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MASTER LOAN AND SECURITY AGREEMENT
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Dated as of April 13, 2001
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UGLY DUCKLING CORPORATION,
UGLY DUCKLING CAR SALES & FINANCE CORPORATION,
UGLY DUCKLING CREDIT CORPORATION,
UGLY DUCKLING CAR SALES, INC.,
UGLY DUCKLING CAR SALES FLORIDA, INC., and
UGLY DUCKLING FINANCE CORPORATION,
as the Borrower
and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
as the Lender
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TABLE OF CONTENTS
Page
Section 1 Definitions and Accounting Matters...................................................................1
1.01 Certain Defined Terms...................................................................................1
1.02 Accounting Terms and Determinations....................................................................22
1.03 UCC Terms and Determinations...........................................................................22
Section 2 Advances, Note and Prepayments......................................................................22
2.01 Advances...............................................................................................22
2.02 Notes..................................................................................................22
2.03 Procedure for Borrowing................................................................................23
2.04 Limitation on Types of Advances; Illegality............................................................24
2.05 Repayment of Advances; Interest........................................................................24
2.06 Mandatory Prepayments or Pledge........................................................................26
2.07 Optional Prepayments...................................................................................26
2.08 Requirements of Law....................................................................................26
2.09 Extension of Termination Date..........................................................................27
2.10 Power of Attorney......................................................................................27
Section 3 Payments; Computations; Taxes; Commitment Fee.......................................................27
3.01 Payments...............................................................................................27
3.02 Computations...........................................................................................28
3.03 U.S. Taxes.............................................................................................28
3.04 Commitment Fee.........................................................................................29
Section 4 Collateral Security.................................................................................29
4.01 Collateral; Security Interest..........................................................................29
4.02 Further Documentation..................................................................................32
4.03 Changes in Locations, Name, etc........................................................................32
4.04 Lender's Appointment as Attorney-in-Fact...............................................................32
4.05 Performance by Lender of Borrower's Obligations........................................................34
4.06 Proceeds...............................................................................................34
4.07 Remedies...............................................................................................34
4.08 Limitation on Duties Regarding Presentation of Collateral..............................................35
4.09 Powers Coupled with an Interest........................................................................35
4.10 Release of Security Interest...........................................................................35
Section 5 Conditions Precedent................................................................................35
5.01 Initial Advance........................................................................................35
5.02 Initial and Subsequent Advances........................................................................38
Section 6 Representations and Warranties......................................................................39
6.01 Existence..............................................................................................39
6.02 Financial Condition....................................................................................39
6.03 Litigation.............................................................................................39
6.04 No Breach..............................................................................................39
6.05 Action.................................................................................................40
6.06 Approvals..............................................................................................40
6.07 Margin Regulations.....................................................................................40
6.08 Taxes..................................................................................................40
6.09 Investment Company Act.................................................................................40
6.10 No Default.............................................................................................40
6.11 Collateral; Collateral Security........................................................................41
6.12 Chief Executive Office; Chief Operating Office; State of Incorporation.................................41
6.13 Location of Books and Records..........................................................................41
6.14 True and Complete Disclosure...........................................................................41
6.15 ERISA..................................................................................................42
6.16 Licenses...............................................................................................42
6.17 No Burdensome Restrictions.............................................................................42
6.18 Subsidiaries...........................................................................................42
6.19 Origination of Contract Loans..........................................................................42
6.20 Borrower Solvent; Fraudulent Conveyance................................................................43
6.21 Master Agency Agreement................................................................................43
6.22 Exchange Debt..........................................................................................43
6.23 Senior Secured Loan....................................................................................43
6.24 Designated Senior Indebtedness.........................................................................43
Section 7 Covenants of the Borrower...........................................................................44
7.01 Financial Statements...................................................................................44
7.02 Litigation.............................................................................................46
7.03 Existence, Compliance, Records, Inspection.............................................................46
7.04 Prohibition of Fundamental Changes.....................................................................47
7.05 Borrowing Base Deficiency..............................................................................47
7.06 Duty to Notify Lender..................................................................................47
7.07 Servicing..............................................................................................47
7.08 Privatization Covenants................................................................................49
7.09 Underwriting Guidelines................................................................................50
7.10 Lines of Business......................................................................................50
7.11 Transactions with Affiliates...........................................................................50
7.12 Limitation on Liens....................................................................................51
7.13 Limitation on Sale of Assets...........................................................................51
7.14 Limitation on Distributions............................................................................51
7.15 Financial Covenants....................................................................................51
7.16 Restricted Payments....................................................................................52
7.17 Servicing Transmission.................................................................................52
7.18 No Amendment or Waiver.................................................................................52
7.19 Insurance..............................................................................................52
7.20 Further Identification of Collateral...................................................................53
7.21 Certificate of a Responsible Officer of the Borrower...................................................53
7.22 Backup Servicer........................................................................................53
7.23 Inventory Facility.....................................................................................53
7.24 Master Agency Agreement................................................................................53
7.25 Stock Pledge Collateral................................................................................53
7.26 Exchange Debt Documents................................................................................53
7.27 Exclusive Source of Financing..........................................................................54
Section 8 Events of Default...................................................................................54
Section 9 Remedies Upon Default...............................................................................56
Section 10 No Duty on Lender's Part............................................................................57
Section 11 Miscellaneous.......................................................................................57
11.01 Waiver.................................................................................................57
11.02 Notices................................................................................................57
11.03 Indemnification and Expenses...........................................................................58
11.04 Amendments.............................................................................................58
11.05 Successors and Assigns.................................................................................58
11.06 Survival...............................................................................................59
11.07 Captions...............................................................................................59
11.08 Counterparts...........................................................................................59
11.09 Loan Agreement Constitutes Security Agreement; Governing Law...........................................59
11.10 SUBMISSION TO JURISDICTION; WAIVERS....................................................................59
11.11 WAIVER OF JURY TRIAL...................................................................................60
11.12 Acknowledgments........................................................................................60
11.13 Hypothecation or Pledge of Collateral..................................................................60
11.14 Assignments; Participations............................................................................60
11.15 Periodic Due Diligence Review..........................................................................61
11.16 Set-Off................................................................................................62
11.17 Intent.................................................................................................62
11.18 Entire Agreement.......................................................................................62
11.19 Confidentiality........................................................................................62
SCHEDULES
SCHEDULE 1 Representations and Warranties re: Pledged Contracts that are Not Acquired Contracts
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 Relevant States
SCHEDULE 4 Subsidiaries
SCHEDULE 5 Contract Debtor Documents
SCHEDULE 6 Representations and Warranties re: Pledged Contracts that are Acquired Contracts
SCHEDULE 7 Permitted Liens
SCHEDULE 8 Required Insurance
SCHEDULE 9 Exchange Debt Documents
SCHEDULE 10 Senior Loan Documents
EXHIBITS
EXHIBIT A Form of Promissory Note
EXHIBIT B Form of Custodial Agreement
EXHIBIT C Form of Opinion of Counsel to the Borrower
EXHIBIT D Form of Notice of Borrowing and Pledge
EXHIBIT E Underwriting Guidelines
EXHIBIT F Required Fields for Servicing Transmission
EXHIBIT G Form of Borrowing Base Certificate
EXHIBIT H Form of Confidentiality Agreement
EXHIBIT I Form of Contract
EXHIBIT J Master Agency Agreement
EXHIBIT K Form of Subordination Agreement
EXHIBIT L Collection Policies and Procedures
EXHIBIT M Form of Power of Attorney
MASTER LOAN AND SECURITY AGREEMENT
This MASTER LOAN AND SECURITY AGREEMENT (as amended from time to time, this
"Loan Agreement") dated as of April 13, 2001 is entered into by and between Ugly
Duckling Corporation, a Delaware corporation ("UDC"), Ugly Duckling Car Sales
and Finance Corporation, an Arizona corporation ("UDCSFC"), Ugly Duckling Credit
Corporation, an Arizona corporation ("UDCC"), Ugly Duckling Car Sales, Inc., an
Arizona corporation ("Car Sales"), Ugly Duckling Car Sales Florida, Inc., a
Florida corporation ("Car Sales Florida") and Ugly Duckling Finance Corporation,
an Arizona corporation ("UDFC") (each of the foregoing entities is individually
sometimes referred to herein as a "Duck Entity"; all of the Duck Entities are
collectively referred to herein as the "Borrower"; UDCC is sometimes referred to
herein as the "Servicer"; and Car Sales and Car Sales Florida are sometimes
referred to herein as the "Originators"), and Greenwich Capital Financial
Products, Inc., a Delaware corporation (hereinafter referred to as the
"Lender"). The obligations of the Borrower to the Lender under this Loan
Agreement are the joint and several liability of each Duck Entity.
RECITALS
The Borrower wishes to obtain financing from time to time to provide
funding for the origination of Eligible Contracts (as defined herein), which
Eligible Contracts are to be sold or contributed from time to time by the
Borrower to one or more trusts or other entities to be sponsored by the Borrower
or an Affiliate (as defined herein) thereof, or to third-parties, and which
Eligible Contracts shall secure Advances (as defined herein) to be made by the
Lender hereunder.
The Lender has agreed, subject to the terms and conditions of this Loan
Agreement (as defined herein), to provide such financing to the Borrower.
Accordingly, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1 Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 1.01 or in other
provisions of this Loan Agreement in the singular to have the same meanings when
used in the plural and vice versa):
"Accepted Servicing Practices" means, with respect to any Contract, the
servicing practices of the Borrower described in the Collection Policies and
Procedures attached hereto as Exhibit L, as amended from time to time.
"Accounting Period" means a calendar month, beginning with the month during
which this Loan Agreement is executed and ending with the calendar month during
which the Secured Obligations has been paid in full following termination of
this Loan Agreement.
"Acquired Contracts" means Champion Contracts, Seminole Contracts, DCT
Contracts, VAM Contracts and Contracts acquired by the Borrower from third
parties after the date hereof.
Page 1
"Advance" has the meaning specified in Section 2.01(a) hereof.
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" (together with the
correlative meanings of "controlled by" and "under common control with") means
possession, directly or indirectly, of the power (a) to vote 10% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
directors or managing general partners (or their equivalent) or such Person, or
(b) to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"Alternate Base Rate" means the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City, New York.
"Applicable Margin" means 2.80%.
"Assigned In-Transit Contract Value" means for any Contract, the value that
would be assigned to such In-Transit Contract if such In-Transit Contract
constituted an Eligible Contract and was included in the Borrowing Base.
"Assignment" shall mean, with respect to a Contract, any assignment,
including any assignment by an Originator, an originator of Acquired Contracts,
or a Dealer other than an Originator to Borrower, and any intervening assignment
of such Contract.
"Available Liquidity" means, with respect to the Borrower at any date, the
aggregate for such date of (i) all cash of the Borrower, (ii) all Cash
Equivalents then held by the Borrower, (iii) the unused portion of available
commitments under the Inventory Facility and under this Loan Agreement, (iv) the
value that would be assigned to all other Eligible Contracts that could be
included in the Borrowing Base for purposes of Advances but for the limitation
of the Maximum Credit, and (v) the Assigned In-Transit Contract Value.
"Average Charged-Off Losses Ratio (Pledged Contracts)," as of any date,
means with respect to all Pledged Contracts, the Accounting Period average of
the Charged-Off Losses Ratio of all Pledged Contracts for the three (3)
consecutive Accounting Periods most recently ended prior to such date; provided
that, until the June 2001 Accounting Period has expired, the Average Charged-Off
Losses Ratio shall be the average of the Charged-Off Losses Ratio for all
Pledged Contracts for the Accounting Periods which have expired.
"Average Charged-Off Losses Ratio (Managed Portfolio Contracts)" means,
with respect to Managed Portfolio Contracts, the Accounting Period average of
the Charged-Off Losses Ratio for all Managed Portfolio Contracts for three (3)
consecutive Accounting Periods most recently ended prior to such date; provided
that, until the June 2001 Accounting Period has expired, the Average Charged-Off
Losses Ratio for all Managed Portfolio Contracts shall be the Accounting Period
average of such Charged-Off Losses Ratio for the Accounting Periods which have
expired.
Page 2
"Backup Servicer" means ▇▇▇▇▇ Fargo Financial Corporation, in its capacity
as Backup Servicer pursuant to a backup servicing agreement or such other Backup
Servicer as may be requested by Borrower and approved by Lender in Lender's
reasonable discretion.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978, as
amended from time to time.
"Borrower" has the meaning provided in the heading hereof.
"Borrowing Base" shall equal the lesser of: (X) the sum of (A) the
Borrowing Base (UDC Contracts), (B) the Borrowing Base (Existing Non-UDC
Contracts) and (C) the Borrowing Base (New Non-UDC Contracts) and (Y) the Market
Value of the Eligible Contracts; provided, however, that the Borrowing Base in
respect of Eligible Contracts which have been originated prior to the cut-off
date of the most recently closed Securitization Transaction shall not exceed the
greater of (i) $12,500,000 and (ii) 20% of the outstanding Advances;.
"Borrowing Base (Existing Non-UDC Contracts)" means, with respect to all
Eligible Contracts owned by Borrower as of the date hereof that were not
originated by any present or past Duck Entity, the amount equal to (A)
eighty-six percent (86%) of the Principal Balance of all Champion Contracts that
the Lender determines are Eligible Contracts; plus (B) seventy-five percent
(75%) of the Principal Balance of all Seminole Contracts that the Lender
determines are Eligible Contracts; plus (C) fifty percent (50%) of the Principal
Balance of all DCT Contracts that the Lender determines are Eligible Contracts;
plus (D) forty and one-half percent (40.5%) of the Principal Balance of all VAM
Contracts that the Lender determines are Eligible Contracts.
"Borrowing Base (New Non-UDC Contracts)" means, with respect to all
Eligible Contracts acquired by the Borrower from any third party after the date
hereof, an amount as determined by Lender in its sole discretion and agreed to
by Borrower.
"Borrowing Base (UDC Contracts)" means, with respect to all Eligible
Contracts originated by the Originators or any other predecessor Duck Entity at
any date, the amount equal to (A) the aggregate Principal Balance thereof
multiplied by (B) the least of (i) the Effective Securitization Net Proceeds
Percentage, (ii) the Weighted Average Securitization Net Proceeds Percentage as
of such date, or (iii) 65%.
"Borrowing Base Certificate" means the certificate and accompanying
computer file (in a format acceptable to Lender) prepared by the Borrower
substantially in the form of Exhibit G attached hereto.
"Borrowing Base Deficiency" has the meaning provided in Section 2.06
hereof.
"Business Day" means any day other than (i) a Saturday or Sunday, or (ii) a
day in which the New York Stock Exchange, the Federal Reserve Bank of New York
or the Custodian is authorized or obligated by law or executive order to be
closed.
Page 3
"Capitalized Lease" means a lease of (or other agreement conveying the
right to use) real or personal property with respect to which at least a portion
of the rent or other amounts thereon constitute Capital Lease Obligations.
"Capital Lease Obligations" means, for any Person, all obligations of such
Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under GAAP, and, for purposes of this Loan Agreement, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP.
"Car Sales" has the meaning set forth in the first paragraph of this Loan
Agreement.
"Car Sales Florida" has the meaning set forth in the first paragraph of
this Loan Agreement.
"Cash Collateral Account" means the cash collateral account established
pursuant to the Cash Collateral Account Agreement and the collections and other
amounts from time to time deposited therein as contemplated by the Cash
Collateral Account Agreement.
"Cash Collateral Account Agreement" means that certain agreement dated as
of January 11, 2001 by and between UDC, Car Sales, UDFC and BNY Midwest Trust
Company as in effect on the date hereto, and as such agreement may be amended,
modified, renewed and replaced from time to time in connection with the
refinancings permitted pursuant to Section 7.25; provided, however, that any
such replacement agreement shall not create a Lien on collateral other than the
collateral of the type described in the original Cash Collateral Account
Agreement.
"Cash Equivalents" means (a) securities with maturities of 90 days or less
from the date of acquisition issued or fully guaranteed or insured by the United
States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of 90 days or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank satisfying the requirements of clause (b) of this definition,
having a term of not more than seven days with respect to securities issued or
fully guaranteed or insured by the United States Government, (d) commercial
paper of a domestic issuer rated at least A-1 or the equivalent thereof by
Standard and Poor's Ratings Services ("S&P") or P-1 or the equivalent thereof by
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and in either case maturing within
90 days after the day of acquisition, (e) securities with maturities of 90 days
or less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as the case may be) are
rated at least A by S&P or A2 by Moody's, (f) securities with maturities of 90
days or less from the date of acquisition backed by standby letters of credit
issued by any commercial bank satisfying the requirements of clause (b) of this
definition or (g) shares of money market mutual or similar funds which invest
exclusively in assets satisfying the requirements of clauses (a) through (f) of
this definition.
Page 4
"Cashflow Interest Coverage Ratio" means, for UDC and its consolidated
subsidiaries as of any Quarterly Measurement Date, the ratio computed by
dividing (i) the sum of (x) Net Income during the related Cumulative Quarterly
Measurement Period and (y) Interest Expense during the related Cumulative
Quarterly Measurement Period by (ii) Interest Expense during the related
Cumulative Quarterly Measurement Period.
"Certificate of Title" means with respect to each Financed Vehicle, the
certificate of title (or other evidence of ownership) issued by the department
of motor vehicles, or other appropriate governmental body, of the state in which
the Financed Vehicle is to be registered showing the Contract Debtor as owner,
with a notation of the Borrower's first lien or such other status indicated
thereon which is necessary to perfect Borrower's security interest in the
Financed Vehicle as a first priority security interest, and showing no other
actual or possible lien interest in the Financed Vehicle.
"Champion Contract" means a Contract which was purchased in a True Sale by
Champion Financial Services, Inc. from a Dealer who was not a Borrower entity or
an Affiliate of Borrower.
"Change of Control" means, except with respect to a Privatization
Transaction that satisfies the conditions set forth in Section 7.08 below, the
acquisition by any Person, or two or more Persons acting in concert, of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of outstanding
shares of voting stock of the Borrower at any time, if after giving effect to
such acquisition (i) such Person or Persons (other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇
▇▇▇▇▇▇▇▇) owns twenty-five percent (25%) or more of such outstanding voting
stock, (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ collectively do not own more than
fifty percent (50%) of such outstanding shares of voting stock or (iii) ▇▇▇▇
▇▇▇▇▇▇▇▇ ceases to be employed by the Borrower in his respective current
capacity (or a more senior capacity) for any reason and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ cease
to be Chairman of the Board of UDC, unless a satisfactory replacement for ▇▇▇▇
▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is approved by Lender in its reasonable
discretion.
"Charged-Off Contract" means the earliest to occur with respect to a
Contract (i) for which all, or any part in excess of 10%, of any Scheduled
Payment is due and unpaid ninety (90) days after the due date for such Scheduled
Payment; (ii) for which the Financed Vehicle has been surrendered or repossessed
and the redemption period granted the Contract Debtor or required by applicable
law has expired, or is to be repossessed but is unable to be located or is
otherwise subject to being repossessed; (iii) which has been settled for less
than the Principal Balance; (iv) which has been liquidated by the Servicer
through the sale of the Financed Vehicle; (v) for which proceeds have been
received which in the Servicer's judgment, constitute the final amounts
recoverable in respect of such Contract; (vi) which has been charged-off (or
should have been charged-off) in accordance with the Credit and Collection
Policy; or (vii) for which the Contract Debtor is a party to a proceeding under
any Debtor Relief Law which arose after the creation of such Contract (other
than as a creditor or claimant).
Page 5
"Charged-Off Losses Ratio" means as of the end of an Accounting Period with
respect to any group of Contracts, the percentage equivalent of a fraction the
numerator of which is the Principal Balance of such Contracts which became
Charged-Off Contracts during such Accounting Period minus amounts received by
Borrower during the Accounting Period and applied to any such Contracts which
became Charged-Off Contracts during a previous Accounting Period, and the
denominator of which is the Principal Balance of all such Contracts which are
not Charged-Off Contracts.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" has the meaning assigned to such term in Section 4.01(b)
hereof.
"Collections" means all proceeds of, Scheduled Payments or other payments
or distributions of principal, interest or other amounts on, Insurance Proceeds,
payments from Contract Rights Payors and any other amounts received by or on
behalf of the Borrower in respect of the Pledged Contracts.
"Commitment Fee" has the meaning assigned to such term in Section 3.04
hereof.
"Confidential Information" means confidential and proprietary information
of the Borrower that is identified in writing to Lender as being either
confidential or proprietary; provided that Confidential Information shall not
include (i) the Loan Documents or (ii) any information which (A) at the time of
disclosure or thereafter is generally known by the public (other than as a
result of disclosure by Lender), (B) was or becomes known to Lender from a
person that, to the knowledge of Lender, is not prohibited from transmitting the
information to Lender, and (iii) any such information described in clauses (i)
or (ii) above that is currently in Lender's possession.
"Consent and Subordination Agreement" means that certain consent and
subordination agreement dated January 11, 2001 among the Borrower, BNY Midwest
Trust Company and GECC.
"Consolidating Depository Account" has the meaning set forth in the Master
Agency Agreement.
"Contract" means a retail installment or conditional sale contract, with
any Modifications, originated or acquired by Borrower at any time pursuant to
which a Contract Debtor has (i) purchased a new or used Motor Vehicle, (ii)
granted a security interest in the Motor Vehicle to secure the Contract Debtor's
payment obligations, and (iii) agreed to pay the unpaid purchase price and a
finance charge in periodic installments no less frequently than monthly.
"Contract Collateral" has the meaning assigned thereto in Section
4.01(b)(i) hereof.
Page 6
"Contract Debtor" means, with respect to a Contract, the Person that has
executed the Contract as a purchaser, and any guarantor, co-signer or other
Person obligated to make payments under the Contract.
"Contract Debtor Documents" means, with respect to a Contract, those
documents that are identified on Schedule 5 attached hereto and made a part
hereof.
