1
EXHIBIT 10.8
LOAN AND SECURITY AGREEMENT
dated December 19, 1995
between
BANKAMERICA BUSINESS CREDIT, INC.
and
THE LOAN PRO$, INC.
2
TABLE OF CONTENTS
ARTICLE ONE - DEFINITIONS
1.1 Terms Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Actual Loss Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Net Earnings from Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Advance Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Applicable Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Attorney Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Base Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bulk Purchase Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Capital Adequacy Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Certificate of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Charge Off Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Collection Account Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Contract Debtor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dealer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dealer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Delinquency/Repossession Adjustment Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Delinquency/Repossession Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Eligible Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Emergent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Excess Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Federal Reserve Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Funding Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
General Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(1)
3
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Intercompany Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Loan Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Loss Reserve Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Modified Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Net Charge Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Net Contract Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Notice of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Repossession Inventory Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Repossession Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Requirement of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Solvent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Stated Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Total Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Vehicle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Vehicle Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Vehicle Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Vehicle Reserve Percentage ("VRP") . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE TWO - LOAN
2.1 Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE THREE - INTEREST AND OTHER CHARGES
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(2)
4
3.3 Unused Line Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.4 Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE FOUR - PAYMENTS AND PREPAYMENTS
4.1 Payment of Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Termination of Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Payments by the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Payments as Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.5 Apportionment, Application and Reversal of Payments . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Indemnity for Returned Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7 Lender's and Lenders' Books and Records; Monthly Statements . . . . . . . . . . . . . . . . . . . 17
ARTICLE FIVE - YIELD PROTECTION
5.1 Reduction of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.2 Certificates of Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.3 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE SIX - COLLATERAL
6.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 Perfection and Protection of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Location of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 Title to, Liens on, and Sale of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 Access and Examination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Collateral Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 Collection of Contracts; Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Right to Cure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Lender' Rights, Duties and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Protection of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Servicing of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.14 Borrower's Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.15 Verification of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE SEVEN - BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Notices to the Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE EIGHT - GENERAL WARRANTIES AND REPRESENTATIONS
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents . . . . . . . 26
(3)
5
8.2 Validity and Priority of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4 Corporate Name; Prior Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6 Contract Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7 Credit Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8 Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.9 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.12 Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.13 Trade Names and Terms of Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.15 No Violation of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.16 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.17 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.18 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.19 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.21 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.22 Offices; FTC; Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE NINE - AFFIRMATIVE AND NEGATIVE COVENANTS
9.1 Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Corporate Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Compliance with Law and Agreements; Maintenance of Licenses . . . . . . . . . . . . . . . . . . . 31
9.4 Mergers, Consolidations or Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.5 Distributions; Capital Change; Restricted Investments . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Transactions Affecting Collateral or Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.11 Business Conducted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.12 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.13 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.14 Limitations on Bulk Purchase Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.15 Debt Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.16 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.17 Loss Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.18 Unsubordinated Debt to Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.19 Charge-Off Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.20 Subordinated Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.21 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE TEN - CONDITIONS TO BORROWINGS
(4)
6
10.1 Conditions Precedent to Making of Revolving Loans on the Closing Date . . . . . . . . . . . . . . 34
10.2 Conditions Precedent to Each Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE ELEVEN - DEFAULT; REMEDIES
11.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.3 Cumulative Remedies; No Prior Recourse to Collateral . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE TWELVE - TERM AND TERMINATION
12.1 Term and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE THIRTEEN - AMENDMENTS; WAIVER; SUCCESSORS
13.1 No Waivers Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.2 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE FOURTEEN - MISCELLANEOUS
14.1 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.2 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver . . . . . . . . . . . . . . 41
14.3 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.4 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.5 Other Security and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.6 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.8 Waiver of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.9 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.10 Indemnity of the Lender by the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.11 Final Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.13 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.14 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
14.15 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(5)
7
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") is made and entered
into as of December 19, 1995, between BankAmerica Business Credit, Inc., a
Delaware corporation (the "Lender"), having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, and The Loan Pro$, Inc. (the
"Borrower"), a South Carolina corporation, whose chief executive office is
located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
In consideration of the mutual covenants contained herein, the parties
agree as follows.
ARTICLE ONE - DEFINITIONS
2 Terms Defined. As used in this Agreement, the listed terms are
defined as follows:
"Actual Loss Percent" means, as of any date of calculation,
the percent (rounded to the nearest whole percent) resulting from dividing (a)
the aggregate amount of all of the Borrower's Net Charge Off's during each of
the twelve (12) months immediately preceding the date of calculation, by (b)
the average monthly amount of the Borrower's Net Contracts Payments outstanding
as of the last day of each of those twelve (12) months.
"Adjusted Net Earnings from Operations" means, with respect
to any fiscal period of the Borrower, the Borrower's net income after provision
for income taxes for such fiscal period, as determined in accordance with GAAP
and reported on the financial statements for such period, less any and all of
the following included in such net income: (a) gain arising from the sale of
capital assets; (b) gain arising from any write-up in the book value of any
asset; (c) earnings of any corporation, substantially all the assets of which
have been acquired by the Borrower in any manner, to the extent realized by
such other corporation prior to the date of acquisition; (d) earnings of any
business entity in which the Borrower has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by the
Borrower in the form of cash distributions; (e) earnings of any person to which
assets of the Borrower shall have been sold, transferred or disposed of, or
into which the Borrower shall have been merged or which has been a party with
the Borrower to any consolidation or other form of reorganization, prior to the
date of such transaction; (f) gain arising from the acquisition of any debt or
equity security of the Borrower or from cancellation or forgiveness of Debt;
and (g) gain arising from extraordinary items, as determined in accordance with
GAAP, or from any other nonrecurring transaction.
"Adjusted Tangible Assets" means all assets except: (a)
deferred assets, other than prepaid insurance and prepaid taxes, (b)
trademarks, trade names, franchises, goodwill, and other similar intangibles;
(c) unamortized debt discount and expense; (d) assets of the Borrower
constituting Intercompany Accounts; (e) assets located and notes and
receivables due from obligors domiciled outside the United States of America,
Puerto Rico, or Canada; (f) accounts, notes, and other receivables due from
Affiliates; and (g) fixed assets to the extent of any write-up in the book
value thereof resulting from a revaluation effective after the first Closing
Date.
1
8
"Adjusted Tangible Net Worth" means, at any date, the
remainder of (a) net book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves as determined
in accordance with GAAP) at which the Adjusted Tangible Assets of the Borrower
would be shown on a balance sheet of the Borrower at such date prepared in
accordance with GAAP, minus (b) the amount at which its liabilities (other than
capital stock, surplus, and retained earnings) would be shown on such balance
sheet and the Repossession Inventory Adjustment, and including as liabilities
all reserves for contingencies and other potential liabilities which would be
shown on such balance sheet or disclosed in the footnotes thereto.
"Advance Rate" means (a) eighty-five percent (85%) minus (b)
the sum of the Charge Off Adjustment Percent plus the Delinquency/Repossession
Adjustment Percent.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another Person
if the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Applicable Margin" means three-quarters of one percent
(0.75%).
"Attorney Costs" means and includes all fees, expenses and
disbursements of any law firm or other external counsel engaged by the Lender,
the allocated cost of internal legal services of the Lender and all expenses
and disbursements of internal counsel of the Lender.
"Availability" means, as of any date of calculation, (a) the
Advance Rate multiplied by all Net Contract Payments to be made under all of
the Borrower's Eligible Contracts, minus (b) the Vehicle Reserve.
"Bank of America" means Bank of America National Trust and
Savings Association, a national banking association, or any successor entity
thereto.
"Base Rate" means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by Bank of America,
in San Francisco, California, as its "reference rate" (the "reference rate"
being a rate set by Bank of America based upon various factors including Bank
of America's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate). Each Interest Rate based upon
the Base Rate shall be adjusted simultaneously with any change in the Base
Rate.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made by the Lender to the Borrower.
"Borrowing Base" means the sum of the Adjusted Tangible Net
Worth of the Borrower, plus all Subordinated Debt of the Borrower.
"Bulk Purchase Transaction" means the purchase by the
Borrower of Contracts in a single transaction for an aggregate purchase price
in excess of $500,000.
2
9
"Business Day" means any day that is not a Saturday, Sunday,
or a day on which banks in San Francisco, California, are required or permitted
to be closed.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"Certificate of Title" means the certificate of title or
other evidence of ownership of any Vehicle issued by the Division of Motor
Vehicles or its counterpart in other jurisdictions in which the Contract Debtor
resides.
"Charge Off Adjustment" means the excess, calculated as of
the first day of each month, of the Actual Loss Percent over four percent (4%).
"Closing Date" shall mean the date of the execution of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" has the meaning specified in Section 6.1 hereof.
"Collection Account Agreement" means that certain Collection
Account Agreement substantially in the form attached hereto as Exhibit A and
incorporated herein.
"Contract" means a loan account, account, installment sale
contract, contract right, Instrument, note, document, chattel paper, general
intangible, and all other forms of obligations owing to the Borrower, all
rights of the Borrower thereunder, and any collateral therefor, including all
rights under any and all Security Documents related to the Contract.
"Contract Debtor" means each Person who is obligated to the
Borrower to perform any duty under or to make any payment pursuant to the terms
of a Contract.
"Dealer" means a dealer that has sold a Vehicle to a Contract
Debtor pursuant to a Contract.
"Dealer Agreement" means an agreement between the Borrower
and a Dealer that governs the sale or assignment of Contracts from such Dealer
to the Borrower, including any provisions for assignment (whether with or
without recourse, a repurchase obligation by the Dealer or a guaranty by such
Dealer) contained in such agreement with respect to assignments.
"Debt" means all liabilities, obligations, and indebtedness
of the Borrower to any Person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired, or
owing, whether primary, secondary, direct or indirect, contingent, fixed, or
otherwise, and including, without in any way limiting, the generality of the
foregoing: (a) the Borrower's liabilities and obligations to trade creditors;
(b) all Obligations; (c) all obligations and liabilities to any Person secured
by a Lien on the Borrower's Property, even though the Borrower shall not have
assumed
3
10
or become liable for the payment thereof; provided, however, that all such
obligations and liabilities which are limited in recourse to such Property
shall be included in Debt only to the extent of the book value of such property
as would be shown on a balance sheet of the Borrower prepared in accordance
with GAAP; (d) all obligations and liabilities created or arising under any
lease or conditional sale or other title retention agreement with respect to
Property used or acquired by the Borrower, even if the rights and remedies of
the lessor, seller, or lender thereunder are limited to repossession of such
Property; provided, however, that all such obligations and liabilities which
are limited in recourse to such Property shall be included in Debt only to the
extent of the book value of such property as would be shown a balance sheet of
the Borrower prepared in accordance with GAAP: (e) all accrued pension fund and
other employee benefit plan obligations and liabilities; (f) all obligations
and liabilities under Guaranties; (g) Subordinated Debt; and (h) deferred
taxes.
"Default" means an event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of the applicable Reference Rate, plus the
Applicable Margin, plus five percent (5%). The Default Rate shall be adjusted
simultaneously with any change in the applicable Reference Rate.
"Delinquency/Repossession Adjustment Percent" means, as of
any date of calculation, (a) one percent (1%) when the average
Delinquency/Repossession Percent for the two months immediately preceding such
date is greater than eight percent (8%), but less than nine percent (9%), and
(b) two percent (2%) when the average Delinquency/Repossession Percent for the
two months immediately preceding such date is equal to or greater than nine
percent (9%).
"Delinquency/Repossession Percent" means the percent (rounded
to the nearest whole percent), calculated as of the first day of each month, by
dividing (a) the aggregate amount of the Net Contract Payments owing under all
of the Borrower's Contracts with respect to which any payment due thereunder is
more than sixty (60) days past due, as determined on a contractual basis, as of
the last day of each of the three (3) months immediately preceding the date of
calculation, plus the Repossession Value of all Vehicles which the Borrower has
repossessed but has not sold as of the date of calculation, by (b) the average
monthly amount of the Borrower's Net Contracts Payments outstanding as of the
last day of each of those three (3) months.
"Distribution" means, in respect to the Borrower: (a) the
payment or making of any dividend or other distribution of Property in respect
to the capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or options or warrants for such stock) of
such corporation.
"Eligible Contract" means only such Contracts of the Borrower
which the Lender, in its sole discretion deems eligible, and without limiting
the Lender's discretionary rights, satisfy at all times all of the following
requirements as determined by the Lender, in its sole and absolute discretion:
(a) the Contract strictly complies with all of
the Borrower's warranties and representations contained herein;
4
11
(b) the Contract Debtor is not more than sixty
(60) days contractually delinquent in making a payment scheduled thereunder;
(c) except as provided in clause (b) of this
Section, neither the Borrower nor the Contract Debtor is in default under the
terms of the Contract (e.g., the Property securing repayment thereof is subject
to repossession or has been repossessed and sold and the proceeds thereof
applied to the Contract balance (the latter sometimes being referred to as a
"deficiency balance" Contract));
(d) the Borrower has not within any 12-month
period granted to the Contract Debtor more than two extensions of time (each
not longer than one month) for the payment of any sum due under the Contract;
(e) the Contract is not subject to any defense,
counterclaim, offset, discount, or allowance;
(f) the terms of the Contract and all related
documents and instruments comply in all respects with all Requirements of Law;
(g) the Contract Debtor is not an employee or
other Affiliate of the Borrower;
(h) the creditworthiness of the Contract Debtor
is acceptable to the Lender and, without limiting the generality of the
foregoing, the Contract Debtor's creditworthiness and the terms of the Contract
shall conform to the Borrower's credit guidelines;
(i) the Contract Debtor thereunder is not subject
to a bankruptcy proceeding under Federal law or any similar proceeding under
state law;
(j) the Contract Debtor thereunder is a resident
of the continental United States;
(k) under the terms of the Contract, the first
scheduled payment thereunder is due within forty-five (45) days following the
date the Contract Debtor first entered into the Contract and all other payments
are scheduled to be made on the same date of each month thereafter;
(l) with respect to which the Contract Debtor is
located in any state requiring the filing of a Business Activity Report or
similar document in order to permit the Borrower to seek judicial enforcement
in such state of payment of such Contract, unless the Borrower has qualified to
do business in such state, or has filed a Notice of Business Activities Report
or the equivalent thereof for the then-current year, or is exempt from such
filing requirement;
(m) the terms of the Contract require that the
unpaid principal balance thereof shall be payable in equal monthly payments
which will amortize the full principal amount thereof over its scheduled term;
(n) if the Contract is a Vehicle Contract, then
repayment of the Vehicle Contract is secured by a first priority, perfected
interest in the subject Vehicle, and the Borrower has obtained a Certificate of
Title reflecting the Borrower as the lien holder at the time the Contract is
5
12
pledged to the Lender or the Borrower has obtained such a Certificate of Title
within one hundred-twenty (120) days following the earlier of the date such
Contract was first entered into by the Borrower or the date the Contract was
first acquired by the Lender;
(o) if the Contract is a Vehicle Contract, then
to the extent that the Contract balance includes sums representing the
financing of so-called "extended warranty plans," such plans are (i) in
substantial compliance with all applicable consumer credit laws, including any
and all special insurance laws relating thereto, and (ii) underwritten by (x) a
major automobile manufacturer, or an Affiliate thereof, or (y) an independent
reputable and financially sound insurance company;
(p) no portion of the loan proceeds advanced by
the Lender to the Contract Debtor were used to finance the acquisition of real
property or refinance existing indebtedness secured by real property; and
(q) the Contract was not a Modified Contract.
