worth calculated in accordance with GAAP (including advances and
loans from AMC or its affiliates (other than subsidiaries of Guarantor) to
Guarantor and subordinated debt with maturities exceeding three years) of at
least $5 million.
5.10. LITIGATION MATTERS. Borrower and/or Guarantor shall notify
Lender in writing, promptly upon its learning thereof, of any litigation,
arbitration or administrative proceeding which may reasonably be expected to
materially and adversely affect the operations, financial condition or business
of Borrower or Guarantor or Borrower's or Guarantor's ability to perform under
this Agreement or involve Lender's security interest in the Collateral or other
rights under this Agreement, the Note or the Guarantee.
5.11. FULFILLMENT OF OBLIGATIONS. Each of Borrower and Guarantor shall
pay and perform, as and when due, all of its obligations of whatever nature,
except where the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with generally
accepted accounting principles with respect thereto have been provided on the
books of Borrower or Guarantor, as the case may be, and except to the extent
that the failure to do so could not individually or in the aggregate reasonably
be expected to materially and adversely affect the financial condition,
operations, business or prospects of Borrower or Guarantor, as the case may be.
5.12. NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE. Borrower will
provide Lender with not less than 30 days prior written notice of any change in
the chief executive office of Borrower to permit Lender to make any additional
filings necessary to continue Lender's perfected security interest in the
Collateral.
5.13. COMPLIANCE WITH LAWS, ETC. Each of Borrower and Guarantor shall,
and shall cause each of its respective subsidiaries (as applicable) to, comply
(i) in all material respects with all Requirements of Law and any change therein
or in the application, administration or interpretation thereof (including,
without limitation any request, directive, guideline or policy, whether or
not having the force of law) by any Governmental Authority charged with the
administration or interpretation thereof; and (ii) with all indentures,
mortgages, deeds of trust, agreements, or other instruments or contractual
obligations to which it is a party, including without limitation, each Basic
Document to which it is a party, or by which it or any of its properties may be
bound or affected, or which may affect the Receivables, if the failure to comply
therewith could, individually or in the aggregate, reasonably be expected to
materially and adversely affect the financial condition, operations, business or
prospects of Borrower or Guarantor, as the case may be.
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5.14. DELIVERY OF COLLATERAL. On the closing date for each
Cross-Collateralized Subsequent Securitization, Borrower shall deliver to
Lender, or to Lender's designee or agent, each Cross-Collateralized Security
relating to such Cross-Collateralized Subsequent Securitization, together with
(a) appropriate instruments of transfer duly endorsed in blank, and together
with a Medallion Guarantee with respect to the signature on the transfer power
accompanying such Cross-Collateralized Security, (b) Lien, priority and
perfection opinions relating to the pledge of such Cross-Collateralized
Security, and (c) such other opinions and documents as Lender's counsel shall
reasonably request. Notwithstanding the foregoing, if any Cross-Collateralized
Security is pledged pursuant to an agreement described in clause (iv) of the
definition of Other Residual Financing Agreement, the provisions of this Section
5.14 shall not apply to such Cross-Collateralized Security if so specified in
such Other Residual Financing Agreement.
5.15. CROSS-COLLATERALIZATION. Lender hereby acknowledges that,
(a) pursuant to Section 3.03(c)(i) of the Spread Account Agreement, on and
after the Series 1998-2 Residual Financing Availability Date (as defined in the
Spread Account Agreement) the Spread Account shall, if so provided in a Series
Supplement (as defined in the Spread Account Agreement), be available to fund
deficiencies or pay other amounts due with respect to a Series (as defined in
the Spread Account Agreement) other than Series 1998-2 (as defined in the Spread
Account Agreement) (amounts released from time to time from the Spread Account
to fund such deficiencies or pay such other amounts due, the "Released
Amounts"), (b) the security interest granted by Borrower to Lender in any
Cross-Collateralized Security pursuant to Section 3.1(b) is intended as security
for the prompt and complete payment when due of the Obligations, Other RF
Obligations and Warehouse Obligations, but payments to Lender in respect of any
such Cross-Collateralized Security shall in no event exceed the aggregate
Released Amounts, and (c) if the Borrower enters into a Series Supplement (as
defined in the Spread Account Agreement) providing for cross-collateralization
as described in clause (a) above, such transaction shall not give rise to or
otherwise constitute a breach of the covenant set forth in Section 6.1; provided
that Borrower shall not, pursuant to any Series Supplement or otherwise, modify
the provisions of Section 3.03(c)(i) of the Spread Account Agreement as in
effect on the Closing Date in any manner without the prior written consent of
Lender.
6. Negative Covenants.
Each of Borrower and Guarantor (where indicated) hereby covenants to Lender
that, until the payment in full and final performance of all of Borrower's and
Guarantor's respective obligations to Lender under this Agreement, the Note and
the Guarantee, without Lender's prior written consent (which shall not be
unreasonably withheld), it shall be subject to the following restrictions:
6.1. ADVERSE TRANSACTIONS. Neither Borrower nor Guarantor shall enter
into any transaction (including without limitation, and subject to Section
5.15(c), any Series Supplement (as such term is defined in the Spread Account
Agreement)) which adversely affects the Collateral or Lender's rights under this
Agreement, the Note or the Guarantee.
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6.2. GUARANTIES. Neither Borrower nor Guarantor shall guarantee
or otherwise in any way become liable with respect to the obligations or
liabilities, of any other Person if any such action would constitute a breach of
the covenant contained in Section 5.9 hereof, except (a) for the obligations of
affiliates of Borrower or Guarantor to Lender and (b) by customary endorsement
of instruments or items of payment for deposit to the general account of
Borrower or Guarantor or for delivery to Lender.
6.3. CORPORATE DOCUMENTS. Borrower will not amend or modify any
provision of its Certificate of Incorporation or by-laws without Lender's prior
written consent.
6.4. INVESTMENTS; DIVIDENDS. The covenants set forth in this
Section 6.4 shall be effective unless (i) the Advance Rate shall be less than
50% (provided that until the first Calculation Date on which the Advance Rate
exceeds the Maintenance Advance Rate, the Present Value of the Collateral used
to calculate such Advance Rate shall be the Present Value of the Collateral as
of the close of business on the Closing Date) or (ii) the net worth of AMC
calculated in accordance with generally accepted accounting principles shall be
greater than $75 million (and such covenants shall be reinstated if neither of
the foregoing conditions remains satisfied):
(a) INVESTMENTS. Neither Borrower nor Guarantor shall make any investment
in any Person through the direct or indirect holding of securities or otherwise,
other than in the ordinary course of business or in connection with the future
securitization of receivables.
(b) DIVIDENDS. Guarantor shall not declare or pay any dividends.
6.5. LOANS; CAPITAL STRUCTURE; AFFILIATES. The covenants set forth in
this Section 6.5 shall become effective (i) upon written notice from Lender to
Borrower and Guarantor that Lender has determined a material adverse change as
described in Section 8.1(n) hereof has occurred or (ii) in the event that AMC
shall have breached the net worth covenant set forth in Section 10(g) of the AMC
Guarantee:
(a) Except for routine and customary salary advances or loans to employees
in connection with relocation expenses consistent with past practice of AMC and
its affiliates, neither Borrower nor Guarantor shall make any unsecured loans or
other advances of money to officers, directors, employees, stockholders, or
affiliates in excess of $50,000 in the aggregate. Other than the indebtedness
under this Agreement and the Note, neither Borrower nor Guarantor shall incur
any long term or working capital debt (i) if such action would constitute a
breach of the covenant contained in Section 5.9 hereof or (ii) secured by
Collateral.
(b) CHANGES IN CAPITAL STRUCTURE OR BUSINESS OBJECTIVES. Neither Borrower
nor Guarantor shall do any of the following if it will adversely affect the
payment or performance of, or Borrower's and Guarantor's ability to pay and/or
perform, its obligations to Lender with respect to this Agreement, the Note and
the Guarantee: (i) redeem, retire, purchase or otherwise acquire, directly or
indirectly, any of Borrower's or Guarantor's stock, except in connection with
employment or similar agreements with officers and directors of Borrower or
Guarantor
24
consistent with past practice, or (ii) make any change in Borrower's or
Guarantor's capital structure, or (iii) make any material change in any of its
business objectives, purposes or operations which could reasonably be expected
to adversely affect the payment or performance of, or Borrower's and Guarantor's
ability to pay and/or perform, its obligations to Lender with respect to this
Agreement, the Note or the Guarantee.
(c) TRANSACTIONS WITH AFFILIATES. Neither Borrower nor Guarantor shall
enter into, or be a party to, any transaction with any affiliate or stockholder
of Borrower or Guarantor, except, consistent with Borrower's or Guarantor's
practice before entering into this Agreement, in the ordinary course of, and
pursuant to the reasonable requirements of, Borrower's and Guarantor's business
and upon fair and reasonable terms (which Borrower agrees to discuss with Lender
from time to time upon Lender's request) which are not materially less favorable
than would be obtained in a comparable arm's length transaction with a person or
entity not an affiliate or stockholder of Borrower or Guarantor.
6.6. LIENS. (a) Borrower shall not grant or otherwise create any Lien
on any of its properties except to Lender hereunder and to Lender under any
Other Residual Financing Agreement.
(b) Neither Borrower nor Guarantor shall grant or otherwise permit any
Liens on the capital stock of Borrower, except to Financial Security Assurance
Inc. under the Stock Pledge and Collateral Agency Agreement dated as of March 1,
1997 among Guarantor, as pledgor, Financial Security Assurance Inc., as pledgee,
and Chase Bank of Texas, National Association , as collateral agent, as such
agreement may be amended, supplemented or otherwise modified from time to time.
6.7. VSI POLICIES. Borrower has obtained each VSI Policy (as defined
in the Pooling and Servicing Agreement without giving effect to the proviso to
such definition) and (a) as of the Initial Cutoff Date, one or more of such
policies is in full force and effect with respect to each Initial Receivable and
(b) as of the Related Subsequent Cutoff Dates, one or more of such policies
is in effect with respect to each Subsequent Receivable. Borrower will not
(a) replace any such VSI Policy with a substitute insurance policy unless
(i) the insurer issuing such replacement policy has a rating by A.M. Best of
"A-" or higher and (ii) such replacement shall not adversely affect the
Collateral or Lender's rights under this Agreement, the Note or the Guaranty,
and (b) except as provided in clause (a) above, Borrower will not cancel or
otherwise terminate any VSI Policy (or any replacement insurance policy) unless
Lender has given its prior written consent to such cancellation or termination.