"Contract Delivery Documents" means, with respect to a Contract, the
original Certificate of Title (or, to the extent provided in Section 2(b) of the
Custodial Agreement, evidence of application for a Certificate of Title) and the
original executed Contract with original Contract Debtor signatures.
"Contract Rights" means, with respect to a Contract, (i) Borrower's
interest in the Financed Vehicle; (ii) all rights of Borrower regarding the
Contract and Financed Vehicle, including but not limited to rights to electronic
funds transfers and rights under all dealer agreements and purchase agreements
pursuant to which the Contract was acquired by Borrower; (iii) all rights of
Borrower with respect to Optional Contract Debtor Insurance, Required Contract
Debtor Insurance, and any other policies of fire, theft or comprehensive
insurance, collision insurance, public liability insurance or property damage
insurance maintained with respect to the Financed Vehicle, the Contract, or the
Contract Debtor; (iv) all rights of Borrower, if any, to prepaid dealer rate
participation in connection with the Contract; (v) Collections, and (vi) all
rights of Borrower to the originals of all books, records (including electronic
data), reports, files, and documents relating to the Contracts, including, but
not limited to, Contract Debtor Documents, financial statements of Contract
Debtors, and all payment reports or records relating to the Contracts.
"Contract Rights Payors" means Persons, other than Contract Debtors,
against whom Contract Rights may be asserted.
"Contractual Obligation" means as to any Person, any material provision of
any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound or any material provision of any
security issued by such Person.
"Cumulative Custodial Report" has the meaning set forth in the Custodial
Agreement.
"Cumulative Quarterly Measurement Period" means, for UDC and its
consolidated subsidiaries as of any Quarterly Measurement Date, the period from
the beginning of the fiscal year of UDC and its consolidated subsidiaries
through and including such Quarterly Measurement Date.
"Custodial Agreement" means the Custodial Agreement, dated as of the date
hereof, among the Borrower, BNY Midwest Trust Company and the Lender,
substantially in the form of Exhibit B hereto, as the same shall be modified and
supplemented and in effect from time to time.
Page 7
"Custodian" means The Bank of New York, its successors and permitted
assigns under the Custodial Agreement.
"Cygnet Dealer Loan" means the $12,000,000 promissory note from Cygnet
Capital Corporation ("CCC") dated December 20, 1999 payable to UDFC in
connection with the sale of 100% of the stock of Cygnet Dealer Finance, Inc. to
CCC.
"DCT Contract" means a Contract which was purchased in a True Sale by
Borrower from DCT of Ocala Corporation (d/b/a Best Chance) on August 25, 1999.
"Dealer" means a merchant in the business of selling Motor Vehicles to the
public in the retail market.
"Debt to EBITDA Ratio" means, for UDC and its consolidated subsidiaries as
of the last day of any Accounting Period, the ratio computed by dividing (i)
Total Debt as of such Measurement Date minus Securitized Borrowings by (ii)
EBITDA for the twelve-month period ending on such Measurement Date.
"Debtor Relief Laws" means the Bankruptcy Code (Title 11 of the United
States Code) of the United States of America and all other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, readjustment
of debt, marshaling of assets or similar debtor relief laws of the United States
or any State of the United States from time to time in effect affecting the
rights of creditors generally.
"Default" means an Event of Default or an event that with notice or lapse
of time or both would become an Event of Default.
"Deferral Rate" means as of the last day of an Accounting Period with
respect to the Managed Portfolio Contracts, the quotient of (i) the total number
of any payment or due date changes made to Managed Portfolio Contracts during
the Accounting Period, which increases the term of the installment loan
obligation or delays a Scheduled Payment by up to thirty (30) days, divided by
(ii) the number of Managed Portfolio Contracts at the end of such Accounting
Period, which quotient shall be expressed as a percentage. For the purposes of
the foregoing, with respect to Managed Portfolio Contracts for which more than
one scheduled payment is required in each month, the extension of multiple
payments due in any such month shall be considered as a single extension for
purposes of determining such total number of payment or due date changes.
"Delinquency Measurement Ratio" means as of the last day of an Accounting
Period and with respect to a group of Contracts, the quotient of (i) the
Principal Balance of all such Contracts which are Delinquency Measurement
Contracts and that as of the end of any Accounting Period have Scheduled
Payments for which all or any part of excess of 10.00% of any such Scheduled
Payment is due and unpaid for more than thirty (30) days from the due date of
such Scheduled Payments, divided by (ii) the aggregate Principal Balance of all
such Delinquency Measurement Contracts as of the end of such Accounting Period,
which quotient shall be expressed as a percentage.
Page 8
"Delinquency Measurement Contracts" means, with respect to a group of
Contracts, all such Contracts which are not Charged-Off Contracts or not paid in
full.
"Depository Account" has the meaning set forth in the Master Agency
Agreement.
"Dollars" and "$" means lawful money of the United States of America.
"Duck Entity" has the meaning set forth in the first paragraph of this
Agreement.
"Due Date" means, with respect to a Contract, the day of the month on which
a Scheduled Payment is due on the Contract, exclusive of any days of grace.
"Due Diligence Review" means the performance by the Lender of any or all of
the reviews permitted under Section 11.16 hereof with respect to any or all of
the Contracts or the Borrower or related parties, as desired by the Lender from
time to time.
"EBITDA" means, for UDC and its consolidated subsidiaries for any period,
without duplication, the sum of the amounts for such period of (i) Net Income,
(ii) Interest Expense (excluding any Interest Expense with respect to any
Indebtedness arising out of a Securitization Transaction), (iii) provisions for
taxes based on income, (iv) total depreciation expense, (v) total amortization
expense, in each case determined for UDC and its consolidated subsidiaries on a
consolidated basis in accordance with GAAP.
"Effective Date" means the date upon which the conditions precedent set
forth in Section 5.01 shall have been satisfied.
"Effective Securitization Net Proceeds Percentage" means, as of any date,
the Securitization Net Proceeds Percentage based on the Securitization
Transaction most recently closed on or prior to such date.
"Eligible Contract" means (X) with respect to each Pledged Contract other
than the Acquired Contracts, each such Contract (i) which satisfies each
requirement set forth in Schedule 1 attached hereto and made a part hereof at
the time of delivery of such Pledged Contract to the Custodian and thereafter,
except to the extent expressly stated in Schedule 1 to apply only at delivery or
only thereafter, (ii) which is included in the aggregate numbers reported in
Trust Receipt Exhibit A, (iii) which is not listed as having an Exception on the
Cumulative Custodial Report, and (iv) for which the original Contract has not
been delivered to the Borrower or Servicer pursuant to a Request for Release;
and (Y) with respect to each Pledged Contract which is an Acquired Contract,
each such Contract (i) which satisfies each requirement set forth in Schedule 6
attached hereto and made a part hereof at the time of delivery of such Pledged
Contract to the Custodian and thereafter, except to the extent expressly stated
in Schedule 6 to apply only at delivery or only thereafter, (ii) which is
included in the aggregate numbers reported in Trust Receipt Exhibit A, (iii)
which is not listed as having an Exception on the Cumulative Custodial Report,
and (iv) for which the original Contract has not been delivered to the Borrower
or Servicer pursuant to a Request for Release.
Page 9
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Borrower is a member and (ii) solely for purposes of potential
liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and Section 412(n) of the
Code, described in Section 414(m) or (o) of the Code of which Borrower is a
member.
"Event of Default" has the meaning provided in Section 8 hereof.
"Exception" has the meaning set forth in the Custodial Agreement.
"Exception Report" has the meaning set forth in the Custodial Agreement.
"Exchange Debt" means the Indebtedness of the Borrower pursuant to (i) that
certain indenture dated October 15, 1998 between UDC and ▇▇▇▇▇▇ Trust and
Savings Bank, as Trustee, (ii) that certain First Supplemental Indenture dated
October 15, 1998 between UDC and ▇▇▇▇▇▇ Trust and Savings Bank, as Trustee,
whereby UDC issued 12% Subordinated Debentures and (iii) that certain Second
Supplemental Indenture dated April 15, 2000 between UDC and ▇▇▇▇▇▇ Trust and
Savings Bank, as Trustee, whereby UDC issued 11% Subordinated Debentures.
"Exchange Debt Documents" means those documents described on Schedule 9
attached hereto.
"Federal Funds Rate" means, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Lender from three primary dealers
(other than an affiliate of the Lender).
"Financed Vehicle" means the new or used Motor Vehicle purchased by a
Contract Debtor pursuant to a Contract, or any substituted vehicle which is
properly documented and approved by Lender.
"Funding Date" means a date on which an Advance is made hereunder.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GECC" means General Electric Capital Corporation, a New York Corporation.
"GECC Agreement" means the Amended and Restated Motor Vehicle Installment
Contract dated August 15, 1997, as amended, by and among GECC and the Duck
Entities.
Page 10
"GECC Inventory Facility" means the Inventory Facility under (and as
defined in) the GECC Agreement.
"GECC Security Interest" means the security interest in assets of the
Borrower granted to GECC pursuant to the GECC Agreement, as modified by the
Intercreditor Agreement.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
and any court or arbitrator having jurisdiction over the Borrower, any of its
Subsidiaries or any of its properties.
"Gross Margin Ratio" shall mean, with respect to all Motor Vehicles sold by
the Borrower during any Accounting Period, the ratio obtained by dividing (i)
the aggregate sales price of such Motor Vehicles minus the aggregate cost of
such Motor Vehicles (including purchase costs and any reconditioning or repair
costs) by (ii) the aggregate sales price of such Motor Vehicles.
"Guarantee" means, as to any Person, any obligation of such person directly
or indirectly guaranteeing any Indebtedness of any other Person in any manner
providing for the payment of any Indebtedness of any other Person or otherwise
protecting the holder of such Indebtedness against loss (whether by virtue of
partnership arrangements, by agreement to keep well, to purchase assets, goods,
securities or services, or take or pay or otherwise). The amount of any
Guarantee of a Person shall be deemed to be an amount equal to the stated or
determinable about of the primary obligation in respect of which such Guarantee
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by such Person in good faith. The
terms "Guarantee" and "Guaranteed" used as verbs shall have correlative
meanings.
"Indebtedness" means, for any Person: (a) obligations created, issued or
incurred by such Person for borrowed money (whether by loan, the issuance and
sale of debt securities or the sale of Property to another Person subject to an
understanding or agreement, contingent or otherwise, to repurchase such Property
from such Person); (b) obligations of such Person to pay the deferred purchase
or acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
within 90 days of the date the respective goods are delivered or the respective
services are rendered; (c) Indebtedness of others secured by a Lien on the
Property of such Person, whether or not the respective Indebtedness so secured
has been assumed by such Person; (d) accrued obligations of such Person in
respect of letters of credit or similar instruments issued or accepted by banks
and other financial institutions for account of such Person; (e) Capital Lease
Obligations of such Person; (f) obligations of such Person under repurchase
agreements or like arrangements; (g) Indebtedness of others Guaranteed by such
Person; and (h) any other obligation of such Person by a note, bond, debenture
or similar instrument that would be classified as indebtedness on a balance
sheet prepared in accordance with GAAP.
"Insurance Proceeds" means with respect to each Contract, proceeds of the
Optional Contract Debtor Insurance and/or the Required Contract Debtor
Insurance.
Page 11
"Intercreditor Agreement" means that certain intercreditor agreement among
Lender, GECC and BNY Midwest Trust Company (on behalf of the lenders under the
Senior Secured Loan) dated as of the date hereof.
"Interest Expense" means, for UDC and its consolidated subsidiaries for any
period, total interest expense (net of interest income) (including that portion
attributable to Capitalized Leases in accordance with GAAP and capitalized
interest) of UDC and its consolidated subsidiaries with respect to all
outstanding Indebtedness of UDC and its consolidated subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under interest rate
agreements, but excluding, however, the amortization of deferred financing fees.
"In-Transit Contract" means, as of any date, any Pledged Contract which has
been originated by Borrower within 30 days proceeding such date, but for which
the Custodian has not provided to the Lender the deliveries required by the
Custodial Agreement confirming that the Custodian is in physical possession of
the Contract Delivery Documents.
"Inventory Property" shall mean all inventory held by Car Sales and Car
Sales Florida in the ordinary course of business, all Certificates of Title with
respect thereto, and all proceeds of the foregoing (other than proceeds which
constitute Contracts or Contract Collateral).
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment Management, Inc
"▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Loan Agreement" means that certain loan agreement dated as
of February 12, 1998, as amended, between UDC and certain affiliates of ▇▇▇▇▇
▇▇▇▇▇▇▇▇.
"Lender" has the meaning assigned thereto in the heading hereto.
"Lender Account" means the following account (or such other account as
Lender may designate from time to time) maintained by the Lender at The Chase
Manhattan Bank: Account Number 140095961, For the A/C of Greenwich Capital
Financial Products, Inc., ABA# ▇▇▇▇▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇. Servicer shall
deposit all Collections into such account pursuant to the terms of Section
2.05(c) hereof.
"LIBO Base Rate" means with respect to each day an Advance is outstanding
(or if such day is not a Business Day, the next succeeding Business Day), the
rate per annum equal to the rate published by Bloomberg or if such rate is not
available, the rate appearing at page 3750 of the Telerate Screen as one-month
LIBOR on such date, and if such rate shall not be so quoted, the rate per annum
at which the Lender is offered Dollar deposits at or about 11:00 A.M., eastern
time, on such date by prime banks in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations are then being conducted
for delivery on such day for a period of one month and in an amount comparable
to the amount of the Advances to be outstanding on such day.
"LIBO Rate" means as of the tenth day of each calendar month (or the next
Business Day), a rate per annum determined by the Lender in its sole discretion
in accordance with the following formula (rounded upwards to the nearest l/100th
of one percent), which rate as determined by the Lender shall be conclusive
absent manifest error by the Lender:
Page 12
LIBO Rate = (LIBO Base Rate) / (1.00 - LIBO Reserve Requirements)
The LIBO Rate shall be calculated on the date of this Loan Agreement and
shall be reset effective on the first day of each month thereafter.
"LIBO Reserve Requirements" means as of the tenth day of each calendar
month (or the next Business Day), the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements applicable to
the Lender in effect on such day (including, without limitation, basic,
supplemental, marginal and emergency reserves under any regulations of the Board
of Governors of the Federal Reserve System or other Governmental Authority
having jurisdiction with respect thereto), dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank of such
Governmental Authority. As of the Effective Date, the LIBO Reserve Requirements
shall be deemed to be zero.
"Lien" means any mortgage, lien, pledge, charge, security interest or
similar encumbrance.
"Loan Agreement" means this Master Loan and Security Agreement, as may be
amended, supplemented or otherwise modified from time to time as mutually agreed
by the parties in writing.
"Loan Documents" means collectively, this Loan Agreement, the Note, and the
Custodial Agreement, and upon its execution and delivery as required by Section
7.22, the backup servicing agreement described therein and any other document or
agreement contemplated thereby or executed and delivered thereunder.
"Managed Portfolio Contracts" means Contracts, serviced by Borrower, which
were originated or purchased by Borrower, including but not limited to those
contracts which have been subsequently sold to a third party, with the servicing
retained by Borrower and with a residual interest in the installment contracts
held by Borrower.
"Market Value" shall mean the value, determined by the Lender in its sole
reasonable discretion, of the Eligible Contracts if sold in their entirety to a
single third-party purchaser. The Lender's determination of Market Value shall
be conclusive upon the parties, absent manifest error on the part of the Lender.
The Lender shall have the right to ▇▇▇▇ to market the Eligible Contracts on a
daily basis which Market Value may be determined to be zero. The Borrower
acknowledges that the Lender's determination of Market Value is for the limited
purpose of determining the amount of the Borrowing Base for lending purposes
hereunder without the ability to perform customary purchaser's due diligence and
is not necessarily equivalent to a determination of the fair market value of the
Eligible Contracts achieved by obtaining competing bids in an orderly market in
which the originator/servicer is not in default under a revolving debt facility
and the bidders have adequate opportunity to perform customary loan and
servicing due diligence.
Page 13
"Master Agency Agreement" means that certain Master Depository Accounts and
Post Office Boxes and Agency Agreement dated as of September 29, 1997 among
UDCC, BNY Midwest Trust Company, in its individual capacity and as Trustee, and
certain other parties, as amended, modified or supplemented from time to time,
together with any acknowledgement and agreement.
"Master Custodial Report" means the report delivered pursuant to the
Custodial Agreement to Lender by the Custodian on and as of each Funding Date
which: (i) identifies each of the Pledged Contracts by account number and the
name of the Contract Debtor, and (ii) indicates whether the Custodian then holds
all Contract Delivery Documents for such Pledged Contract.
"Material Adverse Effect" means a material adverse effect on (a) the
property, business, operations, financial condition or prospects of the Borrower
or any Affiliate of the Borrower, (b) the ability of the Borrower to perform in
all material respects its obligations under any of the Loan Documents to which
it is a party, (c) the validity or enforceability in all material respects of
any of the Loan Documents, (d) the rights and remedies of the Lender under any
of the Loan Documents, (e) the timely payment of the principal of or interest on
the Advances or other amounts payable in connection therewith or (f) the
Collateral.
"Maximum Credit" means, during any calendar year, (i) from May 1 through
November 30, the aggregate amount of $75,000,000.00 and (ii) at other times, the
aggregate amount of $100,000,000.00.
"MBIA" means the MBIA Insurance Corporation.
"MBIA Event of Default" means, with respect to an MBIA-Wrapped
Securitization, an "Insurance Agreement Event of Default" under and as defined
in the related insurance and indemnity agreement.
"MBIA Performance Trigger" means, with respect to an MBIA-Wrapped
Securitization, a "Portfolio Performance Event" under and as defined in the
related pooling and servicing agreement.
"MBIA-Wrapped Securitization" means a Securitization Transaction in which
MBIA has guaranteed the repayment of one or more senior classes of issued
securities.
"Measurement Date" means, for UDC and its consolidated subsidiaries, the
last day of an Accounting Period.
"Minimum Net Worth" shall mean as of the date of determination for UDC and
its consolidated subsidiaries, the number computed as (i) the sum of (x) Net
Equity plus (y) Subordinated Debt minus (ii) the sum of (x) the aggregate amount
of all advances to employees plus (y) the aggregate amount of the principal
balance on the Cygnet Dealer Loan plus (z) the aggregate value of Intangible
Assets in each case determined in accordance with GAAP for UDC and its
consolidated subsidiaries.
Page 14
"Modification" shall mean, with respect to a Contract, any amendment or
agreement modifying such Contract made in accordance with Accepted Servicing
Practices.
"Motor Vehicle" means a passenger motor vehicle, van, or light duty truck
which is not manufactured for a particular commercial purpose and which can be
registered for use on public highways, and is not a vehicle that is not titled
in the United States or has not been previously titled in the United States.
"Multiemployer Plan" means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been or are required to be made by
Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA.
"Net Equity" means the excess of the book value of the assets of UDC and
its consolidated subsidiaries over the book value of the liabilities of UDC and
its consolidated subsidiaries, in each case determined in accordance with GAAP.
"Net Income" means, for any period for UDC and its consolidated
subsidiaries, the net income (or loss) of UDC and its consolidated subsidiaries
for such period taken as a single accounting period determined in conformity
with GAAP; provided that there shall be excluded (i) the income (or loss) of any
Person (other than UDC and its consolidated subsidiaries) in which any other
Person (other than UDC and its consolidated subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other distributions actually
paid to UDC and its consolidated subsidiaries by such Person during such period,
(ii) the income (or loss) of any Person accrued prior to the date it becomes a
consolidated subsidiary or is merged into or consolidated with UDC or a
consolidated subsidiary or that Person's assets are acquired by UDC or a
consolidated subsidiary, (iii) the income of any subsidiary to the extent that
the declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of the terms
of their charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such Subsidiary, (iv) any
after-tax gains or losses attributable to asset sales permitted under Section
7.13 or returned surplus assets of any pension plan, and (v) (to the extent not
included in clauses (i) through (iv) above) any net extraordinary gains or net
non-cash extraordinary losses.
"Non-Contract Collateral" has the meaning assigned thereto in Section
4.01(b)(ii)(H) hereof.
"Note" means the promissory note provided for by Section 2.02(a) hereof for
Advances and any promissory note delivered in substitution or exchange therefor,
in each case as the same shall be modified and supplemented and in effect from
time to time.
"Notice of Borrowing and Pledge" has the meaning assigned to such term in
Section 2.03(d) hereof.
"Optional Contract Debtor Insurance" means any insurance, other than
Required Contract Debtor Insurance, which insures a Financed Vehicle or a
Contract Debtor's obligations under a Contract, including but not limited to
credit life, credit health, credit disability, unemployment insurance, and any
service contract, mechanical breakdown coverage, warranty, or extended warranty
for a Financed Vehicle.
Page 15
"Originated Eligible Contract" means an Eligible Contract which was
originated by an Originator.
"Originator" means Car Sales or Car Sales Florida.
"Outside Financing" has the meaning assigned to such term in Section
4.01(d) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means those liens on any asset of any Duck Entity as of
the date hereof as set forth on Schedule 7 attached hereto.
"Person" means any individual, corporation, company, voluntary association,
partnership, joint venture, limited liability company, trust, unincorporated
association or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" means an employee benefit or other plan established or maintained by
the Borrower or any ERISA Affiliate and that is covered by Title IV of ERISA,
other than a Multiemployer Plan.
"Pledged Contract" means, at any date, each Contract owned by the Borrower
on such date, whether or not such Contract is an Eligible Contract, excluding
any Contract released pursuant to Section 4.01(d) and 4.01(e) hereof, and any
Terminated Contracts.
"Post-Default Rate" means, in respect of any principal of any Advance or
any other amount under this Loan Agreement, the Note or any other Loan Document
that is not paid when due to the Lender (whether at stated maturity, by
acceleration or mandatory prepayment or otherwise), a rate per annum during the
period from and including the due date to but excluding the date on which such
amount is paid in full equal to 5% per annum, plus (a) LIBO Rate plus (b) the
Applicable Margin.