"Emergent" means Emergent Financial Corporation, a South
Carolina corporation.
"Event of Default" has the meaning specified in Section 11.1
hereof.
"Excess Availability" means, as of the date of determination,
Availability, minus the aggregate amount of the Revolving Loans outstanding.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context in
which it is used, the financial statements attached hereto, or any financial
statements required to be given to the Lender pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for accounting
purposes. The current fiscal year of the Borrower will end on December 31,
1995.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of
the date of determination.
"General Intangibles" means all of the Borrower's now owned
or hereafter acquired general intangibles, choses in action and causes of
action and all other intangible personal property of the Borrower of every kind
and nature (other than Contracts), including, without limitation, all contract
rights, proprietary rights, corporate or other business records, trade names,
trade secrets, goodwill, copyrights, customer lists, registrations, licenses,
franchises, tax refund claims, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance
6
13
and any proceeds thereof, and any letter of credit, guarantee, claim, security
interest or other security held by or granted to the Borrower to secure payment
by a Contract Debtor of any of the Contracts.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Gross Contract Payments" means all presently due and future,
unpaid, noncancelable installment payments scheduled to be made under a
Contract owned by the Borrower, regardless of the method of interest
calculation (i.e., interest bearing or pre-computed).
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligation of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without limitation, any
such obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance sheet
condition; or (c) to lease property or to purchase any debt or equity
securities or other property or services.
"Guide" and "Black Book" means, respectively, the National
Automobile Dealers Association Official Used Car Guide and the National Auto
Research Black Book. In the event that either of those publications shall, at
any time, cease to be published, then the Lender shall, in its sold discretion,
select a comparable publication.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower
with, any Affiliate.
"Interest Coverage Ratio" means, for any period, the ratio of
(a) Adjusted Net Earnings from Operations for such period plus the sum of the
following to the extent deducted in computing Adjusted Net Earnings from
Operations: (i) tax expense and (ii) total interest expense over (b) total
interest expense during such period.
"Instruments" shall have the same meaning as given to that
term in the UCC, and shall include all negotiable instruments, notes secured by
mortgages or trust deeds, and any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease, and is of a
type which is, in the ordinary course of business, transferred by delivery with
any necessary endorsement or assignment.
"IRS" means the Internal Revenue Service and any other
Governmental Authority succeeding to any of its principal functions under the
Code.
7
14
"Lien" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute, or contract, and including
without limitation, a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes.
"Loan Account" means the loan account of the Borrower, which
account shall be maintained by the Lender.
"Loan Documents" means this Agreement and all other
agreements, instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Obligations, the
Collateral, the Lender's Liens in the Collateral, or any other aspect of the
transactions contemplated by this Agreement.
"Loss Reserve Percentage" means, as of any date of
determination, the greater of (a) three and one- half percent (3.5%) or (b) the
Actual Loss Percent.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrower or the
Collateral; (b) a material impairment of the ability of the Borrower to perform
under any Loan Document and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against the Borrower of any Loan Document.
"Modified Contract" means a Contract which, at any time,
either (a) was in default for failure to pay for more than 60 days after its
original contractual due date any payment due thereunder and such payment
default was cured by adjusting or amending the Contract terms, or accepting a
reduced payment or otherwise, or (b) is a refinance or renewal of a prior
Contract with the Contract Debtor to accomplish any of the foregoing.
"Net Charge Offs" means for any period the aggregate amount
of all unpaid payments scheduled to be made under the Borrower's Contracts
which have been charged off by the Borrower during such period, as reduced by
the amount of cash actually received by the Borrower during the such period on
Contracts which have been charged off during previous periods or such period.
"Net Contract Payments" means, as of the date of
determination, the remainder of (a) the aggregate amount of all Gross Contract
Payments, minus (b) the aggregate amount of all unearned finance charges,
unearned discounts, unearned fees, and unearned insurance premiums applicable
thereto or included therein, as appropriate.
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
"Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower to
the Lender, arising under or pursuant to this Agreement or any of the other
Loan Documents, whether or not evidenced by any note, or other instrument or
document, whether arising from an extension of credit, opening of a letter of
credit, acceptance, loan, guaranty, indemnification or otherwise, whether
direct or indirect (including, without
8
15
limitation, those acquired by assignment from others, and any participation by
the Lender in the Borrower's debts owing to others), absolute or contingent,
due or to become due, primary or secondary, as principal or guarantor, and
including, without limitation, all principal, interest, charges, expenses,
fees, attorneys' fees, filing fees and any other sums chargeable to the
Borrower hereunder or under any of the other Loan Documents.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, Governmental Authority, or any other entity.
"Property" means any interest in any kind of property or
asset, whether personal or real property, or mixed, or tangible or intangible.
"Repossession Inventory Adjustment" means, as of any date of
calculation, the Repossession Value of all Vehicles with respect to which more
than ninety (90) days have elapsed since the date such Vehicles were
repossessed by the Borrower without having been sold during such ninety- (90)
day period.
"Repossession Value" means, as of any date of determination,
the lesser of (a) the Net Contract Payments then owing under a Vehicle Contract
with respect to which the subject Vehicle has been repossessed by the Borrower,
or (b) the value of such Vehicle, as determined by the then most recently
published edition of the Guide and Black Book, as appropriate.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its Property or to which the Person or any of
its Property is subject.
"Responsible Officer" means the chief executive officer or
the president of the Borrower, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants, the chief financial officer or the treasurer of the
Borrower, or any other officer having substantially the same authority and
responsibility.
"Revolving Loans" means, collectively, all Borrowings
provided for under Article Two hereof.
"Security Documents" means all security agreements, chattel
mortgages, deeds of trust, mortgages, or other security instruments,
guaranties, sureties, and agreements of every type and nature (including a
Certificate of Title) securing the obligations of a Contract Debtor under a
Contract.
"Solvent" means when used with respect to any Person that (a)
the fair value of all its assets is in excess of the total amount of its debts
(including contingent liabilities); (b) it is able to pay its debts as they
mature; (c) it does not have unreasonably small capital for the business in
which it is engaged or for any business or transaction in which it is about to
engage; and (d) it is not "insolvent" as such term is defined in Section
101(32) of the Bankruptcy Code.
"Stated Termination Date" means the second anniversary
following the Closing Date.
9
16
"Subordinated Debt" means all debt of the Borrower acceptable
to Lender which at all times during the term of this Agreement is subordinated
to the Borrower's Obligations hereunder pursuant to a written subordination
agreement, the terms of which are satisfactory to the Lender in its sole and
absolute discretion.
"Subsidiary" means any corporation of which more than fifty
percent (50%) of the outstanding securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions), is at the time, directly or indirectly through one or more
intermediaries, owned by the Borrower and/or one or more of its Subsidiaries.
"Termination Date" means the earliest to occur of (a) the
Stated Termination Date, (b) the date the Total Facility is terminated either
by the Borrower pursuant to Section 4.2 or by the Lender pursuant to Section
11.2, and (c) the date this Agreement is otherwise terminated for any reason
whatsoever.
"Total Facility" means Twenty Million Dollars ($20,000,000).
"UCC" means the Uniform Commercial Code (or any successor
statute) of the state of New Jersey or of any other state the laws of which are
required by Section 12:A9-103 thereof to be applied in connection with the
issue of perfection of security interests.
"Unused Line Fee" shall have the meaning given to that term
in Section 3.3.
"Vehicle" means a new or used, two-axeled, automobile or
light-duty truck, together with all equipment sold or financed in connection
therewith.
"Vehicle Contract" means a Contract which is a motor vehicle
retail installment Contract and a Contract arising from a loan made by the
Borrower to a Contract Debtor and secured by a Lien on a Vehicle.
"Vehicle Reserve" means, as of any date of calculation, an
amount equal to (a) the Gross Contract Payments then owing under all Vehicle
Contracts acquired and originated by the Borrower during the twelve (12)
calendar months immediately preceding the date of calculation, multiplied by
(b) the Vehicle Reserve Percentage for such period.
"Vehicle Reserve Percentage ("VRP")" means, for any period,
the excess of the percent determined in accordance with the following formula
exceeds one hundred percent (100%):
VRP = [The aggregate amount paid by the Borrower to third parties
or lent in connection with Vehicle Contracts acquired or
originated during the applicable period (excluding amounts
attributable to license fees, title fees, taxes, credit
insurance, extended warranty insurance, and license plate
fees included in the unpaid balance of such Vehicle
Contracts); DIVIDED BY
10
17
The sum of (a) in the case of new Vehicles, the
aggregate dealer cost of new Vehicles which are the
subject of such Contracts, plus (b) in the case of
used Vehicles, the aggregate value for all Vehicles
which are the subject of such Contracts, as
established by Guide or the Black Book. (The Guide
and Black Book used shall be the most recently
published edition thereof at the time Borrower
purchased the subject Contract.)]
2.1 Accounting Terms. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
ARTICLE TWO - LOAN
2.1 Revolving Loans. Subject to satisfaction of the terms and
conditions of this Agreement, including the conditions precedent set forth in
Article Ten, the Lender agrees, upon the request of the Borrower, made from
time to time during the period of the Closing Date to the Termination Date, to
make revolving loans ("Revolving Loans") to the Borrower in an amount not to
exceed the lesser of the Total Facility or the Availability; provided, however,
no Borrowings will be made to the Borrower if a Default or an Event of Default
exists. All such Borrowings shall be added to the Revolving Loans when made.
The Lender, in its sole and absolute discretion, may elect to make Borrowings
in excess of the Availability on one or more occasions, but if it does so, the
Lender shall not be deemed thereby to have changed the limits of the Total
Facility or the Availability. Immediately upon demand by the Lender for
repayment of such excess, the Borrower shall make such payment, without penalty
or fee. Such excess shall constitute part of the Revolving Loans hereunder and
shall be subject to all of the terms and conditions of this Agreement. If the
sum of the outstanding Revolving Loans exceeds the Availability, the Lender may
refuse to make or otherwise restrict the making of Revolving Loans as the
Lender determines until such excess has been eliminated.
2.2 Borrowing Procedure. (a) Each Borrowing shall be made
upon the Borrower's irrevocable written notice delivered to the Lender in the
form of a Notice of Borrowing (which notice must be received by the Lender no
later than 11:00 a.m. (Cherry Hill, New Jersey time) on the requested Funding
Date (which shall be a Business Day), specifying the amount of the Borrowing.
In lieu of delivering the above-described Notice of Borrowing, the Borrower may
give the Lender telephonic notice of such request by the required time, with
such telephonic notice to be confirmed in writing within twenty (24) hours of
the giving of such notice but Lender shall be entitled to rely on the
telephonic notice in making such Revolving Loans.
(b) On or prior to the Closing Date and thereafter prior to
any change with respect to any of the information contained in the following
clauses (i) and (ii), the Borrower shall deliver to the Lender a writing
setting forth (i) the account of the Borrower to which the Lender is authorized
to transfer the proceeds of the Revolving Loans requested pursuant to this
Section 2.2, and (ii) the names of the officers authorized to request Revolving
Loans on behalf of the Borrower, and shall provide the Lender with a specimen
signature of each such officer. The Lender shall be entitled to rely
conclusively on such officer's authority to request Revolving Loans on behalf
of the Borrower, the proceeds of which
11
18
are to be transferred to any of the accounts specified by the Borrower pursuant
to the immediately preceding sentence, until the Lender receives written notice
to the contrary. The Lender shall have no duty to verify the identity of any
individual representing himself as one of the officers authorized by the
Borrower to make such requests on its behalf.
(c) No Liability. The Lender shall not incur any
liability to the Borrower as a result of acting upon any notice referred to in
Sections 2.2(a) and (b), which notice the Lender believes in good faith to have
been given by an officer duly authorized by the Borrower to request Revolving
Loans on its behalf or for otherwise acting in good faith under this Section
2.2, and the crediting of Revolving Loans to the Borrower's deposit account, or
transmittal to such Person as the Borrower shall direct, shall conclusively
establish the obligation of the Borrower to repay such Revolving Loans as
provided herein.
(d) Notice Irrevocable. Any Notice of Borrowing (or
telephonic notice in lieu thereof) made pursuant to Section 2.2(a) shall be
irrevocable and the Borrower shall be bound to borrow the funds requested
therein in accordance therewith.