7. Conditions Precedent.
7.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of Lender to
extend to Borrower the Loan as described in this Agreement are subject to
satisfaction of the following conditions on or prior to the Closing Date:
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(a) The receipt by Lender, concurrently with the signing of this
Agreement and, with respect to paragraph (v) only, together with the
financial statements to be delivered pursuant to this Agreement, in
form and substance satisfactory to Lender, of the following:
(i) Evidence of the authority of the persons executing this
Agreement, the Note, the Guarantee and the AMC Guarantee and any other
documents contemplated herein and therein, together with specimen
signatures of such persons; and
(ii) A certified copy of Borrower's, Guarantor's and AMC's
Certificate of Incorporation and By-Laws and a good standing
certificate from the State of Delaware and/or of California, as
applicable; and
(iii) Certified copies of all necessary resolutions of the Board of
Directors of Borrower, Guarantor and AMC authorizing the execution and
delivery and performance under this Agreement, the Note, the Guarantee
and the AMC Guarantee, as applicable; and
(iv) The duly executed, original Note; and
(v) A certificate, as of the date of signing of the Agreement, by
the President, a Vice President or the Treasurer of each of Borrower,
Guarantor and AMC certifying that the representations and warranties
contained in Section 4 hereof or in Section 9 of the AMC Guarantee, as
the case may be, are true and correct, that each of Borrower, Guarantor
and AMC, as the case may be, is in compliance with the covenants set
forth in Sections 5 and 6 hereof or in Section 10 of the AMC Guarantee,
as the case may be, and that no Default, Event of Default or Other RF
Event of Default has occurred and is continuing; and
(vi) The duly executed, original of the Guarantee and the AMC
Guarantee; and
(vii) The following opinions of counsel in form and substance
satisfactory to Lender's counsel:
(A) Standard corporate opinions of Borrower,
Guarantor and AMC regarding due authorization, execution,
consents, material litigation and noncontravention;
(B) Enforceability of this Agreement, the Note,
Guarantee and the AMC Guarantee;
(C) Lien, priority and perfection opinions relating
to the pledge of Collateral pledged on the date hereof by
Borrower to Lender;
26
(D) Non-consolidation opinions as between Borrower,
Guarantor and AMC; and
(E) Such other opinions as Lender's counsel shall
reasonably request; and
(viii) A notice to Trustee signed by Borrower, Lender and the Trustee
to the effect set forth in Section 2.7(b); and
(ix) Such other documents, certificates or financial or other
information as Lender may reasonably request.
(b) The consummation of the Securitization Transaction.
(c) The Excess Cash Flow Certificate shall have been delivered to
Lender or its agent, together with appropriate instruments of transfer
duly endorsed in blank, and together with a Medallion Guarantee with
respect to the signature on the transfer power accompanying the Excess
Cash Flow Certificate delivered to Lender or its agent on the Closing
Date.
(d) Financing statements on Form UCC-1 naming Borrower as "debtor" and
Lender as "secured party" and describing the Collateral as "collateral"
thereunder, shall have been delivered to Lender in proper form for
filing in each jurisdiction in which it is necessary to file to perfect
a security interest therein.
8. Events of Default.
8.1. EVENTS OF DEFAULT. Each of the following events and occurrences
shall constitute an Event of Default under this Agreement if not cured within
three Business Days of their occurrence unless the context of the provision
indicates otherwise (provided that the events described in paragraphs (f), (g),
(h), (i), (j) and (m) shall have no cure period):
(a) Payment by or on behalf of Borrower shall fail to be made to Lender
when due of principal or interest on the Loan or of any other
Obligation.
(b) Borrower fails to perform or observe any material provision of
Section 6 of this Agreement, or Guarantor fails to perform or observe
any material provision of the Guarantee or AMC fails to perform or
observe any material provision of the AMC Guarantee (such materiality
in each case, as determined by Lender) and such failure to perform or
observe continues unremedied for 30 days following the earlier to occur
of (i) a Responsible Officer having actual knowledge of such failure to
perform or observe and (ii) written notice of such failure to perform
or observe from Lender to Borrower, Guarantor or AMC, as the case may
be.
27
(c) Borrower shall fail to perform or observe any other provision of
this Agreement (other than as referred to in Sections 8.1(a) or 8.1(b))
or the Note, or Guarantor shall fail to perform or observe any
provision of the Guarantee (other than as referred to in Sections
8.1(a) or 8.1(b)), or AMC shall fail to perform or observe any material
provision of the AMC Guarantee (other than as referred to in Sections
8.1(a) or 8.1(b)) within 30 days (or, in the case of any failure to
perform or observe the provisions of Section 5.14, 5 days) following
the earlier of (i) a Responsible Officer having actual knowledge of
such failure to perform or observe or (ii) written notice thereof from
Lender; provided that any such failure to perform or observe Section
5.11 hereof caused solely by an event described in Section 8.1(d) shall
constitute an Event of Default only as provided in Section 8.1(d).
(d) Borrower, Guarantor or AMC shall fail to pay any money due under
any other agreement, note, indenture or instrument evidencing,
securing, guaranteeing or otherwise relating to indebtedness of
Borrower, Guarantor or AMC for borrowed money, which failure to pay
constitutes an event of default under any such agreement or instrument
or constitutes a default thereunder and such default shall continue
beyond the grace period (not to exceed one Business Day), if any,
therein specified and, in connection with such failure, the maturity of
such indebtedness is accelerated; or Borrower, Guarantor or AMC shall
default in the observance or performance of any other covenant or
condition in any such agreement or instrument and such default shall
continue beyond the grace period, if any, therein specified and, in
connection with such default, the maturity of such indebtedness is
accelerated; or any other event shall occur or condition shall exist if
the effect of such event or condition is to accelerate the maturity of
such indebtedness; or any such indebtedness shall be declared due and
payable prior to the stated maturity thereof; other than, in each case,
indebtedness with respect to which the failure to pay could not,
individually or in the aggregate, reasonably be expected to have a
material adverse effect on the financial condition, operations,
business or prospects of Borrower, Guarantor or AMC, as the case may
be.
(e) Borrower, Guarantor or AMC receives notice, or a Responsible
Officer has knowledge, of a breach by Borrower, Guarantor or AMC of any
material representation, warranty or obligation contained in this
Agreement, the Note, the Guarantee, the AMC Guarantee, the Basic
Documents or in any other agreement with Lender; provided that (i) a
breach by Borrower, Guarantor or AMC of a representation or warranty in
a Basic Document shall not constitute an Event of Default hereunder if
such party shall have cured such breach within the applicable cure
period, if any, set forth in such Basic Document and (ii) a breach by
Guarantor of the representations and warranties set forth in Section
3.2(b) of the Purchase Agreement shall not constitute an Event of
Default hereunder so long as Guarantor complies with its obligations
under Section 6.2 of the Purchase Agreement with respect to such
breach; provided, further, that any such breach of
28
Section 5.11 hereof caused solely by an event described in
Section 8.1(d) shall constitute an Event of Default only as provided
in Section 8.1(d).
(f) The Collateral or any other assets of Borrower, Guarantor or AMC
are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of Borrower, Guarantor or AMC and
the same is not dissolved or dismissed within sixty (60) days
thereafter except, in the case of Guarantor or AMC, where any such
actions or events would not either individually or in the aggregate
materially and adversely affect the financial condition, operations,
business or prospects of Guarantor or AMC, as the case may be; an
application is made by any Person other than Borrower, Guarantor or AMC
for the appointment of a receiver, trustee, or custodian for the
Collateral or a material portion of the assets of Borrower, Guarantor
or AMC and the same is not dismissed within sixty (60) days after the
application thereof, or Borrower, Guarantor or AMC shall have
concealed, removed or permitted to be concealed or removed, in the case
of Borrower, any part, and in the case of Guarantor or AMC, any
material portion, of its property with intent to hinder, delay or
defraud its creditors or made or suffered a transfer of any of its
property which is fraudulent under any bankruptcy, fraudulent
conveyance or other similar law.
(g) An application is made by Borrower, Guarantor or AMC for the
appointment of a receiver, trustee or custodian for the Collateral or
any other assets of Borrower, Guarantor or AMC; a petition under any
section or chapter of the Bankruptcy Code or federal or state law or
regulation shall be filed by Borrower, Guarantor or AMC, or Borrower,
Guarantor or AMC shall make an assignment for the benefit of its
creditors, or any case or proceeding shall be filed by Borrower,
Guarantor or AMC for its dissolution, liquidation, or termination, by
Borrower, Guarantor or AMC, or Borrower, Guarantor or AMC ceases to
conduct its business.
(h) Borrower, Guarantor or AMC is enjoined, restrained or in any way
prevented by court order from conducting all or any material part of
its business affairs, or a petition under any section or chapter of the
Bankruptcy Code or any similar federal or state law or regulation is
filed against Borrower, Guarantor or AMC, or any case or proceeding is
filed against Borrower, Guarantor or AMC, for its dissolution or
liquidation, and such injunction, restraint, petition, case or
proceeding is not dismissed within sixty (60) days after the entry of
filing thereof.
(i) A notice of lien, levy or assessment is filed of record with
respect to all or any assets of Borrower, Guarantor or AMC by the
United States, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other governmental agency and it is
not released within sixty (60) days after the filing and is material to
the financial position of the respective entity, or if any
29
taxes or debts become a lien or encumbrance upon the Collateral or any
other affiliate's assets, and the same is not released within sixty
(60) days after the same becomes a lien or encumbrance, except to the
extent that such taxes or debts are being contested in good faith in
appropriate proceedings, adequate reserves have been set aside for the
payment thereof and notice of such proceedings and of the actions being
taken in respect thereof have been provided to Lender.
(j) Borrower, Guarantor or AMC becomes insolvent or admits in writing
to its inability to pay its debts as they mature.
(k) LBAC shall at any time resign, or be terminated, as a servicer
under any securitization.
(l) Lender shall for any reason cease to have a first priority
perfected security interest in the Collateral free and clear of all
Liens, other than the Liens granted to Lender hereunder; provided that
the Borrower shall have five days after Borrower obtains actual
knowledge of such condition to cure such condition.
(m) The Guarantee or the AMC Guarantee shall cease to be in full force
and effect or the Guarantor or AMC or an officer or authorized
representative acting on its behalf shall so assert.