"Power of Attorney" means the irrevocable power of attorney executed by
each Duck Entity in favor of the Lender in the form attached hereto as Exhibit
M.
"Principal Balance" means, with respect to any Contract as of any date, the
amount financed minus the sum of the following amounts without duplication: (i)
that portion of all Scheduled Payments actually received on or prior to such day
allocable to principal using the Simple Interest Method; (ii) any payment of the
amount financed with respect to the Contract allocable to principal; and (iii)
any prepayment in full or any partial prepayments applied to reduce the amount
financed.
"Privatization Transaction" means any transaction or series of transactions
whereby ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or any Affiliate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ acquires or seeks
to acquire any of outstanding capital stock of UDC and which is intended to
result in UDC stock no longer being registered under the Securities Exchange Act
of 1934 and UDC not being subject to the reporting requirements of Section 13 or
Section 15d or such Act, whether by tender offer, open market purchase, stock
buy-back program, merger, exchange offer or other means. Notwithstanding the
foregoing, Privatization Transaction shall not include the issuance of warrants
to purchase up to 1.5 million shares of UDC in accordance with the Verde Loan
Agreement, or the issuance of common stock upon the exercise of such warrants.
Page 16
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Quarterly Measurement Date" means, for UDC and its consolidated
subsidiaries with respect to any fiscal year, the last day of the March, June,
September and December Accounting Periods.
"Regulations T, U and X" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
modified and supplemented and in effect from time to time.
"Replacement Inventory Facility" means an inventory facility entered into
by Borrower that satisfies each of the following criteria: (i) provides Borrower
with at least $25,000,000 in inventory financing; (ii) is in form and content
satisfactory to Lender; (iii) includes an intercreditor agreement between the
inventory lender and Lender, in form and content satisfactory to Lender; and
(iv) does not grant the inventory lender a security interest in the Stock Pledge
Collateral.
"Request for Release" has the meaning set forth in the Custodial Agreement.
"Required Contract Debtor Insurance" means the insurance coverage required
pursuant to the Underwriting Guidelines.
"Requirement of Law" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer" means, as to any Person, the chief executive officer
or, with respect to financial matters, the chief financial officer of such
Person; provided, that in the event any such officer is unavailable at any time
he or she is required to take any action hereunder, Responsible Officer means
any officer authorized to act on such officer's behalf as demonstrated by a
certificate of corporate resolution.
"Restricted Payments" means with respect to any Person, (i) collectively,
all dividends or other distributions of any nature (cash, securities, assets or
otherwise), and all payments, by virtue of redemption or otherwise, on any class
of equity securities (including, without limitation, warrants, options or rights
therefor) issued by such Person, whether such securities are now or may
hereafter be authorized or outstanding and any distribution in respect of any of
the foregoing, whether directly or indirectly and (ii) any payment on account
of, or set apart assets for a sinking or other analogous fund for the purchase,
defeasance, retirement or other acquisition of any subordinate debt of the
Borrower, whether now or hereafter outstanding, or any other distributions in
respect thereof, either directly or indirectly, whether in cash or property or
in obligations of the Borrower.
Page 17
"Rolling Average Managed Portfolio Contracts Deferral Rate" means, with
respect to all Managed Portfolio Contracts as of the last day of an Accounting
Period, the average of the Deferral Rates for all Managed Portfolio Contracts
for the three (3) consecutive Accounting Periods most recently ended; provided
that, until the June 2001 Accounting Period has expired, the Rolling Average
Deferral Rate shall be the average of the Deferral Rates for the Accounting
Periods which have expired since the date of this Loan Agreement.
"Rolling Average Delinquency Ratio (Pledged Contracts)" means, with respect
to all Pledged Contracts as of the last day of an Accounting Period, the average
of the Delinquency Measurement Ratios for all Pledged Contracts for the three
(3) consecutive Accounting Periods most recently ended; provided that, until the
June 2001 Accounting Period has expired, the Rolling Average Delinquency Ratio
(Pledged Contracts) shall be the average of the Delinquency Measurement Ratios
for the Accounting Periods which have expired since the date of this Loan
Agreement.
"Rolling Averaged Delinquency Ratio (Managed Portfolio Contracts)" means,
with respect to all Managed Portfolio Contracts of the last day of an Accounting
Period, the average of the Delinquency Measurement Ratios for all Managed
Portfolio Contracts for the three (3) consecutive Accounting Periods most
recently ended; provided that, until June 2001 Accounting Period has expired,
the Rolling Average Delinquency Ratio (Managed Portfolio Contracts) shall be the
average of the Delinquency Measurement Ratios for all Managed Portfolio
Contracts for the Accounting Periods which have expired since the date of this
Loan Agreement.
"Schedule of Payments" means the schedule of payments disclosed on a
Contract.
"Scheduled Payments" means the periodic installment payment amount
disclosed in the Schedule of Payments for the Contract.
"Secured Obligations" has the meaning assigned thereto in Section 4.01(c)
hereof.
"Securitization Letter" means that certain letter agreement by and between
Borrower and Lender dated the date hereof, outlining rights and obligations with
respect to securitizations and whole loan sales of Contracts subject to this
Loan Agreement from time to time.
"Securitization Net Proceeds Percentage" means, with respect to a
Securitization Transaction, the percentage as determined solely by Lender
according to the following formula (with the result rounded to the nearest
1/100th of a percent):
Page 18
[(Total Securitized Pool - Securitization Reductions) / Total Securitized
Pool] - 4.00%
"Securitization Reductions" means with respect to any Securitization
Transaction, an amount equal to the sum of (i) all credit enhancement, including
but not limited to the amount of any cash deposit to reserve funds or spread
accounts as of the closing date of the Securitization Transaction, and the
amount of overcollateralization of the collateral included in such
Securitization Transaction, and (ii) certificates or notes issued in connection
with such Securitization Transaction that are not Securitized Borrowings.
"Securitization Transaction" means any transaction entered into by the
Borrower or an Affiliate of the Borrower from time to time involving the
securitization of Contracts subject to this Loan Agreement.
"Securitized Borrowings" means the aggregate outstanding principal balance
of all of the investment grade securities issued and sold in a Securitization
Transaction to any Person who is not a Duck Entity or an Affiliate of any Duck
Entity.
"Seminole Contract" means a Contract which was originally purchased in a
True Sale by Borrower from Seminole Finance; provided, however, that any such
Contract that has been sold or securitized by Borrower and then subsequently
repurchased by Borrower and that remains owned by Borrower shall not be deemed
to be a Seminole Contract.
"Senior Secured Loan" means the Indebtedness of the Borrower pursuant to
that certain Senior Secured Loan Agreement dated as of January 11, 2001 among
UDC, BNY Midwest Trust Company as Collateral Agent, and the lenders who are
party thereto from time to time.
"Senior Secured Loan Documents" means those documents set forth on Schedule
10 attached hereto.
"Servicer" means UDCC.
"Servicing Records" has the meaning set forth in Section 11.15(b).
"Servicing Transmission" means a report delivered to the Lender by the
Borrower which, on a Contract-by-Contract basis and in the aggregate, with
respect to the Contracts serviced hereunder by the Servicer which were included
in the Borrowing Base prior to the first day of the month in which Servicing
Transmission is delivered, (i) summarizes the Borrower's delinquency and loss
experience with respect to Contracts serviced by the Servicer (including, in the
case of the Contracts, the following categories: current, 1-30, 31-60, 61-90 and
defaulted), (ii) contains a complete written calculation or analysis of each
covenant in Section 7, (iii) contains the information displayed on Exhibit F and
(iv) contains any other information reasonably requested by the Lender with
respect to the Contracts.
"Simple Interest Method" means the method of allocating a generally fixed
level payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (expressed as
a fraction of a year, based on the actual number of days in the calendar month
and the actual number of days in the calendar year) elapsed since the date
through which interest was last paid and the remainder of such payment is
allocable to principal.
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"Stock Pledge Collateral" means the capital stock owned by the Borrower,
whether now owned or hereafter acquired, and rights to receive dividends and
other distributions of every nature, now existing or hereafter created and
wherever located, of Ugly Duckling Receivables Corporation II, Ugly Duckling
Receivables Corporation III, or any other bankruptcy remote entity created for
the purpose of a Securitization Transaction.
"Subordinated Debt" means a debt obligation of the Borrower which is
subordinated to Lender pursuant to a subordination agreement which is in the
form of Exhibit K or pursuant to some other agreement approved in writing by
Lender; or in the case of the Exchange Debt pursuant to the terms and conditions
thereof including without limitation, the Exchange Debt, the indebtedness
pursuant to the Verde Loan Agreement, and the indebtedness pursuant to the ▇▇▇▇▇
▇▇▇▇▇▇▇▇ Loan Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person.
"SunAmerica Security Interest" means the security interest in the Contract
Collateral granted to the Senior Secured Loan lenders pursuant to the
Intercreditor Agreement and a security agreement of even date herewith.
"Tax" or "Taxes" means any federal, state, local, provincial, or foreign
income, gross receipts, license, payroll, employment, excise, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, unemployment, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on minimum,
or other tax, fee, assessment or charge of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not.
"Terminated Contract" has the meaning set forth in the Custodial Agreement.
"Termination Date" means April 12, 2002, or such earlier date on which this
Loan Agreement shall terminate in accordance with the provisions hereof or by
operation of law as same may be extended pursuant to Section 2.09 hereof.
Page 20
"Total Debt" means, as at any date of determination, the aggregate stated
balance sheet amount of all Indebtedness of UDC and its consolidated
subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Total Securitized Pool" means the aggregate Principal Balance of Contracts
securitized in a Securitization Transaction by Borrower.
"True Sale" means any sale, transfer, conveyance or assignment of a
Contract whereby any and all interest of the originator in, to and under any
Contract funded in the name of or acquired by such originator or seller has been
sold, transferred, conveyed and assigned to the Borrower pursuant to a legal
sale and such originator retains no interest in such Contract, and if so
requested by the Lender, is covered by an opinion of counsel to such effect in
form and substance acceptable to the Lender.
"Trust Receipt Exhibit A" has the meaning set forth in the Custodial
Agreement.
"UCC" means the Uniform Commercial Code.
"UDC" has the meaning set forth in the first paragraph of this Loan
Agreement.
"UDCC" has the meaning set forth in the first paragraph of this Loan
Agreement.
"UDCSFC" has the meaning set forth in the first paragraph of this Loan
Agreement.
"UDFC" has the meaning set forth in the first paragraph of this Loan
Agreement.
"Underwriting Guidelines" means collectively, the underwriting guidelines
attached as Exhibit E hereto as amended from time to time in accordance with
Section 7.09.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided that if by reason of
mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"Uniform Commercial Code" means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"VAM Contract" means Contract which was purchased in a True Sale by
Borrower from Virginia Auto Mart, Virginia Auto Mart II and Fresh Start Credit
Corporation on November 8, 1999.
"Verde" means Verde Investments, Inc. and any of its Affiliates, successors
or assigns.
"Verde Loan Agreement" means that certain loan agreement dated as of
January 11, 2001 between UDC and Verde whereby UDC issued to Verde subordinated
debt in the principal amount of $7,000,000 and warrants to purchase common stock
of UDC.
Page 21
"Weighted Average Securitization Net Proceeds Percentage" means, at any
date, the average of the Securitization Net Proceeds Percentage (weighted by the
original amount of each Total Securitized Pool) obtained in the three
Securitization Transactions most recently closed on or before such date.
1.02 Accounting Terms and Determinations. Any accounting term used in this
Loan Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given such term in accordance with GAAP, and all financial
computations hereunder shall be computed, unless otherwise specifically provided
herein, in accordance with GAAP consistently applied. That certain terms or
computations are explicitly modified by the phrase "in accordance with GAAP"
shall in no way be construed to limit the foregoing. Financial statements and
other information furnished pursuant to this Loan Agreement shall be prepared in
accordance with GAAP as in effect at the time of such preparation.
1.03 UCC Terms and Determinations. Except as otherwise expressly provided
herein, all terms used herein which are defined in the Uniform Commercial Code
as in effect in the applicable jurisdiction from time to time shall have the
meanings which they are given in such Uniform Commercial Code.
Section 2 Advances, Note and Prepayments.
2.01 Advances.
(a) Subject to fulfillment of the conditions precedent set forth in
Sections 5.01 and 5.02 hereof, and provided that no Default shall have occurred
and be continuing hereunder, the Lender agrees from time to time, on the terms
and conditions of this Loan Agreement, to make loans (individually, an
"Advance"; collectively, the "Advances") to the Borrower in Dollars, on any
Business Day from and including the Effective Date to but excluding the
Termination Date in an aggregate principal amount at any one time outstanding up
to but not exceeding the lesser of (i) the Maximum Credit and (ii) the Borrowing
Base as in effect from time to time.
(b) Subject to the terms and conditions of this Loan Agreement, during such
period the Borrower may borrow, repay and reborrow hereunder.
(c) In no event shall an Advance be made when any Default or Event of
Default has occurred and is continuing.
2.02 Notes.
(a) The Advances made by the Lender shall be evidenced by a single
promissory note of the Borrower substantially in the form of Exhibit A hereto
(the "Note"), dated the date hereof, payable to the Lender in a principal amount
equal to the amount of the Maximum Credit as originally in effect and otherwise
duly completed. The Lender shall have the right to have its Note subdivided, by
exchange for promissory notes of lesser denominations or otherwise, provided
that no such promissory note shall be in a denomination of less than $5,000,000.
Page 22
(b) The date, amount and interest rate of each Advance made by the Lender
to the Borrower, and each payment made on account of the principal thereof,
shall be recorded by the Lender on its books and, prior to any transfer of the
Note, noted by the Lender on the grid attached to the Note or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or notation shall not affect the obligations of the Borrower to make a payment
when due of any amount owing hereunder or under the Note in respect of the
Advances.
(c) The Note may be signed by UDC, or UDC acting on behalf of all of the
Duck Entities pursuant to Section 2.10 below.
2.03 Procedure for Borrowing.
(a) Allowable Time and Amount of Advances. During the term of this Loan
Agreement, the Borrower, or UDC acting on behalf of all of the Duck Entities
pursuant to Section 2.10 below, may request an Advance in a minimum principal
amount of $500,000 on any Business Day during the period from and including the
Effective Date to but excluding the Termination Date.
(b) Notice of Borrowing and Pledge. Any request for an Advance by the
Borrower shall be made by delivering to the Lender, with a copy to the
Custodian, an irrevocable notice of borrowing and pledge substantially in the
form of Exhibit D hereto (a "Notice of Borrowing and Pledge"), which must be
received no later than 12:00 noon (eastern time) on the requested Funding Date.
Any such delivery may be made by facsimile or email delivered to the individual
designated by the Lender to receive such notice.
(c) Additional Deliveries. It shall be a condition precedent to the making
of an Advance on a Funding Date that each of the following shall have occurred:
(i) Estimate of Advance. If the estimated amount of the Advance to be
requested exceeds $5,000,000, then not later than 5:00 p.m. (eastern
time) on the Business Day prior to the Funding Date, the Borrower
shall deliver to the Lender an estimate of the amount of such Advance
to be requested on such Funding Date.
(ii) Borrower's Deliveries Under the Custodial Agreement. The Borrower
shall have timely made all of the deliveries under Sections 2.01, 2.02
and 2.03 of the Custodial Agreement;
(iii)Custodian's Deliveries Under the Custodial Agreement. The Custodian
shall have timely made all of the deliveries under Sections 3.01,
3.02, 3.03 and 3.04 of the Custodial Agreement; and
(iv) Borrowing Base Certificate. Not later than 10:00 a.m. (eastern time)
on the Funding Date, the Borrower shall have delivered to the Lender a
Borrowing Base Certificate which reflects all Eligible Contracts as of
the close of business on the day preceding the Funding Date.
Page 23
(d) Advance by Lender. Upon the Borrower's request for a borrowing pursuant
to Section 2.03(b) above, the Lender shall, assuming all conditions precedent
set forth in this Section 2.03 and in Section 5.01 and 5.02 have been met, and
provided no Default shall have occurred and be continuing, not later than 2:00
p.m. (eastern time) on the requested Funding Date make an Advance in an amount
which would not cause the aggregate amount of Advances then outstanding
(including the requested Advance) to exceed the lesser of (i) the Maximum Credit
or (ii) the Borrowing Base. Subject to the foregoing, such Advance will be made
available to the Borrower by the Lender transferring, via wire transfer
(pursuant to wire transfer instructions provided by the Borrower on or prior to
such Funding Date), the aggregate amount of such Advance in funds immediately
available to the Borrower.
(e) Market Value of Eligible Contracts. The Lender may calculate the Market
Value of all of the Eligible Contracts at any time and from time to time. To
assist the Lender in such determination, the Borrower shall promptly deliver to
Lender such information as the Lender may reasonably request. Any such
calculation of Market Value will be made by Lender in its sole discretion, and
any such calculation made in good faith by the Lender shall be conclusive.
2.04 Limitation on Types of Advances; Illegality. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any LIBO Rate:
(a) the Lender determines, which determination shall be conclusive, that
quotations of interest rates for the relevant deposits referred to in the
definition of "LIBO Base Rate" in Section 1.01 hereof are not being provided in
the relevant amounts or for the relevant maturities for purposes of determining
rates of interest for Advances as provided herein; or
(b) the Lender determines, which determination shall be conclusive, that
the Applicable Margin plus the relevant rate of interest referred to in the
definition of "LIBO Rate" in Section 1.01 hereof upon the basis of which the
rate of interest for Advances is to be determined is not likely adequately to
cover the cost to the Lender of making or maintaining Advances; or
(c) it becomes unlawful for the Lender to honor its obligation to make or
maintain Advances hereunder using a LIBO Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long
as such condition remains in effect, the Lender shall be under no
obligation to make additional Advances, and the Borrower shall, at its
option, either prepay such Advances or pay interest on such Advances at the
Alternative Base Rate.
2.05 Repayment of Advances; Interest.
(a) The Borrower shall repay in full on the Termination Date the then
aggregate outstanding principal amount of the Advances (as evidenced by the
Note).
(b) Except as provided in Section 2.04 above, the Borrower shall pay to the
Lender interest on the unpaid principal amount of each Advance for the period
from and including the date of such Advance to but excluding the date such
Advance shall be paid in full, at a rate per annum equal to the LIBO Rate plus
the Applicable Margin. Notwithstanding the foregoing, the Borrower shall pay to
the Lender interest at the applicable Post-Default Rate on any principal of any
Advance and on any other amount payable by the Borrower hereunder or under the
Note, that shall not be paid in full when due (whether at stated maturity, by
acceleration or by mandatory prepayment or otherwise), for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Accrued interest on each Advance as calculated in this Section 2.05(b)
shall be payable as provided in Section 2.05(c) and (e). Any accrued and unpaid
interest shall be due and payable on the Termination Date, except that interest
payable at the Post-Default Rate shall accrue daily and shall be payable
promptly upon receipt of invoice. Promptly after the determination of any
interest rate provided for herein or any change therein, the Lender shall give
written notice thereof to the Borrower.
Page 24
(c) The Borrower shall cause the Servicer to, and the Servicer shall: (i)
within 24 hours of the receipt by the Borrower or the Servicer of any
Collections, deposit such Collections into a Depository Account; (ii) on a daily
basis, cause all amounts representing Collections which constitute available
funds in any such Depository Account (other than the Consolidating Depository
Account) to be deposited into such Consolidating Depository Account; and (iii)
as soon as any collections received by the Borrower or the Servicer are
identified as Collections with respect to a Pledged Contract, but in any event
within three days of the receipt of such Collections by the Borrower or the
Servicer, cause such Collections to be deposited into the Lender's Account.
Funds in the Lender Account shall be applied by Lender, without duplication, in
the following order:
(i) First, for application to overdue interest on the Advances;
(ii) Second, for application to accrued interest on the Advances;
(iii) Third, for application to any fees due to Lender;
(iv) Fourth, for application to any expenses incurred by Lender which are
to be paid by Borrower under the Loan Documents;
(v) Fifth, for application to the unpaid principal balance of the
Advances;
(vi) Sixth, to all other accrued and unpaid Secured Obligations; and
(vii) Seventh, the remainder to the Borrower.
(d) No later than the fifteenth (15th) day of each month (or the next
Business Day), the Servicer shall provide the Lender with a report which shall
summarize the transactions described in Section 2.05(c) above for the prior
month.
(e) No later than one (1) Business Day after receipt of notice from Lender,
which notice shall be delivered after receipt by Lender of the report described
in Section 2.05(d) above, the Borrower shall pay Lender the full amount of any
accrued and unpaid interest on the Advances for the prior month which has not
been paid theretofore pursuant to Section 2.05(c).
Page 25
2.06 Mandatory Prepayments or Pledge.
Before 10:00 a.m. (eastern time) on each Business Day, the Borrower shall
deliver to the Lender a Borrowing Base Certificate, the calculation in such
certificate to be made as of the close of business on the prior Business Day. In
the event that such Borrowing Base Certificate indicates or if at any time the
aggregate outstanding principal amount of Advances exceeds, or if at any time
Lender shall notify Borrower that the aggregate outstanding principal amount of
Advances exceeds the Borrowing Base (a "Borrowing Base Deficiency"), the
Borrower shall no later than the close of business on the next Business Day
either prepay the Advances in part or in whole or pledge additional Eligible
Contracts (which Collateral shall be in all respects acceptable to the Lender)
to the Lender, such that after giving effect to such prepayment or pledge the
aggregate outstanding principal amount of the Advances does not exceed the
Borrowing Base.
2.07 Optional Prepayments. The Advances are prepayable without premium or
penalty, in whole or in part, at any time. Any amounts prepaid shall be applied
in the order set forth in Section 2.05(c). Amounts repaid may be reborrowed in
accordance with the terms of this Loan Agreement.