ARTICLE THREE - INTEREST AND OTHER CHARGES
3.1 Interest. (a) Interest Rates. All Revolving Loans and
other outstanding Obligations shall bear interest on the unpaid principal
amount thereof (including, to the extent permitted by law, on interest thereon
not paid when due) from the date made until paid in full in cash at a
fluctuating per annum rate equal to the Base Rate plus the Applicable Margin,
but not to exceed the Maximum Rate described in Section 3.2. Each change in
the Base Rate shall be reflected in the interest rate described above as of the
effective date of such change. All interest charges shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).
Interest accrued on all Revolving Loans accrued during a month will be payable
in arrears on the fifteenth day of the immediately following month.
(b) Default Rate. If any Default or Event of Default
occurs and is continuing and the Lender in its discretion so elects, then,
while any such Default or Event of Default is continuing, all of the
Obligations shall bear interest at the Default Rate applicable thereto.
3.2 Maximum Interest Rate. In no event shall any interest rate
provided for hereunder exceed the maximum rate permissible for corporate
borrowers under applicable law for loans of the type provided for hereunder
(the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations under this Agreement, the total amount of interest paid
or accrued under the terms of this Agreement is less than the total amount of
interest which would, but for this Section 3.2, have been paid or accrued if
the interest rates otherwise set forth in this Agreement had at all times been
in effect, then the Borrower shall, to the extent permitted by applicable law,
pay the Lender an amount equal to the difference between (a) the lesser of (i)
the amount of interest which would have been charged if the Maximum Rate had,
at all times, been in effect or (ii) the amount of interest which would have
accrued had the interest rates otherwise set forth
12
19
in this Agreement, at all times, been in effect and (b) the amount of interest
actually paid or accrued under this Agreement. In the event that a court
determines that the Lender has received interest and other charges hereunder in
excess of the Maximum Rate, such excess shall be deemed received on account of,
and shall automatically be applied to reduce, the Obligations other than
interest, in the inverse order of maturity, and if there are no Obligations
outstanding, the Lender shall refund to the Borrower such excess.
3.3 Unused Line Fee. The Borrower agrees to pay, on the
fifteenth day of each month and on the Termination Date an unused line fee
equal to one eighth of one percent (0.125%) per annum on the average daily
amount by which the Total Facility exceeded the sum of the average daily
outstanding amount of Revolving Loans during the immediately preceding month or
shorter period if calculated on the Termination Date. The unused line fee
shall be computed on the basis of a 360-day year for the actual number of days
elapsed.
3.4 Audit Fees. The Borrower agrees to pay to the Lender on the
fifteenth day of each month, a monthly audit fee equal to the greater of (a)
$625 or (b) one-twelfth of five-one hundredths of one percent (0.004166%) of
the aggregate amount of the Gross Contract Payments under all of the Borrower's
Contracts, calculated as of the last day of the month immediately preceding the
date such fee is due. The Borrower agrees to pay such fees in order to
reimburse all costs and fees incurred by the Lender's internal auditors in
connection with audits of the Borrower performed by such auditors during the
term of this Agreement. Such fee payments shall commence with the month
immediately following the date appearing on page one of this Agreement.
Notwithstanding the foregoing, upon the occurrence of any Event of Default, the
Borrower shall pay, on demand, all of the Lender's costs incurred in connection
with the verification, audit, and inspection of the Collateral without regard
to the foregoing limitations.
ARTICLE FOUR - PAYMENTS AND PREPAYMENTS
4.1 Payment of Revolving Loans. The Borrower shall repay the
outstanding principal balance of the Revolving Loans, plus all accrued but
unpaid interest thereon, on the Termination Date. The Borrower may prepay
Revolving Loans at any time, and reborrow subject to the terms of this
Agreement. In addition, and without limiting the generality of the foregoing,
the Borrower shall pay to the Lender the amount by which the sum of the
outstanding Revolving Loans exceed the Borrower's Availability and/or the Total
Facility.
4.2 Termination of Facility. The Borrower may terminate this
Agreement upon at least ten (10) Business Days' notice to the Lender upon (a)
the payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, (b) the payment of the early termination fee set forth in the
next sentence, and (c) the payment in full in cash of all other Obligations
together with accrued interest thereon. If this Agreement is terminated at any
time prior to the Stated Termination Date for any reason whatsoever other than
as a result of acceleration by the Lender, the Borrower shall pay to the Lender
an early termination fee determined in accordance with the following table:
13
20
PERIOD DURING WHICH EARLY
TERMINATION OCCURS EARLY TERMINATION FEES
------------------------- ----------------------
On or prior to December , 1996 One percent (1%) of the
Total Facility
After December , 1996,
but on or prior to the One-half of one percent (.50%)
second anniversary of the of the Total Facility
Closing Date
4.3 Payments by the Borrower. (a) All payments to be made by
the Borrower shall be made without set-off, recoupment or counterclaim. Except
as otherwise expressly provided herein, all payments by the Borrower shall be
made to the Lender at the Lender's address set forth in Section 14.7, and shall
be made in immediately available funds, no later than 2:00 p.m. (Cherry Hill,
New Jersey time) on the date specified herein. Any payment received by the
Lender later than 2:00 p.m. (Cherry Hill, New Jersey time) shall be deemed to
have been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.
(b) Whenever any payment is due on a day other than a
Business Day, such payment shall be made on the Business Day immediately
preceding such day.
4.4 Payments as Revolving Loans. All payments of principal,
interest, fees, premiums and other sums payable hereunder, including all
reimbursement for expenses pursuant to Section 14.6, may, at the option of the
Lender, in its sole discretion, subject only to the terms of this Section 4.4,
be paid from the proceeds of Revolving Loans made hereunder, whether made
following a request by the Borrower pursuant to Section 2.2 or a deemed request
as provided in this Section 4.4. The Borrower hereby irrevocably authorizes
the Lender to charge the Loan Account for the purpose of paying principal,
interest, fees, premiums and other sums payable hereunder, including
reimbursing expenses pursuant to Section 14.6, and agrees that all such amounts
charged shall constitute Revolving Loans and that all such Revolving Loans so
made shall be deemed to have been requested by the Borrower pursuant to Section
2.2.
4.5 Apportionment, Application and Reversal of Payments. All
payments shall be remitted to the Lender and all such payments not relating to
principal or interest of specific Revolving Loans, or not constituting payment
of specific fees, and all proceeds of Contracts or other Collateral received by
the Lender, shall be applied subject to the provisions of this Agreement,
first, to pay any fees, or expense reimbursements then due to the Lender from
the Borrower; second, to pay interest due in respect of all Revolving Loans;
third, to pay or prepay principal of the Revolving Loans; and fourth, to the
payment of any other Obligation due to the Lender by the Borrower. The Lender
shall have the continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the Obligations.
4.6 Indemnity for Returned Payments. If, after receipt of any
payment of, or proceeds applied to the payment of, all or any part of the
Obligations, the Lender is for any reason compelled to surrender such payment
or proceeds to any Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for
any other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continue and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Lender, and the
Borrower shall be liable to pay to the Lender, and hereby does indemnify the
Lender and hold the Lender harmless for, the
14
21
amount of such payment or proceeds surrendered. The provisions of this Section
4.6 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final
and irrevocable. The provisions of this Section 4.6 shall survive the
termination of this Agreement.
4.7 Lender's and Lenders' Books and Records; Monthly Statements.
The Borrower agrees that the Lender's books and records showing the Obligations
and the transactions pursuant to this Agreement and the other Loan Documents
shall be admissible in any action or proceeding arising therefrom, and shall
constitute rebuttably presumptive proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other instrument. The
Lender will provide to the Borrower a monthly statement of the Revolving Loans,
payments, and other transactions pursuant to this Agreement. Such statement
shall be deemed correct, accurate, and binding on the Borrower and an account
stated (except for reversals and reapplications of payments made as provided in
Section 4.5 and corrections of errors discovered by the Lender), unless the
Borrower notifies the Lender in writing to the contrary within thirty (30) days
after such statement is rendered. In the event a timely written notice of
objections is given by the Borrower, only the items to which exception is
expressly made will be considered to be disputed by the Borrower.
ARTICLE FIVE - YIELD PROTECTION
5.1 Reduction of Return. If the Lender shall have determined
that (a) the introduction of any Capital Adequacy Regulation, (b) any change in
any Capital Adequacy Regulation, (c) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (d) compliance by the Lender or any corporation controlling the
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation controlling the Lender and (taking into consideration the Lender's
or such corporation's policies with respect to capital adequacy and the
Lender's desired return on capital) determines that the amount of such capital
is increased as a consequence of the Total Facility, loans, credits or
obligations under this Agreement, then, upon demand of the Lender, the Borrower
shall pay to the Lender, from time to time as specified by the Lender,
additional amounts sufficient to compensate the Lender for such increase.
5.2 Certificates of Lender. The Lender claiming reimbursement or
compensation under this Article Five shall deliver to the Borrower a
certificate setting forth in reasonable detail the amount payable to the Lender
hereunder and such certificate shall be conclusive and binding on the Borrower
in the absence of manifest error.
5.3 Survival. The agreements and obligations of the Borrower in
this Article Five shall survive the payment of all other Obligations.
15
22
ARTICLE SIX - COLLATERAL
6.1 Grant of Security Interest. As security for all Obligations,
the Borrower hereby grants to the Lender a continuing security interest in,
lien on, and right of setoff against, all of the following Property of the
Borrower, whether now owned or existing or hereafter acquired or arising,
regardless of where located: (a) all Contracts, and any returned or repossessed
property relating thereto; (b) all General Intangibles; (c) all money,
securities and other property of any kind of the Borrower in the possession or
under the control of the Lender, or a bailee of any such party or such party's
Affiliates; (d) all Vehicles; (e) all deposit accounts, credits and balances
with and other claims against the Lender or any of its Affiliates or any other
financial institution in which the Borrower maintains deposits; (f) all books,
records and other Property related to or referring to any of the foregoing,
including, without limitation, books, records, account ledgers, data processing
records, computer software and other Property and General Intangibles at any
time evidencing or relating to any of the foregoing; (g) all accessions to,
substitutions for and replacements, products and proceeds of any of the
foregoing, including, but not limited to, proceeds of any insurance policies,
claims against third parties, and condemnation or requisition payments with
respect to all or any of the foregoing; (h) all of the Borrower's rights, but
not its obligations, under all Dealer Agreements, including all rights to
require a Dealer to repurchase a Contract acquired from such Dealer; and (i)
proceeds of proceeds, Property, Property rights, privileges and benefits
arising out of, from the enforcement of, or in connection with the Contracts,
the Property rights and the policies of insurance referred to above, and all
credit balances in favor of the Borrower on the Lender's books. All of the
foregoing and all other Property of the Borrower in which the Lender may at any
time be granted a Lien, is herein collectively referred to as the "Collateral."
All of the Obligations shall be secured by all of the Collateral.
6.2 Perfection and Protection of Security Interest. (a) The
Borrower shall, at its expense, perform all steps requested by the Lender at
any time to perfect, maintain, protect, and enforce the Lender's Liens in the
Collateral, including, without limitation: (i) executing and filing financing
or continuation statements, and amendments thereof, in form and substance
satisfactory to the Lender; (ii) delivering to the Lender the originals of all
Instruments, documents, and chattel paper, and all other Collateral of which
the Lender determines it should have physical possession in order to perfect
and protect the Lender's security interest therein, duly pledged, endorsed or
assigned to the Lender without restriction; (iii) placing notations on the
Borrower's books of account to disclose the Lender's security interest; and
(iv) taking such other steps as are deemed necessary or desirable by the Lender
to maintain and protect the Lender's Liens in the Collateral. To the extent
permitted by applicable law, the Lender may file, without the Borrower's
signature, one or more financing statements disclosing the Lender's Liens in
the Collateral. The Borrower agrees that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
(b) Except with respect to Collateral delivered to the
Lender pursuant to this Section 6.2, the Borrower shall immediately following
the execution or receipt of a Contract, stamp on the Contract the following
words: "This document is subject to a security interest in favor of BankAmerica
Business Credit, Inc."
(c) If any Collateral is at any time in the possession or
control of any bailee or any of the Borrower's agents, then the Borrower shall
notify the Lender thereof and shall notify such Person of the Lender's security
interest in such Collateral and, upon the Lender's request, instruct such
Person to hold all such Collateral for the Lender's account subject to the
Lender's instructions. If at any time
16
23
any Collateral is located on any operating facility of the Borrower which is
not owned by the Borrower, then the Borrower shall, at the request of the
Lender, obtain written waivers, in form and substance satisfactory to the
Lender, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral.
(d) From time to time, the Borrower shall, upon the
Lender's request, execute and deliver confirmatory written instruments pledging
to the Lender the Collateral with respect to the Borrower, but the Borrower's
failure to do so shall not affect or limit the Lender's security interest or
the Lender's other rights in and to the Collateral with respect to the
Borrower. So long as this Agreement is in effect and until all Obligations
have been fully satisfied, the Lender's Liens in the Collateral shall continue
in full force and effect in all Collateral (whether or not deemed eligible for
the purpose of calculating the Availability or as the basis for any advance,
loan, extension of credit, or other financial accommodation).
(e) The Borrower shall immediately deliver to the Lender
the Certificates of Title, applications for title, and such other documents as
the Lender may request for all of the Vehicles at any time owned or repossessed
by the Borrower sufficient for the Lender to become the lien holder of record
for such Vehicles under the law of the state in which such Vehicle has been
registered. The Lender may, at any time and at the Borrower's expense, submit
such documents to the appropriate Governmental Authority, including the South
Carolina Division of Motor Vehicles, and have the Lender become the Lien holder
of record on the Certificate of Title or other appropriate document for such
Vehicles. Upon the Borrower's request, the Lender agrees to release its Lien
in such Vehicles provided (a) the Vehicle has been sold in an arm's length sale
to a party, other than an Affiliate of the Borrower, and (b) all cash proceeds
of the sale are paid directly to the Lender for application to the Revolving
Loans.