(n) Lender, in its good faith judgment, has reasonable cause to believe
that there has been a material adverse change in (i) the Collateral,
(ii) in Lender's rights under this Agreement, the Note, the Guarantee
or the AMC Guarantee, or (iii) in the business, operations, prospects
or condition (financial or otherwise) of Borrower, Guarantor or AMC
(which, in the case of this clause (iii), has not been cured within
three Business Days following written notice thereof from the Lender);
provided that Lender, in its good faith judgement, has reasonable cause
to believe that as a result of such event (x) Borrower may be unable to
fulfill its obligations hereunder (y) Guarantor may be unable to
fulfill its obligations under the Guarantee or (z) AMC may be unable to
fulfill its obligations under the AMC Guarantee.
8.2. REMEDIES OF DEFAULT. (a) If not cured within the cure period, if
any, provided within the relevant provision, then upon the continuance of such
Event of Default Lender may, by notice to Borrower (which notice shall be deemed
given automatically upon occurrence of an Event of Default referred to in
paragraph (f), (g), (h), (i) or (j)), declare immediately due and payable all
principal, interest and other Obligations payable hereunder and under the Note
by Borrower then due and payable that would otherwise be due after the date
specified in the notice (or the date such notice is deemed given), whereupon all
those amounts shall become immediately due and payable, all without further
diligence, presentment, demand of payment, protest or notice of any kind, all of
which are expressly waived by Borrower. If any Event of Default shall occur and
be continuing, Lender may exercise all rights and remedies of a secured party
under the Code, and, to the extent permitted by law, all other rights and
remedies
30
granted to Lender in this Agreement, the Guarantee and the AMC Guarantee and in
any other instrument or agreement securing, evidencing or relating to the
Obligations. Without limiting the generality of the foregoing, if an Event of
Default or Other RF Event of Default shall occur and be continuing Lender may
sell the Collateral in a commercially reasonable manner as determined by Lender
(subject to the limitations set forth in the Pooling and Servicing Agreement),
instituting suit in equity or instituting other appropriate proceedings, whether
for the specific performance of any agreement contained herein, or for an
injunction against a violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law. If Lender opts to sell or
otherwise dispose of the Collateral as one of its remedies upon an Event of
Default or Other RF Event of Default, Borrower (subject to Section 2.9) and
Guarantor shall remain liable for any remaining deficiency upon applying the
proceeds of such sale or other disposition against any and all Obligations and
Other RF Obligations, including, without limitation, the reasonable fees and
disbursements of any attorneys employed by Lender to collect such deficiency.
(b) (i) Without limitation to any of the provisions or remedies set forth
in Section 8.2(a), if any Event of Default shall have occurred and be
continuing, Borrower may, with the consent of Lender in Lender's sole
discretion, (i) make a principal payment on the Loans in such amount as Lender
shall specify or (ii) pledge additional Collateral having such value, as
determined by Lender in its sole discretion, as Lender shall specify. If Lender
consents to Borrower's taking such action as is described in this Section 8.2(b)
upon an Event of Default, Borrower (subject to Section 2.9) and Guarantor shall
remain liable for any remaining deficiency between the amount of the Obligations
and the amount of the principal payment or pledge of additional Collateral made
pursuant hereto, and under no circumstances shall Lender's consent to such
action be construed as a waiver of such deficiency or a modification of the
Obligations.
(ii) In the event that Borrower shall hereinafter pledge any
Collateral in addition to the Collateral pledged to Lender on the date
hereof, Borrower shall, concurrently with such pledge, deliver to Lender an
opinion of counsel in form and substance reasonably satisfactory to Lender
regarding priority, perfection and the absence of Liens in respect of such
Collateral.
(c) Notwithstanding anything in Section 6.5 to the contrary, it is
expressly understood and agreed that Lender shall have sole discretion in
determining whether to enforce the covenants set forth in Section 6.5 or
immediately to pursue the remedies set forth in this Section 8.2 upon the
occurrence of a material adverse change as described in Section 8.1(n). Under no
circumstances shall Lender's decision to enforce the covenants set forth in
Section 6.5 following such a material adverse change be construed as a waiver of
the Event of Default described in Section 8.1(n), or otherwise in any way
modify, limit, delay or impair any rights which Lender would otherwise have
pursuant to this Section 8.2.
(d) Lender shall use its reasonable efforts to notify Guarantor and AMC
upon the occurrence of an Event of Default; provided that the omission so to
notify shall not relieve Guarantor or AMC from any liability which it may have
to Lender (or extend the period of time
31
within which performance is required by Guarantor or AMC) in connection with
such Event of Default or from any of its respective obligations under the
Guarantee or the AMC Guarantee, as the case may be.
9. Miscellaneous.
9.1. PAYMENT OF EXPENSES, INDEMNITY, ETC. Each of Borrower and
Guarantor jointly and severally agree to:
(i) pay or reimburse Lender on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
modification or supplement to, or any waiver under, this Agreement or
the Guarantee and any other document prepared in connection therewith,
and the consummation and administration of the transactions
contemplated thereby, including without limitation the reasonable fees
and disbursements of counsel to Lender; provided that, neither the
Borrower nor Guarantor shall be obligated to reimburse Lender for the
foregoing costs and expenses of counsel unless such costs and expenses
are incurred in connection with:
(A) the advice of counsel with respect to (1) the
performance of Borrower or Guarantor and/or any of their
respective Affiliates under this Agreement, the Guarantee
or any other document prepared in connection therewith or
(2) (x) the rights of Lender under this Agreement, the
Guarantee or any other document prepared in connection
therewith and (y) Lender's rights relating to the
Collateral (including, without limitation, its security
interest therein), in each case in this clause (2) in
connection with any change in the condition (financial or
otherwise), operations, business or prospects of the
Borrower or any of its Affiliates;
(B) any waiver in respect of this Agreement, the
Guarantee or any other document prepared in connection
therewith (whether or not executed or otherwise granted as
provided therein);
(C) any amendment, supplement or modification in
respect of this Agreement, the Guarantee or any other
document prepared in connection therewith that is executed
by the parties thereto as required by this Agreement or the
Guarantee or any other document prepared in connection
therewith, as the case may be; or
(D) any proposed amendment, supplement or
modification in respect of this Agreement, the Guarantee or
any other document prepared in connection therewith that is
not
32
executed by the parties thereto as required by such loan
document if Borrower proposed or requested such amendment,
supplement or modification;
(ii) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements of
counsel to Lender, in connection with the occurrence or continuance of
a Default or Event of Default and the enforcement, collection,
protection or preservation (whether through negotiations, legal
proceedings or otherwise) of this Agreement or the Guarantee, the
Collateral, any Obligation or any right, remedy, power or privilege of
Lender hereunder or under the Guarantee;
(iii) pay and hold Lender harmless from and against any and all present
and future stamp, excise, recording or other similar taxes or fees
payable in connection with the execution, delivery, recording and
filing of this Agreement or the Guarantee and hold Lender harmless from
and against any and all liabilities with respect to or resulting from
any delay or omission to pay such taxes or fees; and
(iv) indemnify Lender and its affiliates and each of their respective
directors, officers, employees and agents and hold each of them
harmless from and against, any and all liabilities, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements, including without limitation the reasonable fees and
disbursement of counsel to Lender and such other parties, incurred by
any of them in connection with, arising out of or in any way relating
to any investigation, claim, litigation or other proceeding, pending or
threatened (whether or not any of them is designated a party thereto),
in connection with, arising out of or in any way related to this
Agreement or the Guarantee or any of the transactions contemplated
herein or therein or any use of the proceeds of the Loan by Borrower;
provided that Lender shall not be entitled to any indemnification for
any of the foregoing resulting from its gross negligence or willful
misconduct.
If and to the extent that the indemnity obligations of Borrower under this
Section 9.1 may be unenforceable for any reason, Borrower hereby agree to make
the maximum contribution to the payment and satisfaction of each of such
indemnity obligations which is permissible under applicable law.
9.2. SET-OFF. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder Lender is hereby authorized at any
time and from time to time, without notice to Borrower, Guarantor or to any
other person or entity, any such notice being hereby expressly waived, to
set-off against any obligation owing by Lender or any affiliate of Lender to
Borrower or Guarantor, or against any funds or other property of Borrower or
33
Guarantor held by or otherwise in the possession of Lender or any affiliate of
Lender, the obligations and liabilities of Borrower to Lender under this
Agreement or of Guarantor to Lender under its respective Guarantee, irrespective
of whether or not Lender shall have made any demand hereunder or under the
Guarantee.
9.3. AMENDMENTS. No provision of this Agreement may be amended,
supplemented, modified or waived unless the same shall be in writing signed by
Lender, Borrower and Guarantor and, solely in the case of amendments,
supplements, modifications or waivers to Sections 2.10 and 9.5 hereof, without
the prior written consent of the Certificate Insurer thereto.
9.4. WAIVER; CUMULATIVE RIGHTS. No failure on the part of Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement or the Note shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement, the Note or the Guarantee preclude any other
or further exercise thereof or the exercise of any other right, power, or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
9.5. NONPETITION COVENANT. Lender shall not, prior to the date which
is one year and one day after the termination of each of the Pooling and
Servicing Agreement and the Spread Account Agreement with respect to Borrower,
petition or otherwise invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against Borrower under any
Federal or State bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of Borrower or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of Borrower.
9.6. NON-AFFILIATION. Lender hereby agrees that, so long as it has
any interest in the Excess Cash Flow Certificate hereunder, it shall not become
an affiliate of Borrower.
9.7. BINDING EFFECT. This Agreement shall be binding upon and shall
be enforceable by Borrower, Guarantor and Lender and their respective successors
and permitted assigns.
9.8. SURVIVAL. The provisions of Sections 3.13(b), (c) and (d) and
9.1 shall survive the execution and delivery of this Agreement and the payment
in full of the Obligations, and in the case of Section 9.1, the Other RF
Obligations.
9.9. GOVERNING LAW, ETC.; WAIVER OF TRIAL BY JURY. (A) THIS AGREEMENT
AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF
THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR THE
34
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTE, THE GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PARTY HERETO IN ANY OTHER
JURISDICTION. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(B) EACH OF BORROWER, LENDER AND GUARANTOR HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
(C) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS PERSONALLY
DELIVERED OR TRANSMITTED BY REGISTERED MAIL TO THE ADDRESS SET FORTH FOR NOTICES
IN SECTION 9.10; PROVIDED THAT UPON ANY SUCH SERVICE BY REGISTERED MAIL THE
SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH, SEND NOTICE OF SUCH SERVICE TO
THE OTHER PARTY VIA FACSIMILE TRANSMISSION. NOTHING IN THIS AGREEMENT WILL
AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.
9.10. NOTICE. (a) Any notice hereunder shall be in writing and shall
be personally delivered, transmitted by postage prepaid registered airmail, by
facsimile, telegram or cable to the parties as follows:
To Lender: Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Asset-Backed Finance
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
WITH A COPY TO:
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
35
Facsimile: (000) 000-0000
To Borrower: Long Beach Acceptance Receivables Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With copies to Guarantor and AMC as per
clause (b) below.