2.08 Requirements of Law.
(a) If any Requirement of Law (other than with respect to any amendment
made to the Lender's certificate of incorporation and by-laws or other
organizational or governing documents) or any change in the interpretation or
application thereof or compliance by the Lender with any request or directive
(whether or not having the force of law) from any central bank or other
Governmental Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax of any kind whatsoever with
respect to this Loan Agreement, the Note or any Advance made by it
(excluding net income or franchise taxes) or change the basis of
taxation of payments to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory Advance or similar requirement against assets held by
deposits or other liabilities in or for the account of advances.
Advances or other extensions of credit by, or any other acquisition of
funds by any office of the Lender which is not otherwise included in
the determination of the LIBO Rate hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Advance or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable thereafter incurred.
Page 26
(b) If the Lender shall have determined that the adoption of or any change
in any Requirement of Law (other than with respect to any amendment made to the
Lender's certificate of incorporation and by-laws or other organizational or
governing documents) regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any corporation controlling
the Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation (taking
into consideration the Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by the Lender to be material, then from
time to time, the Borrower shall promptly pay to the Lender such additional
amount or amounts as will thereafter compensate the Lender for such reduction.
(c) If the Lender becomes entitled to claim any additional amounts pursuant
to this subsection, it shall promptly notify the Borrower of the event by reason
of which it has become so entitled. A certificate as to any additional amounts
payable pursuant to this subsection submitted by the Lender to the Borrower
shall be conclusive in the absence of manifest error.
2.09 Extension of Termination Date. Upon the mutual agreement of Lender and
Borrower, Termination Date will be extended for a period at 364 days by giving
written notice thereof to Borrower at least 30 days prior to the Termination
Date. If the Termination Date is so extended, Borrower shall pay Lender a
renewal fee of $250,000, in immediately available funds by wire transfer to an
account designated by Lender, no later than the date which is the first
anniversary hereof.
2.10 Power of Attorney. Each Duck Entity hereby irrevocably authorizes UDC
at any time and from time to time in the sole discretion of UDC and appoints UDC
as its attorney-in-fact, to act on behalf of such Duck Entity (i) to execute the
Notice of Borrowing and Pledge and the Note on behalf of such Duck Entity as
debtor and to file financing statements necessary or desirable in the sole
discretion of UDC to perfect and to maintain the perfection and priority of the
interest of the Lender in the Collateral, (ii) to file a carbon, photographic or
other reproduction of this Loan Agreement or any financing statement with
respect to the Collateral as a financing statement in such offices as UDC in its
sole discretion deems necessary or desirable to perfect and to maintain the
perfection and priority of the interests of the Lender in the Collateral and
(iii) to take any other action that UDC deems necessary in its sole discretion
to fulfill the Borrower's obligations under this Loan Agreement. This
appointment is coupled with an interest and is irrevocable.
Section 3 Payments; Computations; Taxes; Commitment Fee.
3.01 Payments.
Except to the extent otherwise provided herein, all payments of principal,
interest and other amounts to be made by the Borrower under this Loan Agreement
and the Note, shall be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to the Lender at the Lender Account, not
later than 1:00 p.m., eastern time, on the date on which such payment shall
become due (each such payment made after such time on such due date to be deemed
to have been made on the next succeeding Business Day). The Borrower
acknowledges that it has no rights of withdrawal from the foregoing account.
Page 27
3.02 Computations. Interest on the Advances shall be computed on the basis
of a 360-day year for the actual days elapsed (including the first day but
excluding the last day) occurring in the period for which payable.
3.03 U.S. Taxes.
(a) The Borrower agrees to pay to the Lender such additional amounts as are
necessary in order that the payment of any amount due to the Lender hereunder
after deduction for or withholding in respect of any U.S. Tax (as defined below)
imposed with respect to such payment (or in lieu thereof, payment of such U.S.
Tax by the Lender), will not be less than the amount stated herein to be then
due and payable; provided, that, if the Lender is not a U.S. Person (as defined
in Code Section 7701(a)(30)), the foregoing obligation to pay such additional
amounts shall not apply:
(i) to any payment to the Lender hereunder unless the Lender is entitled
to submit a Form W-8BEN (relating to the Lender and entitling it to a
complete exemption from withholding on all interest to be received by
it hereunder in respect of the Advances) or Form W-8ECI (relating to
all interest to be received by the Lender hereunder in respect of the
Advances), or
(ii) to any U.S. Tax imposed solely by reason of the failure by the Lender
to comply with applicable certification, information, documentation or
other reporting requirements concerning the nationality, residence,
identity or connections with the United States of America of the
Lender if such compliance is required by statute or regulation of the
United States of America as a precondition to relief or exemption from
such U.S. Tax.
For the purposes of this Section 3.03, (w) "Form W-8BEN" means Form W-8BEN of
the Department of the Treasury of the United States of America, (x) "Form
W-8ECI" means Form W-8ECI of the Department of the Treasury of the United States
of America (or in relation to either such Form such successor and related forms
as may from time to time be adopted by the relevant taxing authorities of the
United States of America to document a claim to which such Form relates), and
(y) "U.S. Taxes" means any present or future tax, assessment or other charge or
levy imposed by or on behalf of the United States of America or any taxing
authority thereof or therein.
(b) Within thirty (30) days after paying any such amount to the Lender, and
within thirty (30) days after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the Borrower shall
deliver to the Lender evidence satisfactory to the Lender of such deduction,
withholding or payment (as the case may be).
(c) The Lender represents and warrants to the Borrower that on the date
hereof the Lender is either incorporated under the laws of the United States or
a State thereof or is entitled to submit a Form W-8BEN (relating to the Lender
and entitling it to a complete exemption from withholding on all interest to be
received by it hereunder in respect of the Advances) or Form W-8ECI (relating to
all interest to be received by the Lender hereunder in respect of the Advances).
Page 28
3.04 Commitment Fee. The Borrower agrees to pay to the Lender, on the date
hereof a commitment fee equal to $750,000 (the "Commitment Fee"), such payment
to be made in Dollars, in immediately available funds, without deduction,
set-off or counterclaim.
Section 4 Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the Custodial Agreement, the Custodian shall hold the
Contract Delivery Documents as exclusive bailee and agent for the Lender
pursuant to the terms of the Custodial Agreement and shall deliver to the Lender
the deliveries required under the Custodial Agreement, confirming that it has
reviewed such Contract Delivery Documents in the manner required by the
Custodial Agreement and identifying any deficiencies in such Contract Delivery
Documents as so reviewed.
(b) Each of the following items or types of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as the "Collateral":
(i) each Contract owned by the Borrower and each of the following items
with respect to such Contract:
(A) the Contract Debtor Documents;
(B) the Contract Rights;
(C) any payments from a bank account of, and any electronic funds
transfers from, any Contract Debtor or Contract Rights Payor
(subject to the terms and conditions of the Master Agency
Agreement);
(D) any associated chattel paper, lease, instrument, installment sale
contract or installment loan contract;
(E) all rights of the Borrower in and to the related Financed
Vehicle, including any repossessed Financed Vehicle, and in and
to any other collateral securing such Contract, including any
security deposit;
(F) any contract purchase discount;
(G) any rights of Borrower to dealer reserves or rate participation
with respect to such Contract, if any;
Page 29
(H) any money, payments or proceeds of any insurance policies with
respect to any or all Contracts or any Financed Vehicles with
respect to which Borrower is solely or jointly the owner or is
insured or is the loss payee or is a beneficiary, including any
Insurance Proceeds;
(I) all books and records of the Borrower (including financial
statements, accounting records, customer lists, credit files,
computer programs, electronic data print-outs and other computer
materials and records) with respect to such Contract;
(J) all accessions to, substitutions for and all replacements and
products of, any of the foregoing property; and
(K) all moneys, instruments and other proceeds of the foregoing (all
of the foregoing items in this Section 4.01(b)(i) with respect to
all Pledged Contracts being the "Contract Collateral"); and
(ii) all of the following items owned by the Borrower, whether now owned or
hereafter acquired, now existing or hereafter created and wherever
located, except to the extent the same constitutes (x) the Contract
Collateral or (y) the Cash Collateral Account and amounts on deposit
therein, and (z) the Class C Certificates issued to UDFC in connection
with any Securitization Transaction, but only to the extent the value
of such Class C Certificates does not exceed 2% of the face amount of
all notes and certificates issued with respect to the applicable
Securitization Transaction:
(A) all chattel paper, accounts, leases, instruments, installment
sales contracts, installment payment contracts, general
intangibles, payment intangibles, and promissory notes;
(B) all deposit accounts and other bank accounts or securities
accounts (subject to the terms and conditions of the Master
Agency Agreement);
(C) all Inventory Property;
(D) any collateral securing any of the foregoing;
(E) the proceeds under any insurance policies of the Borrower;
(F) all investment property of the Borrower;
(G) all books and records of the Borrower; and
(H) all monies, instruments and other proceeds of the foregoing (all
of the foregoing items in this Section 4.01(b)(ii) being the
"Non-Contract Collateral"); and
(I) the Stock Pledge Collateral.
Page 30
(c) The Borrower hereby assigns, pledges and grants a security interest to
the Lender in all of its right, title and interest in, to and under all the
Collateral, whether now owned or hereafter acquired, now existing or hereafter
created and wherever located, to secure the repayment of principal of and
interest on all Advances and all other amounts owing to the Lender hereunder,
under the Note and under the other Loan Documents (collectively, the "Secured
Obligations"). The Borrower agrees to ▇▇▇▇ its computer records and tapes to
evidence the security interests granted to the Lender hereunder.
(d) If (i) the Lender makes a determination of Market Value pursuant to
Section 2.03(e) that results in the Borrowing Base being less than the amount
calculated pursuant to clause (X) of the definition of Borrowing Base or (ii)
the Borrower in good faith does not agree with the Lender's initial
determination of the Borrowing Base (New Non-UDC Contracts), then the Borrower
may seek to finance and securitize or otherwise sell Pledged Contracts through
another financing source (any such financing, securitization or sale, an
"Outside Financing"); provided, that in the case of clause (ii) of this Section
4.01(d), the Borrower may only seek to finance and securitize or otherwise sell
such Pledged Contracts as were proposed to be included in the Borrowing Base
(New Non-UDC Contracts) that were subject to the Lender's determination pursuant
to clause (ii). The Lender will execute such documents and instruments as may be
necessary to release and terminate its security interest in such Pledged
Contracts and the related Contract Collateral described in Section 4.01(b)(i)
(such release to be effective on the closing date for such Outside Financing)
if, and only if, each and all of the following conditions are satisfied:
(i) no Default or Event of Default has occurred and is continuing or would
result from such release or such Outside Financing;
(ii) the Borrower has entered into a firm commitment in form and content
satisfactory to Lender to finance, securitize or otherwise sell the
Pledged Contracts in such Outside Financing;
(iii)the Borrower pays the Lender all fees due pursuant to the
Securitization Letter in connection with such Outside Financing; and
(iv) on the date of such release, the Borrower pays the Lender such amount
as is necessary to ensure that no Borrowing Base Deficiency will exist
on such date (after giving effect to such Outside Financing) and that
the Borrower has paid all accrued and unpaid interest on the Advances
and all other amounts which are then due and owing hereunder.
(e) In addition to the release provisions pursuant to Section 4.01(d)
above, upon the occurrence of each Securitization Transaction that is in
accordance with the Securitization Letter, the Lender will execute such
documents and instruments as may be necessary to release and terminate its
security interest in the Pledged Contracts and related Contract Collateral being
included in such Securitization Transaction if, and only if, each and all of the
following conditions are satisfied:
Page 31
(i) no Default or Event of Default has occurred and is continuing or would
result from such release;
(ii) the Borrower pays the Lender all fees due pursuant to the
Securitization Letter in connection with such Securitization
Transaction; and
(iii)on the date of such release, the Borrower pays the Lender such amount
as is necessary to ensure that no Borrowing Base Deficiency will exist
on such date (after giving effect to such Securitization Transaction)
and that the Borrower has paid all accrued and unpaid interest on the
Advances and all other amounts which are then due and owing hereunder.
4.02 Further Documentation. At any time and from time to time, upon the
written request of the Lender, and at the sole expense of the Borrower, the
Borrower will promptly and duly execute and deliver, or will promptly cause to
be executed and delivered, such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Loan Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Lender to file any such financing or continuation
statement without the signature of the Borrower to the extent permitted by
applicable law. A carbon, photographic or other reproduction of this Loan
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
4.03 Changes in Locations, Name, etc. No Duck Entity shall (i) change the
location of its chief executive office, its chief place of business or its
jurisdiction of incorporation from that specified in Section 6 hereof or (ii)
change its name, identity or corporate structure (or the equivalent) or change
the location where it maintains its records with respect to the Collateral
unless it shall have given the Lender at least thirty (30) days prior written
notice thereof and shall have delivered to the Lender all Uniform Commercial
Code financing statements and amendments thereto as the Lender shall request and
taken all other actions deemed reasonably necessary by the Lender to continue
its perfected status in the Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and appoints the Lender and
any officer or agent thereof, with full power of substitution, effective during
the continuation of any Event of Default, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Borrower and in the name of the Borrower or in its own name, from
time to time in the Lender's discretion, for the purpose of carrying out the
terms of this Loan Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Loan Agreement, and, without
limiting the generality of the foregoing, the Borrower hereby gives the Lender
the power and right, on behalf of the Borrower, without assent by, but with
notice to, the Borrower, if an Event of Default shall have occurred and be
continuing, to do the following:
Page 32
(i) in the name of the Borrower or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under
any Optional Contract Debtor Insurance or with respect to any other
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such moneys due under any such Optional Contract Debtor Insurance or
with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or threatened
against the Collateral; and
(iii)(A) to direct any party liable for any payment under any Collateral
to make payment of any and all moneys due or to become due thereunder
directly to the Lender or as the Lender shall direct; (B) to ask or
demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, assignments, verifications, notices and other documents
in connection with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any Collateral;
(E) to defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above
and, in connection therewith, to give such discharges or releases as
the Lender may deem appropriate; and (G) generally, to sell, transfer,
pledge and make any agreement with respect to or otherwise deal with
any of the Collateral as fully and completely as though the Lender
were the absolute owner thereof for all purposes, and to do, at the
Lender's option and the Borrower's expense, at any time, or from time
to time, all acts and things which the Lender deems necessary to
protect, preserve or realize upon the Collateral and the Lender's
Liens thereon and to effect the intent of this Loan Agreement, all as
fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that such attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable until payment in full of all Secured
Obligations.
(b) The Borrower also authorizes the Lender, at any time and from time to
time, to execute, in connection with the sale provided for in Section 4.07
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to protect the Lender's
interests in the Collateral and shall not impose any duty upon the Lender to
exercise any such powers. The Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither the
Lender nor any of its officers, directors, or employees shall be responsible to
the Borrower for any act or failure to act hereunder, except for its own gross
negligence or willful misconduct.
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4.05 Performance by Lender of Borrower's Obligations. If the Borrower fails
to perform or comply with any of its material agreements contained in the Loan
Documents and the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the reasonable out-of-pocket
expenses of the Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to the
Post-Default Rate, shall be payable by the Borrower to the Lender on demand and
shall constitute Secured Obligations.
4.06 Proceeds. If an Event of Default shall occur and be continuing,
subject to the Master Agency Agreement, (a) all proceeds of Collateral received
by the Borrower consisting of cash, checks and other near-cash items shall be
held by the Borrower in trust for the Lender, segregated from other funds of the
Borrower, and shall forthwith upon receipt by the Borrower be turned over to the
Lender in the exact form received by the Borrower (duly endorsed by the Borrower
to the Lender, if required) and (b) any and all such proceeds received by the
Lender will be applied by the Lender against, the Secured Obligations. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement shall have been terminated shall be
promptly paid over to the Borrower or to whomsoever may be lawfully entitled to
receive the same. For purposes hereof, proceeds shall include, but not be
limited to, all principal and interest payments, all prepayments and payoffs,
insurance claims, sale proceeds, and any other income and all other amounts
received with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be continuing, the
Lender may exercise, in addition to all other rights and remedies granted to it
in this Loan Agreement and in any other instrument or agreement securing,
evidencing or relating to the Secured Obligations, all rights and remedies of a
secured party under the Uniform Commercial Code. Without limiting the generality
of the foregoing, the Lender without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Borrower or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), at public or private sale or sales, at any exchange, auction or
office of the Lender or elsewhere upon such terms and conditions and at prices
that are consistent with the prevailing market for similar collateral as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Lender shall act
in good faith to obtain the best execution possible under prevailing market
conditions. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is hereby waived or
released. The Borrower further agrees, at the Lender's request, to assemble the
Collateral and make it available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's premises or elsewhere. The Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the Secured
Obligations, in such order as the Lender may elect, and only after such
application and after the payment by the Lender of any other amount required or
permitted by any provision of law, including, without limitation, Section
9-504(1)(c) of the Uniform Commercial Code, need the Lender account for the
surplus, if any, to the Borrower. To the extent permitted by applicable law, the
Borrower waives all claims, damages and demands it may acquire against the
Lender arising out of the exercise by the Lender of any of its rights hereunder,
other than those claims, damages and demands arising from the gross negligence
or willful misconduct of the Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 Business Days before such sale or
other disposition. The Borrower shall remain liable for any deficiency (plus
accrued interest thereon as contemplated pursuant to Section 2.05(b) hereof) if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Secured Obligations and the reasonable fees and disbursements of any
attorneys employed by the Lender to collect such deficiency.
Page 34
4.08 Limitation on Duties Regarding Presentation of Collateral. The
Lender's duty with respect to the custody, safekeeping and physical preservation
of the Collateral in its possession, under the Uniform Commercial Code or
otherwise, shall be to deal with it in the same manner as the Lender deals with
similar property for its own account. Neither the Lender nor any of its
directors, officers or employees shall be liable for failure to demand, collect
or realize upon all or any part of the Collateral or for any delay in doing so
or shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Borrower or otherwise.
4.09 Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
4.10 Release of Security Interest. Upon termination of this Loan Agreement
and repayment to the Lender of all Secured Obligations and the performance of
all obligations under the Loan Documents the Lender shall release its security
interest in any remaining Collateral; provided that if any payment, or any part
thereof, of any of the Secured Obligations is rescinded or must otherwise be
restored or returned by the Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or a trustee or similar
officer for the Borrower or any substantial part of its Property, or otherwise,
this Loan Agreement, all rights hereunder and the Liens created hereby shall
continue to be effective, or be reinstated, until such payments have been made.
Section 5 Conditions Precedent.
5.01 Initial Advance. The obligation of the Lender to make its initial
Advance hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Advance, of the following conditions
precedent:
Page 35
(a) Loan Agreement. The Lender shall have received this Loan Agreement,
executed and delivered by a duly authorized officer of each Duck Entity.
(b) Loan Documents. The Lender shall have received the following documents,
each of which shall be satisfactory to the Lender in form and substance:
(i) Note. The Note, duly completed and executed.
(ii) Custodial Agreement. The Custodial Agreement, duly executed and
delivered by each Duck Entity, the Lender and the Custodian. In
addition, each Duck Entity shall have filed all Uniform Commercial
Code and related filings and performed all actions under the Custodial
Agreement and taken such other action as the Lender shall have
requested in order to perfect the security interests created pursuant
to this Loan Agreement.
(iii)Intercreditor Agreement. The Intercreditor Agreement, duly executed
and delivered by each of GECC and BNY Midwest Trust Company and
acceptable to Lender in its sole discretion.
(iv) Master Depository Account. The Lender shall have approved and become a
party to the Master Agency Agreement pursuant to Section 12 therein,
and shall have received a certified copy of the Master Agency
Agreement as in effect or the date hereof.
(v) Amendment of GECC Agreement. GECC and the Borrower shall have duly
executed and delivered an amendment to the GECC Agreement terminating
the Warehouse Facility (as such term is defined in the GECC
Agreement), in form and content satisfactory to Lender, including but
not limited to a provision providing for the extension at Borrower's
option of the Inventory Facility.
(vi) Amendment of GECC UCC-1 Filings. The GECC UCC-1 filings shall have
been amended to provide notice of the GECC Intercreditor Agreement.
(vii)Perfected Liens. The Duck Entities shall have taken all steps
necessary to ensure that the security interest granted hereunder in
the Collateral shall constitute a fully perfected security interest
under the Uniform Commercial Code in all right, title and interest of
the Duck Entities in, to and under such Collateral, which can be
perfected by filing under the Uniform Commercial Code, subject only to
the Liens described in Section 6.11(d).
(viii) Power of Attorney. A Power of Attorney shall have been duly executed
and delivered by each Duck Entity to the Lender.
(c) Organizational Documents. A good standing certificate and certified
copies of the charter and by-laws (or equivalent documents) of each Duck Entity
and of all corporate or other authority for each Duck Entity with respect to the
execution, delivery and performance of the Loan Documents and each other
document to be delivered by each Duck Entity from time to time in connection
herewith (and the Lender may conclusively rely on such documents until it
receives notice in writing from the Borrower to the contrary).
Page 36
(d) Legal Opinion. A legal opinion of counsel to the Borrower,
substantially in the form attached hereto as Exhibit C.
(e) Securitization Letter. The Lender shall have received the
Securitization Letter, in form and substance satisfactory to the Lender and
executed by a duly authorized officer of the Borrower.
(f) Filings, Registrations, Recordings. Any documents (including, without
limitation, financing statements) required to be filed, registered or recorded
in order to create, in favor of the Lender, a perfected security interest in the
Collateral, subject to no Liens other than those created hereunder, shall have
been properly prepared and executed for filing (including the applicable
county(ies) if the Lender determines such filings are necessary in its
reasonable discretion), registration or recording in each office in each
jurisdiction in which such filings, registrations and recordations are required
to perfect such security interest.