6.3 Location of Collateral. The Borrower represents and warrants
to the Lender that Schedule 6.3 is a correct and complete list of the
Borrower's chief executive office, the location of its books and records, the
locations of the Collateral with respect to the Borrower (except for Collateral
in the possession of the Lender), and the locations of all of its other places
of business. The Borrower covenants and agrees that it will not (a) maintain
any Collateral with respect to the Borrower at any location other than those
locations listed for the Borrower on Schedule 6.3, (b) otherwise change or add
to any of such locations, or (c) change the location of its chief executive
office from the location identified in Schedule 6.3, unless it gives the Lender
at least thirty (30) days' prior written notice thereof and executes any and
all financing statements and other documents that the Lender requests in
connection therewith.
6.4 Title to, Liens on, and Sale of Collateral. The Borrower
represents and warrants to the Lender and agrees with the Lender that: (a) all
of the Collateral is and will continue to be owned solely by the Borrower free
and clear of all Liens whatsoever; (b) the Lender's Liens in the Collateral
will not be subject to any prior Lien; (c) the Borrower will use, store, and
maintain the Collateral with all reasonable care; and (d) the Borrower will
not, without the Lender's prior written approval, sell, or dispose of or permit
the sale or disposition of any of the Collateral, except for the sale of
repossessed Vehicles in the normal course of business. The inclusion of
proceeds in the Collateral shall not be deemed to constitute the Lender's
consent to any sale or other disposition of the Collateral except as expressly
permitted herein.
17
24
6.5 Access and Examination. The Lender may at all reasonable
times (and at any time when a Default or Event of Default exists) have access
to, examine, audit, make extracts from or copies of and inspect any or all of
the Borrower's records, files, and books of account and the Collateral, and
discuss the Borrower's affairs with the Borrower's officers and management and
independent public accountants after notice to Borrower (and by this provision
the Borrower hereby authorizes said accountants to discuss with the Lender the
finances and affairs of the Borrower and each of its subsidiaries). The
Borrower will deliver to the Lender any instrument necessary for the Lender to
obtain records from any service bureau maintaining records for the Borrower.
The Lender may, at any time and at the Borrower's expense, make copies of all
of the Borrower's books and records, or require the Borrower to deliver such
copies to the Lender. The Lender may, without expense to the Lender, use such
of the Borrower's respective personnel, supplies, and premises as may be
reasonably necessary for maintaining or enforcing the Lender's Liens in the
Collateral. The Lender shall have the right, at any time, in the Lender's name
or in the name of a nominee of the Lender, to verify the validity, amount or
any other matter relating to the Contracts, or other Collateral, by mail,
telephone, or otherwise. In the event of any litigation between the Borrower
and the Lender, any right of civil discovery shall be in addition to, but not
in lieu of, the Lender's rights under this Section 6.5.
6.6 Collateral Reporting. The Borrower shall provide the Lender,
by the fifteenth day of each month, with the following documents at the
following times in form satisfactory to the Lender: (a) a collateral and loan
status report on forms provided by the Lender (or such other form approved by
Lender), (b) an aging of the Borrower's Contracts, listing each Contract under
which any payment due thereunder is sixty (60) or more days past due, as
determined on a contractual basis, together with a reconciliation to the
previous month's aging of the Borrower's Contracts and to the Borrower's
general ledger; and (c) such other reports as to the Collateral as the Lender
shall reasonably request from time to time; and (d) with the delivery of each
of the foregoing, a certificate of an officer of the Borrower certifying as to
the accuracy and completeness of the foregoing. If any of the Borrower's
records or reports of the Collateral are prepared by an accounting service or
other agent, the Borrower hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Lender.
6.7 Contracts. (a) The Borrower hereby represents and warrants
to the Lender with respect to the Borrower's Contracts, that: (i) each
existing Contract represents, and each future Contract will represent, a bona
fide obligation of the Contract Debtor, enforceable in accordance with its
terms, and the Borrower does not know of any fact which impairs or will impair
the validity of any such Contract; (ii) each existing Contract is, and each
future Contract will be, for a liquidated amount payable by the Contract Debtor
thereon on the terms set forth in the Contract therefor or in the schedule
thereof delivered to the Lender, without any offset, deduction, defense
(including the defense of usury), or counterclaim except those known to the
Borrower and disclosed to the Lender pursuant to this Agreement; (iii) there is
only one original counterpart of the Contract executed by the Contract Debtor
(with the possible exception of one duplicate original counterpart which, if in
existence, is in the Contract Debtor's sole possession); (iv) no payment will
be received with respect to any Contract, and no credit, discount, or
extension, or agreement therefor will be granted on any Contract, except
expressly permitted under the terms of this Agreement and as reported to the
Lender in accordance with this Agreement; (v) each Contract correctly sets
forth the terms thereof between the Borrower and the Contract Debtor, including
the interest rate applicable thereto and correctly reasonably describes the
subject personal Property collateral; (vi) the signatures of all Contract
Debtors are genuine and, to the knowledge of the Borrower, each Contract Debtor
had the legal capacity to enter into and execute such documents on the date
thereof; (vii) Any Requirement of Law, the noncompliance with which may have an
adverse impact on the value,
18
25
enforceability or collectability of the Contracts has been complied with by the
Borrower; and (viii) the Borrower has not used illegal, improper, fraudulent or
deceptive marketing techniques or unfair business practices with respect to the
Contracts.
(b) The Borrower shall not accept any note or other
Instrument (except a check or other Instrument for the immediate payment of
money) with respect to any Contract without the Lender's written consent. If
the Lender consents to the acceptance of any such Instrument, it shall be
considered as evidence of the Contract and not payment thereof and the Borrower
will promptly deliver such Instrument to the Lender, endorsed by the Borrower
to the Lender in a manner satisfactory in form and substance to the Lender.
Regardless of the form of presentment, demand, notice of protest with respect
thereto, the Contract Debtor shall remain liable thereon until such instrument
is paid in full.
(c) No discount, credit or allowance shall be granted to any
such Contract Debtor without the Lender's prior written consent, except for
discounts, credits and allowances made or given in the ordinary course of the
Borrower's business when no Event of Default exists hereunder. The Lender may,
at all times when an Event of Default exists hereunder, settle or adjust
disputes and claims directly with Contract Debtors for amounts and upon terms
which the Lender shall consider advisable and, in all cases, the Lender will
credit the Borrower's Loan Account with only the net amounts received by the
Lender in payment of any Contracts.
6.8 Collection of Contracts; Payments. (a) Prior to the Closing
Date, the Borrower shall establish a Collection Account, in accordance with the
Collection Account Agreement, for collections of the Contracts at a bank
acceptable to the Lender. Subject to the Lender's rights under Section 11.2
below, while any portion of the Revolving Loans are unpaid, the Borrower shall
immediately, upon receipt thereof, deposit all cash proceeds of the Collateral
(including, for example, all regular monthly payments received in connection
with the Contracts) into the Collection Account. If, at any time, either (i)
the Borrower's Excess Availability is equal to or less than five percent (5%);
or (ii) an Event of Default occurs, then at all times thereafter, the
Borrower's right to withdraw any funds from the Collection Account shall
immediately terminate and only the Lender shall have a right to withdraw any
funds from the Collection Account. The Lender shall reinstate the Borrower's
right to withdraw funds from the Collection Account in the event (i) the
Borrower's Excess Availability is, at all times, equal to or greater than five
percent (5%) of the Revolving Loan balance during any ninety (90)
consecutive-day period following the date of termination of the Borrower's
Collection Account withdrawal rights and no Default or Event of Default occurs
during that period, where the Borrower's withdrawal rights were terminated
because of inadequate Excess Availability, or (ii) the Lender, in its sole
discretion, waives or allows to be cured (if curable) the Event of Default
which resulted in the termination of the Borrower's withdrawal rights and no
additional grounds for terminating the Borrower's withdrawal rights (e.g., a
new Default or Event of Default) occurs during any ninety (90) consecutive-day
period following the date of termination of the Borrower's Collection Account
withdrawal rights, where the Borrower's withdrawal rights were terminated
because of the occurrence of an Event of Default.
(b) During the period that the Borrower's withdrawal rights
with respect to the Collection Account have been terminated, all payments,
including immediately available funds received by the Lender at a bank
designated in the Collection Agreement on account of Contracts or as proceeds
of other Collateral will be the Lender's sole Property for the benefit of the
Lender and will be credited to the Borrower's Loan Account (conditional upon
final collection).
19
26
6.9 Right to Cure. The Lender may, in its discretion, pay any
amount or do any act required of the Borrower hereunder or under any other Loan
Document in order to preserve, protect, maintain or enforce the Obligations,
the Collateral or the Lender's Liens therein, and which the Borrower fails to
pay or do, including, without limitation, payment of any judgment against the
Borrower, any insurance premium, any landlord's claim, and any other Lien upon
or with respect to the Collateral. All payments that the Lender makes under
this Section 6.9 and all out-of-pocket costs and expenses that the Lender pays
or incurs in connection with any action taken by it hereunder shall be charged
to the Borrower's Loan Account as a Revolving Loan. Any payment made or other
action taken by the Lender under this Section 6.9 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.
6.10 Power of Attorney. The Borrower hereby appoints the Lender
and the Lender's designee as the Borrower's attorney, with power to, when an
Event of Default exists and is continuing: (a) endorse the Borrower's name on
any checks, notes, acceptances, money orders, or other forms of payment or
security that come into the Lender's possession; (b) sign the Borrower's name
on any Certificate of Title relating to any Collateral, including a release
and/or transfer of the Lien on the Vehicle evidenced thereby, on notices of
assignment, financing statements and on other public records; (c) notify the
post office authorities to change the address for delivery of the Borrower's
mail to an address designated by the Lender and to receive, open and dispose of
all mail addressed to the Borrower; (d) send requests for verification of
Contracts to customers or Contract Debtors; and (e) do all things necessary to
carry out this Agreement. The Borrower ratifies and approves all acts of such
attorney. Neither the Lender nor its attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law. This power,
being coupled with an interest, is irrevocable until this Agreement has been
terminated and the Obligations have been fully satisfied.
6.11 Lender' Rights, Duties and Liabilities. The Borrower assumes
all responsibility and liability arising from or relating to the use, sale or
other disposition of the Collateral. Neither the Lender, nor any of its
respective officers, directors, employees or agents shall be liable or
responsible in any way for the safekeeping of any of the Collateral, or for any
loss or damage thereto, or for any diminution in the value thereof, or for any
act of default of any warehouseman, carrier, forwarding agency or other person
whomsoever, all of which shall be at the Borrower's sole risk. The Obligations
shall not be affected by any failure of the Lender to take any steps to perfect
the Lender's Liens in the Collateral or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release the Borrower
from any of the Obligations. The Lender may (but shall not be required to),
without notice to or consent from the Borrower, ▇▇▇ upon or otherwise collect,
extend the time for payment of, modify or amend the terms of, compromise or
settle for cash, credit, or otherwise upon any terms, grant other indulgences,
extensions, renewals, compositions, or releases, and take or omit to take any
other action with respect to the Collateral, any security therefor, any
agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrower for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Lender and the Borrower.
6.12 Protection of Collateral. The Borrower shall pay all
expenses of protecting, storing, insuring, handling, maintaining, and shipping
the Collateral and any and all excise, property, sales, and use taxes levied by
any state, federal or local authority on any of the Collateral or in respect of
the sale thereof.
20
27
6.13 Servicing of Contracts. The Borrower shall collect all
payments and other proceeds of the Contracts and other Collateral and deposit
the proceeds into the Collection Account and perform customary insurance
follow-up with respect to each policy of insurance covering the Property which
is the subject of the Contracts.
6.14 Borrower's Office. The Borrower's chief executive office is
located at the address stated on page one of this Agreement, and the Borrower
covenants and agrees that it will not, without prior written notification to
the Lender, relocate said chief executive office.
6.15 Verification of Contracts. The Lender may from time to time
in its own name or that of a nominee contact customers and Contract Debtors to
verify Contracts.
ARTICLE SEVEN - BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. The Borrower shall maintain, at all
times, correct and complete books, records and accounts in which complete,
correct and timely entries are made of its transactions in accordance with GAAP
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 7.2(a). The Borrower shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance with
GAAP. The Borrower shall maintain at all times books and records pertaining to
the Collateral in such detail, form and scope as the Lender shall reasonably
require, including, but not limited to, records of (a) all payments received
and all credits and extensions granted with respect to the Contracts; and (b)
all other dealings affecting the Collateral. The Borrower shall maintain a
system, satisfactory to the Lender, for duplicating and storing, at a secure
location, a duplicate set of books and records concerning the Collateral. In
addition, the Borrower shall maintain a credit file for each Contract Debtor,
containing financial information reflecting the creditworthiness of each
Contract Debtor.
7.2 Financial Information. The Borrower shall promptly furnish
to the Lender, all such financial information as the Lender shall reasonably
request, and notify its auditors and accountants that the Lender is authorized
to obtain such information directly from them. Without limiting the foregoing,
the Borrower will furnish to the Lender, in such detail as the Lender shall
request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated and
consolidating audited balance sheet, statements of income and expense, cash
flow and of stockholders' equity for the Borrower and Emergent for such Fiscal
Year, and the accompanying notes thereto, setting forth in each case in
comparative form figures for the previous Fiscal Year, all in reasonable
detail, fairly presenting the financial position and the results of operations
of the Borrower and Emergent as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards by and, in
the case of such statements performed on a consolidated basis, accompanied by a
report thereon unqualified as to scope of independent certified public
accountants selected by the Borrower and reasonably satisfactory to the Lender.
The Borrower, simultaneously with retaining such independent public accountants
to conduct such annual audit, shall send a letter to such accountants, with a
copy to the Lender, notifying such accountants that one of the primary purposes
for retaining such accountants' services and having audited financial
statements prepared by them is for use by the Lender.