To Guarantor: Long Beach Acceptance Corp.
Xxx Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To AMC: Ameriquest Mortgage Company
0000 Xxxx xxx Xxxxxxx Xxxx
Xxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To the Certificate
Insurer: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department;
Re: Long Beach Auto Acceptance Corp.,
1998-2 5.87% Asset Backed Certificates,
Class A
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; (000) 000-0000
All notices and other communications shall be deemed to have been duly
given on the date of receipt if delivered personally; the date five (5) calendar
days after posting if transmitted by mail; or in the case of a facsimile,
telegram or cable, at the time sent. Any party may change its address for
purposes hereof by notice to the other.
(b) Lender hereby agrees that it will provide to Guarantor and AMC copies
of all notices it provides to Borrower hereunder.
36
9.11. SEVERABILITY. If any one or more of the provisions contained in
this Agreement or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired.
9.12. COUNTERPARTS. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute a full and original
agreement for all purposes.
9.13. MERGER OR CONSOLIDATION. Any Person (i) into which Borrower or
Guarantor may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Borrower or Guarantor is a party or (iii) succeeding to
all or substantially all of the business of Borrower or Guarantor, provided that
in any of the foregoing cases such Person shall execute an agreement of
assumption to perform every obligation of Borrower or Guarantor, as the case may
be, under this Agreement, and whether or not such assumption agreement is
executed, shall be the successor to Borrower or Guarantor hereunder (without
relieving Borrower or Guarantor of its responsibilities hereunder, if it
survives such merger or consolidation) without the execution or filing of any
document or any further act by any of the parties to this Agreement.
9.14. SUBSEQUENT ACTIONS. Each party shall, upon the written request
of the other party from time to time after execution of this Agreement and
without further consideration, execute such documents or take such action as may
be reasonably necessary to carry out the purpose or intention of this Agreement.
9.15. ASSIGNABILITY. The rights and obligations of the parties under
this Agreement shall not be assigned or otherwise transferred, by sale of
participation interests or otherwise, by any party without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except that this Agreement may be assigned without such prior written consent to
any Person who succeeds Borrower or Guarantor, as the case may be, as provided
in Section 9.13.
9.16. CERTAIN REIMBURSEMENTS. (a) Notwithstanding Section 8 of the
Guarantee or anything herein to the contrary, Borrower may on any Remittance
Date reimburse Guarantor for any payments made under the Guarantee, so long as
(i) all amounts owing to Lender on such Remittance Date have been paid, (ii) no
Default or Event of Default shall have occurred and be continuing and (iii) the
Advance Rate shall be less than the then applicable Target Advance Rate.
(provided that until the first Calculation Date on which the Advance Rate
exceeds the Maintenance Advance Rate, (x) the Present Value of the Collateral
used to calculate such Advance Rate shall be the Present Value of the Collateral
as of the close of business on the Closing Date and (y) the Advance Rate used in
the calculation of the Target Advance Rate shall be based on the Present Value
of the Collateral as of the close of business on the Closing Date).
(b) Notwithstanding Section 8 of the AMC Guarantee or anything herein to
the contrary, Borrower and/or Guarantor may on any Remittance Date reimburse AMC
for any payments made under the Guarantee, so long as (i) all amounts owing to
Lender on such
37
Remittance Date have been paid, (ii) no Default or Event of Default shall have
occurred and be continuing and (iii) the Advance Rate shall be less than the
then applicable Target Advance Rate. (provided that until the first Calculation
Date on which the Advance Rate exceeds the Maintenance Advance Rate, (x) the
Present Value of the Collateral used to calculate such Advance Rate shall be the
Present Value of the Collateral as of the close of business on the Closing Date
and (y) the Advance Rate used in the calculation of the Target Advance Rate
shall be based on the Present Value of the Collateral as of the close of
business on the Closing Date).
[Signature Page Follows]
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first written
above.
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By: ________________________________________
Name:
Title:
LONG BEACH ACCEPTANCE RECEIVABLES CORP., Borrower
By: ________________________________________
Name:
Title:
LONG BEACH ACCEPTANCE CORP., Guarantor
By: ________________________________________
Name:
Title:
39
SCHEDULE 4.16
PLANS
Borrower: None
Guarantor: None
EXHIBIT A
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
PROMISSORY NOTE
November 25, 1998
Amount: U.S. $2,700,000.00
FOR VALUE RECEIVED, LONG BEACH ACCEPTANCE RECEIVABLES CORP. (the
"Borrower") unconditionally promises to pay on the Maturity Date (as defined in
the Agreement referred to below) to the order of Greenwich Capital Financial
Products, Inc. (the "Lender") in Federal or other immediately available funds in
lawful money of the United States the principal sum of TWO MILLION SEVEN HUNDRED
THOUSAND DOLLARS (U.S. $2,700,000.00) or, if less, the aggregate unpaid
principal amount of the Loan made by Lender to Borrower pursuant to the
Agreement, and to pay interest thereon from the date hereof until this Note is
repaid in like money at the rates per annum and in the manner set forth in the
Agreement.
The principal of and interest on this Note shall be payable in
immediately available funds without set-off or counterclaim, in the manner set
forth in the Agreement.
This Note is issued pursuant to the terms of a Credit and Security
Agreement dated as of November 25, 1998 among Borrower, Lender and Long Beach
Acceptance Corp., as Guarantor (as amended from time to time, the "Agreement"),
and is subject to the terms thereof and is entitled to the benefits therein
provided.
Upon the occurrence of an Event of Default (as defined in the
Agreement), the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Agreement,
without presentment, demand, protest or notice of any kind, each of which is
hereby expressly waived by Borrower.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
By: __________________________________
Name:
Title:
A-1
EXHIBIT B
November 25, 1998
[FORM OF LBAC GUARANTEE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Guarantee by Long Beach Acceptance Corp. of Credit
and Security Agreement Dated as of November 25, 1998
-----------------------------------------------------
Ladies and Gentlemen:
1. For value received and in accordance with the terms of the Credit
and Security Agreement, dated as of NOVEMBER 25, 1998 (the "Agreement"), among
Greenwich Capital Financial Products, Inc., as Lender ("Lender"), Long Beach
Acceptance Receivables Corp., as Borrower ("Borrower"), and Long Beach
Acceptance Corp., as Guarantor (the "Guarantor"), Guarantor hereby
unconditionally and irrevocably guarantees to Lender, or any successor in
interest of Lender, the due, punctual and complete payment and performance by
Borrower when and as due, whether at the stated maturity, by acceleration, upon
one or more dates set for repayment or prepayment or otherwise of the
Obligations. Lender may make demands under this Guarantee for such amounts and
performance from time to time. Guarantor hereby represents that its obligations
hereunder do and shall rank PARI PASSU with all unsecured and unsubordinated
indebtedness of Guarantor, as applicable. Terms used and not defined herein
shall have the meanings assigned in the Agreement.
2. Payments and performance required under this Guarantee shall be
payable and performed whenever any amount or performance guaranteed hereunder
has not been promptly made to Lender in accordance with the Agreement. When
pursuing its rights and remedies hereunder against Guarantor, Lender may, but
shall be under no obligation to, pursue the rights, remedies, powers and
privileges as it may have against Borrower or any other Person or against any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto. Any failure by Lender to pursue the other rights, remedies,
powers or privileges or to collect any payments from Borrower or any other
Person or to realize upon any collateral security or guarantee or to exercise
any right of offset, or any release of Borrower or any other Person or of any
the collateral security, guarantee or right of offset, shall not relieve
Guarantor of any liability hereunder, and shall not impair or affect the rights,
remedies, powers or privileges, whether express, implied or available as a
matter of law, of Lender against Guarantor.
3. Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against Guarantor, and without notice to or
further assent by Guarantor, any
B-1
demand for payment of any of the Obligations made by Lender may be rescinded
by Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other Person upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by Lender, and the
Guarantee or the Agreement and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated in
accordance with the terms thereof, in whole or in part, as Lender may deem
advisable from time to time, and any collateral security, guarantee or right
of offset at any time held by Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. Lender shall have no
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Obligations or for the guarantee set forth herein or any
property subject thereto. When making any demand hereunder against Guarantor,
Lender may, but shall be under no obligation to, make a similar demand on
Borrower or any other guarantor (including, without limitation, any other
Guarantor), and any release of Borrower or the other guarantor (including,
without limitation, any other Guarantor), shall not relieve any of its
obligations or liabilities hereunder, and shall not impair or affect the rights,
remedies, powers and privileges, express or implied, or as a matter of law, of
Lender against Guarantor.
4. Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Obligations and notice of or proof of
reliance by Lender upon the guarantee of Guarantor set forth herein or
acceptance of the guarantee of Guarantor set forth herein; the Obligations, and
any of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee of Guarantor set forth herein; and all dealings between Borrower or
Guarantor, on the one hand, and Lender, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee of Guarantor set forth herein. Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment and
all other notices of any kind to or upon Borrower or Guarantor with respect to
the Obligations. The guarantee of Guarantor set forth herein shall be construed
as a guarantee of payment, and not of collection.
5. The guarantee set forth herein shall remain in full force and effect
and be binding in accordance with and to the extent of its terms upon Guarantor
and its successors and permitted assigns, and shall inure to the benefit of
Lender, and its respective successors, endorsees, transferees and assigns, until
all the Obligations and the obligations of Guarantor under the guarantee shall
have been satisfied by payment in full.
6. The guarantee set forth herein shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
Lender for any reason whatsoever, including, without limitation, upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of Guarantor
or Borrower or upon or as a result of the appointment of a receiver,
B-2
intervenor or conservator of, or trustee or similar officer for, Borrower or
Guarantor or any substantial part of its property, or otherwise, all as though
the payments had not been made.
7. All payments due hereunder shall be paid in immediately available
funds after demand no later than 1:00 P.M. on the second Business Day following
the date of such demand. Demand shall be made in writing to Guarantor's office
located at Xxx Xxxx Xxxxxx Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, or such other
address in the United States which may be designated by Guarantor by written
notice delivered to Lender.