(g) Fees and Expenses. The Lender shall have received all fees and expenses
required to be paid by the Borrower on or prior to the initial Funding Date
pursuant to Section 11.03(b) and such fees and expenses may be netted out of any
Advance made by the Lender hereunder.
(h) Financial Statements. The Lender shall have received the financial
statements referenced in Section 7.01(a).
(i) Underwriting Guidelines. The Lender and the Borrower shall have agreed
upon the Borrower's current Underwriting Guidelines for Contracts and the Lender
shall have received a copy thereof.
(j) Consents, Licenses, Approvals, etc. The Lender shall have received a
list certified by the Borrower of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by the
Borrower of, and the validity and enforceability of, the Loan Documents, which
consents, licenses and approvals shall be in full force and effect.
(k) Insurance. The Lender shall have received evidence in form and
substance satisfactory to the Lender showing compliance by the Borrower as of
such initial Funding Date with Section 7.19 hereof.
(l) Exchange Debt Documents. The Lender shall have received certified
copies of the Exchange Debt Documents.
(m) Senior Secured Loan Documents. The Lender shall have received certified
copies of the Senior Secured Loan Documents.
(n) Other Documents. The Lender shall have received such other documents as
the Lender or its counsel may reasonably request.
Page 37
5.02 Initial and Subsequent Advances. The making of each Advance to the
Borrower (including the initial Advance) on any Business Day is subject to the
following further conditions precedent, both immediately prior to the making of
such Advance and also after giving effect thereto and to the intended use
thereof:
(a) no Default or Event of Default shall have occurred and be continuing;
(b) both immediately prior to the making of such Advance and also after
giving effect thereto and to the intended use thereof, the representations and
warranties made by the Borrower in Section 6 hereof, and in each of the other
Loan Documents, shall be true and complete on and as of the date of the making
of such Advance and on and as of each date thereafter until the Termination Date
in all material respects (in the case of the representations and warranties in
Schedule 1 and Schedule 6, solely with respect to Eligible Contracts included in
the Borrowing Base) with the same force and effect as if made on and as of such
date (or, if any such representation or warranty is expressly stated to have
been made as of a specific date, as of such specific date). At the request of
the Lender, the Lender shall have received an officer's certificate signed by a
Responsible Officer of the Borrower certifying as to the truth and accuracy of
the above, which certificate shall specifically include a statement that the
Borrower is in compliance with all governmental licenses and authorizations and
is qualified to do business and in good standing in all required jurisdictions;
(c) the Servicer shall have delivered the Borrowing Base Certificate for
such Funding Date to the Lender pursuant to Section 2.03(c)(iv) of this Loan
Agreement;
(d) the aggregate outstanding principal amount of the Advances shall not
exceed the Borrowing Base;
(e) subject to the Lender's right to perform one or more Due Diligence
Reviews pursuant to Section 11.15 hereof, the Custodian shall have completed its
due diligence view of the Contract Delivery Documents for each Advance and such
other documents, records, agreements, instruments Financed Vehicles or
information relating to such Advances as the Custodian in its reasonable
discretion deems appropriate to review and such review shall be satisfactory to
the Lender in its reasonable discretion;
(f) the Lender shall have received the Notice of Borrowing Base and Pledge
from the Borrower, and the Borrower shall have timely made all of the deliveries
under Sections 2.01, 2.02 and 2.03 of the Custodial Agreement;
(g) the Custodian shall have timely made all of the deliveries under
Sections 3.01, 3.02, 3.03 and 3.04 of the Custodial Agreement; and
(h) if any Pledged Contracts were acquired by the Borrower from third
parties, such Contracts shall conform to the Borrower's Underwriting Guidelines
or the Lender shall have received Underwriting Guidelines for such Contracts
acceptable to the Lender in its sole discretion.
Page 38
Each request for a borrowing by the Borrower hereunder shall constitute a
certification by the Borrower to the effect set forth in this Section (both as
of the date of such notice, request or confirmation and as of the date of such
borrowing).
Section 6 Representations and Warranties. The Borrower represents and
warrants to the Lender that as of the date hereof, each other date upon which
representations and warranties are made or renewed pursuant to the Loan
Documents and, in each case, on and as of each date thereafter until the
Termination Date:
6.01 Existence. Each Duck Entity (a) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has all requisite corporate or other power, and has all
governmental licenses, authorizations, consents and approvals, necessary to own
its assets and carry on its business as now being or as proposed to be
conducted, except where the lack of such licenses, authorizations, consents and
approvals would not be reasonably likely to have a material adverse effect on
its property, business or financial condition, or prospects; and (c) is
qualified to do business and is in good standing in all other jurisdictions in
which the nature of the business conducted by it makes such qualification
necessary, except where failure so to qualify would not be reasonably likely
(either individually or in the aggregate) to have a material adverse effect on
its property, business or financial condition, or prospects and (d) is in
compliance in all material respects with all Requirements of Law.
6.02 Financial Condition. UDC has heretofore furnished to the Lender a copy
of the unaudited balance sheet, of UDC and its consolidated Subsidiaries, dated
as of December 31, 2000. UDC has also heretofore furnished to the Lender the
related consolidated statements of income and retained earnings and of cash
flows for UDC and its consolidated subsidiaries for the year ended December 31,
2000, setting forth comparative form the figures for the previous year. All such
financial statements are and, upon delivery, all financial statements described
in Section 7.01(a) will be, materially complete and correct and fairly present
the consolidated financial condition of UDC and its subsidiaries and the
consolidated results of their operations for the applicable fiscal period, all
in accordance with GAAP applied on a consistent basis. Since December 31, 2000
there has been no development or event nor any prospective development or event
which has had or should reasonably be expected to have a Material Adverse
Effect.
6.03 Litigation. There are no actions, suits, arbitrations, investigations
or proceedings pending or, to its knowledge, threatened against any Duck Entity
or any of its respective Subsidiaries or affecting any of the property thereof
before any Governmental Authority, (i) as to which individually or in the
aggregate there is a reasonable likelihood of an adverse decision which would
have a Material Adverse Effect on the property, business or financial condition,
or prospects of UDC and its consolidated subsidiaries taken as a whole or (ii)
which questions the validity or enforceability of any of the Loan Documents or
any action to be taken in connection with the transactions contemplated hereby.
6.04 No Breach. Neither (a) the execution and delivery of the Loan
Documents or (b) the consummation of the transactions therein contemplated in
compliance with the terms and provisions thereof will conflict with or result in
a breach of the charter or by-laws of any Duck Entity, or any applicable law,
rule or regulation, or any order, writ, injunction or decree of any Governmental
Authority, or other material agreement or instrument to which any Duck Entity,
or any of its Subsidiaries, is a party or by which any of them or any of their
property is bound or to which any of them is subject, or constitute a default
under any such material agreement or instrument, or (except for the Liens
created pursuant to this Loan Agreement) result in the creation or imposition of
any Lien upon any property of any Duck Entity or any of its Subsidiaries,
pursuant to the terms of any such agreement or instrument.
Page 39
6.05 Action. Each Duck Entity has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its obligations under
each of the Loan Documents to which it is a party; the execution, delivery and
performance by each Duck Entity of each of the Loan Documents to which it is a
party has been duly authorized by all necessary corporate or other action on its
part; and each Loan Document has been duly and validly executed and delivered by
each Duck Entity and constitutes a legal, valid and binding obligation of each
Duck Entity, enforceable against each Duck Entity in accordance with its terms.
6.06 Approvals. No authorizations, approvals or consents of, and no filings
or registrations with, any Governmental Authority, or any other Person, are
necessary for the execution, delivery or performance by any Duck Entity of the
Loan Documents to which it is a party or for the legality, validity or
enforceability thereof, except for filings and recordings in respect of the
Liens created pursuant to this Loan Agreement.
6.07 Margin Regulations. Neither the making of any Advance hereunder, nor
the use of the proceeds thereof, will violate or be inconsistent with the
provisions of Regulation T, U or X.
6.08 Taxes. UDC and its consolidated Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by any of them, except for any such taxes, if any,
that are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of UDC and its
consolidated Subsidiaries in respect of taxes and other governmental charges
are, in the opinion of UDC, adequate.
6.09 Investment Company Act. None of the Duck Entities nor any of their
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. No Duck Entity is subject to any Federal or state statute or
regulation which limits its ability to incur indebtedness.
6.10 No Default. No Duck Entity nor any of their Subsidiaries is in default
under or with respect to any of its Contractual Obligations in any respect which
should reasonably be expected to have a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.
Page 40
6.11 Collateral; Collateral Security.
(a) Except for (i) Pledged Contracts released pursuant to Section 4.01(d)
above and (ii) transfers from one Duck Entity to another Duck Entity, (iii) the
GECC Security Interest and (iv) the SunAmerica Security Interest, no Duck Entity
has assigned, pledged, or otherwise conveyed or encumbered any Contract or other
Contract Collateral to any other Person other than another Duck Entity, and
immediately prior to the pledge of any such Contract or other Contract
Collateral, a Duck Entity was the sole owner of such Contract or other Contract
Collateral and had good and marketable title thereto, free and clear of all
Liens, in each case except for Liens to be released simultaneously with the
Liens granted in favor of the Lender hereunder and no Person other than a Duck
Entity has any Lien on any Contract or other Contract Collateral.
(b) The provisions of this Loan Agreement are effective to create in favor
of the Lender a valid security interest in all right, title and interest of the
Duck Entities in, to and under the Collateral.
(c) Upon receipt by the Custodian of the Contract Delivery Documents, the
Lender shall have a fully perfected first priority security interest in the
Contract Collateral.
(d) Upon the filing of financing statements on Form UCC-1 naming the Lender
as "Secured Party" and the Duck Entities as "Debtor", and describing the
Collateral, in the jurisdictions and recording offices listed on Schedule 2
attached hereto, the security interests granted hereunder in the Collateral will
constitute fully perfected security interests under the Uniform Commercial Code
in all right, title and interest of the Duck Entities in, to and under such
Collateral, which can be perfected by filing under the Uniform Commercial Code.
Upon the effectiveness of the Intercreditor Agreement, Lender will have a fully
perfected security interest in the Stock Pledge Collateral. Lender's security
interests in: (i) the Contract Collateral shall be subject to no prior Liens
upon the effectiveness of the Intercreditor Agreement, (ii) the Non-Contract
Collateral shall be subject to no prior Liens other than the Lien of the lender
under the GECC Inventory Facility or the Replacement Inventory Facility, and
(iii) the Stock Pledge Collateral shall be subject to no prior Liens other than
the Lien of the lenders under the Senior Secured Loan, any refinancing of the
Senior Secured Loan, the Lien of GECC under the Consent and Subordination
Agreement and the Verde Loan Agreement.
6.12 Chief Executive Office; Chief Operating Office; State of
Incorporation. Each Duck Entity's chief executive office on the Effective Date
is located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, and the
chief operating office is located at the same address. UDC is a Delaware
corporation; UDCSFC is an Arizona corporation; UDCC is an Arizona corporation;
Car Sales is an Arizona corporation; Car Sales Florida is a Florida corporation;
and UDFC is an Arizona corporation.
6.13 Location of Books and Records. The location where each Duck Entity
keeps it books and records including all computer tapes and records relating to
the Collateral is its chief executive office or chief operating office or the
offices of the Custodian.
6.14 True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Duck Entities to the Lender in connection with the negotiation, preparation or
delivery of this Loan Agreement and the other Loan Documents or included herein
or therein or delivered pursuant hereto or thereto, when taken as a whole, do
not contain any untrue statement of material fact or omit to state any material
fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written
information furnished after the date hereof by or on behalf of the Duck Entities
to the Lender in connection with this Loan Agreement and the other Loan
Documents and the transactions contemplated hereby and thereby will be true,
complete and accurate in every material respect, or (in the case of projections)
based on reasonable estimates, on the date as of which such information is
stated or certified. There is no fact known to a Responsible Officer that, after
due inquiry, could reasonably be expected to have a Material Adverse Effect that
has not been disclosed herein, in the other Loan Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Lender for use in connection with the transactions contemplated
hereby or thereby.
Page 41
6.15 ERISA. Each Plan to which the Duck Entities make direct contributions,
and, to the knowledge of each Duck Entity, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. No event or
condition has occurred and is continuing as to which any Duck Entity would be
under an obligation to furnish a report to the Lender under Section 7.01(d)
hereof.
6.16 Licenses. The Lender will not be required as a result of financing or
taking a pledge of the Contracts to be licensed, registered or approved or to
obtain permits or otherwise qualify (i) to do business in any state in which it
currently so required or (ii) under any state consumer lending, fair debt
collection or other applicable state statute or regulation.
6.17 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation of the Duck Entities or any of their Subsidiaries has a Material
Adverse Effect.
6.18 Subsidiaries. All of the Subsidiaries of UDC at the date hereof are
listed on Schedule 4 to this Loan Agreement.
6.19 Origination of Contract Loans.
(a) The origination and collection practices used by the Duck Entities, the
Servicer or an Originator, as applicable, with respect to the Contracts that are
not Acquired Contracts have been in all material respects legal, proper, prudent
and customary in the used Motor Vehicle loan origination and servicing business,
and in accordance with the Underwriting Guidelines. Each of the Contracts that
are not Acquired Contracts represented on any notice, list or certificate of
Borrower to be an Eligible Contract complies with the representations and
warranties listed in Schedule 1 hereto.
(b) To Borrower's knowledge, the origination practices used by the
originators of the Acquired Contracts with respect to the Acquired Contracts
have been in all material respects legal, proper, prudent and customary in the
used Motor Vehicle loan origination business. The collection practices used by
the Duck Entities or the Servicer, as applicable, with respect to the Acquired
Contracts have been in all material respects legal, proper, prudent and
customary in the used Motor Vehicle servicing business. Each of the Acquired
Contracts represented on any notice, list or certificate of Borrower to be an
Eligible Contract complies with the representations and warranties listed in
Schedule 6 hereto.
Page 43
6.20 Borrower Solvent; Fraudulent Conveyance As of the date hereof and
immediately after giving effect to each Advance, the fair value of the assets of
UDC and its consolidated Subsidiaries taken as a whole are greater than the fair
value of the liability (including, without limitation, contingent liabilities if
and to the extent required to be recorded as a liability on the financial
statements of the UDC and its consolidated Subsidiaries in accordance with GAAP)
of UDC and its consolidated Subsidiaries taken as a whole, and UDC and its
consolidated Subsidiaries taken as a whole are and will be solvent, are and will
be able to pay their debts as they mature and do not and will not have an
unreasonably small capital to engage in the business in which they are engaged
and proposes to engage. No Duck Entity intends to incur, or believes that it has
incurred, debt beyond its ability to pay such debts as they mature. No Duck
Entity is contemplating the commencement of insolvency, bankruptcy, liquidation
or consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of such Duck Entity or any
of its assets. No Duck Entity is transferring any Contracts with any intent to
hinder, delay or defraud any of its creditors.
6.21 Master Agency Agreement. Exhibit J hereto is a full, complete and
correct copy of the Master Agency Agreement and such agreement has not been
modified and is in full force and effect. There are no agreements or
understandings relating to the Master Agency Agreement that are not fully and
accurately described in Exhibit J.
6.22 Exchange Debt. Schedule 9 hereto lists all of the Exchange Debt
Documents. The set of documents delivered to Lender pursuant to Section 5.01(m)
is a full, complete and correct copy of the Exchange Debt Documents and such
documents have not been modified and are in full force and effect. There are no
agreements or understandings relating to the Exchange Debt that are not fully
and accurately described in the documents delivered to Lender.
6.23 Senior Secured Loan. Schedule 10 hereto lists all of the Senior
Secured Loan Documents. The set of documents delivered to Lender pursuant to
Section 5.01(n) is a full, complete and correct copy of the Senior Secured Loan
Documents and such documents have not been modified and are in full force and
effect. There are no agreements or understandings relating to the Senior Secured
Loan that are not fully and accurately described in the documents delivered to
Lender.
6.24 Designated Senior Indebtedness. Borrower hereby designates the Loan
Agreement as "Designated Senior Indebtedness" pursuant to the Indenture, dated
October 5, 1998 (the "Indenture"), from Borrower to BNY Midwest Trust Company,
as successor in interest to ▇▇▇▇▇▇ Trust and Savings Bank, as trustee (pursuant
to which the Exchange Debt described on Schedule 9 was issued). Borrower agrees
to maintain such designation at all times. Borrower will promptly notify the
trustee under the Indenture of such designation and in connection with the
Indenture, Borrower will cause to be issued and delivered to Lender such
supplemental indenture as is required to provide that the amounts owing under
this Agreement constitute "Designated Senior Indebtedness".
Page 43
Section 7 Covenants of the Borrower. The Borrower covenants and agrees with
the Lender that, so long as any Advance is outstanding and until payment in full
of all Secured Obligations:
7.01 Financial Statements. The Borrower shall deliver to the Lender:
(a) (i) as soon as available and in any event within fifteen (15) days
after the end of each month, the consolidated balance sheets of
UDC and its consolidated subsidiaries as at the end of such month
and the related unaudited consolidated statements of income and
retained earnings and of cash flows for UDC and its consolidated
subsidiaries for such month and the portion of the fiscal year
through the end of such month, setting forth in each case in
comparative form the figures for the previous year, accompanied
by a certificate of a Responsible Officer of UDC, which
certificate shall state that such consolidated financial
statements fairly present the consolidated financial condition
and results of operations of UDC and its subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and
for, such month (subject to normal year-end audit adjustments);
(ii) as soon as available and in any event within sixty (60) days
after the end of each of the first three quarterly fiscal periods
of each fiscal year of UDC, the consolidated balance sheets of
UDC and its consolidated subsidiaries as at the end of such
period and the related unaudited consolidated statements of
income and retained earnings and of cash flows for UDC and its
consolidated subsidiaries for such period and the portion of the
fiscal year through the end of such period, setting forth in each
case in comparative form the figures for the previous year,
accompanied by a certificate of a Responsible Officer of UDC,
which certificate shall state that such consolidated financial
statements fairly present the consolidated financial condition
and results of operations of UDC and its Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end audit adjustments);
(b) as soon as available and in any event within one hundred and five (105)
days after the end of each fiscal year of UDC (except with respect to the fiscal
year ended December 31, 2000, for which such delivery shall be made no later
than April 30, 2001), the consolidated balance sheets of UDC and its
consolidated subsidiaries as at the end of such fiscal year and the related
consolidated statements of income and retained earnings and of cash flows for
UDC and its consolidated subsidiaries for such year, setting forth in each case
in comparative form the figures for the previous year, accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall not be qualified as to scope of audit or going
concern and shall state that said consolidated financial statements fairly
present the consolidated financial condition and results of operations of UDC
and its consolidated subsidiaries at the end of, and for, such fiscal year in
accordance with GAAP, and a certificate of such accountants stating that, in
making the examination necessary for their opinion, they obtained no knowledge,
except as specifically stated, of any Default or Event of Default;
notwithstanding that such financial statements may be delivered within the time
period set forth in Section 7.01(a)(ii) and this Section 7.01(b), Borrower
agrees to cause all 10-Q and 10-K filings to be made within the periods of time
required pursuant to applicable law;
Page 44
(c) from time to time such other information regarding the financial
condition, operations, or business of any Duck Entity as the Lender may
reasonably request; and
(d) as soon as reasonably possible, and in any event within thirty (30)
days after a Responsible Officer knows, or with respect to any Plan or
Multiemployer Plan to which any Duck Entity or any of its Subsidiaries makes
direct contributions, has reason to believe, that any of the events or
conditions specified below with respect to any Plan or Multiemployer Plan has
occurred or exists, a statement signed by a senior financial officer of such
Duck Entity setting forth details respecting such event or condition and the
action, if any, that any Duck Entity or its ERISA Affiliate proposes to take
with respect thereto (and a copy of any report or notice required to be filed
with or given to PBGC by such Duck Entity or an ERISA Affiliate with respect to
such event or condition):
(i) any reportable event, as defined in Section 4043(b) of ERISA and
the regulations issued thereunder, with respect to a Plan, as to
which PBGC has not by regulation or otherwise waived the
requirement of Section 4043(a) of ERISA that it be notified
within thirty (30) days of the occurrence of such event (provided
that a failure to meet the minimum funding standard of Section
412 of the Code or Section 302 of ERISA, including, without
limitation, the failure to make on or before its due date a
required installment under Section 412(m) of the Code or Section
302(e) of ERISA, shall be a reportable event regardless of the
issuance of any waivers in accordance with Section 412(d) of the
Code); and any request for a waiver under Section 412(d) of the
Code for any Plan;
(ii) the distribution under Section 4041(c) of ERISA of a notice of
intent to terminate any Plan or any action taken by such Duck
Entity or an ERISA Affiliate to terminate any Plan;
(iii)the institution by PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Duck Entity or any
ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal from a Multiemployer Plan by
such Duck Entity or any ERISA Affiliate that results in liability
under Section 4201 or 4204 of ERISA (including the obligation to
satisfy secondary liability as a result of a purchaser default)
or the receipt by such Duck Entity or any ERISA Affiliate of
notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it
intends to terminate or has terminated under Section 4041A of
ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against such Duck Entity or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days; and
(vi) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA, would
result in the loss of tax-exempt status of the trust of which
such Plan is a part if such Duck Entity or an ERISA Affiliate
fails to timely provide security to such Plan in accordance with
the provisions of said Sections.
Page 45
UDC will furnish to the Lender, at the time it furnishes each set of financial
statements pursuant to paragraphs (a) and (b) above, (i) detailed calculations
for each financial covenant required pursuant to Section 7.18 herein and (ii) a
certificate of a Responsible Officer of UDC to the effect that, to the best of
such Responsible Officer's knowledge, each Duck Entity during such fiscal period
or year has observed or performed all of its covenants and other agreements, and
satisfied every material condition, contained in this Loan Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate (and, if any Default or Event of Default
has occurred and is continuing, describing the same in reasonable detail and
describing the action the Duck Entity has taken or proposes to take with respect
thereto).