21
28
(b) As soon as available, but in any event not later than
forty-five (45) days after the end of each month, unaudited balance sheets of
the Borrower as at the end of such month, and unaudited statements of income
and expense and cash flow for the Borrower for such month and for the period
from the beginning of the Fiscal Year to the end of such month, all in
reasonable detail, fairly presenting the financial position and results of
operations of the Borrower as at the date thereof and for such periods, and
prepared in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to Section 7.2(a). The
Borrower shall certify by a certificate signed by its the chief financial
officer that all such statements have been prepared in accordance with GAAP and
present fairly, subject to normal year-end adjustments, the Borrower's
financial position as at the dates thereof and its results of operations for
the periods then ended.
(c) With each of the audited Financial Statements
delivered pursuant to Section 7.2(a), a certificate of the independent
certified public accountants that examined such statement to the effect that
they have reviewed and are familiar with this Agreement and that, in examining
such Financial Statements, they did not become aware of any fact or condition
which then constituted a Default or Event of Default, except for those, if any,
described in reasonable detail in such certificate.
(d) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), a certificate of the chief financial
officer of the Borrower (i) setting forth in reasonable detail the calculations
required to establish that the Borrower was in compliance with the covenants
set forth in Sections 9.16 through and including Section 9.19 during the period
covered in such Financial Statements and as at the end thereof, and (ii)
stating that, except as explained in reasonable detail in such certificate, (1)
all of the representations and warranties of the Borrower contained in this
Agreement and the other Loan Documents are correct and complete in all material
respects as at the date of such certificate as if made at such time, (2) the
Borrower is, at the date of such certificate, in compliance in all material
respects with all of their respective covenants and agreements in this
Agreement and the other Loan Documents, (3) no Default or Event of Default then
exists or existed during the period covered by such Financial Statements, (4)
describing and analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements; and (5) explaining the
variances of the figures in the corresponding budgets and prior Fiscal Year
financial statements. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been complied
with, or that a Default or Event of Default existed or exists, such certificate
shall set forth what action the Borrower has taken or proposes to take with
respect thereto.
(e) No sooner than sixty (60) days and not less than
thirty (30) days prior to the beginning of each Fiscal Year, annual forecasts
(to include forecasted balance sheets, statements of income and expenses and
statements of cash flow) for the Borrower as at the end of and for each month
of such Fiscal Year.
(f) As soon as available, but in any event not later than
fifteen (15) days after the Borrower's receipt thereof, a copy of all
management reports and management letters prepared for the Borrower by Elliot,
▇▇▇▇▇ & Company or any other independent certified public accountants of the
Borrower.
(g) Promptly after their preparation, copies of any and
all proxy statements, financial statements, and reports which the Borrower
makes available to its stockholders.
22
29
(h) Promptly after the Lender's request, a copy of any
tax return filed by the Borrower or by any of its Affiliates with the IRS.
(i) Such additional information as the Lender may from
time to time reasonably request regarding the financial and business affairs of
the Borrower.
7.3 Notices to the Lender. The Borrower shall notify the Lender,
in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or
Event of Default.
(b) Immediately after becoming aware of the assertion by
the holder of any capital stock of the Borrower or of any Debt in an
outstanding principal amount in excess of $10,000 that a default exists with
respect thereto or that the Borrower is not in compliance with the terms
thereof, or the threat or commencement by such holder of any enforcement action
because of such asserted default or non-compliance.
(c) Immediately after becoming aware of any Material
Adverse Effect.
(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any Person, or any
pending or threatened investigation by a Governmental Authority, which action,
suit, proceeding, counterclaim or investigation seeks damages in excess of
$10,000 (which amount shall not be fully covered by insurance), or which may
otherwise have a Material Adverse Effect.
(e) Immediately after becoming aware of any violation of
any law, statute, regulation, or ordinance of a Governmental Authority
affecting the Borrower which could reasonably be expected to have a Material
Adverse Effect.
(f) Any change in the Borrower's name, state of
incorporation, or form of organization, trade names or styles under which the
Borrower will create or acquire Contracts, or to which instruments in payment
of Contracts may be made payable, in each case at least thirty (30) days prior
thereto.
Each notice given under this Section shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that the Borrower
has taken or proposes to take with respect thereto.
ARTICLE EIGHT - GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower warrants and represents to the Lender that except as
hereafter disclosed to and accepted by the Lender in writing:
8.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents. The Borrower has the corporate power and authority to
execute, deliver and perform this Agreement and the other Loan Documents, to
incur the Obligations, and to grant to the Lender Liens upon and security
interests in the Collateral. The Borrower has taken all necessary corporate
action (including without
23
30
limitation, obtaining approval of its stockholders if necessary) to authorize
its execution, delivery, and performance of this Agreement and the other Loan
Documents. No consent, approval, or authorization of, or declaration or filing
with, any Governmental Authority, and no consent of any other Person, is
required in connection with the Borrower's execution, delivery and performance
of this Agreement and the other Loan Documents, except for those already duly
obtained. This Agreement and the other Loan Documents have been duly executed
and delivered by the Borrower, and constitute the legal, valid and binding
obligation of the Borrower, enforceable against it in accordance with its terms
without defense, setoff or counterclaim. Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the Property of
the Borrower by reason of the terms of (a) any contract, mortgage, Lien, lease,
agreement, indenture, or instrument to which the Borrower is a party or which
is binding upon it, (b) any Requirement of Law applicable to the Borrower, or
(c) the certificate or articles of incorporation or bylaws of the Borrower.
8.2 Validity and Priority of Security Interest. The provisions
of this Agreement and the other Loan Documents create legal and valid Liens on
all the Collateral in favor of the Lender and such Liens constitute perfected
and continuing Liens on all the Collateral, having priority over all other
Liens on the Collateral securing all the Obligations, and enforceable against
the Borrower and all third parties.
8.3 Organization and Qualification. The Borrower (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the state of its incorporation, (b) is qualified to do business as a foreign
corporation and is in good standing in the jurisdictions set forth on Schedule
8.3 which are the only jurisdictions in which qualification is necessary in
order for it to own or lease its Property and conduct its business and (c) has
all requisite power and authority to conduct its business and to own its
Property.
8.4 Corporate Name; Prior Transactions. The Borrower has not,
during the past five (5) years, been known by or used any other corporate or
fictitious name, or been a party to any merger or consolidation, or acquired
all or substantially all of the assets of any Person, or acquired any of its
Property outside of the ordinary course of business.
8.5 Affiliates. Schedule 8.5 is a correct and complete list of
the name and relationship to the Borrower of each and all of the Borrower's
Affiliates. Each Affiliate which is a corporation is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation set forth on Schedule 8.5, and (b) qualified to do business as a
foreign corporation and in good standing in each jurisdiction in which the
failure to so qualify or be in good standing could reasonably be expected to
have a Material Adverse Effect on any such Affiliate and (c) has all requisite
power and authority to conduct its business and own its Property.
8.6 Contract Forms. The Borrower covenants that only Contracts
on a printed form(s) previously approved in writing by the Lender shall be used
by the Borrower for all Contracts which may now exist and which may exist in
the future. The Borrower shall not change or vary the printed terms of such
Contracts without the Lender's prior written consent, unless such change or
variation is expressly required by any Requirement of Law. The Lender may
reasonably withhold its consent until the Lender receives a satisfactory
opinion of the Borrower's counsel regarding compliance of the revised form of
Contract with any Requirement of Law.
24
31
8.7 Credit Guidelines. The Borrower represents and warrants that
it shall not make any changes in its credit guidelines (a copy of which has
been previously furnished by the Borrower to the Lender) without the Lender's
prior written consent which the Lender may withhold in its sole and absolute
discretion. The Borrower's credit guidelines shall state in detail the credit
criteria used by the Borrower in determining the creditworthiness of Contract
Debtors with regard to the Contracts originated by the Borrower and/or
originated by third parties and acquired by the Borrower.
8.8 Financial Statements and Projections. (a) The Borrower has
delivered to the Lender the consolidated audited balance sheet and related
statements of income, retained earnings, changes in financial position, and
changes in stockholders equity for the Borrower as of December 31, 1994,
accompanied by the report thereon of the Borrower's independent certified
public accountants. The Borrower has also delivered to the Lender the
unaudited balance sheet and related statements of income and changes in
financial position for the Borrower as of October 31, 1995. Such financial
statements are attached hereto as Exhibit 8.8. All such financial statements
have been prepared in accordance with GAAP and present accurately and fairly
the financial position of the Borrower as at the dates thereof and their
results of operations for the periods then ended.
(b) The latest projections when submitted to the Lender
as required herein represent the Borrower's best estimate of the future
financial performance of the Borrower for the periods set forth therein. The
latest projections have been prepared on the basis of the assumptions set forth
therein, which the Borrower believes are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time submitted to
the Lender.
8.9 Capitalization. The Borrower's authorized capital stock
consists of 2,000 shares of voting common stock, par value $100 per share and
250,000 shares of non-voting preferred stock. Seven hundred fifty (750) shares
of the Borrower's common stock are validly issued and outstanding and 100
shares of preferred stock are validly issued and outstanding. Six hundred
(600) of the common shares are owned beneficially and of record by Emergent,
one hundred fifty (150) of the common shares are owned beneficially and of
record by ▇▇▇▇▇▇ ▇. ▇▇▇▇, and 100 of the preferred shares are owned
beneficially and of record by Emergent.
8.10 Solvency. The Borrower is Solvent prior to and after giving
effect to the making of the Revolving Loans to be made on the Closing Date and
shall remain Solvent during the term of this Agreement.
8.11 Debt. After giving effect to the making of the Revolving
Loans to be made on the Closing Date, the Borrower has no Debt, except (a) the
Obligations, (b) Debt described on Exhibit 8.8, and (c) trade payables and
other contractual obligations arising in the ordinary course of business.
8.12 Title to Property. The Borrower has good, indefeasible, and
merchantable title to all of its Property (including, without limitation, the
assets reflected on the 11-30-95 Financial Statements delivered to the Lender,
except as disposed of in the ordinary course of business since the date
thereof), free of all Liens except for those disclosed in such Financial
Statements.
8.13 Trade Names and Terms of Sale. All trade names or styles
under which the Borrower creates or acquires Contracts, or to which instruments
in payment of Contracts may be made payable, are listed on Schedule 8.13.
25
32
8.14 Litigation. Except as set forth on Schedule 8.14, there is
no pending or (to the best of the Borrower's knowledge) threatened, action,
suit, proceeding, or counterclaim by any Person, or investigation by any
Governmental Authority, or any basis for any of the foregoing, which could
reasonably be expected to cause a Material Adverse Effect.
8.15 No Violation of Law. The Borrower is not in violation of any
Requirement of Law, judgment, order, or decree applicable to it which violation
could reasonably be expected to have a Material Adverse Effect.
8.16 No Default. The Borrower is not in default with respect to
any note, indenture, loan agreement, mortgage, lease, deed, or other agreement
to which the Borrower or such Subsidiary is a party or by which it is bound,
which default could reasonably be expected to have a Material Adverse Effect.
8.17 Taxes. The Borrower and its Affiliates have filed all
Federal and other tax returns and reports required to be filed, and have paid
all Federal and other taxes, assessments, fees and other governmental charges
levied or imposed upon them or their properties, income or assets otherwise due
and payable.
8.18 Use of Proceeds. The proceeds of the Revolving Loans are to
be used solely for working capital purposes.
8.19 No Material Adverse Change. No Material Adverse Effect has
occurred since the date of the Financial Statements delivered to the Lender.
8.20 Full Disclosure. None of the representations or warranties
made by the Borrower in the Loan Documents as of the date such representations
and warranties are made or deemed made, and none of the statements contained in
any exhibit, report, statement or certificate furnished by or on behalf of the
Borrower in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Borrower to the Lender
prior to the Closing Date), contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
8.21 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Borrower of
the Agreement or any other Loan Document.
8.22 Offices; FTC; Warranties. (a) The Borrower agrees that it
will operate at a licensed location in the jurisdiction requiring such license
in conformity with all such licensing and other laws applicable to the purchase
of Contracts, including Motor Vehicle Retail Installment Sales Acts, Sales
Finance Agency Acts or any other law regulating the business of acquiring the
Contracts from Dealers. To the extent the Borrower does not have a license for
each location, it will immediately procure a license or advise the Lender of
the reason that it is exempt from such licensing requirement or that no such
licensing requirement exists in the jurisdiction of such location.
26
33
(b) The Borrower is familiar with the Federal Trade
Commission's used car rule and is in compliance therewith to the extent the
Borrower is legally obligated for such compliance.
(c) Each Vehicle Contract which has been originated by a
Dealer pursuant to a Dealer Agreement that is enforceable in accordance with
its terms against such Dealer. To the extent that the Borrower allows Dealers
to finance so-called "extended warranty plans," the Borrower will (i) ensure
that the cost of such plans are disclosed and will be in substantial compliance
with all applicable consumer credit laws, including any and all special
insurance laws relating thereto to the extent the Borrower is legally obligated
for such compliance, and (ii) ensure that such plans are underwritten by (x) a
major automobile manufacturer, or an Affiliate thereof, or (y) a reputable
insurance company.
8.23 Insurance. (a) The Borrower shall maintain with respect to
the Borrower's Vehicles (including all repossessed Vehicles), with financially
sound and reputable insurers having a rating of at least A-VII or better by
Best Rating Guide, insurance against loss or damage by fire with extended
coverage; theft, and burglary; public liability, and third party property
damage; and such other hazards or of such other types as is customary for
Persons engaged in the same or similar business, as the Lender, in its
discretion shall specify, in amounts and under policies acceptable to the
Lender.