8. To the full extent permitted by law, Guarantor hereby waives all
rights of subrogation, contribution, reimbursement, indemnity or otherwise,
whether arising by contract or operation of law (including, without limitation,
any such right arising under the Bankruptcy Code) or otherwise by reason of any
payment or performance by Guarantor pursuant to the provisions of this
Guarantee. Without limitation to the foregoing, notwithstanding any payment or
payments made by Guarantor hereunder or any setoff or application of funds of
Guarantor by Lender, Guarantor shall not be entitled to be subrogated to any of
the rights of Lender against Borrower or any collateral security or guarantee or
right of offset held by Lender for the payment of the Obligations, nor shall
Guarantor seek or be entitled to seek any contribution or reimbursement from
Borrower in respect of payments made by Guarantor hereunder, until all amounts
owing to Lender by Borrower and Guarantor on account of the Obligations are paid
in full. If any amount shall be paid to Guarantor on account of the subrogation
rights at any time when all of the Obligations shall not have been paid in full,
the amount shall be held by Guarantor in trust for Lender, segregated from other
funds of Guarantor, and shall forthwith upon receipt by Guarantor, be turned
over to Lender in the exact form received by Guarantor (duly endorsed by
Guarantor to Lender, if required), to be applied against the Obligations,
whether matured or unmatured, at the time and in the order as Lender may
determine. Notwithstanding the foregoing, Guarantor may request reimbursement
from Borrower to the extent permitted pursuant to Section 9.16(a) of the
Agreement.
9. As further security for this Guarantee, Guarantor hereby grants a
first priority security interest in and transfers and assigns to Lender (a) any
and all interest, if any, it may now or hereafter have in the Collateral until
it has been sold or otherwise disposed of by Lender, and (b) all claims and
demands, presently existing or hereafter accrued thereon, and any and all
collateral or security Guarantor now has or may hereafter have or acquire
against Borrower with respect to the Collateral or any of them with full right
on the part of Lender in its own name or in the name of Guarantor to collect and
enforce such claims by legal action, proof of debt in bankruptcy or other
liquidation proceedings, and to vote in any proceedings for the arrangement of
debts at any time proposed, and Guarantor hereby irrevocably appoints Lender as
attorney-in-fact for Guarantor for the purpose of such enforcement and for the
purpose of endorsing in the name of Guarantor any Collateral for the payment of
money.
10. In the event that any representation or warranty made by Borrower
or by Guarantor in the Agreement or any Basic Document to which it is a party
shall be false or misleading in any material respect, there shall be immediately
due from Guarantor to Lender the
B-3
loss, out-of-pocket cost, damage or out-of-pocket expense incurred by Lender by
reason of such representation or warranty being false or misleading in any
material respect.
11. In the event that Lender for any reason whatsoever shall deem it
necessary to enforce this Guarantee or any rights hereunder or otherwise, there
shall be immediately due from Guarantor to Lender, all losses, out-of-pocket
costs, damages, out-of-pocket expenses, claims and liabilities associated with
such enforcement, including but not limited to, reasonable outside attorneys'
fees and out-of-pocket disbursements, together with all reasonable out-of-pocket
costs and out-of-pocket expenses of any related action.
12. Guarantor hereby covenants that it shall not assign this Guarantee
except with the prior written consent of Lender, which consent shall not be
unreasonably withheld.
13. Guarantor represents and warrants to Lender that each of the
representations and warranties made by it in the Agreement is true and correct.
14. The obligations of Guarantor under this Guarantee are irrevocable,
primary, absolute and unconditional and shall be paid or performed strictly in
accordance with this Guarantee under all circumstances irrespective of:
(a) any lack of validity or enforceability of the Agreement, the AMC
Guarantee or any of the Collateral, or any amendment, other modification or
waiver in respect thereof;
(b) any exchange or release of any other obligations hereunder;
(c) the existence of any claim, set-off, defense, reduction, abatement
or other right that Lender or Borrower may have at any time against Borrower,
Guarantor or any other person;
(d) any document presented in connection with this Guarantee proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(e) any payment by Guarantor under this Guarantee against presentation
of a certificate or other document that does not strictly comply with terms of
this Guarantee; and
(f) any other circumstances, other than payment in full, that might
otherwise constitute a defense available to, or discharge of, Borrower in
respect of the Agreement.
15. Neither the failure of Borrower or Lender to perform any covenant
or obligation in favor of Guarantor nor the failure or omission to make a demand
permitted hereunder shall in any way affect or limit Guarantor's obligations
under this Guarantee. If an action or proceeding to enforce this Guarantee is
brought, the beneficiary shall be entitled to recover from Guarantor costs and
expenses reasonably incurred, including without limitation reasonable fees and
expenses of counsel and out-of-pocket costs.
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16. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. Communications with respect to this
Guarantee other than requests for payment pursuant to a notice referred to in
the preceding paragraph shall also be addressed to Guarantor at Xxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000, specifically referring to this Guarantee.
17. EACH PARTY HERETO HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY
LITIGATION ARISING HEREUNDER AND ALSO WAIVES THE RIGHT IN ANY SUCH LITIGATION,
TO IMPOSE COUNTERCLAIMS OR SET-OFFS OF ANY KIND OR DESCRIPTION UNLESS SUCH
COUNTERCLAIM OR SET-OFF IS COMPULSORY OR MANDATORY IN NATURE UNDER THE NEW YORK
CIVIL PRACTICE LAW AND RULES. EACH PARTY HERETO FURTHER SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUCH PROCEEDING PERSONALLY DELIVERED OR TRANSMITTED BY
REGISTERED MAIL TO THE ADDRESS SET FORTH ABOVE; PROVIDED THAT UPON ANY SUCH
SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH,
SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
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Any notice hereunder shall be in writing and shall be personally
delivered, transmitted by postage prepaid registered mail, by facsimile,
telegram or cable to the parties at the address for notices set forth in the
Agreement. All notices and other communications shall be deemed to have been
duly given on the date of receipt if delivered personally; the date five (5)
calendar days after posting if transmitted by mail; or in the case of a
facsimile, telegram or cable, at the time sent. Either party may change its
address for purposes hereof by notice to the other.
LONG BEACH ACCEPTANCE CORP., Guarantor
By: __________________________________
Name:
Title:
AGREED AND ACCEPTED:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By: __________________________________
Name:
Title:
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EXHIBIT C
November 25, 1998
[FORM OF AMC GUARANTEE]
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Guarantee by Ameriquest Mortgage Company of Long Beach
Acceptance Corp. Guarantee Dated as of November 25, 1998
---------------------------------------------------------
Ladies and Gentlemen:
1. For value received and in accordance with the terms of (i) the
Credit and Security Agreement, dated as of NOVEMBER 25, 1998 (the "Agreement"),
among Greenwich Capital Financial Products, Inc., as Lender ("Lender"), Long
Beach Acceptance Receivables Corp., as Borrower ("Borrower") and Long Beach
Acceptance Corp., as Guarantor ("LBAC"), and (ii) the Guarantee dated NOVEMBER
25, 1998 made by LBAC in favor of Lender (the "LBAC Guarantee"), Ameriquest
Mortgage Company, a Delaware corporation ("AMC"), hereby unconditionally and
irrevocably guarantees to Lender, or any successor in interest of Lender, the
due, punctual and complete payment and performance by LBAC when and as due,
whether at the stated maturity, by acceleration, upon one or more dates set for
repayment or prepayment or otherwise, of the LBAC Obligations. For purposes of
this guarantee, "LBAC Obligations" shall mean any and all Obligations of LBAC to
Lender under the Agreement and the LBAC Guarantee. Lender may make demands under
this guarantee for such amounts and performance from time to time. AMC hereby
represents that its obligations hereunder do and shall rank PARI PASSU with all
unsecured and unsubordinated indebtedness of AMC, as applicable. Terms used and
not defined herein shall have the meanings assigned in the Agreement.
2. Payments and performance required under this guarantee shall be
payable and performed whenever any amount or performance guaranteed hereunder
has not been promptly made to Lender in accordance with the Agreement and the
LBAC Guarantee. When pursuing its rights and remedies hereunder against AMC,
Lender may, but shall be under no obligation to, pursue the rights, remedies,
powers and privileges as it may have against Borrower, LBAC or any other Person
or against any collateral security or guarantee for the LBAC Obligations or any
right of offset with respect thereto. Any failure by Lender to pursue the other
rights, remedies, powers or privileges or to collect any payments from Borrower,
LBAC or any other Person or to realize upon any collateral security or guarantee
or to exercise any right of offset, or any release of Borrower, LBAC or any
other Person or of any of the collateral security, guarantee or right of offset,
shall not relieve AMC of any liability hereunder, and shall not impair or affect
the rights,
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remedies, powers or privileges, whether express, implied or available as a
matter of law, of Lender against AMC.
3. AMC shall remain obligated hereunder notwithstanding that, without
any reservation of rights against AMC, and without notice to or further assent
by AMC, any demand for payment of any of the LBAC Obligations made by Lender may
be rescinded by Lender, and any of the LBAC Obligations continued, and the LBAC
Obligations, or the liability of any other Person upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
Lender, and the LBAC Guarantee or the Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated in accordance with the terms thereof, in whole or in part, as Lender
may deem advisable from time to time, and any collateral security, guarantee or
right of offset at any time held by Lender for the payment of the LBAC
Obligations may be sold, exchanged, waived, surrendered or released. Lender
shall have no obligation to protect, secure, perfect or insure any Lien at any
time held by it as security for the LBAC Obligations or for the guarantee set
forth herein or any property subject thereto. When making any demand hereunder
against AMC, Lender may, but shall be under no obligation to, make a similar
demand on Borrower, LBAC or any other guarantor and any release of Borrower,
LBAC or any other guarantor shall not relieve any of its obligations or
liabilities hereunder, and shall not impair or affect the rights, remedies,
powers and privileges, express or implied, or as a matter of law, of Lender
against AMC.
4. AMC waives any and all notice of the creation, renewal, extension
or accrual of any of the LBAC Obligations and notice of or proof of reliance by
Lender upon the guarantee of AMC set forth herein or acceptance of the guarantee
of AMC set forth herein; the LBAC Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee of AMC set forth
herein; and all dealings between LBAC or AMC, on the one hand, and Lender, on
the other, shall likewise be conclusively presumed to have been had or
consummated in reliance upon the guarantee of AMC set forth herein. AMC waives
diligence, presentment, protest, demand for payment and notice of default or
nonpayment and all other notices of any kind to or upon LBAC or AMC with respect
to the LBAC Obligations. The guarantee of AMC set forth herein shall be
construed as a guarantee of payment, and not of collection.
5. The guarantee set forth herein shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon AMC
and its successors and permitted assigns, and shall inure to the benefit of
Lender, and its respective successors, endorsees, transferees and assigns, until
all the LBAC Obligations and the obligations of AMC under this guarantee shall
have been satisfied by payment in full. Notwithstanding Section 2.10 of the
Agreement, the obligations of AMC under this guarantee shall be fully recourse
to AMC and all property and assets of AMC whether now owned or hereinafter
acquired, and AMC shall remain liable for all of the LBAC Obligations pursuant
to the terms of this guarantee.