7.02 Litigation. UDC will immediately, but in any event within one (1)
Business Day after service of process on UDC or any of its Subsidiaries, give to
the Lender notice of all legal or arbitrable proceedings affecting UDC or any of
its Subsidiaries that (a) questions or challenges the validity or enforceability
of any of the Loan Documents, (b) seek damages from UDC or any of its
Subsidiaries equal to or greater than $250,000, or (c) as to which there is a
reasonable likelihood of an adverse determination that would result in damages
paid by any Duck Entity equal to or greater than $250,000 or otherwise have a
Material Adverse Effect.
7.03 Existence, Compliance, Records, Inspection. Each of UDC and its
Subsidiaries will:
(a) except for fundamental changes permitted pursuant to Section 7.04,
preserve and maintain its legal existence and all of its material rights,
privileges, licenses and franchises and not change its name or its jurisdiction
of incorporation;
(b) comply with the requirements of all applicable laws, rules, regulations
and orders of Governmental Authorities (including, without limitation, truth in
lending and all environmental laws) if failure to comply with such requirements
would be reasonably likely (either individually or in the aggregate) to have a
Material Adverse Effect;
(c) keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied;
(d) not move its chief executive office or chief operating office from the
addresses referred to in Section 6.13 unless it shall have provided the Lender
thirty (30) days prior written notice of such change;
(e) pay and discharge all taxes, assessments and governmental charges or
levies imposed on it or on its income or profits or on any of its Property prior
to the date on which penalties attach thereto, except for any such tax,
assessment, charge or levy the payment of which is being contested in good faith
and by proper proceedings and against which adequate reserves are being
maintained; and
Page 46
(f) permit representatives of the Lender, during normal business hours upon
three (3) Business Days' prior written notice at a mutually desirable time, to
examine, copy and make extracts from its books and records, to inspect any of
its Properties, and to discuss its business and affairs with its officers, all
to the extent reasonably requested by the Lender.
7.04 Prohibition of Fundamental Changes. Except in connection with a
Privatization Transaction permitted under Section 7.08, no Duck Entity shall
enter into any transaction of merger or consolidation or amalgamation, or
liquidate, wind up or dissolve itself (or suffer any liquidation, winding up or
dissolution) or sell all or substantially all of its assets; provided, that any
Duck Entity may merge or consolidate with (a) any wholly owned subsidiary of
such Duck Entity, or (b) any other Person if such Duck Entity is the surviving
corporation, or (c) any other Duck Entity if, after giving effect thereto, no
Default or Event of Default would exist hereunder.
7.05 Borrowing Base Deficiency. If at any time there exists a Borrowing
Base Deficiency the Borrower shall cure same in accordance with Section 2.06
hereof.
7.06 Duty to Notify Lender. The Borrower shall give prompt notice in
accordance with the requirements of this Section 7.06 to the Lender as set forth
in Section 11.02 below:
(a) upon the Borrower becoming aware of, and in any event within one (1)
Business Day after, the occurrence of any Default or Event of Default or any
event of default or default under any other material agreement of the Borrower;
(b) upon the Borrower becoming aware of any default related to any
Collateral, any Material Adverse Effect and any event or change in circumstances
which should reasonably be expected to have a Material Adverse Effect;
(c) upon the entry of a judgment or decree in an amount in excess of
$250,000.
Each notice pursuant to this Section 7.06 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken or proposes
to take with respect thereto.
7.07 Servicing.
(a) Lender Administration. Lender shall have no liability to Borrower with
respect to Collections received by Lender, or the Lender Account, other than to:
(i) apply the Collections pursuant to Section 4.2 of this Loan Agreement and
(ii) upon termination of this Loan Agreement and Borrower's satisfaction of all
of its obligations under this Loan Agreement, to transfer the amounts described
in Section 2.05(c)(vii) to Borrower. Lender shall have no liability to Borrower
with respect to any interest or other earnings which are earned, or could have
been earned, on the Collections while they are in the Lender Account.
Page 47
(b) Borrower Administration.
(i) Borrower shall perform all aspects of servicing, administering,
collecting, liquidating, accounting for and managing
(collectively, "administering", "administer", or
"administration") the Pledged Contracts it customarily performs
in accordance with the Accepted Servicing Practices, which
practices are in accordance with applicable law and have been
disclosed to Lender prior to the date hereof. Borrower shall
provide such administration in a reasonable and prudent way that
does not, in Lender's determination, adversely affect the value
of the Collateral to Lender. If in Lender's opinion, Borrower
fails to administer the Pledged Contracts in accordance with
Borrower's practices disclosed to Lender prior to the date
hereof, Lender shall notify Borrower of the deficiencies in
Borrower's administration and Borrower shall have ten (10)
Business Days to cure any such deficiencies. The administration
provided by Borrower shall include but not be limited to all
servicing currently provided by Borrower, and Financed Vehicle
titling and lien perfection, customer service, insurance claim
tracking and collection, insurance maintenance, Contract
enforcement, Contract billing, payment processing, portfolio and
Contract accounting, portfolio management, delinquency
collection, repossession, foreclosure, resale, and maintaining
current Contract Debtor and Financed Vehicle location information
(name, address and phone number). Borrower shall maintain
current, accurate, and complete records of activity and comments
regarding collection, insurance, payments, and other material
events. The records regarding collection history, payments,
Contract accounting, customer service notes, Contract Debtor
names and addresses and Principal Balance shall be computerized.
Borrower shall require Contract Debtors to maintain Required
Contract Debtor Insurance. Borrower shall administer and
otherwise deal with the Contracts in compliance with all
applicable laws. Borrower shall conduct foreclosure sales in a
commercially reasonable manner and take the steps necessary to
preserve the deficiency liability of the Contract Debtors.
(ii) Borrower shall administer the Pledged Contracts at its existing
service centers in Arizona, Florida and Texas or at such other
locations that Borrower provides prior notice of to Lender and
Lender approves for Contract administration.
(iii)Borrower shall furnish to Lender such reports in such form that
Lender reasonably determines are necessary for it to track and
monitor the Pledged Contracts, Collections, Financed Vehicles,
and insurance. Such reports shall be in a format and on a medium
readable by Lender's computer software, or such other format or
medium acceptable to Lender.
(iv) Notwithstanding anything herein to the contrary, (A) Borrower
shall remain liable under all Contracts, and any other contracts
and agreements with Contract Rights Payors or otherwise included
in or related to the Collateral, to the extent set forth therein
to perform all of its duties and obligations thereunder to the
same extent as if this Loan Agreement had not been executed, and
(B) the exercise by Lender of any rights under any of the Loan
Documents shall not release Borrower from any of its duties or
obligations under the Contracts, or the other contracts and
agreements, and (C) Lender shall not have any obligation or
liability under the Contracts, or the other contracts and
agreements, nor shall Lender be obligated to perform any of the
obligations or duties of Borrower thereunder or to take any
action to collect or enforce any rights thereunder.
Page 48
(v) Borrower shall administer the Contracts at its own expense. In
the event that Borrower fails to administer the Contracts in
accordance with Section 7.07(b)(i), or there is Default or Event
of Default, Lender may cause the Backup Servicer take over all or
part of the Contract administration or, if the Backup Servicer
fails or refuses to so act, Lender may do so. If Lender takes
over all or part of such administration, Borrower shall pay to
Lender on demand all out-of-pocket costs incurred by Lender in
the performance of Borrower's administration obligations, and
Borrower shall pay Lender for the administration performed by
Lender an administration fee (exclusive of out-of-pocket costs)
established by Lender, and until so paid such costs and fee shall
be part of the Loan. Nothing herein shall be deemed to permit
Lender to take over servicing of any Contract that is not a
Pledged Contract.
7.08 Privatization Covenants.
(a) UDC shall not commence or consummate any Privatization Transaction
unless and until each of the following conditions are satisfied.
(i) The Borrower will have entered into the Replacement Inventory
Facility;
(ii) Borrower shall have provided evidence reasonably acceptable to
Lender that MBIA has consented to the Privatization Transaction
and is willing to continue as surety provider for the Borrower's
future Securitization Transactions notwithstanding the
Privatization Transaction on substantially similar terms and
conditions as prior Securitization Transactions;
(iii)▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall have committed in writing to receive not
more than $4 million per annum (in installments of not more than
$1 million per calendar quarter) in repayment of its outstanding
subordinated debt until such debt is retired; provided that ▇▇▇▇▇
▇▇▇▇▇▇▇▇ may receive greater payments than permitted by the
foregoing, but only to the extent that such payments are made
directly by a Person other than UDC or any of its Subsidiaries,
including by ▇▇▇▇▇▇ ▇▇▇▇▇▇ or Verde;
(iv) At the time that such Privatization Transaction is being
effected, no MBIA Performance Trigger or MBIA Event of Default
shall have occurred and be continuing under any outstanding
MBIA-Wrapped Securitization.
(b) In connection with any Privatization Transaction, the Borrower agrees
as follows:
(i) UDC will not expend a cumulative amount of more than $10 million,
measured from the date of this Loan Agreement, in connection with
all Privatization Transactions, without the prior written
approval of Lender;
Page 49
(ii) No Duck Entity or other Subsidiary of UDC will incur any
subordinated debt which has a stated maturity of less than five
years or which has an aggregate principal amount greater than $32
million; and
(iii)If the Privatization Transaction is effected by or on behalf of
▇▇▇▇▇▇ ▇▇▇▇▇▇, neither ▇▇▇▇▇▇ ▇▇▇▇▇▇ nor ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall sell
any capital stock owned directly or beneficially by them or any
of their Affiliates in any Privatization Transaction.
(c) After the consummation of any Privatization Transaction that satisfies
all of the conditions set forth in Section 7.08(a) and (b), the Borrower shall
satisfy the following covenants in addition to all of the other covenants and
conditions in this Loan Agreement:
(i) UDC shall not sell any common stock or other equity security to
any third party without the Lender's prior written consent;
(ii) If the Privatization Transaction is effected by or on behalf of
▇▇▇▇▇▇ ▇▇▇▇▇▇, provided no Event of Default has occurred and is
continuing hereunder, the Borrower may pay up to $2 million per
year of Verde's corporate expenses, to be applied in level
monthly payments of not more than $166,666.67 per month.
(iii)If the Privatization Transaction is effected by or on behalf of
▇▇▇▇▇▇ ▇▇▇▇▇▇, the amount or formula for payment of any bonus,
dividend or other distribution by any Duck Entity to ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall be subject to (1) Lender's prior approval in its
sole discretion, including but not limited to Lender's prior
approval of pro-forma financial projections for the twelve-month
period during which such bonus, dividend or distribution will be
paid, which projections demonstrate that the Borrower will have
not less than $10 million of Available Liquidity at all times
during such period, and (2) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ executing and
delivering an agreement in form and content reasonably
satisfactory to Lender implementing the provisions of Section
9(b) hereof. No such bonus, dividend or other distribution shall
be paid the Available Liquidity is ------------ less than $10
million, or if there exists an Event of Default hereunder.
(iv) No Duck Entity may convert into a subchapter S corporation
without the prior written consent of the Lender.
7.09 Underwriting Guidelines. The Borrower shall notify the Lender in
writing of any material modifications to the Underwriting Guidelines prior to
implementation of such change, and unless the Lender objects in writing within
three (3) Business Days of receipt of notice, the proposed modifications shall
be deemed acceptable.
7.10 Lines of Business. The Borrower will not engage to any substantial
extent in any line or lines of business activity other than the businesses
generally carried on by it as of the Effective Date.
7.11 Transactions with Affiliates. The Borrower will not enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction (a) is otherwise permitted under this Loan Agreement, (b) other
than as expressly permitted by Section 7.08 hereof, is in the ordinary course of
the Borrower's business and (c) upon fair and reasonable terms no less favorable
to the Borrower than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate, or make a payment that is not otherwise
permitted by this Section 7.11 to any Affiliate.
Page 50
7.12 Limitation on Liens. The Borrower will not, nor will it permit or
allow others to, create, incur or permit to exist any Lien, security interest or
claim on or to any of the Collateral without the consent of the Lender, except
for Permitted Liens, provided that such Permitted Liens are not Liens on
Contracts, the GECC Security Interest, the SunAmerica Security Interest or Liens
created pursuant to an inventory financing facility approved by the Lender in
its sole discretion and the Liens on the Stock Pledge Collateral described in
Section 6.11(d)(iii). The Borrower will defend the Collateral against, and will
take such other action as is necessary to remove, any Lien, security interest or
claim on or to the Collateral, other than the security interests created under
this Loan Agreement and the other Liens described in the preceding sentence, and
the Borrower will defend the right, title and interest of the Lender in and to
any of the Collateral against the claims and demands of all persons whomsoever.
7.13 Limitation on Sale of Assets. The Borrower shall not convey, sell,
lease, assign, transfer or otherwise dispose of (collectively, "Transfer"), all
or substantially all of its Property, business or assets (including, without
limitation, receivables and leasehold interests) whether now owned or hereafter
acquired or allow any Subsidiary to Transfer substantially all of its assets to
any Person; provided, that the Borrower may after prior written notice to the
Lender allow such action with respect to any Subsidiary which is not a material
part of the Borrower's overall business operations.
7.14 Limitation on Distributions. The Borrower shall not make any payment
on account of, or set apart assets for a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of, any stock
of the Borrower, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower, except (a) as contemplated by and
provided for in this Loan Agreement, or (b) with the prior written consent of
Lender.
7.15 Financial Covenants. So long as any Advances are outstanding, the
Borrower will comply with all of the provisions of this Section 7.17:
(a) Minimum Net Worth. At all times, Minimum Net Worth shall be not less
than $150 million until the successful completion of a Privatization
Transaction; thereafter, at all times Minimum Net Worth shall be not less than
$170 million.
(b) Maintenance of Liquidity. The Borrower shall insure that it has
Available Liquidity at all times in an amount of not less than $7.5 million.
(c) Cashflow Interest Coverage Ratio. The Cashflow Interest Coverage Ratio,
as of each Quarterly Measurement Date specified below, shall be not less than
the ratio specified below:
Quarterly Measurement Date Ratio
Three months ending March 31, 2001 1.1:1.0
Six months ending June 30, 2001 1.1:1.0
Nine months ending September 30, 2001 1.25:1.0
Twelve months ending December 31, 2001 1.25:1.0
(and any Quarterly Measurement Date thereafter)
Page 51
(d) Debt to EBITDA Ratio. The Debt to EBITDA Ratio, as of any Quarterly
Measurement Date shall be not greater than 5.0:1.0.
(e) Gross Margin Ratio. The average Gross Margin Ratio achieved on all
vehicle sales during any Accounting Period shall not be less than 0.415.
(f) Borrower's Rolling Average Delinquency Ratio (Pledged Contracts) shall
not exceed 8.5% as of the last day of any Accounting Period.
(g) Borrower's Rolling Average Delinquency Ratio (Managed Portfolio
Contracts) shall not exceed ten percent (10%) as of the last day of any
Accounting Period.
(h) Borrower's Average Charged-Off Losses Ratio (Pledged Contracts) shall
not exceed 1.75% as of the last day of any Accounting Period.
(i) Borrower's Average Charged-Off Losses Ratio (Managed Portfolio
Contracts) shall not exceed two and three quarters percent (2.75%) as of the
last day of any Accounting Period.
(j) Borrower's Rolling Average Managed Portfolio Contracts Deferral Rate
shall not exceed 2.00%.
7.16 Restricted Payments The Borrower shall not make any Restricted
Payments following an Event of Default.
7.17 Servicing Transmission. The Borrower shall provide to the Lender on a
monthly basis no later than 10:00 a.m. eastern time on the fifteenth (15th) day
of any calendar month (or the next Business Day) (or such other day requested by
Lender) the Servicing Transmission.
7.18 No Amendment or Waiver. The Borrower will not, nor will it permit or
allow others to amend, modify, terminate or waive any provision of any Contracts
to which the Borrower is a party in any manner which shall reasonably expected
to materially and adversely affect the value of such Contracts as Collateral.
7.19 Insurance. Borrower shall maintain the insurance set forth on Schedule
8 hereto with coverage limits that are reasonable and customary for an entity of
Borrower's size and business. Borrower shall pay all insurance premiums payable
for such coverage and upon request of Lender shall deliver a copy of the
policies of such insurance to Lender, together with evidence of payment of all
premiums therefor.
Page 52
7.20 Further Identification of Collateral. The Borrower will furnish to the
Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Lender or any Lender may reasonably request, all in reasonable
detail.
7.21 Certificate of a Responsible Officer of the Borrower. At the time that
the Borrower delivers financial statements to the Lender in accordance with
Section 7.01 hereof, the Borrower shall forward to the Lender a certificate of a
Responsible Officer of the Borrower which demonstrates that the Borrower is in
compliance with the covenants set forth in Sections 7.12, 7.13 and 7.15 above.
7.22 Backup Servicer. The Borrower, the Lender and the Backup Servicer
shall have entered into a backup servicing agreement which is satisfactory in
form and substance to the Lender no later than June 30, 2001.
7.23 Inventory Facility. On or before each of June 1, 2001 and September 1,
2001, Borrower shall have either exercised its option to renew the GECC
Inventory Facility pursuant to the amendment to the GECC Agreement described in
Section 5.01(b)(v), or entered into the Replacement Inventory Facility. If by
October 31, 2001 the Borrower has not entered into the Replacement Inventory
Facility, then the Borrower shall enter into a Securitization Transaction
(pursuant to the terms of the Securitization Letter), which Securitization
Transaction shall close before December 31, 2001 and shall have a cut-off date
of December 1, 2001.
7.24 Master Agency Agreement. The Borrower shall not modify, amend or waive
any provision of the Master Agency Agreement without the prior written consent
of the Lender.
7.25 Stock Pledge Collateral. The Borrower shall not ▇▇▇▇▇ ▇ ▇▇▇▇ on the
Stock Pledge Collateral to any Person other than a Lien granted pursuant to the
Senior Secured Loan or any refinancing of the Senior Secured Loan or other loan
permitted under the last sentence of this Section 7.25; provided, that such
subordination shall be no more adverse to the Lender than the subordination of
the Lender to the holder of the Senior Secured Loan (assuming for this purpose
that the Verde Loan Agreement has been terminated and its Lien on the Stock
Pledge Collateral has been released). Lender agrees to subordinate its Lien on
the Stock Pledge Collateral in connection with (i) any refinancing of the Senior
Secured Loan or (ii) any other financing secured by the Stock Pledge Collateral,
provided that (x) after giving effect on a pro forma basis to such other
financing the Borrower shall not be in violation of any of the financial
covenants contained in Section 7.15.
7.26 Exchange Debt Documents. The Borrower shall not modify, amend or waive
any provision of the Exchange Debt Documents without the prior written consent
of the Lender.
Page 53
7.27 Exclusive Source of Financing. Except as permitted by the terms and
conditions of Section 4.01(d) hereof, the Borrower shall not sell, securitize or
otherwise finance any of its Contracts through any Person other than the Lender.
7.28 Depository Accounts. Within sixty (60) days of the date of this Loan
Agreement, the Borrower shall give irrevocable instructions to banks with whom
the Borrower has established Depository Accounts to deposit all funds in the
Depository Accounts into the Consolidating Depository Account on a daily basis.
Section 8 Events of Default. Each of the following events shall constitute
an event of default (an "Event of Default") hereunder:
(a) the Borrower shall default in the payment of any principal of or
interest on any Advance when due (whether at stated maturity, upon acceleration
or at mandatory prepayment); or
(b) the Borrower shall default in the payment of any other amount payable
by it hereunder or under any other Loan Document after notification by the
Lender of such default, and such default shall have continued unremedied for
three Business Days; or
(c) any representation, warranty or certification made or deemed made
herein or in any other Loan Document by the Borrower or any certificate
furnished to the Lender pursuant to the provisions thereof, shall prove to have
been false or misleading in any material respect as of the time made or
furnished (other than the representations and warranties set forth in Schedule 1
and Schedule 6 unless Borrower shall have made any such representations and
warranties with knowledge that they were materially false or misleading at the
time made); or
(d) the Borrower shall fail to comply with the requirements of Section
2.05(c), Section 2.06, Section 7.03(a), Section 7.04, Section 7.06, Section
7.08, Sections 7.12 through 7.17, Section 7.20, Section 7.22 or Section 7.23
hereof; or the Borrower shall otherwise fail to observe or perform any other
agreement contained in this Loan Agreement or any other Loan Document and such
failure to observe or perform shall continue unremedied for a period of five (5)
Business Days; or
(e) the Borrower fails to cure any deficiencies in its administration of
the Pledged Contracts after notice from Lender within the period set forth in
Section 7.07(b)(i) hereunder; or
(f) a final judgment or judgments for the payment of money in excess of
$500,000 in the aggregate (to the extent that it is, in the reasonable
determination of the Lender, uninsured and provided that any insurance or other
credit posted in connection with an appeal shall not be deemed insurance for
these purposes) shall be rendered against the Borrower or any of its
Subsidiaries by one or more courts, administrative tribunals or other bodies
having jurisdiction over them and the same shall not be discharged (or provision
shall not be made for such discharge) or bonded, or a stay of execution thereof
shall not be procured, within sixty (60) days from the date of entry thereof and
the Borrower or any such Subsidiary shall not, within said period of sixty (60)
days, or such longer period during which execution of the same shall have been
stayed or bonded, appeal therefrom and cause the execution thereof to be stayed
during such appeal; or
Page 54
(g) any Duck Entity shall admit in writing its inability to pay its debts
as such debts become due; or
(h) UDC or any of its Subsidiaries shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
examiner or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the Bankruptcy Code, (iv) file a petition
seeking to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing; or
(i) a proceeding or case shall be commenced, without the application or
consent of the Borrower or any of its Subsidiaries, in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of the Borrower or any such Subsidiary or of all or any substantial part of
its property, or (iii) similar relief in respect of the Borrower or any such
Subsidiary under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) or more days; or an order for relief against
the Borrower or any such Subsidiary shall be entered in an involuntary case
under the Bankruptcy Code; or (j) the Custodial Agreement or any Loan Document
shall for whatever reason (including an event of default thereunder) be
terminated or the lien on the Collateral created by this Loan Agreement or
Borrower's material obligations hereunder shall cease to be in full force and
effect, or the enforceability thereof shall be contested by the Borrower; or
(k) any event or series of events that have had, or any circumstance which
is reasonably likely to have, a Material Adverse Effect, in each case as
determined by the Lender in its sole discretion, or the existence of any other
condition which, in the Lender's sole discretion, constitutes a material
impairment of the Borrower's ability to perform its obligations under this Loan
Agreement, the Note or any other Loan Document; or
(l) (i) any Person shall engage in any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii)
any material "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived, shall exist with respect to any Plan or any Lien
in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect
to, or proceedings shall commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Lenders, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the
Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion
of the Lenders is likely to, incur any liability in connection with a withdrawal
from, or the insolvency or reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan; and in
each case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could reasonably be expected
to have a Material Adverse Effect; or
Page 55
(m) any Change of Control of the Borrower shall have occurred without the
prior consent of the Lender; or
(n) if a default or event of default occurs under Indebtedness of any Duck
Entity with a principal amount in excess of $500,000 (with respect to any
particular item of Indebtedness or in the aggregate) or under any agreement with
the Lender or its Affiliates, and in each case after any applicable cure period
has expired; or
(o) the Lender reasonably requests, specifying the reasons for such
request, information and/or written responses to such requests regarding the
financial well-being of the Borrower, and the Borrower does not provide such
information or responses within three (3) Business Days of such request;
provided that no such Event of Default shall be deemed to have occurred if after
receiving such request the Borrower promptly notifies the Lender that the
allotted time period is not sufficient to satisfy the request for information
and the Lender agrees in writing to a longer period; or
(p) Borrower fails to enter into the Replacement Inventory Facility before
December 31, 2001.