(b) The Borrower shall cause the Lender to be named in each
such policy as secured party and sole loss payee or additional insured, in a
manner acceptable to the Lender. Each policy of insurance shall contain a
clause or indorsement requiring the insurer to give not less than thirty (30)
days prior notice to the Lender in the event of cancellation of the policy for
any reason whatsoever and a clause or indorsement stating that the interest of
the Lender shall not be impaired or invalidated by any act or neglect of the
Borrower. All premiums for such insurance shall be paid by the Borrower when
due, and certificates of insurance and, if requested by the Lender, photocopies
of the policies, shall be delivered to the Lender. If the Borrower fails to
procures such insurance or to pay the premiums therefor when due, the Lender
may do so from the proceeds of the Revolving Loans.
(c) The Borrower shall promptly notify the Lender of any
loss or damage or destruction to the Borrower's Vehicles, whether or not
covered by insurance. The Lender is hereby authorized to collect all
insurance proceeds directly and to apply them to fees, expenses, the Revolving
Loans, and to other Obligations in the order provided in Section 4.5.
ARTICLE NINE - AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Lender that, so long as any of the
Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. The Borrower shall (a) file
when due all tax returns and other reports which it is required to file; (b)
pay, or provide for the payment, when due, of all taxes, fees, assessments and
other governmental charges against it or upon its Property, income and
franchises, make all required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide to the Lender,
upon request, satisfactory evidence of its timely compliance with the
foregoing; and (c) pay when due all Debt owed by it and all claims of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, and all other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; provided, however, so
27
34
long as Borrower has notified the Lender in writing, the Borrower need not pay
any tax, fee, assessment, or governmental charge, that (i) it is contesting in
good faith by appropriate proceedings diligently pursued, (ii) the Borrower has
established proper reserves for as provided in GAAP, and (iii) no Lien on the
Collateral results from such non-payment.
9.2 Corporate Existence and Good Standing. The Borrower shall
maintain its corporate existence and its qualification and good standing in all
jurisdictions in which the failure to maintain such qualification or good
standing could reasonably be expected to have a material adverse effect on the
Borrower's Property, business, operations, prospects, or condition (financial
or otherwise).
9.3 Compliance with Law and Agreements; Maintenance of Licenses.
The Borrower shall comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business
(including the State Board of Financial Institutions of the state of South
Carolina). The Borrower shall obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its Property and
to conduct its business as conducted on the Closing Date.
9.4 Mergers, Consolidations or Sales. The Borrower shall not
enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, lease, or otherwise dispose of all or any part of or
any interest in the Collateral, or wind up, liquidate or dissolve, or agree to
do any of the foregoing, without the prior written consent of Lender.
9.5 Distributions; Capital Change; Restricted Investments. The
Borrower shall not (i) directly or indirectly declare or make, or incur any
liability to make, any Distribution, or (ii) make any change in its capital
structure which could have a Material Adverse Effect.
9.6 Transactions Affecting Collateral or Obligations. The
Borrower shall not enter into any transaction which could have a Material
Adverse Effect.
9.7 Guaranties. The Borrower shall not make, issue, or become
liable on any Guaranty, except Guaranties in favor of the Lender.
9.8 Debt. The Borrower shall not incur or maintain any Debt,
other than: (a) the Obligations; (b) trade payables and contractual obligations
to suppliers and customers incurred in the ordinary course of business; and
(c) other Debt existing on the Closing Date and reflected in the Financial
Statements attached hereto as Exhibit 8.8.
9.9 Prepayment. The Borrower shall not voluntarily prepay any
Debt, except the Obligations and any Subordinated Debt in accordance with the
terms of this Agreement.
9.10 Transactions with Affiliates. Except as set forth below, the
Borrower shall not sell, transfer, distribute, or pay any money or Property,
including, but not limited to, any fees or expenses of any nature (including,
but not limited to, any fees or expenses for management services), to any
Affiliate, or lend or advance money or Property to any Affiliate, or invest in
(by capital contribution or otherwise) or purchase or repurchase any stock or
indebtedness, or any Property, of any Affiliate, or become liable on any
Guaranty of the indebtedness, dividends, or other obligations of any Affiliate.
Notwithstanding the foregoing, the Borrower may pay Emergent Group, Inc. a
management fee to pay administrative and overhead expenses (including taxes) as
are, from time to time, reasonably allocated
28
35
to Borrower by Emergent provided: (a) the amount paid to Emergent as a
management fee in any Fiscal Year does not exceed the greater of sixty thousand
dollars ($60,000) or thirty-four percent (34%) of the Borrower's Adjusted Net
Earnings from Operations for such Fiscal Year, before provision for income
taxes for such period (with the provision for income taxes being calculated for
the Borrower without reference to the taxable income of any other Person); and
(b) no Default or Event of Default exists at the time of such payment.
9.11 Business Conducted. The Borrower shall not engage directly
or indirectly, in any line of business other than the businesses in which the
Borrower is engaged on the Closing Date.
9.12 Liens. The Borrower shall not create, incur, assume, or
permit to exist any Lien on any Collateral, except for the Lien in favor of the
Lender.
9.13 Fiscal Year. The Borrower shall not change its Fiscal Year.
9.14 Limitations on Bulk Purchase Transactions. The Borrower
shall not enter into any Bulk Purchase Transaction without the Lender's prior
written consent which shall not be unreasonably withheld or delayed.
9.15 Debt Ratio. The Borrower shall not permit the ratio,
calculated as of the last day of each month, of Debt to Adjusted Tangible Net
Worth, to exceed: (a) 15 to 1 prior to December 1, 1996, and (b) 10 to 1
thereafter.
9.16 Interest Coverage Ratio. Commencing with the quarter ending
March 31, 1996, and on the first day of each fiscal quarter thereafter, the
Borrower will maintain an Interest Coverage Ratio of not less than (a) 1.2 to 1
prior to October 1, 1996, and (b) 1.25 to 1 thereafter. The ratio shall be
calculated for the period commencing on the first day of the then current
Fiscal Year to the date of calculation.
9.17 Loss Reserves. The Borrower shall maintain loss reserves,
calculated as of the last day of each month, in an aggregate amount which shall
not be less than the Loss Reserve Percentage, multiplied by the Net Contract
Payments as of such date.
9.18 Unsubordinated Debt to Borrowing Base. The Borrower shall
not permit the ratio, calculated as of the last day of each month, of (a) the
remainder of all Debt minus all Subordinated Debt, to (b) Borrowing Base, to be
more than 3 to 1.
9.19 Charge-Off Policy. The Borrower shall establish and
implement, in a manner satisfactory to the Lender, a policy for charging off
the unpaid balance of its delinquent Contracts. Without limiting the
generality of the foregoing, the Borrower's policy shall provide that as of the
last day of each quarter in each Fiscal Year, the Borrower shall charge off the
unpaid balance of all Contracts with respect to which any payment due
thereunder is one hundred eighty (180) or more days delinquent, as determined
on a contractual basis.
9.20 Subordinated Obligations. Except as previously and expressly
consented to in writing by the Lender, the Borrower shall not directly or
indirectly permit (a) any payment to be made in respect of any Subordinated
Debt; (b) the amendment, rescission, or other modification of the provisions of
any
29
36
of the Borrower's Subordinated Debt in such a manner as to affect adversely the
Lender's Liens in the Collateral or the prior position of such Liens; or (c)
the prepayment or redemption of all or any part of any Subordinated Debt of the
Borrower.
9.21 Further Assurances. The Borrower shall execute and deliver,
or cause to be executed and delivered, to the Lender such documents and
agreements, and shall take or cause to be taken such actions, as the Lender
may, from time to time, request to carry out the terms and conditions of this
Agreement and the other Loan Documents.
ARTICLE TEN - CONDITIONS TO BORROWINGS
10.1 Conditions Precedent to Making of Revolving Loans on the
Closing Date. The obligation of the Lender to make the initial Revolving Loans
on the Closing Date are subject to the following conditions precedent having
been satisfied in a manner satisfactory to the Lender:
(a) This Agreement, the documents listed in Schedule
10.1, and the other Loan Documents are in form and substance satisfactory to
the Lender and its counsel, and have been executed and delivered by each party
thereto and the Borrower shall have performed and complied with all covenants,
agreements and conditions contained herein and the other Loan Documents which
are required to be performed or complied with by the Borrower before or on such
Closing Date.
(b) After making the Revolving Loans on the Closing Date
(including such Revolving Loans made to pursuant to Section 4.7 as
reimbursement for fees, costs and expenses then payable under this Agreement)
and with all its obligations current, the Borrower would have Excess
Availability greater than five (5%) of the Revolving Loans.
(c) All representations and warranties made hereunder and
in the other Loan Documents shall be true and correct as of the Closing Date as
if made on such date.
(d) No Default or Event of Default shall exist on the
Closing Date, or would exist after giving effect to the Revolving Loans to be
made on such date.
(e) The Lender shall have received such opinions of
counsel for the Borrower as the Lender shall request, each such opinion to be
in a form, scope, and substance satisfactory to the Lender.
(f) The Lender shall have received:
(i) acknowledgment copies of proper financing
statements, duly filed on or before the Closing Date under the UCC of all
jurisdictions that the Lender may deem necessary or desirable in order to
perfect the Lender's Lien; and
(ii) duly executed such UCC-3 Termination
Statements and other instruments, in form and substance satisfactory to the
Lender, as shall be necessary to terminate and satisfy all Liens on the
Collateral.
30
37
(g) The Borrower shall have paid all fees and expenses of
the Lender and the Attorney costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby.
(h) The Lender shall have had an opportunity, if they so
choose, to examine the books of account and other records and files of the
Borrower and to make copies thereof, and to conduct a pre-closing audit which
shall include, without limitation, verification of Contracts and Availability,
and the results of such examination and audit shall have been satisfactory to
the Lender in all respects.
(i) All proceedings taken in connection with the
execution of this Agreement, all other Loan Documents and all documents and
papers relating thereto shall be satisfactory in form, scope, and substance to
the Lender.
The acceptance by the Borrower of any Revolving Loans made on the
Closing Date shall be deemed to be a representation and warranty made by the
Borrower to the effect that all of the conditions precedent to the making of
such Revolving Loans have been satisfied, with the same effect as delivery to
the Lender of a certificate signed by the a Responsible Officer of the
Borrower, dated the Closing Date, to such effect.
10.2 Conditions Precedent to Each Revolving Loan. The obligation
of the Lender to make each Revolving Loan, including the initial Revolving
Loans on the Closing Date, shall be subject to the further conditions precedent
that on and as of the date of any such extension of credit the following
statements shall be true, and the acceptance by the Borrower of any extension
of credit shall be deemed to be a statement to the effect set forth in clauses
(a) and (b), with the same effect as the delivery to the Lender of a
certificate signed by a Responsible Officer, dated the date of such extension
of credit, stating that:
(a) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, except to the extent the Lender has been notified by the Borrower that
any representation or warranty is not correct and the Lender have explicitly
waived in writing compliance with such representation or warranty; and
(b) No event has occurred and is continuing, or would
result from such extension of credit, which constitutes a Default or an Event
of Default.
ARTICLE ELEVEN - DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default
("Event of Default") if any one or more of the following shall occur for any
reason:
(a) any failure to pay the principal of or interest or
premium on any of the Obligations when due, whether upon demand or otherwise;
(b) any representation or warranty made by the Borrower in
this Agreement or by the Borrower in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by
31
38
the Borrower at any time to the Lender shall prove to be untrue in any material
respect as of the date on which made or furnished;
(c) any default shall occur in the observance or
performance of any of the covenants and agreements contained in this Agreement,
any other Loan Documents, or any other agreement entered into at any time to
which the Borrower and the Lender are party, or if any such agreement or
document shall terminate (other than in accordance with its terms or the terms
hereof or with the written consent of the Lender) or become void or
unenforceable, without the written consent of the Lender;
(d) default shall occur with respect to any Debt for
borrowed money (other than the Obligations) in an outstanding principal amount
which exceeds, in the aggregate for all such Debt with respect to which default
shall have occurred, $10,000, or under any agreement or instrument under or
pursuant to which any such Debt or indebtedness may have been issued, created,
assumed, or guaranteed by the Borrower and such default shall continue for more
than the period of grace, if any, therein specified, if the effect thereof
(with or without the giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt or indebtedness to
accelerate, the maturity of any such Debt; or any such Debt or indebtedness
shall be declared due and payable or be required to be prepaid (other than by a
regularly scheduled required prepayment) prior to the stated maturity thereof;
(e) the Borrower shall (i) file a voluntary petition in
bankruptcy or file a voluntary petition or an answer or otherwise commence any
action or proceeding seeking reorganization, arrangement or readjustment of its
debts or for any other relief under the federal Bankruptcy Code, as amended, or
under any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing, or consent to, approve of, or acquiesce in, any such
petition, action or proceeding; (ii) apply for or acquiesce in the appointment
of a receiver, assignee, liquidator, sequestrator, custodian, trustee or
similar officer for it or for all or any part of its Property; (iii) make an
assignment for the benefit of creditors; or (iv) be unable generally to pay its
Debts as they become due;
(f) an involuntary petition shall be filed or an action
or proceeding otherwise commenced against the Borrower seeking reorganization,
arrangement or readjustment of the debts of the Borrower or for any other
relief under the federal Bankruptcy Code, as amended, or under any other
bankruptcy or insolvency act or law, state or federal, now or hereafter
existing and either (i) such petition, action or proceeding shall not have been
dismissed within a period of sixty (60) days after its commencement or (ii) an
order for relief against the Borrower shall have been entered in such
proceeding;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, trustee or similar officer for the Borrower or for all or any part
of its Property shall be appointed or a warrant of attachment, execution or
similar process shall be issued against any part of the Property of the
Borrower;
(h) the Borrower shall file a certificate of dissolution
under applicable state law or shall be liquidated, dissolved or wound-up or
shall commence or have commenced against it any action or proceeding for
dissolution, winding-up or liquidation, or shall take any corporate action in
furtherance thereof;
(i) all or any material part of the Property of the
Borrower shall be nationalized, expropriated or condemned, seized or otherwise
appropriated, or custody or control of such Property or
32
39
of the Borrower shall be assumed by any Governmental Authority or any court of
competent jurisdiction at the instance of any Governmental Authority, except
where contested in good faith by proper proceedings diligently pursued where a
stay of enforcement is in effect;
(j) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(k) one or more judgments or orders for the payment of
money aggregating in excess of $10,000, which amount shall not be fully covered
by insurance, shall be rendered against the Borrower;
(l) any loss, theft, damage or destruction of any item or
items of Collateral or other Property of the Borrower occurs which (i)
materially and adversely affects the Property, business, operation, prospects,
or condition of the Borrower; or (ii) is material in amount and is not
adequately covered by insurance;
(m) there occurs a Material Adverse Effect and such
Effect shall continue for thirty (30) days after notice from the Lender to the
Borrower;
(n) there is filed against the Borrower any civil or
criminal action, suit or proceeding under any federal or state racketeering
statute (including, without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (1) is not
dismissed within one hundred twenty (120) days, and (2) could result in the
confiscation or forfeiture of any material portion of the Collateral;
(o) for any reason other than the failure of the Lender
to take any action available to it to maintain perfection of the Lender's Liens
in the Collateral, pursuant to the Loan Documents, any Loan Document ceases to
be in full force and effect or any Lien with respect to any material portion of
the Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens or is terminated, revoked or declared
void;
(p) Emergent shall, at any time, cease to directly own at
least fifty-one percent (51%) of the legal and beneficial interest in the
issued and outstanding voting stock of the Borrower or Emergent shall convey,
pledge, or transfer any interest in such stock to any Person; or
(q) the Delinquency/Repossession Percent for two
consecutive months is at any time equal to or greater than ten (10%) percent
and such Percent shall continue for thirty (30) days after notice from the
Lender to the Borrower.