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6. The guarantee set forth herein shall continue to be effective, or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the LBAC Obligations is rescinded or must otherwise be restored or
returned by Lender for any reason whatsoever, including, without limitation,
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
LBAC or AMC or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, LBAC or AMC or any
substantial party of its property, or otherwise, all as though the payments had
not been made.
7. All payments due hereunder shall be paid in immediately available
funds after demand no later than 1:00 P.M. on the second Business Day following
the date of such demand. Demand shall be made in writing to AMC's office located
at 0000 Xxxx xxx Xxxxxxx Xxxx, Xxxxxx, XX 00000, Attention: General Counsel or
such other address in the United States which may be designated by AMC by
written notice delivered to Lender.
8. To the full extent permitted by law, AMC hereby waives all rights
of subrogation, contribution, reimbursement, indemnity or otherwise, whether
arising by contract or operation of law (including, without limitation, any
such right arising under the Bankruptcy Code) or otherwise by reason of any
payment or performance by AMC pursuant to the provisions of this guarantee.
Without limitation to the foregoing, notwithstanding any payment or payments
made by AMC hereunder or any setoff or application of funds of AMC by Lender,
AMC shall not be entitled to be subrogated to any of the rights of Lender
against or any collateral security or guarantee or right of offset held by
Lender for the payment of the LBAC Obligations, nor shall AMC seek or be
entitled to seek any contribution or reimbursement from LBAC in respect of
payments made by AMC hereunder, until all amounts owing to Lender by LBAC on
account of the LBAC Obligations are paid in full. If any amount shall be paid
to AMC on account of the subrogation rights at any time when all of the LBAC
Obligations shall not have been paid in full, the amount shall be held by AMC
in trust for Lender, segregated from other funds of AMC, and shall forthwith
upon receipt by AMC, be turned over to Lender in the exact form received by
AMC (duly endorsed by AMC to Lender, if required), to be applied against the
LBAC Obligations, whether matured or unmatured, at the time and in the order
as Lender may determine. Notwithstanding the foregoing, AMC may request
reimbursement from Borrower or Guarantor to the extent permitted pursuant to
Section 9.16(b) of the Agreement.
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, AMC EXPRESSLY
WAIVES ANY AND ALL BENEFITS UNDER CALIFORNIA CIVIL CODE SECTIONS 2809, 2810,
2819, 2845, 2849, 2850, AND 2855, CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS
580A, 580B, 580D, AND 726, AND ANY OTHER SURETYSHIP OR SIMILAR LAW OR DEFENSE
NOW OR HEREAFTER IN EFFECT.
9. AMC hereby represents and warrants to Lender as of the date of this
guarantee and on an ongoing basis on each date that the LBAC Obligations are
outstanding as follows:
(a) ORGANIZATION. It is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware and is duly
qualified to do business in
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each jurisdiction in which the failure to be so qualified could reasonably be
expected to have a material adverse effect on its financial condition,
operations, business or prospects.
(b) POWER AND AUTHORITY. It has all requisite corporate power and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as now being conducted and
to execute and deliver and perform its obligations under this guarantee, except
as could not reasonably be expected to have a material adverse effect on its
financial condition, operations, business or prospects.
(c) AUTHORIZATION OF GUARANTEE. All appropriate and necessary
action has been taken by it to authorize the execution and delivery of this
guarantee and the performance and observance of the terms hereof.
(d) GUARANTEE BINDING. This guarantee has been duly executed and
delivered and constitutes its legal, valid and binding obligation, enforceable
in accordance with its terms, except as enforceability may be limited by laws
governing insolvency or creditors' rights generally and general equity
principles. The execution, delivery and performance of this guarantee does not
and will not violate any provision of law, regulation, order or other
governmental directive, or conflict with, constitute a default under, or result
in the breach of any provision of any material agreement, ordinance, decree,
bond, indenture, order or judgment to which it is a party or by which it is
bound.
(e) COMPLIANCE WITH LAW. It is conducting its business and
operations in compliance with all applicable laws, regulations, ordinances and
directives of governmental authorities, except to the extent that any
noncompliance could not reasonably be expected to have a material adverse effect
on its financial condition, operation, business or prospects. It has filed all
tax returns required to be filed and has paid all taxes due in respect of the
ownership of its assets or the conduct of its operations except (a) to the
extent that the payment of such taxes is being contested in good faith by it in
appropriate proceedings and adequate reserves have been provided for the payment
thereof, or (b) with respect to such returns and/or taxes which are not material
in either nature or amount such that any failure to file such returns or pay
such taxes would not materially and adversely affect its financial condition,
operations, business or prospects.
(f) CONSENTS. All licenses, consents and approvals required from
and all registrations and filings required to be made with any governmental or
other public body or authority for the making and performance by it of this
guarantee have been obtained and are in effect, except as could not reasonably
be expected to have a material adverse effect on its financial condition,
operations, business or prospects or on its ability to perform the obligations
hereunder.
(g) LITIGATION. There is no action, suit or proceeding at law or in
equity by or before any court, governmental agency or authority or arbitral
tribunal now pending or, to the best of its knowledge, threatened against or
affecting it which, if determined adversely, may
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reasonably be expected to have a material adverse effect on its business,
operations or financial condition.
(h) FINANCIAL STATEMENTS. The unaudited balance sheets of AMC as at
September 30, 1998, and the related statements of income for the fiscal periods
ended on such date, heretofore furnished to Lender, are complete and correct in
all material respects and fairly present the financial condition of AMC as at
said date (subject to normal year-end audit adjustments and tax planning
adjustments), all in accordance with U.S. generally accepted accounting
principles applied on a consistent basis. On said date, AMC had no material
contingent liabilities, liabilities for taxes, unusual or anticipated losses
from any unfavorable commitments, except as referred to or reflected in said
balance sheets as at said date. Since September 30, 1998, there has been no
material adverse change in the operations, condition (financial or otherwise),
business or prospects of AMC from that set forth in said financial statements as
at said date.
(i) OTHER OBLIGATIONS. It is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Basic Documents or in any agreement or instrument to which it is a party or by
which it is bound the result of which could reasonably be expected to have a
material adverse effect on its business, operations or financial condition.
(j) INVESTMENT COMPANY ACT. It is not an "investment company" or a
company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended.
(k) FULL DISCLOSURE. No representation or warranty made by or on
behalf of AMC contained in this guarantee and no written information or
information in any certificate, financial statement or report furnished or
to be furnished by or on behalf of AMC hereunder or in connection with the
transactions contemplated hereby contains or will contain an untrue statement of
a material fact, or, omits or will omit to state any material fact necessary to
make the statements herein or therein contained, in light of the circumstances
in which made, not misleading.
(l) ERISA. Set forth on Schedule 9(l) hereto is a list of all
Plans, if any, maintained by AMC or any of its subsidiaries. Except as may be
set forth on such schedule, neither AMC nor any of its subsidiaries maintains
any Plans, and AMC agrees to notify Lender in advance of forming any Plans.
Neither AMC nor any Commonly Controlled Entity has any obligations or
liabilities with respect to any employee pension benefit plans or Multiemployer
Plans, nor have any such Persons had any obligations or liabilities with respect
to any such Plans during the five-year period prior to the date this
representation is made or deemed made. AMC will give notice if at any time it or
any Commonly Controlled Entity has any obligations or liabilities with respect
to any employee pension benefit plan or Multiemployer Plan. All Plans maintained
by AMC or any Commonly Controlled Entity are in substantial compliance with all
applicable laws (including ERISA). AMC is not an employer under any
Multiemployer Plan.
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(m) BASIC DOCUMENTS. Each of the representations and warranties
made by it in (i) the Guaranty Agreement, dated as of November 25, 1998, between
AMC and the Trustee, and (ii) the Guaranty, dated as of November 25, 1998, among
AMC, Borrower and Lender, is true and correct; provided that this representation
shall not be deemed to have been breached if AMC shall have breached a
representation or warranty in either such document but shall have cured such
breach within the applicable cure period, if any, set forth therein.
10. AMC hereby covenants as follows:
(a) NOTICE. It shall promptly give notice to Lender of the
occurrence of (i) any Event of Default relating to it under the Agreement or
event which with the giving of notice or the passing of time or both would
constitute such an Event of Default relating to it, specifying the event and the
action which it proposes to take with respect thereto, (ii) any event or
occurrence known to it which will or could reasonably be expected to adversely
affect the collectibility of the Receivables or the ability of LBAC to service
such Receivables or the ability of AMC to perform its obligations under any
related documents or (iii) any other event or occurrence which individually or
in the aggregate could reasonably be expected to materially and adversely affect
AMC's financial condition, operations, business or prospects.
(b) TAXES. AMC shall pay and discharge all taxes and governmental
charges upon it or against any of its properties or assets or its income prior
to the date after which penalties attach for failure to pay, except (i) to the
extent that AMC shall be contesting in good faith in appropriate proceedings its
obligation to pay such taxes or charges, adequate reserves having been set aside
for the payment thereof, or (ii) with respect to such taxes and charges which
are not material in either nature or amount such that any failure to pay or
discharge them, and any resulting penalties, either in any one instance or in
the aggregate, would not materially and adversely affect the financial
condition, operations, business or prospects of AMC.
(c) BOOKS AND RECORDS; OTHER INFORMATION. (i) AMC shall maintain
accurate and complete books and records with respect to its business. All
accounting books and records shall be maintained in accordance with generally
accepted accounting principles consistently applied.
(ii) Only to the extent reasonably necessary to protect Lender's
interest hereunder, AMC shall, and shall cause each of its respective
subsidiaries to, permit any representative of Lender to visit and inspect any of
the properties of AMC to examine the books and records of AMC and to make copies
and take extracts therefrom, and to discuss the business, operations,
properties, condition (financial or otherwise) or prospects of AMC and each such
subsidiary with the officers and independent public accountants thereof and as
often as Lender may reasonably request, and so long as no default hereunder
shall have occurred and be continuing, all at such reasonable times during
normal business hours upon reasonable notice. AMC shall provide to Lender all
information regarding its respective operations and practices as Lender shall
reasonably request in writing. In connection with the matters described in this
Section 10(c), Lender shall not at any time use or disclose to any Person,
except to any
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professional adviser who needs to know such information in connection with the
transactions contemplated hereby, or except in connection with any litigation or
arbitral proceedings commenced by or against Lender or any of its affiliates,
any information that may be within or may come to its or their knowledge if such
information is of a type that would generally be expected to be held as
confidential; provided that the foregoing shall not apply to the extent that
such information was (i) previously known by Lender from sources other than AMC
or its directors, officers or agents, (ii) in the public domain through no fault
of Lender, (iii) lawfully acquired by Lender on a non-confidential basis from
other sources who are not known by Lender to be bound by a confidentiality
agreement with AMC or (iv) required to be disclosed by judicial or
administrative process or by any other Requirement of Law.