Section 9 Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default (subject to the
expiration of the applicable cure period contained therein) other than those
referred to in Section 8(h) or (i), the Lender may immediately declare the
principal amount of the Advances then outstanding under the Note to be
immediately due and payable, together with all interest thereon and reasonable
fees and out-of-pocket expenses accruing under this Loan Agreement; provided
that upon the occurrence of an Event of Default referred to in Section 8(h) or
(i), such amounts shall immediately and automatically become due and payable
without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding on the Note shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower and may thereupon exercise any remedies available to it at law and
pursuant to the Loan Documents.
(b) Upon the occurrence of an Event of Default involving the breach of any
covenant set forth in Section 7.15 hereof, the aggregate cumulative amount any
bonuses, dividends and other distributions described in Section 7.08(c)(iii)
(net of the amount of any income taxes previously paid thereon) shall, upon
notice from Lender, be contributed to the capital of UDC by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
within five (5) Business Days of such notice.
Page 56
(c) Upon the occurrence of one or more Events of Default, the Lender shall
have the right to obtain physical possession of the Servicing Records and all
other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrower or any third party acting for the Borrower and the
Borrower shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all agreements
of the Borrower contained in this Loan Agreement.
(d) Upon the occurrence of one or more Events of Default, the Lender shall
have the right to transfer the rights and obligations of the Servicer to the
Back-up Servicer pursuant to the provisions of the agreement with the Back-up
Servicer.
(e) Upon the occurrence of one or more Events of Default, the Lender shall
have the right to cause any and all payments to Verde with respect to the Verde
corporate expenses to be terminated.
Section 10 No Duty on Lender's Part. The powers conferred on the Lender
hereunder are solely to protect the Lender's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
Section 11 Miscellaneous.
11.01 Waiver. No failure on the part of the Lender or the Borrower to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by this Loan
Agreement, all notices, requests and other communications provided for herein
and under the Custodial Agreement (including, without limitation, any
modifications of, or waivers, requests or consents under, this Loan Agreement)
shall be given or made in writing (including, without limitation, by telex or
telecopy) delivered to the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof); or, as to any party, at
such other address as shall be designated by such party in a written notice to
each other party. Except as otherwise provided in this Loan Agreement and except
for notices given under Section 2 (which shall be effective only on receipt),
all such communications shall be deemed to have been duly given when transmitted
by telex or telecopier or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid.
Page 57
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender harmless from and indemnify the
Lender against all liabilities, losses, damages, judgments, costs and expenses
of any kind which may be imposed on, incurred by, or asserted against the
Lender, relating to or arising out of, this Loan Agreement, the Note, any other
Loan Document or any transaction contemplated hereby or thereby, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Loan Agreement, the Note, any other Loan Document or any
transaction contemplated hereby or thereby, that, in each case, results from
anything other than the Lender's gross negligence or willful misconduct. In any
suit, proceeding or action brought by the Lender in connection with any Contract
for any sum owing thereunder, or to enforce any provisions of any Contract, the
Borrower will save, indemnify and hold the Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, set-off,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Borrower. The Borrower also agrees to reimburse the
Lender as and when billed by the Lender for all the Lender's reasonable
out-of-pocket costs and expenses incurred in connection with the enforcement or
the preservation of the Lender's rights under this Loan Agreement, the Note, any
other Loan Document or any transaction contemplated hereby or thereby, including
without limitation the reasonable fees and disbursements of its counsel. The
Borrower hereby acknowledges that, notwithstanding the fact that the Note is
secured by the Collateral, the obligation of the Borrower under the Note is a
recourse obligation of the Borrower.
(b) The Borrower agrees to pay within 15 days of being billed by the Lender
all of the out-of pocket costs and expenses incurred by the Lender in connection
with the development, preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith.
The Borrower agrees to pay within 15 days of being billed by the Lender all of
the out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including, without limitation, (i) all the reasonable fees,
disbursements and expenses of counsel to the Lender and (ii) all the due
diligence, inspection, testing and review costs and expenses incurred by the
Lender with respect to Collateral under this Loan Agreement, including, but not
limited to, those costs and expenses incurred by the Lender pursuant to Sections
11.03(a), 11.14 and 11.16 hereof other than any costs and expenses incurred in
connection with the Lender's rehypothecation of the Contracts prior to an Event
of Default.
11.04 Amendments. Except as otherwise expressly provided in this Loan
Agreement, any provision of this Loan Agreement may be modified or supplemented
only by an instrument in writing signed by the Borrower and the Lender and any
provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns. This Loan Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
Page 58
11.06 Survival. The obligations of the Borrower under Sections 3.03 and
11.03 hereof shall survive the repayment of the Advances and the termination of
this Loan Agreement. In addition, each representation and warranty made, or
deemed to be made by a request for a borrowing, herein or pursuant hereto shall
survive the making of such representation and warranty, and the Lender shall not
be deemed to have waived, by reason of making any Advance, any Default that may
arise by reason of such representation or warranty proving to have been false or
misleading, notwithstanding that the Lender may have had notice or knowledge or
reason to believe that such representation or warranty was false or misleading
at the time such Advance was made.
11.07 Captions. The table of contents and captions and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this Loan Agreement.
11.08 Counterparts. This Loan Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Loan Agreement by
signing any such counterpart. This Loan Agreement and the other Loan Documents
may be signed and delivered through facsimile signatures which shall operate as
true and effective signatures of the persons sending the facsimile transmission.
11.09 Loan Agreement Constitutes Security Agreement; Governing Law. This
Loan Agreement shall be governed by New York law without reference to choice of
law doctrine (but with reference to Section 5-1401 of the New York General
Obligations Law, which by its terms applies to this Loan Agreement), and shall
constitute a security agreement within the meaning of the Uniform Commercial
Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH LOAN PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE
FEDERAL COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(b) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH
COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME; AND
Page 59
(c) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN
ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Loan Agreement, the Note and the other Loan Documents to which
it is a party;
(b) the Lender has no fiduciary relationship to the Borrower, and the
relationship between the Borrower and the Lender is solely that of debtor and
creditor; and
(c) no joint venture exists among or between the Lender and the Borrower.
11.13 Hypothecation or Pledge of Collateral. Nothing in this Loan Agreement
shall preclude the Lender from engaging in repurchase transactions with the
Collateral or otherwise pledging, repledging, transferring, hypothecating, or
rehypothecating the Collateral; provided, however, that the Contract Delivery
Documents shall remain in the possession of the Custodian. Nothing contained in
this Loan Agreement shall obligate the Lender to segregate any Collateral
delivered to the Lender by the Borrower; provided, however, that nothing in this
Section 11.13 shall relieve Lender of its obligation to release Collateral
pursuant to the terms of this Loan Agreement.
11.14 Assignments; Participations.The Borrower may assign any of its rights
or obligations hereunder or under the Note with the prior written consent of the
Lender which consent shall not be unreasonably withheld. The Lender may assign
or transfer to any bank or other financial institution that makes or invests in
loans or any Affiliate of the Lender all or any of its rights or obligations
under this Loan Agreement and the other Loan Documents, subject to the following
conditions:
(i) unless otherwise agreed to in writing by the Lender and the
Borrower, each such assignment shall be in an amount not less
than $5,000,000;
(ii) the Lender shall be the administrative agent under this Loan
Agreement;
(iii)each assignee shall have an investment grade rating of not less
than BBB- from S&P or Baa3 from ▇▇▇▇▇'▇; and
(iv) the assignee shall not be a competitor of any Duck Entity.
Page 60
(b) The Lender may, in accordance with applicable law, at any time sell to
one or more lenders or other entities ("Participants") participating interests
in any Advance, the Note, its commitment to make Advances, or any other interest
of the Lender hereunder and under the other Loan Documents. In the event of any
such sale by the Lender of participating interests to a Participant, the
Lender's obligations under this Loan Agreement to the Borrower shall remain
unchanged, the Lender shall remain solely responsible for the performance
thereof, the Lender shall remain the holder of the Note for all purposes under
this Loan Agreement and the other Loan Documents, and the Borrower and the
Lender shall continue to deal solely and directly with the Lender in connection
with the Lender's rights and obligations under this Loan Agreement and the other
Loan Documents. The Borrower agrees that if amounts outstanding under this Loan
Agreement and the Note are due or unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Loan Agreement and the Note
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Loan Agreement or the Note; provided, that
such Participant shall only be entitled to such right of set-off if it shall
have agreed in the agreement pursuant to which it shall have acquired its
participating interest to share with the Lender the proceeds thereof. The Lender
also agrees that each Participant shall be entitled to the benefits of Sections
2.07 and 11.03 with respect to its participation in the Advances outstanding
from time to time; provided, that the Lender and all Participants shall be
entitled to receive no greater amount in the aggregate pursuant to such Sections
than the Lender would have been entitled to receive had no such transfer
occurred.
(c) The Lender may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants)
only after notifying the Borrower in writing and securing signed confidentiality
statements (a form of which is attached hereto as Exhibit H) and only for the
sole purpose of evaluating participations and for no other purpose.
(d) The Borrower agrees to cooperate with the Lender in connection with any
such assignment and/or participation, to execute and deliver such replacement
notes, and to enter into such restatements of, and amendments, supplements and
other modifications to, this Loan Agreement and the other Loan Documents in
order to give effect to such assignment and/or participation. The Borrower
further agrees to furnish to any Participant identified by the Lender to the
Borrower copies of all reports and certificates to be delivered by the Borrower
to the Lender hereunder, as and when delivered to the Lender.
11.15 Periodic Due Diligence Review. The Borrower acknowledges that the
Lender has the right to perform continuing due diligence reviews with respect to
the Contracts, for purposes of verifying compliance with the representations,
warranties and specifications made hereunder, or otherwise, and the Borrower
agrees that upon reasonable (but no less than one (1) Business Day's) prior
notice to the Borrower, the Lender or its authorized representatives will be
permitted during normal business hours to examine, inspect, make copies of, and
make extracts of, the Contract Delivery Documents and any and all documents,
records, agreements, instruments or information relating to such Contracts in
the possession, or under the control, of the Borrower and/or the Custodian. The
Borrower also shall make available to the Lender a knowledgeable financial or
accounting officer for the purpose of answering questions respecting the
Contract Delivery Documents and the Contracts. Without limiting the generality
of the foregoing, the Borrower acknowledges that the Lender shall make Advances
to the Borrower based solely upon the information provided by the Borrower to
the Lender in the Master Custodial Report and the representations, warranties
and covenants contained herein, and that the Lender, at its option, has the
right, at any time to conduct a partial or complete due diligence review on some
or all of the Contracts securing such Advance, including, without limitation,
ordering new credit reports and otherwise re-generating the information used to
originate such Contract. In addition, the Lender has the right to perform
continuing Due Diligence Reviews of the Borrower and its Affiliates, directors,
officers, employees and significant shareholders. The Borrower and Lender
further agree that all out-of-pocket costs and expenses incurred by the Lender
in connection with the Lender's activities pursuant to this Section 11.16 shall
be paid for as agreed by such parties.
Page 61
11.16 Set-Off. In addition to any rights and remedies of the Lender
provided by this Loan Agreement and by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, upon any amount becoming
due and payable by the Borrower hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against such
amount any and all Property and deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the Lender or any
Affiliate thereof to or for the credit or the account of the Borrower. The
Lender agrees promptly to notify the Borrower after any such set-off and
application made by the Lender; provided that the failure to give such notice
shall not affect the validity of such set-off and application.
11.17 Intent. The parties recognize that each Advance is a "securities
contract" as that term is defined in Section 741 of Title 11 of the United
States Code, as amended.
11.18 Entire Agreement. This Loan Agreement embodies the entire agreement
and understanding of the parties hereto and supersedes any and all prior
agreements, arrangements and understandings relating to the matters provided for
herein. No alteration, waiver, amendments, or change or supplement hereto shall
be binding or effective unless the same is set forth in writing by a duly
authorized representative of each party hereto.
11.19 Confidentiality. Lender acknowledges that in implementing,
maintaining and enforcing this Loan Agreement Lender will obtain access to
Confidential Information. Except as otherwise required by law or court order,
the Lender shall keep all such Confidential Information confidential and shall
not (a) disclose the Confidential Information to any third party, other than
Lender's employees, officers, directors, agents, attorneys, accountants and
representatives (whom Lender shall direct to keep such Confidential Information
confidential in accordance with the terms of this Section 11.19); or (b) use the
Confidential Information for any purpose other than in connection with the
implementation, maintenance and enforcement of this Loan Agreement.
* * * * *
Page 62
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed and delivered as of the day and year first above written.
Lender: GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
[Continuation of Master Loan and Security Agreement Signature Pages]
Borrower: UGLY DUCKLING CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 63
[Continuation of Master Loan and Security Agreement Signature Pages]
Borrower: UGLY DUCKLING CAR SALES & FINANCE CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 64
[Continuation of Master Loan and Security Agreement Signature Pages]
Borrower and Servicer: UGLY DUCKLING CREDIT CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 65
[Continuation of Master Loan and Security Agreement Signature Pages]
Borrower: UGLY DUCKLING CAR SALES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 66
[Continuation of Master Loan and Security Agreement Signature Pages]
Borrower: UGLY DUCKLING CAR SALES FLORIDA, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 67
[Continuation of Master Loan and Security Agreement Signature Pages]
UGLY DUCKLING FINANCE CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
--------------------
▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Page 68
Schedule 1
REPRESENTATIONS AND WARRANTIES
RE: ELIGIBLE CONTRACTS THAT ARE NOT ACQUIRED CONTRACTS
Eligible Contracts
As to each Eligible Contract, other than an Acquired Contract, that forms
part of the Collateral hereunder (and the related Contract Delivery Documents),
the Borrower shall be deemed to make the following representations and
warranties to the Lender as of such date and as of each day thereafter:
(a) The information set forth in the Master Custodial Report with respect
to the Pledged Contracts is complete, true and correct in all material respects.
(b) Each Contract is in the form of Exhibit I, or a different form was
consented to in writing by Lender as acceptable for Eligible Contracts.
(c) The first Scheduled Payment is due within forty-five (45) days after
the date of the Contract.
(d) Not more than three (3) Scheduled Payments are due and unpaid in whole
or in part at the time it is delivered to Lender or thereafter.
(e) The Contract Debtor is not more than sixty (60) days delinquent on
payments, and the Servicer has not designated the Contract as out for or in
repossession.
(f) Any right of rescission arising out of the Contract of the Contract
Debtor shall have expired.
(g) The Contract is not a Charged-off Contract.
(h) If the Contract was originated after 1998, the Contract is a Simple
Interest Method loan and has a fixed "APR" and the "Finance Charge" was computed
using a fixed rate.
(i) The initial term of the Contract does not exceed forty-eight (48)
months and the Schedule of Payments has equal periodic payments except for
payments due during the first 90 days of the term of the Contract and except for
the final payment which may be less than the other equal payments, and the
payment obligation is in United States dollars. In the event such Contract is
pre-paid, the prepayment shall fully pay the Principal Balance and unpaid
interest, including interest in the month of prepayment to the date of
prepayment, at the APR.
(j) The Contract is for the absolute sale of the Financed Vehicle to the
Contract Debtor, and the Financed Vehicle is not on approval or subject to any
agreement between the Contract Debtor and the Dealer for the repurchase or
return of the Financed Vehicle.
(k) The Contract does not present a credit, collateral or documentation
risk which is material and unacceptable to Lender.
(l) The Contract was originated by an originator in a Permitted State.
(m) If the Contract Debtor is an employee, officer, agent, director,
stockholder, supplier or creditor of Borrower or an Affiliate, the Contract does
not contain terms more favorable than those available to an unrelated Person.
(n) The Contract contains the original signature of the Contract Debtor and
the Dealer.
(o) The Contract is the only unsatisfied original executed Contract for the
purchase of the Financed Vehicle and accurately reflects all of the actual terms
and conditions of the Contract Debtor's purchase of the Financed Vehicle.
Neither Borrower nor an Affiliate has made any agreement with the Contract
Debtor to reduce the amount owed on the Contract. Neither Borrower nor an
Affiliate is required to perform any additional service for, or perform or incur
any additional obligation to, the Contract Debtor in order for Borrower to
enforce the Contract.
(p) The Contract, at the time Borrower purchased it, met Borrower's
creditworthiness and other advance criteria in the Underwriting Guidelines, or
the Contract does not meet such criteria and Lender approved in writing the
deviation for that Contract.
(q) The Contract Debtor's obligations under the Contract are secured by a
validly perfected first priority security interest in the Financed Vehicle in
favor of Borrower or Lender as secured party.
(r) The Contract has not been, nor is it designated to be, terminated,
satisfied, canceled, subordinated or rescinded in whole or in part; nor has the
Financed Vehicle been released, or designated for release, from the security
interest granted by the Contract; and all of the holder's obligations under the
Contract have been performed except those which first arise subsequent to the
delivery to Lender.
(s) No provision of the Contract has been waived, extended, altered or
modified in any respect except for (i) routine payment extensions for no more
than (1) month which were done no more frequently than two (2) times every
twelve (12) months and (ii) routine term extensions not exceeding two (2) months
which were done no more frequently than one (1) time every twelve (12) months
unless consented to by lender. The day of the month that Scheduled payments are
due has not been changed from the original Schedule of Payments except for no
more than one change which did not change the due date in a manner such that
there was more than a thirty (30) day period for which no Scheduled Payment was
due. In the event a Contract is removed from the Borrowing Base, Borrower may
grant an additional two (2) extensions or Modifications during the term of the
contract. Borrower shall identify these Contracts as being removed from the
Borrowing Base, Borrower may grant an additional two (2) extensions or
Modifications during the term of the Contract. Borrower shall identify these
Contracts as being removed form the Borrowing Base in Borrower's data processing
records.
(t) No claims of rescission, setoff, counterclaim, defense or other
material disputes have been asserted with respect to the Contract or Financed
Vehicle.
(u) There are no unsatisfied liens or claims for taxes, labor, materials,
fines, confiscation, or replevin relating to the Contract or Financed Vehicle.
There is no unsatisfied claim against the Contract Debtor based on the operation
or use of the Financed Vehicle. All taxes due for the purchase, use and
ownership of the Financed Vehicle have been paid. All taxes due on the transfer
or the Contract to the Borrower and Lender have been paid.
(v) The Contract requires Required Contract Debtor Insurance. Borrower is a
loss payee or insured under the Required Contract Debtor Insurance.
(w) Borrower has not repossessed the Financed Vehicle or commenced a
replevin action or other lawsuit, against the Contract Debtor or Financed
Vehicle.
(x) The model year of the Financed Vehicle is not more than twelve (12)
years earlier than the model year in effect at the time the Contract is
delivered to Lender.
(y) The obligation of the original Contract Debtor has not been released or
assumed by another Person unless the release or assumption was properly
documented and Lender consents in writing to it for purposes of the Contract
being an Eligible Contract.
(z) The cash down payment has been paid in full by the Contract Debtor and
not loaned to the Contractor Debtor by the Borrower or an Affiliate, and any
trade-in has been delivered to the Dealer with an endorsed Certificate of Title.
The average cash down payment for the portfolio of Contracts is equal to at
least $600.
(aa) The Lender has received from the Custodian the deliveries required
under the Custodial Agreement serving as confirmation that the Custodian is in
physical possession of the Contract Delivery Documents.
(bb) The Contract Debtor is not thirty-one (31) or more days contractually
delinquent in payments, and, when taken together with all other Contracts which
are thirty-one (31) or more days contractually delinquent, all such Contracts so
not exceed 3% of the aggregate Principal Balance of all Eligible Contracts.