11.2 Remedies. (a) If a Default or an Event of Default exists,
the Lender may, in its discretion, do one or more of the following at any time
or times and in any order, without notice to or demand on the Borrower: (i)
reduce the amount of the Total Facility, or the advance rates against Eligible
Contracts used in computing the Availability, or reduce one or more of the
other elements used in computing the Availability; and (ii) restrict the amount
of or refuse to make Revolving Loans. If an Event of Default exists, the
Lender may do one or more of the following, in addition to the actions
described in the preceding sentence, at any time or times and in any order,
without notice to or demand on the Borrower: (i) terminate any obligation to
make any further Revolving Loans and this Agreement;
33
40
(ii) declare any or all Obligations to be immediately due and payable;
provided, however, that upon the occurrence of any Event of Default described
in Sections 11.1(e), 11.1(g), or 11.1(h), the Total Facility shall
automatically and immediately expire and all Obligations shall automatically
become immediately due and payable without notice or demand of any kind; and
(iii) pursue its other rights and remedies under the Loan Documents and
applicable law.
(b) If an Event of Default exists, all rights of the
Borrower to collect any payments due under the Collateral and all rights of the
Borrower to exercise the consensual rights which it would otherwise be entitled
to exercise with respect thereto, shall, at the option of the Lender and upon
written notice from the Lender to the Borrower, immediately terminate. The
Borrower acknowledges and agrees that following an Event of Default the Lender
shall be entitled to receive all of the Contract payments, without deduction,
even though this may render the Borrower insolvent and leave the Borrower
without any funds to pay its operating expenses. The Borrower, at the Lender's
request, shall immediately provide the Lender with a current list of the names,
addresses, and Contract numbers for all Contract Debtors and shall, at the
Lender's request following an Event of Default, immediately direct all Contract
Debtors (pursuant to a form of notice prepared by the Lender) to make all
payments due under the Contracts and the other Collateral directly to the
Lender or to a bank account designated by the Lender, and the Borrower shall
otherwise cooperate with the Lender in that regard.
(c) If an Event of Default exists: (i) the Lender shall
have, in addition to all other rights, the rights and remedies of a secured
party under the UCC; (ii) the Lender may, at any time, take possession of the
Collateral and keep it on the Borrower's premises, at no cost to the Lender or
remove any part of it to such other place or places as the Lender may desire,
or the Borrower shall, upon the Lender's demand, at the Borrower's cost,
assemble the Collateral and make it available to the Lender at a place
reasonably convenient to the Lender; (iii) the Lender may exchange, waive, or
release any of the Collateral, apply Collateral and direct the order or manner
of sale thereof as the Lender may determine, and settle, compromise, collect,
or otherwise liquidate any Collateral in any manner, all without affecting the
Obligations or the Lender's right to take any action with respect to any other
Collateral; and (iv) the Lender may sell and deliver any Collateral at public
or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Lender deems advisable, in its sole discretion, and may, if
the Lender deems it reasonable, postpone or adjourn any sale of the Collateral
by an announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, the Borrower agrees that
any notice by the Lender of sale, disposition or other intended action
hereunder or in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to the Borrower if such notice is mailed by
registered or certified mail, return receipt requested, postage prepaid, or is
delivered personally against receipt, at least five (5) Business Days prior to
such action to the Borrower's address specified in or pursuant to Section
14.7. If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the Lender
receives payment, and if the buyer defaults in payment, the Lender may resell
the Collateral without further notice to the Borrower. In the event the Lender
seeks to take possession of all or any portion of the Collateral by judicial
process, the Borrower irrevocably waives: (a) the posting of any bond, surety
or security with respect thereto which might otherwise be required; (b) any
demand for possession prior to the commencement of any suit or action to
recover the Collateral; and (c) any requirement that the Lender retain
possession and not dispose of any Collateral until after trial or final
judgment. The Borrower agrees that the Lender has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person. The Lender is hereby granted a license or other right to use, without
charge,
34
41
the Borrower's labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar Property, in advertising or
selling any Collateral, and the Borrower's rights under all licenses and all
franchise agreements shall inure to the Lender's benefit. The proceeds of sale
shall be applied first to all expenses of sale, including attorneys' fees, and
then to the Obligations in whatever order the Lender elects. The Lender will
return any excess to the Borrower and the Borrower shall remain liable for any
deficiency.
(d) If an Event of Default occurs, the Borrower hereby
waives all rights to notice and hearing prior to the exercise by the Lender of
the Lender's rights to repossess the Collateral without judicial process or to
replevy, attach or levy upon the Collateral without notice or hearing.
(e) If the Lender terminates this Agreement upon an Event of
Default, the Borrower shall pay the Lender, immediately upon termination, an
early termination fee equal to the early termination fee that would have been
payable under Article Four if this Agreement had been terminated on that date
pursuant to the Borrower's election.
11.3 Cumulative Remedies; No Prior Recourse to Collateral. The
enumeration herein of the Lender's rights and remedies is not intended to be
exclusive, and such rights and remedies are in addition to and not by way of
limitation of any other rights or remedies that the Lender may have under the
UCC or other applicable law. The Lender shall have the right, in its sole
discretion, to determine which rights and remedies are to be exercised and in
which order. The exercise of one right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative. The Lender may,
without limitation, proceed directly against the Borrower to collect the
Obligations without any prior recourse to the Collateral. No failure to
exercise and no delay in exercising, on the part of the Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.
ARTICLE TWELVE - TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end
on the Stated Termination Date. The Lender may terminate this Agreement
without notice upon the occurrence of an Event of Default. Upon the effective
date of termination of this Agreement for any reason whatsoever, all
Obligations (including, without limitation, all unpaid principal of, accrued
interest on and prepayment penalties, if any) shall become immediately due and
payable. Notwithstanding the termination of this Agreement, until all
Obligations are indefeasibly paid and performed in full in cash, the Borrower
shall remain bound by the terms of this Agreement and shall not be relieved of
any of its Obligations hereunder, and the Lender shall retain all of its rights
and remedies hereunder (including, without limitation, the security interest of
the Lender in and all rights and remedies with respect to all then existing and
after-arising Collateral).
ARTICLE THIRTEEN - AMENDMENTS; WAIVER; SUCCESSORS
13.1 No Waivers Cumulative Remedies. No failure by the Lender to
exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other
35
42
agreement between or among the Borrower and the Lender, or delay by the Lender
in exercising the same, will operate as a waiver thereof. No waiver by the
Lender will be effective unless it is in writing, and then only to the extent
specifically stated. No waiver by the Lender on any occasion shall affect or
diminish the Lender's rights thereafter to require strict performance by the
Borrower of any provision of this Agreement. The Lender's rights under this
Agreement will be cumulative and not exclusive of any other right or remedy
which the Lender may have.
13.2 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Lender and the Borrower and then
any such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
ARTICLE FOURTEEN - MISCELLANEOUS
14.1 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
14.2 Governing Law; Choice of Forum; Service of Process; Jury
Trial Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE
CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE
OF NEW JERSEY; PROVIDED THAT THE LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW JERSEY OR OF THE UNITED STATES LOCATED IN THE STATE OF NEW JERSEY, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER AND THE LENDER
CONSENT, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER AND THE LENDER IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF
THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE LENDER
DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES
THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
36
43
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
(c) THE BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO The BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 14.7 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
14.3 Waiver of Jury Trial. (a) THE BORROWER AND THE LENDER EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY, RELATED PERSON, PARTICIPANT, OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER AND THE LENDER EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) THE BORROWER AGREES THAT IT WILL NOT ASSERT AGAINST
THE LENDER ANY CLAIM FOR CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
14.4 Survival of Representations and Warranties. All of the
Borrower's representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Lender or its agents.
14.5 Other Security and Guaranties. The Lender, may, without
notice or demand and without affecting the Borrower's obligations hereunder,
from time to time: (a) take from any Person and hold collateral (other than
the Collateral) for the payment of all or any part of the Obligations and
exchange, enforce or release such collateral or any part thereof; and (b)
accept and hold any endorsement or guaranty of payment of all or any part of
the Obligations and release or substitute any such endorser or guarantor, or
any Person who has given any Lien in any other collateral as security for the
payment of all or any part of the Obligations, or any other Person in any way
obligated to pay all or any part of the Obligations.
37
44
14.6 Fees and Expenses. The Borrower agrees to pay to the Lender,
on demand, all costs and expenses that Lender pays or incurs in connection with
the negotiation, preparation, consummation, administration, enforcement, and
termination of this Agreement, including, without limitation: (a) Attorney
Costs; (b) costs and expenses (including attorneys' and paralegals' fees and
disbursements which shall include the allocated costs of Lender's in-house
counsel fees and disbursements) for any amendment, supplement, waiver, consent,
or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and title
searches and title insurance; (d) taxes, fees and other charges for filing
financing statements and continuations, and other actions to perfect, protect,
and continue the Lender's Liens in the Collateral (including costs and expenses
paid or incurred by the Lender in connection with the consummation of
Agreement); (e) sums paid or incurred to pay any amount or take any action
required of the Borrower under the Loan Documents that the Borrower fails to
pay or take; (f) costs of appraisals, inspections, and verifications of the
Collateral, including, without limitation, travel, lodging, and meals for
inspections of the Collateral and the Borrower's operations by the Lender's
personnel, plus the Lender's then customary charge for field examinations and
audits and the preparation of reports thereof, as more particularly described
in Section 3.4; (g) costs and expenses of forwarding loan proceeds, collecting
checks and other items of payment, and establishing and maintaining the
Collection Account; (h) costs and expenses of preserving and protecting the
Collateral; and (i) costs and expenses (including attorneys' and paralegals'
fees and disbursements which shall include the allocated cost of the Lender's
in-house counsel fees and disbursements) paid or incurred to obtain payment of
the Obligations, enforce the Lender's Liens in the Collateral, sell or
otherwise realize upon the Collateral, and otherwise enforce the provisions of
the Loan Documents, or to defend any claims made or threatened against the
Lender arising out of the transactions contemplated hereby (including without
limitation, preparations for and consultations concerning any such matters).
The foregoing shall not be construed to limit any other provisions of the Loan
Documents regarding costs and expenses to be paid by the Borrower. All of the
foregoing costs and expenses may be charged by the Lender to the Borrower's
Loan Account as Revolving Loans as described in Section 4.4.
14.7 Notices. Except as otherwise provided herein, all notices,
demands and requests that any party is required or elects to give to any other
shall be in writing, or by a telecommunications device capable of creating a
written record, and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by overnight mail and
courier service, (b) four (4) days after it shall have been mailed by United
States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
If to the Lender or to BABC: BankAmerica Business Credit, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Portfolio Administration
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Bank of America NT&SA
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Legal Department
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
38
45
If to the Borrower: The Loan Pro$, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
14.8 Waiver of Notices. Unless otherwise expressly provided
herein, the Borrower waives presentment, protest and notice of demand or
dishonor and protest as to any instrument, notice of intent to accelerate the
Obligations and notice of acceleration of the Obligations, as well as any and
all other notices to which it might otherwise be entitled. No notice to or
demand on the Borrower which the Lender may elect to give shall entitle the
Borrower to any or further notice or demand in the same, similar or other
circumstances.
14.9 Binding Effect. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided, however, that no
interest herein may be assigned by the Borrower without prior written consent
of the Lender. The rights and benefits of the Lender hereunder shall, if such
Persons so agree, inure to any successor or assignee.
14.10 Indemnity of the Lender by the Borrower. The Borrower agrees
to indemnify and hold the Lender and its respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, charges, expenses
and disbursements (including Attorney Costs) of any kind or nature whatsoever
which may at any time (including at any time following repayment of the
Revolving Loans) be imposed on, incurred by or asserted against any such Person
in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in connection with
any of the foregoing, including with respect to any investigation, litigation
or proceeding (including any insolvency proceeding or appellate proceeding)
related to or arising out of this Agreement or the Revolving Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely
from the willful misconduct of such Indemnified Person. The agreements in this
Section shall survive payment of all other Obligations.