(d) PAYMENT OF FEES AND EXPENSES. AMC shall pay to Lender, on
demand, any and all fees, costs or expenses which Lender pays to a bank or other
similar institution arising out of or in connection with the return of payments
by AMC deposited for collection by Lender.
(e) CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT. AMC shall
continue in business in a prudent, reasonable and lawful manner with all
licenses, permits, and qualifications necessary to perform its obligations under
this guarantee, except where failure to do so could not reasonably be expected
to materially and adversely affect such performance.
(f) FINANCIAL STATEMENTS AND ACCESS TO RECORDS. AMC shall provide
Lender with quarterly unaudited financial statements within sixty (60) days of
the end of AMC's first three fiscal quarters, and will provide Lender with
audited annual financial statements within one hundred twenty (120) days of
AMC's fiscal year-end audited by a nationally recognized independent certified
public accounting firm. Upon request of Lender, AMC shall provide Lender with
unaudited monthly financial statements. AMC shall deliver to Lender with each
financial statement a certificate by AMC's chief financial officer, certifying
that such financial statements are complete and correct in all material respects
and that, except as noted in such certificate, such chief financial officer has
no knowledge of any default by it hereunder or any event which with the giving
of notice or the passing of time or both would constitute such a default.
(g) FINANCIAL CONDITION. AMC shall maintain a net worth of at least
95% of the net worth AMC is required to maintain pursuant to the credit
documents AMC has entered into with its primary warehouse lender (which on the
date hereof is Chase Bank of Texas, National Association) (net worth, in each
case, being calculated in accordance with such credit documents); provided that,
if such credit documents are terminated and AMC does not have a primary
warehouse lender, the reference to such credit documents will be deemed to be to
such credit documents as in effect immediately prior to such termination. AMC
shall maintain a debt-to-equity ratio of no more than 105% of the debt-to-equity
ratio AMC is required to maintain pursuant to the credit documents AMC has
entered into with its primary warehouse lender (which on the date hereof is
Chase Bank of Texas, National Association) (debt-to-equity, in each case, being
calculated in accordance with such credit documents); provided that, if such
credit
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documents are terminated and AMC does not have a primary warehouse lender, the
reference to credit documents AMC has entered into with its primary warehouse
lender will be deemed to be to such credit documents as in effect immediately
prior to such termination.
(h) LITIGATION MATTERS. AMC shall notify Lender in writing,
promptly upon its learning thereof, of any litigation, arbitration or
administrative proceeding which may reasonably be expected to materially and
adversely affect the operations, financial condition or business of AMC or AMC's
ability to perform under this guarantee or other rights under this guarantee.
(i) FULFILLMENT OF OBLIGATIONS. AMC shall pay and perform, as and
when due, all of its obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with generally accepted accounting
principles with respect thereto have been provided on the books of AMC, and
except to the extent that the failure to do so could not individually or in the
aggregate reasonably be expected to materially and adversely affect the
financial condition, operations, business or prospects of AMC.
(j) COMPLIANCE WITH LAWS, ETC. AMC shall, and shall cause each of
its respective subsidiaries to, comply (i) in all material respects with all
Requirements of Law and any change therein or in the application, administration
or interpretation thereof (including, without limitation any request, directive,
guideline or policy, whether or not having the force of law) by any Governmental
Authority charged with the administration or interpretation thereof; and (ii)
with all indentures, mortgages, deeds of trust, agreements, or other instruments
or contractual obligations to which it is a party, including without limitation,
each Basic Document to which it is a party, or by which it or any of its
properties may be bound or affected, or which may affect the Receivables, if the
failure to comply therewith could, individually or in the aggregate, reasonably
be expected to materially and adversely affect the financial condition,
operations, business or prospects of AMC.
(k) NO ASSIGNMENT. Except in connection with an assignment to any
successor that complies with Section 15 hereof, AMC shall not assign this
guarantee, except with the prior written consent of Lender, which consent shall
not be unreasonably withheld.
(l) VALUATION MODEL. AMC expressly accepts and acknowledges, and
agrees to comply with and be bound by, the provisions of Section 3.13 of the
Agreement.
11. The obligations of AMC under this guarantee are irrevocable,
primary, absolute and unconditional and shall be paid or performed strictly in
accordance with this guarantee under all circumstances irrespective of:
(a) any lack of validity or enforceability of the Agreement, the
LBAC Guarantee or of any of the Collateral, or any amendment, other modification
or waiver in respect thereof;
(b) any exchange or release of any other obligations hereunder;
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(c) the existence of any claim, set-off, defense, reduction,
abatement or other right that Lender, Borrower or LBAC may have at any time
against any of Borrower, LBAC, AMC or any other person;
(d) any document presented in connection with the Agreement, the
LBAC Guarantee or this guarantee proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
(e) any payment by AMC under this guarantee against presentation of
a certificate or other document that does not strictly comply with terms of this
guarantee; and
(f) any other circumstances, other than payment in full, that might
otherwise constitute a defense available to, or discharge of, Lender, Borrower
or LBAC in respect of the Agreement or the LBAC Guarantee.
12. Neither the failure of Borrower, Lender or LBAC to perform any
covenant or obligation in favor of AMC nor the failure or omission to make a
demand permitted hereunder shall in any way affect or limit AMC's obligations
under this guarantee.
13. AMC agrees to:
(i) pay or reimburse Lender on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment,
modification or supplement to, or any waiver under, this guarantee,
the LBAC Guarantee and any other document prepared in connection
therewith, and the consummation and administration of the
transactions contemplated thereby, including without limitation the
reasonable fees and disbursements of counsel to Lender;
(ii) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements
of counsel to Lender, in connection with the occurrence or
continuance of a default under this guarantee and the LBAC
Guarantee and the enforcement, collection, protection or
preservation (whether through negotiations, legal proceedings or
otherwise) of this guarantee, any LBAC Obligation or any right,
remedy, power or privilege of Lender hereunder or under the LBAC
Guarantee;
(iii) pay and hold Lender harmless from and against any and all
present and future stamp, excise, recording or other similar taxes
or fees payable in connection with the execution, delivery,
recording and filing of this guarantee or the LBAC Guarantee and
hold Lender harmless from and against any and all liabilities with
respect to or resulting from any delay or omission to pay such
taxes or fees; and
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(iv) indemnify Lender and its affiliates and each of their
respective directors, officers, employees and agents and hold each
of them harmless from and against, any and all liabilities, losses,
damages, penalties, actions, judgments, suits, claims, costs,
expenses and disbursements, including without limitation the
reasonable fees and disbursements of counsel to Lender and such
other parties, incurred by any of them in connection with, arising
out of or in any way relating to any investigation, claim,
litigation or other proceeding, pending or threatened (whether or
not any of them is designated a party thereto), in connection with,
arising out of or in any way related to this guarantee or the LBAC
Guarantee or any of the transactions contemplated herein or
therein; provided that Lender shall not be entitled to any
indemnification for any of the foregoing resulting from its gross
negligence or willful misconduct.
If and to the extent that the indemnity obligations of AMC under this Section 13
may be unenforceable for any reason, AMC hereby agrees to make the maximum
contribution to the payment and satisfaction of each of such indemnity
obligations which is permissible under applicable law.
14. In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, during the continuance of
any default under this guarantee or the LBAC Guarantee Lender is hereby
authorized at any time and from time to time, without notice to AMC or to any
other person or entity, any such notice being hereby expressly waived, to
set-off against any obligation owing by Lender or any affiliate of Lender to
LBAC or AMC, or against any funds or other property of LBAC or AMC held by or
otherwise in the possession of Lender or any affiliate of Lender, the LBAC
Obligations and the obligations and liabilities of AMC to Lender hereunder,
irrespective of whether or not Lender shall have made any demand hereunder or
under the LBAC Guarantee.
15. Any Person (i) into which AMC may be merged or consolidated,
(ii) resulting from any merger or consolidation to which AMC is a party or
(iii) succeeding to all or substantially all of the business of AMC, provided
that in any of the foregoing cases such Person shall execute an agreement of
assumption to perform every obligation of AMC under this guarantee, and
whether or not such assumption agreement is executed, shall be the successor
to AMC hereunder (without relieving AMC of its responsibilities hereunder, if
it survives such merger or consolidation) without the execution or filing of
any document or any further act by any of the parties to this guarantee.
16. Each party shall, from time to time after execution of this
guarantee and without further consideration, execute such documents or take such
action as may be reasonably necessary to carry out the purpose or intention of
this guarantee.
17. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK. Communications with respect to this
guarantee other than requests for payment pursuant to a notice referred to in
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the preceding paragraph shall also be addressed to AMC at 0000 Xxxx xxx Xxxxxxx
Xxxx, Xxxxxx, XX 00000, Attention: General Counsel, specifically referring to
this guarantee.
18. EACH PARTY HERETO HEREBY WAIVES THE RIGHT OF TRIAL BY JURY IN ANY
LITIGATION ARISING HEREUNDER AND ALSO WAIVES THE RIGHT IN ANY SUCH LITIGATION,
TO IMPOSE COUNTERCLAIMS OR SET-OFFS OF ANY KIND OR DESCRIPTION UNLESS SUCH
COUNTERCLAIM OR SET-OFF IS COMPULSORY OR MANDATORY IN NATURE UNDER THE NEW YORK
CIVIL PRACTICE LAW AND RULES. EACH PARTY HERETO FURTHER SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY
FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTEE OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY HERETO IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN ANY SUCH PROCEEDING PERSONALLY DELIVERED OR TRANSMITTED BY
REGISTERED MAIL TO THE ADDRESS SET FORTH ABOVE; PROVIDED THAT UPON ANY SUCH
SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH,
SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
C-11
Any notice hereunder shall be in writing and shall be personally
delivered, transmitted by postage prepaid registered airmail, by facsimile,
telegram or cable to the parties at the address for notices set forth in the
Agreement. All notices and other communications shall be deemed to have been
duly given on the date of receipt if delivered personally; the date five (5)
calendar days after posting if transmitted by mail; or in the case of a
facsimile, telegram or cable, at the time sent. Either party may change its
address for purposes hereof by notice to the other.