14.11 Final Agreement. This Agreement and the other Loan Documents
are intended by the Borrower and the Lender to be the final, complete, and
exclusive expression of the agreement between them. This Agreement supersedes
any and all prior oral or written agreements relating to the subject matter
hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except by
a written agreement signed by the Borrower and a duly authorized officer of the
Lender.
39
46
14.12 Counterparts. This Agreement may be executed in any number
of counterparts, and by the Lender and the Borrower in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement.
14.13 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not
be construed to modify, enlarge, or restrict any provision.
14.14 Right of Setoff. In addition to any rights and remedies of
the Lender provided by law, if an Event of Default exists, the Lender is
authorized at any time and from time to time, without prior notice to the
Borrower, any such notice being waived by the Borrower to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by, such Lender to or for the credit or the
account of the Borrower against any and all Obligations owing to the Lender,
now or hereafter existing, irrespective of whether or not the Lender shall have
made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured. The Lender agrees promptly to
notify the Borrower and the Lender after any such set-off and application made
by the Lender; provided, however, that the failure to give such notice shall
not affect the validity of such set-off and application.
14.15 Time of the Essence. the Borrower acknowledges and agrees
that time is of the essence with respect to all of its obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
"LENDER" "BORROWER"
BankAmerica Business Credit, Inc., The Loan Pro$, Inc.,
a Delaware corporation a South Carolina corporation
by: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ by: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇,
------------------------ ---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇,
Executive Vice President Chief Financial Officer
by: /s/ J. ▇▇▇▇ ▇▇▇, Secretary
---------------------------
J. ▇▇▇▇ ▇▇▇, Secretary
40
47
EXHIBIT "A" TO
LOAN AND SECURITY AGREEMENT
COLLECTION ACCOUNT AGREEMENT
This Collection Account Agreement ("Agreement") is made as of December
, 1995, by and between BankAmerica Business Credit, Inc. ("the Lender"), a
Delaware corporation, doing business as BA Business Credit, Inc., located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇; Carolina First
Bank ("Bank") located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇; and The Loan Pro$, Inc. ("Company"), a South Carolina corporation,
located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
WITNESSETH
Whereas, Company authorizes and/or has established with Bank, at its
office specified above Special Depository Account No. 1040337300 with the title
Loan Pro$, Inc. ("Collection Account"); and
Whereas, Company has, pursuant to a financing agreement, pledged,
assigned, and granted to the Lender a continuing security interest in certain
property described therein, including, without limitation, all present and
future accounts, contract rights, instruments, documents, chattel paper and
general intangibles of Company, and all proceeds thereof, which may from time
to time be deposited in the Collection Account.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound, the parties agree as follows.
AGREEMENT
1. Deposits into Collection Account. Company agrees that all
payments, whether in cash, by check or other instrument, or otherwise, received
by Company from its customers as proceed of the Collateral shall be deposited
by Company in the Collection Account. Company shall furnish to the Lender each
day a collection report setting forth, in such reasonable detail as the Lender
may request, the deposits made during each day in the Collection Account,
together with a copy of each deposit slip issued in connection with such
deposits.
2. Collection Account Drawing Rights. Company authorizes and
directs that the sole signatories authorized to withdraw amounts from, to draw
upon, or to otherwise exercise any powers with respect to, the Collection
Account and the funds deposited therein, are and shall be the employees of
Company identified on Exhibit "A" attached hereto and made a part hereof, and
the officers or agents of the Lender identified on Exhibit "B" attached hereto
and made a part hereof or such other persons as the Lender may from time to
time designate in writing to Bank. Funds deposited into the Collection Account
may be withdrawn subject to the Bank's funds availability schedule applied to
corporate (wholesale or non-retail) accounts, at any time or from time to time.
Until such time as the Lender gives Bank Notice described in paragraph 6
hereof, the parties agree that all funds deposited in the Collection Account
from time to time shall be held by Bank for Company, shall be the property of
Company, and all collected funds may be withdrawn, at any time or from time to
time, by check, draft, wire transfer,
1
48
or otherwise as Company shall determine. After receipt of Notice from the
Lender in accordance with paragraph 6, below, all funds deposited in the
Collection Account shall be held by Bank for the Lender, shall be the property
of the Lender, and may be withdrawn from time to time by the Lender, and
Company shall have no further authority to withdraw any amount from, to draw
upon, or to otherwise exercise any powers as a depositor or owner with respect
to the Collection Account and the funds deposited therein. Company shall not
give, and Bank shall not honor, any instructions to change the authorized
signatories on the Collection Account unless such instructions are given, or
approved, in writing by the Lender.
3. Security Interest in Items to be Deposited. the Lender and
Company agree that all checks, money orders, and other evidences of payment
deposited in the Collection Account, which checks will be made payable to
Company without Company's endorsement, from time to time shall be held by Bank
for Company or the Lender, as appropriate, and subject to the security interest
of the Lender.
4. Charges to Collection Account. Bank will not charge or
debit, or exercise any right of offset or banker's Lien against, the Collection
Account except as provided below. Bank may charge the Collection Account for
any items deposited in the Collection Account which are returned for any reason
or otherwise not collected and may charge the Collection Account for all
service charges, commissions, expenses, and other items ordinarily chargeable
to the Collection Account. If there are not sufficient funds in the Collection
Account to pay such amounts, then Company agrees to pay Bank within ten
business days of written demand all such amounts, regardless of any other
collection efforts Bank may have expended. If Company does not pay Bank such
amounts within ten business days, then the Lender agrees to pay Bank within ten
business days of written demand (i) all service charges, commissions, and
expenses ordinarily chargeable to the Collection Account, and (ii) after
delivery of the Notice from the Lender in accordance with paragraph 6, items
deposited in the Collection Account which are returned for any reason or not
collected otherwise. Company and the Lender acknowledge Company is obligated
to pay all customary and reasonable Bank charges resulting from the Collection
Account. Company agrees to reimburse the Lender for any monies that the Lender
forwards to Bank in settlement of any charges as detailed above. In the
absence of willful misconduct on the part of Bank, Company agrees to bear all
risk of loss associated with the Collection Account. Bank hereby agrees to
accept cash payment in lieu of balances as compensation for service charges
incurred on, or normally charged to, the Collection Account.
5. Collection Account Records. Company hereby instructs Bank
and Bank agrees to furnish to the Lender, with a copy to Company, bank
statements with respect to the Collection Account which are customarily
provided to customers of Bank at the times such statements are normally
provided to customers of Bank, through the normal method of transmission, U.S.
Mail.
Additionally, Company hereby instructs Bank and Bank agrees to make available
to the Lender and Company, upon request, copies of all daily debit and credit
advices of the Collection Account.
6. Bank's Notice. Bank will take the following actions upon
receipt of written notice ("Notice") from the Lender:
a. Bank shall (and in the event of such a Notice,
Company hereby irrevocably authorizes and instructs Bank to) cease honoring all
drafts, demands, withdrawal requests, or remittance instructions by Company
made after receipt of Notice.
2
49
b. Following the receipt of the Notice and at all times
thereafter, Bank shall hold solely for the account of the Lender all funds
which may be on deposit in the Collection Account at the time the Notice is
received by Bank and all funds thereafter deposited into the Collection
Account, and Bank will remit all such collected funds (subject to paragraph 4.,
above) directly to the Lender, in accordance with Bank's procedures then in
effect as the funds are collected, by electronic transfers to the account
indicated below.
After receipt of the Notice, Bank hereby agrees and acknowledges that
all collected funds in the Collection Account shall be forwarded by wire
transfer to BA Business Credit, Inc., account number ▇▇▇-▇-▇▇▇▇▇▇
("Concentration Account"), at Chase Manhattan Bank, New York, New York, ABA No.
▇▇▇▇▇▇▇▇▇, or such other bank as the Lender may from time to time designate in
writing and, on a daily basis, Bank will initiate an automated clearing house
transfer to move collected funds from Bank to the Concentration Account and the
Lender shall have sole control over the Collection Account and the sole right
to exercise and enforce all rights and remedies with respect thereof. The
Notice shall be effective when it is received by Bank in writing at the address
set forth in paragraph 9, below (or at such other address as Bank may specify
by written notice received by the Lender) and when Bank has had a reasonable
time, based upon the same standards as those applicable to payment and stop
payment instructions generally, to act thereon.
7. Termination. Upon receipt of the Lender's prior written
consent, this Agreement may be terminated by Bank or Company at any time by
giving thirty (30) days' prior written notice to the other party.
8. Modification of Agreement. This Agreement cannot be changed,
modified or terminated without the written consent of the Lender.
9. Notices. All notices or demands by any party on the other
relating to this Agreement shall, except as otherwise provided herein, be in
writing. Notices shall be deemed received within five business days after
being deposited in a United States post office box, postage prepaid, properly
addressed to Company, the Lender, or to Bank at the addresses stated below,
subject to the earlier receipt thereof as described in paragraph 6(b). Notices
may also effectively be given by transmittal over electronic transmitting
devices such as NBI, TWIX, Telex or telecopy machine, if the party to whom the
notice is being sent has such a device in its office, provided a complete copy
of any notice so transmitted shall also be mailed in the same manner as
required for a mailed notice. Notices given by electronic transmitting devices
shall be deemed effective on the day of transmission. All notices, including
telephone notices, daily debit and credit advices, monthly statements of
account, photocopies, returned items and general correspondence shall be sent
to the following addresses and, where applicable given at the following
telephone numbers or to such other person or address as any party shall
designate to the others from time to time in writing:
A. BankAmerica Business Credit, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
3
50
B. The Loan Pro$, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
C. Carolina First Bank
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10. Notice of Legal Process. If Bank receives any notice of
legal process of any kind relating to Company, Bank shall use its best efforts
to give reasonable oral notice to the Lender of such legal process.
11. Indemnification. Company hereby agrees to indemnify and hold
Bank harmless from and against any and all liabilities, losses, costs, and
expenses incurred directly or indirectly by Bank as a consequence of Bank
executing this Agreement and performing its obligations hereunder, including
reasonable attorney's fees. Under no circumstances will Bank be liable for any
consequential or special damages to Company, the Lender or any third party, as
a result of this Agreement.
12. Successors and Assigns; Governing Law. This Agreement shall
be binding upon and inure to the benefit of the successors and assigns of the
parties and shall be governed by and construed in accordance with the laws of
the state of New Jersey.
13. Counterparts. This Agreement may be executed in any number
of counterparts, and by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original but all such
counterparts together shall constitute one and the same instrument.
14. Agreement Duly Authorized. All parties hereto represent and
warrant that they have taken all actions and obtained all authorizations,
consents and approvals as are conditions precedent to their authority to
execute this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date shown above.
"LENDER"
BankAmerica Business Credit, Inc.,
a Delaware corporation
By:
------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Executive Vice President
4
51
"COMPANY"
The Loan Pro$, Inc.,
a South Carolina corporation
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇,
Chief Financial Officer
"BANK"
Carolina First Bank
By:
----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Vice President
Accepted this day of December 1995.
-----
5
52
EXHIBIT "A"
TO
COLLECTION ACCOUNT AGREEMENT
Authorized Persons - Company
Name Signature Exemplar
---- ------------------
1. ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------
2. ▇▇▇▇▇ ▇. Lining
----------------------------------
3. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
4.
--------------------------------- ----------------------------------
5.
--------------------------------- ----------------------------------
6.
--------------------------------- ----------------------------------
1
53
EXHIBIT "B"
TO
COLLECTION ACCOUNT AGREEMENT
Authorized Persons - the Lender
Name Signature Exemplar
---- ------------------
1.
------------------- --------------------------
2.
------------------- --------------------------
3.
------------------- ---------------------------
[To be completed by BankAmerica Business Credit, Inc.]
1
54
SCHEDULE 6.3
TO
LOAN AND SECURITY AGREEMENT
(LOCATION OF THE BORROWER'S BOOKS AND RECORDS AND COLLATERAL)
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Aviation Square
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
West View Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Palmetto Plaza
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
1
55
SCHEDULE 8.3 TO
LOAN AND SECURITY AGREEMENT
[LIST OF JURISDICTIONS IN WHICH QUALIFIED AND IN GOOD STANDING]
South Carolina
1
56
SCHEDULE 8.5 TO
LOAN AND SECURITY AGREEMENT
[LIST OF AFFILIATES]
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Emergent Group, Inc.
Emergent Financial Corporation
▇▇▇▇▇▇▇ Railroad Company
Carolina Investors, Inc.
Emergent Business Capital, Inc.
Premier Financial Services, Inc.
Emergent Equity Advisors
Emergent Mortgage Corporation
Emergent Commercial Mortgage
Emergent Business Capital Holdings Corporatino
Cambridge Banc
1
57
EXHIBIT 8.8 TO
LOAN AND SECURITY AGREEMENT
[BORROWER'S FINANCIAL STATEMENTS]
1
58
SCHEDULE 8.13 TO
LOAN AND SECURITY AGREEMENT
[LIST OF BORROWER'S TRADE NAMES]
NONE
1
59
SCHEDULE 8.14 TO
LOAN AND SECURITY AGREEMENT
[LIST OF BORROWER'S PENDING LITIGATION]
NONE
1
60
SCHEDULE 10.1
TO
LOAN AND SECURITY AGREEMENT
[LIST OF REQUIRED CLOSING DOCUMENTS]
The Lender shall have received on or before the first Closing Date all
of the following documents which shall be satisfactory to the Lender in form
and content:
1. Certificate of Secretary (the Borrower).
2. UCC-1 financing statements (South Carolina).
3. Certificate of good standing for the Borrower (South
Carolina Secretary of State).
4. Opinion of the Borrower's and Emergent's counsel.
5. Certificate of the Borrower's chief financial
officer.
6. Carolina First Bank's Payoff letter.
7. The Borrower's authorization letter.
8. Carolina First Bank's UCC termination statements.
9. Certificate of Secretary (Emergent).
10. Certificate of good standing for Emergent (South
Carolina Secretary of State).
11. Continuing Guaranty (Emergent).
1