AMERIQUEST MORTGAGE COMPANY
By: __________________________________
Name:
Title:
AGREED AND ACCEPTED:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., Lender
By: __________________________________
Name:
Title:
C-12
EXHIBIT D
LONG BEACH ACCEPTANCE RECEIVABLES CORP.
QUARTERLY COMPLIANCE CERTIFICATE
I, __________, Treasurer of Long Beach Acceptance Receivables Corp. hereby
certify that the representations and warranties contained in Section 4 of the
Credit and Security Agreement (the "Agreement") dated as of November 25, 1998
among Long Beach Acceptance Receivables Corp., Long Beach Acceptance Corp. and
Greenwich Capital Financial Products, Inc. are true and correct, that Long Beach
Acceptance Receivables Corp. is in compliance with the covenants set forth in
Sections 5 and 6 of the Agreement and that no Event of Default (as defined in
the Agreement), and no event which with notice or lapse of time or both would
become an Event of Default, has occurred and is continuing.
Dated: ___________ __________________________________________________
Name:
Title: [Comptroller] [Vice President-Finance] [Treasurer]
D-1
EXHIBIT E
[FORM OF OPINION OF COUNSEL TO THE
BORROWER AND EACH GUARANTOR]*
November 25, 1998
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Re: Credit and Security Agreement, dated as of November 25, 1998, by
and among Greenwich Capital Financial Products, Inc., as Lender,
Long Beach Acceptance Receivables Corp., as Borrower and Long
Beach Acceptance Corp., as Guarantor
------------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Long Beach Acceptance Receivables
Corp., a Delaware corporation (the "Borrower"), Long Beach Acceptance Corp., a
Delaware corporation ("LBAC") and Ameriquest Mortgage Company, a Delaware
corporation ("AMC") in connection with the preparation, execution and delivery
of:
(a) the Credit and Security Agreement, dated as of November 25, 1998
(the "Credit and Security Agreement"), by and among Greenwich Capital
Financial Products, Inc. (the "Lender"), Borrower and LBAC, as
Guarantor;
(b) the Note (as defined in the Credit and Security Agreement);
(c) the Guarantee, dated November 25, 1998 (the "LBAC Guarantee"), made
by LBAC in favor of Lender; and
(d) the Guarantee, dated November 25, 1998 (the "AMC Guarantee"), made
by AMC in favor of Lender.
(the documents referred to in clauses (a) through (d), collectively, the
"DELIVERED DOCUMENTS").
-----------------------
* May be incorporated into such other opinions delivered by counsel to Borrower
and each Guarantor in connection with the Securitization Transaction.
E-1
This opinion is being furnished to Lender at the request of Borrower,
LBAC and AMC.
In rendering the opinions set forth herein, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Delivered Documents, (ii) the articles of incorporation
and by-laws of each of Borrower, LBAC and AMC, each as in effect on the date
hereof, (iii) resolutions of the boards of directors of each of Borrower, LBAC
and AMC relating to each of the Delivered Documents adopted on or prior to the
date hereof, and (iv) such certificates of public officials and such other
certificates, documents, records, and statements of officers and other
representatives of Borrower, LBAC and AMC and public officials as we have deemed
appropriate or necessary as the basis for the opinions set forth below. As to
certain facts material to the opinions expressed herein, we have relied upon,
and assumed the accuracy of, (i) the representations and warranties contained in
the Delivered Documents, and (ii) the certificates and other documents, records
and statements referred to in the immediately preceding sentence. We have
assumed the genuineness of all signatures (other than those of Borrower, LBAC
and AMC), the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. We have also assumed the due
execution and delivery, pursuant to due authorization, by Lender of the Credit
and Security Agreement.
We are admitted to the bar in the State of New York and we express no
opinion as to the laws of any jurisdiction other than the laws of the State of
New York, the State of Delaware and the Federal securities laws of the United
States.
Based upon the foregoing, and subject to the qualifications and
exceptions stated herein, we are of the opinion that:
1. Each of Borrower, LBAC and AMC (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation,
(b) has the corporate power and authority to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except, with respect to the preceding clause (c), to the extent
that the failure to be so qualified and in good standing would not, in the
aggregate, reasonably be expected to have a material adverse effect on the
business, operations, property or condition (financial or otherwise) or
prospects of Borrower, LBAC or AMC (a "MATERIAL ADVERSE EFFECT").
2. Borrower has the corporate power and authority to execute, deliver and
perform each of the Credit and Security Agreement and the Note, to borrow under
the Credit and Security Agreement and the Note, and to grant liens pursuant to
the Credit and Security Agreement, and has taken all necessary corporate action
to authorize such borrowing, the granting of such liens on the terms and subject
to the conditions of the Credit and Security Agreement, and the execution,
delivery and performance of each of the Credit and Security Agreement and the
Note.
E-2
LBAC has the corporate power and authority to execute, deliver and perform each
of the Credit and Security Agreement and the LBAC Guarantee, and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit and Security Agreement and the LBAC Guarantee. AMC has the
corporate power and authority to execute, deliver and perform the AMC Guarantee,
and has taken all necessary corporate action to authorize the execution,
delivery and performance of the AMC Guarantee.
3. No consent or authorization of, filing with or other act by or in
respect of any governmental authority of or within the State of New York, the
State of California or the State of Delaware is required in connection with the
borrowing under the Credit and Security Agreement and the Note or with the
execution, delivery, performance, validity or enforceability of the Delivered
Documents, except for consents, authorizations and filings which have been
obtained or made, as the case may be, and are in full force and effect.
4. Each of the Credit and Security Agreement and the Note has been duly
executed and delivered on behalf of Borrower and constitutes a legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, subject to the effect of (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other similar laws relating to
or affecting the rights of creditors and (ii) the application of general
principles of equity (regardless of whether enforceability is considered in
proceedings at law or in equity). Each of the Credit and Security Agreement and
the LBAC Guarantee has been duly executed and delivered on behalf of LBAC and
constitutes a legal, valid and binding obligation of LBAC, enforceable against
each LBAC in accordance with its terms, subject to the effect of (i) bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or transfer or
other similar laws relating to or affecting the rights of creditors and (ii) the
application of general principles of equity (regardless of whether
enforceability is considered in proceedings at law or in equity). The AMC
Guarantee has been duly executed and delivered on behalf of AMC and constitutes
a legal, valid and binding obligation of AMC, enforceable against AMC in
accordance with its terms, subject to the effect of (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or transfer or other similar
laws relating to or affecting the rights of creditors and (ii) the application
of general principles of equity (regardless of whether enforceability is
considered in proceedings at law or in equity).
5. The execution, delivery and performance by each of Borrower, LBAC and
AMC of the Delivered Documents to which it is a party, the borrowing by Borrower
under the Credit and Security Agreement and the use of the proceeds thereof, and
the granting of liens by Borrower pursuant to the Credit and Security Agreement,
will not violate any Requirement of Law of the State of New York, the State of
California or in respect of the General Corporation Law of the State of Delaware
or Regulation G of the Board of Governors of the Federal Reserve System, or, to
the best of our knowledge, any of the material terms or provisions of, or
constitute a default under, any indenture, mortgage, loan agreement, deed of
trust or any other material agreement or instrument to which Borrower, LBAC or
AMC is a party or by which Borrower, LBAC or AMC is bound (collectively, the
"SPECIFIED AGREEMENTS"), and will not result in, or require, the creation or
imposition of any lien on any of either of their respective properties or
E-3
revenues pursuant to any such Requirement of Law or Specified Agreement (other
than the liens created by the Credit and Security Agreement in favor of Lender).
As used herein "REQUIREMENT OF LAW" means the governing documents of Borrower,
LBAC or AMC, or any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon, Borrower, LBAC or AMC or any of their respective properties
or to which Borrower, LBAC or AMC or any of their respective properties is
subject.
6. No litigation or proceeding of or before any arbitrator or governmental
authority is pending or, to the best of our knowledge, threatened by or against
Borrower, LBAC, AMC or any of their respective subsidiaries or against any of
their respective properties or revenues (a) with respect to any of the Delivered
Documents or any of the transactions contemplated thereby, or (b) which would
reasonably be expected to have a Material Adverse Effect.
7. Borrower is not (a) an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment Company Act of
1940, as amended or (b) a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8. The provisions of the Credit and Security Agreement are effective to
create, in favor of Lender, a legal, valid and enforceable security interest in
all right, title and interest of Borrower in the "Collateral" described therein.
9. Upon (i) delivery to Lender of the Pledged Securities, together with a
bond power for each Pledged Security endorsed in blank by a duly authorized
officer of Borrower, and (ii) the filing of financing statements in the form of
Annex A in the offices in the jurisdictions as listed on Schedule 1 hereto, the
security interests created under the Credit and Security Agreement will
constitute fully perfected first priority security interests in all right, title
and interest of Borrower in the "Collateral" described therein which can be
perfected by filing a financing statement under Article 9 of the Uniform
Commercial Code as in effect in the State of New York.
10. The issuance of the Note, the LBAC Guarantee and the AMC Guarantee to
Lender pursuant to the Credit and Security Agreement are not transactions
requiring the registration of the Note, the LBAC Guarantee or the AMC Guarantee
under the Securities Act of 1933, as amended.
* * *
E-4
This opinion is rendered only to Lender is solely for its benefit in
connection with the above transactions and may not be relied upon by Lender for
any other purpose, relied upon by any other person, firm or corporation for any
purpose without our prior written consent.
Very truly yours,
E-5
EXHIBIT F
[Reserved]
F-1
EXHIBIT G
Credit and Security Agreement dated as of March 31, 1997 by and among Greenwich
Capital Financial Products, Inc., as lender, Long Beach Acceptance Receivables
Corp., as borrower, and Long Beach Acceptance Corp., as guarantor, as amended by
Amendment No. 1 thereto dated as of January 30, 1998, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
Credit and Security Agreement dated as of August 29, 1997 by and among Greenwich
Capital Financial Products, Inc., as lender, Long Beach Acceptance Receivables
Corp., as borrower, and Long Beach Acceptance Corp., as guarantor, as amended by
Amendment No. 1 thereto dated as of January 30, 1998, and as otherwise may be
amended, supplemented or otherwise modified from time to time pursuant to the
terms thereof.
Credit and Security Agreement dated as of January 30, 1998 by and among
Greenwich Capital Financial Products, Inc., as lender, Long Beach Acceptance
Receivables Corp., as borrower, and Long Beach Acceptance Corp., as guarantor,
and as otherwise may be amended, supplemented or otherwise modified from time to
time pursuant to the terms thereof.
G-1