(cc) Each Contract, the sale of the Financed Vehicle and the sale of any
Required Contract Debtor Insurance and Optional Contract Debtor Insurance
complied at the time the related Contract was originated or made, and shall
continue to comply in all material respects with all requirements of applicable
Federal, State and local laws, and regulations thereunder including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Soldier's and Sailors' Civil Relief Act of 1940, the Texas Finance Code and
other State adaptations of the Uniform Consumer Credit Code, and other consumer
credit laws and equal credit opportunity and disclosure laws. The form of each
Contract and the manner in which it was completed and executed and all documents
delivered and disclosures made in connection therewith are in compliance with
all requirements of applicable Federal, State and local laws, and all applicable
regulations thereunder, except to the extent a failure to so comply would not
have an adverse effect on (i) the collection and payment of the Contract, or
(ii) the interests in such Contract of the Borrower.
(dd) None of the Contracts Debtors is the United States of America, or any
State, or any agency, department, or instrumentality of the United States of
America, any State or municipality.
(ee) No Contract has been originated in, or is subject to the laws of, any
jurisdiction under which the sale, transfer, and assignment of such Contract, or
the assignment and grant of a security interest pursuant to this Loan Agreement,
shall be unlawful, void or voidable. The Borrower has not entered into any
agreement with any Contract Debtor or any other Person that prohibits, restricts
or conditions the sale, assignment, or grant of security interest in any portion
of the Contracts. No consent of any Contract Debtor or other Person is required
for the sale and assignment of or grant of security interest in the Contract.
(ff) Each Contract constitutes "chattel paper" under the UCC.
(gg) (A) If the Contract was originated in a State in which notation of
security interest on the title document of the related Financed Vehicle is
required or permitted to perfect such security interest, the title document for
such Financed Vehicle shows the Borrower named as the original and only secured
party under the related Contract as the holder of a first priority security
interest in such Financed Vehicle; provided that any assumed name, designation
or trade name may be used by the Borrower on the title document; provided
further that the use of any such assumed name, designation or trade name by the
Borrower shall result in a fully perfected first priority security interest in
favor of Borrower and a legal opinion has been delivered to Lender by Borrower's
legal counsel stating the foregoing, and (B) if the Contract was originated in a
State in which the filing of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such filings or recordings have
been duly made and show the Borrower named as the secured party under the
Contract. With respect to each Contract for which the title document has not yet
been returned from the Registrar of Titles, the Seller has received and
delivered to the custodian written evidence that such title document showing the
Borrower as first lienholder has been applied for.
(hh) Each Contract represents the genuine, legal, valid and binding
obligation of the Contract Debtor thereunder and is enforceable by the holder
thereof in accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally, and all parties to such contract had full legal
capacity to execute and deliver such contract and all other documents related
thereto and to grant the security interest purported to be granted thereby.
(ii) Each Contract Debtor is and continues to be domiciled in the United
States.
(jj) No Financed Vehicle has suffered a casualty and no Financed Vehicle
has been materially damaged and not repaired, and no Financed Vehicle is located
outside of the United States.
(kk) The Financed Vehicle is customarily used and garaged in the state
issuing the Certificate of Title.
(ll) Each Financed Vehicle was properly delivered to the related Contract
Debtor in good repair, without material defects and in satisfactory order. Each
Financed Vehicle was accepted by the Contract Debtor after reasonable
opportunity to inspect and test same and, at the time of such delivery and
acceptance, no Contract Debtor informed the Borrower of any material defect
therein.
(mm) No Contract Debtor is involved in the business of leasing or selling
any Financed Vehicles.
(nn) No Contract constitutes a "consumer lease" under either (A) the UCC as
in effect in the jurisdiction whose law governs the Contract, or (B) the
Consumer Leasing Act, 15 U.S.C. 1667.
Schedule 2
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FILING JURISDICTIONS AND OFFICES
--------------------------------------------------------------------------
-------------------------------- ------------------------------------
Arizona Nevada
-------------------------------- ------------------------------------
Arizona Secretary of State Nevada Secretary of State
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ------------------------------------
California New Mexico
-------------------------------- ------------------------------------
California Secretary of State New Mexico Secretary of State
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Room #255 Room 300
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ------------------------------------
Delaware Texas
-------------------------------- ------------------------------------
Delaware Secretary of State Texas Secretary of ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Loockerman & Federal Street Austin, Texas 78701
Dover, Delaware 19901
-------------------------------- ------------------------------------
Florida Virginia
-------------------------------- ------------------------------------
Department of State Virginia State Corporation Commission
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------- ------------------------------------
Georgia
-------------------------------- ------------------------------------
▇. ▇▇▇▇▇▇ County Clerk
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇. ▇▇ ▇▇▇▇ County Clerk
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------
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Schedule 3
RELEVANT STATES
Arizona
Nevada
California
New Mexico
Texas
Florida
Georgia
Virginia
Schedule 4
SUBSIDIARIES
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
NAME: FEDERAL TAX ID ACRONYM: dba, IF APPLICABLE: JURISDICTION OF
NUMBER: INCORPORATION:
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Car Sales and ▇▇-▇▇▇▇▇▇▇ UDCSFC Arizona
Finance Corporation (formerly
Duck Ventures, Inc.)
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Credit Corporation ▇▇-▇▇▇▇▇▇▇ UDCC Arizona
(formerly Champion Acceptance
Corporation)
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Champion Financial Services, Inc. ▇▇-▇▇▇▇▇▇▇ CFS Arizona
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Car Sales, Inc. ▇▇-▇▇▇▇▇▇▇ UDCS Ugly Duckling Autos, Arizona
Ugly Duckling
Processing Center,
Ugly Duckling Car
Sales,
Ugly Duckling City of
Cars,
Ugly Duckling
Autorama,
Ugly Duckling
Glendale Motors,
Ugly Duckling-Blue
Chip Motors
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Car Sales Florida, ▇▇-▇▇▇▇▇▇▇ UDCSFL Ugly Duckling Autos Florida
Inc. Champion Acceptance,
Ugly Duckling Car
Sales
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Finance Corporation ▇▇-▇▇▇▇▇▇▇ UDFC Arizona
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Funding Corporation UDFUND Delaware
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Receivables Corp. ▇▇-▇▇▇▇▇▇▇ UDRCII Delaware
II
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Ducking Receivables Corp. ▇▇-▇▇▇▇▇▇▇ UDRCIII Delaware
III
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Portfolio ▇▇-▇▇▇▇▇▇▇ UDPP Arizona
Partnership, LLP
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Drake Insurance Services, Inc. ▇▇-▇▇▇▇▇▇▇ DRAKE Arizona
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Drake Insurance Agency, Inc. ▇▇-▇▇▇▇▇▇▇ DIAI Arizona
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Drake Property & Casualty 86-0838815 DPCI Turks & Caicos Islands
Insurance Co.
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Drake Life Insurance Co. ▇▇-▇▇▇▇▇▇▇ DLIC Turks & Caicos Islands
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Dealer Finance, UDDFI Arizona
Inc.
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
Ugly Duckling Dealer Finance UDDF Arizona
Alabama, Inc.
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
UDRAC, Inc. ▇▇-▇▇▇▇▇▇▇ UDRAC Ugly Duckling Arizona
Rent-A-Car
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
UDRAC Rentals, Inc. ▇▇-▇▇▇▇▇▇▇ UD-RENT Ugly Duckling Arizona
Rent-A-Car
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Cygnet Financial Corporation ▇▇-▇▇▇▇▇▇▇ CFC Delaware
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Cygnet Financial Services, Inc. ▇▇-▇▇▇▇▇▇▇ CYFS Arizona
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Cygnet Financial Portfolio, Inc. ▇▇-▇▇▇▇▇▇▇ CFP Arizona
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Cygnet Support Services, Inc. ▇▇-▇▇▇▇▇▇▇ CSS Arizona
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Fidelity Funding Auto FFARC Delaware
Receivables Corp.
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Fidelity Funding Auto FFARCII Delaware
Receivables Corp. II
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Fidelity Funding Auto FFARCIII Delaware
Receivables Corp. III
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
Fidelity Funding Receivables, FFR Delaware
L.L.C.
---------------------------------- ------------------ ------------------------- ------------------- ---------------------------
SECURITIZATION TRUSTS
---------------------------------- ------------------- ------------------ ----------------------- -----------------------------
NAME: FEDERAL TAX ID ABBREVIATION: dba, IF JURISDICTION OF
NUMBER: APPLICABLE: INCORPORATION:
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1996-B
1996-B
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1996-C
1996-C
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1997-A
1997-A
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1997-B
1997-B
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1997-C
1997-C
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1997-D
1997-D
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust CAG 1997-E
1997-E
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Champion Auto Grantor Trust ▇▇-▇▇▇▇▇▇▇ CAG 1998-A
1998-A
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Ugly Duckling Auto Grantor ▇▇-▇▇▇▇▇▇▇ DUCK 1998-B
Trust 1998-B
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Ugly Duckling Auto Grantor ▇▇-▇▇▇▇▇▇▇ DUCK 1998-C
Trust 1998-C
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Ugly Duckling Auto Grantor ▇▇-▇▇▇▇▇▇▇ DUCK 1998-D
Trust 1998-D
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Duck Auto Grantor Trust 1999-A ▇▇-▇▇▇▇▇▇▇ DUCK 1999-A
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Duck Auto Owner Trust 1999-B ▇▇-▇▇▇▇▇▇▇ DUCK 1999-B
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Duck Auto Owner Trust 1999-C ▇▇-▇▇▇▇▇▇▇ DUCK 1999-C
------------------------------- --------------------- ------------------------- ------------------- ---------------------------
Schedule 5
CONTRACT DEBTOR DOCUMENTS
Each of the following documents constitute the Contract Debtor Documents:
1. The Contract Delivery Documents;
2. The dealer invoice and invoices for any additional equipment included in
the Contract, if applicable;
3. Each of the following: (a) the original signed completed credit
application, (b) the credit bureau reports, (c) the completed credit
investigation form, (d) the completed verification of employment and income
forms, and (e) Contract Debtor references;
4. Verification of Required Contract Debtor Insurance showing Borrower as loss
payee, additional insured, or lienholder;
5. Borrower's funds disbursement listing, if applicable;
6. A certificate for each type of Optional Contract Debtor Insurance purchased
by Contract Debtor;
7. Borrower's "deal structure" sheet;
8. The military pay allotment form if the Contract Debtor is in military
service and if such allotment has been made; and
9. The payment history and accounting for the Contract.
Schedule 6
REPRESENTATIONS AND WARRANTIES
RE: ELIGIBLE CONTRACTS THAT ARE ACQUIRED CONTRACTS
As to each Acquired Contract that is an Eligible Contract and forms part of
the Collateral hereunder (and the related Contract Delivery Documents), the
Borrower shall be deemed to make the following representations and warranties to
the Lender as of such date and as of each date thereafter:
(a) The information set forth in the Master Custodial Report with respect
to the Eligible Contracts is complete, true and correct in all material
respects.
(b) Each Contract is in the form consented to in writing by Lender as
acceptable for Eligible Contracts; provided, that Lender hereby consents to the
form of the Acquired Contracts in existence as of the Effective Date, unless
such Contracts are in violation of law or are in breach of any other
representation and warranty in this Schedule 6.
(c) The first Scheduled Payment is or was due within sixty (60) days after
the date of the Contract.
(d) The Contract Debtor is not more than sixty (60) days delinquent on
payments, and the Servicer has not designated the Contract as out for or in
repossession.
(e) Any right of rescission arising out of the Contract of the Contract
Debtor shall have expired.
(f) The Contract is not a Charged-off Contract.
(g) The Contract has a fixed "APR" and the "Finance Charge" was computed
using a fixed rate.
(h) The initial term of the Contract does not exceed sixty (60) months and
the Schedule of Payments has equal periodic payments except for payments due
during the first 90 days of the term of the Contract and except for the final
payment which may be less than the other equal payments, and the payment
obligation is in United States dollars. In the event such Contract is pre-paid,
the prepayment shall fully pay the Principal Balance and unpaid interest,
including interest in the month of prepayment to the date of prepayment, at the
APR.
(i) The Contract is for the absolute sale of the Financed Vehicle to the
Contract Debtor, and the Financed Vehicle is not on approval or subject to any
agreement between the Contract Debtor and the Dealer for the repurchase or
return of the Financed Vehicle.
(j) The Contract does not present credit, collateral or documentation risk
which is material and unacceptable to Lender.
(k) The Contract was originated by a Dealer that is not an Originator in a
Permitted State.
(l) If the Contract Debtor is an employee, officer, agent, director,
stockholder, supplier or creditor of Borrower or an Affiliate, the Contract does
not contain terms more favorable than those available to an unrelated Person.
(m) The Dealer has been paid all amounts due for the purchase of the
Contract from the Dealer, as applicable.
(n) The Contract contains the original signature of the Contract Debtor and
the Dealer.
(o) The Contract is the only unsatisfied original executed Contract for the
purchase of the Financed Vehicle and accurately reflects all of the actual terms
and conditions of the Contract Debtor's purchase of the Financed Vehicle.
Neither Borrower nor an Affiliate has made any agreement with the Contract
Debtor to reduce the amount owed on the Contract. Neither Borrower nor an
Affiliate is required to perform any additional service for, or perform or incur
any additional obligation to, the Contract Debtor in order for Borrower to
enforce the Contract.
(p) The Contract, at the time Borrower purchased it, met Borrower's
creditworthiness and other advance criteria in the related underwriting
guidelines, or the Contract does not meet such criteria and Lender approved in
writing the deviation for that Contract.
(q) The Contract Debtor's obligations under the Contract are secured by a
validly perfected first priority security interest in the Financed Vehicle in
favor of Borrower or Lender as secured party.
(r) The Contract has not been, nor is it designated to be, terminated,
satisfied, canceled, subordinated or rescinded in whole or in part; nor has the
Financed Vehicle been released, or designated for release, from the security
interest granted by the Contract; and all of the holder's obligations under the
Contract have been performed except those which first arise subsequent to the
delivery to Lender.
(s) The Contract Debtor's obligations under the Contract are secured by a
validly perfected first priority security interest in the Financed Vehicle.
(t) The Contract has not been, nor is it designated to be, terminated,
satisfied, canceled, subordinated or rescinded in whole or in part; nor has the
Financed Vehicle been released, or designated for release, from the security
interest granted by the Contract; and all of the holder's obligations under the
Contract have been performed except those which first arise subsequent to the
delivery to Lender.
(u) No provision of the Contract has been waived, extended, altered or
modified in any respect except for routine payment extensions made in accordance
with the related servicer's then-existing servicing guidelines.
(v) No claims of rescission, setoff, counterclaim, defense or other
material disputes have been asserted with respect to the Contract or Financed
Vehicle.
(w) There are no unsatisfied liens or claims for taxes, labor, materials,
fines, confiscation, or replevin relating to the Contract or Financed Vehicle;
there is no unsatisfied claim against the Contract Debtor based on the operation
or use of the Financed Vehicle; all taxes due for the purchase, use and
ownership of the Financed Vehicle have been paid; and all taxes due on the
transfer of the Contract have been paid.
(x) Borrower has not repossessed the Financed Vehicle or commenced a
replevin action or other lawsuit, against the Contract Debtor or Financed
Vehicle.
(y) The model year of the Financed Vehicle is not more than twelve (12)
years earlier than the model year in effect at the time the Contract is
delivered to Lender.
(z) The obligation of the original Contract Debtor has not been released or
assumed by another Person unless the release or assumption was properly
documented and Lender consents in writing to it for purposes of the Contract
being an Eligible Contract.
(aa) The Lender has received from the Custodian the deliveries required
under the Custodial Agreement serving as confirmation that the Custodian is in
physical possession of the Contract Delivery Documents.
(bb) The Contract Debtor is not thirty-one (31) or more days contractually
delinquent in payments, and, when taken together with all other Contracts which
are thirty-one (31) or more days contractually delinquent, all such Contracts so
not exceed 3% of the aggregate Principal Balance of all Eligible Contracts.
(cc) Each Contract and the sale of the Financed Vehicle complied at the
time the related Contract was originated or made, and shall continue to comply
in all material respects with all requirements of applicable Federal, State and
local laws, and regulations thereunder including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act,
the Federal Reserve Board's Regulations B and Z, the Soldier's and Sailors'
Civil Relief Act of 1940, the Texas Finance Code and other State adaptations of
the Uniform Consumer Credit Code, and other consumer credit laws and equal
credit opportunity and disclosure laws. To Borrower's knowledge, the form of
each Contract and the manner in which it was completed and executed and all
documents delivered and disclosures made in connection therewith are in
compliance with all requirements of applicable Federal, State and local laws,
and all applicable regulations thereunder, except to the extent a failure to so
comply would not have an adverse effect on (i) the collection and payment of the
Contract, or (ii) the interests in such Contract of the Borrower.
(dd) None of the Contracts Debtors is the United States of America, or any
State, or any agency, department, or instrumentality of the United States of
America, any State or municipality.
(ee) No Contract has been originated in, or is subject to the laws of, any
jurisdiction under which the sale, transfer, and assignment of such Contract, or
the assignment and grant of a security interest pursuant to this Loan Agreement,
shall be unlawful, void or voidable. The Borrower has not entered into any
agreement with any Contract Debtor or any other Person that prohibits, restricts
or conditions the sale, assignment, or grant of security interest in any portion
of the Contracts. No consent of any Contract Debtor or other Person is required
for the sale and assignment of or grant of security interest in the Contract.
(ff) Each Contract constitutes "chattel paper" under the UCC.
(gg) (A) If the Contract was originated in a State in which notation of
security interest on the title document of the related Financed Vehicle is
required or permitted to perfect such security interest, the title document for
such Financed Vehicle shows the Borrower named as the original and only secured
party under the related Contract as the holder of a first priority security
interest in such Financed Vehicle; provided that any assumed name, designation
or trade name may be used by the Borrower on the title document; provided
further that the use of any such assumed name, designation or trade name by the
Borrower shall result in a fully perfected first priority security interest in
favor of Borrower and a legal opinion has been delivered to Lender by Borrower's
legal counsel stating the foregoing, and (B) if the Contract was originated in a
State in which the filing of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such filings or recordings have
been duly made and show the Borrower named as the secured party under the
Contract. With respect to each Contract for which the title document has not yet
been returned from the Registrar of Titles, the Seller has received and
delivered to the custodian written evidence that such title document showing the
Borrower as first lienholder has been applied for.
(hh) Borrower has an executed power of attorney from the lawful owner of
the Contract that authorizes Borrower or any third party so authorized by
Borrower to execute any title related documents in connection with the servicing
and collection of the Contract.
(ii) Each Contract represents the genuine, legal, valid and binding
obligation of the Contract Debtor thereunder and is enforceable by the holder
thereof in accordance with its terms, except only as such enforcement may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally, and all parties to such contract had full legal
capacity to execute and deliver such contract and all other documents related
thereto and to grant the security interest purported to be granted thereby.
(jj) Each Contract Debtor is and continues to be domiciled in the United
States, unless serving abroad in the United States armed forces.
(kk) No Financed Vehicle has suffered a casualty and no Financed Vehicle
has been materially damaged and not repaired, and no Financed Vehicle is located
outside of the United States.
(ll) The Financed Vehicle is customarily used and garaged in the state
issuing the Certificate of Title.
(mm) Financed Vehicle was properly delivered to the related Contract Debtor
in good repair, without material defects and in satisfactory order. Each
Financed Vehicle was accepted by the Contract Debtor after reasonable
opportunity to inspect and test same and, at the time of such delivery and
acceptance, no Contract Debtor informed the Borrower of any material defect
therein.
(nn) No Contract Debtor is involved in the business of leasing or selling
any Financed Vehicles.
(oo) No Contract constitutes a "consumer lease" under either (A) the UCC as
in effect in the jurisdiction whose law governs the Contract, or (B) the
Consumer Leasing Act, 15 U.S.C. 1667.
(pp) Such other additional representations and warranties as the Lender at
its sole discretion shall require with respect to Acquired Contracts that are
acquired by the Borrower after the Effective Date.
Schedule 7
PERMITTED LIENS
1. Rights of set off of banks and securities intermediaries with respect to
deposit or securities accounts (other than any account subject to the
Master Agency Agreement) maintained with such banks or securities
intermediaries.
2. Liens arising in cash, deposit accounts, securities or investment property
by reason of such property constituting proceeds of other assets of
Borrower that do not constitute Collateral, including, without limitation,
proceeds of casualty insurance on assets that do not constitute Collateral.
3. Pledges or deposits made to secure worker's compensation insurance (or to
participate in any fund in connection with worker's compensation
insurance), unemployment insurance, pensions or social security programs.
4. Liens imposed by mandatory provisions of law as for materialmen, mechanics,
warehousemen and other like liens arising in the ordinary course of
business, securing indebtedness whose payment is not yet due.
5. Inchoate Liens for taxes, assessments and governmental charges or levies
imposed upon a Person or upon such Person's income or profits or property,
if the same are not yet due and payable and no demand for payment made by
the applicable governmental unit.
6. Liens arising from good faith deposits in connection with tenders, leases,
real estate bids or contracts (other than contracts involving the borrowing
of money), pledges or deposits to secure public or statutory obligations
and deposits to secure (or in lieu of) surety, stay, appeal or customs
bonds and deposits to secure payment of taxes, assessments, customs duties
or other similar charges.
Schedule 8
REQUIRED INSURANCE
Policy Type
Commercial Property Insurance
Commercial General Liability Coverage
Business Automobile Coverage
Garage Policy - Garage Liability
Garage Policy - Garage Keepers
Comprehensive Crime - Crime and Employee Dishonesty Coverage
D&O Insurance - Directors, Officers and Corporate Liability Insurance
Workers' Compensation Insurance
Schedule 9
SCHEDULE OF EXCHANGE DEBT DOCUMENTS
1. Indenture dated as of October 15, 1998 between Ugly Duckling Corporation
("UDC") and ▇▇▇▇▇▇ Trust and Savings Bank --- ("Trustee")
2. First Supplemental Indenture dated as of October 15, 1998 between UDC and
Trustee
3. Second Supplemental Indenture dated as of April 15, 2000 between UDC and
Trustee
Schedule 10
SCHEDULE OF SENIOR SECURED LOAN DOCUMENTS
1. Senior Secured Loan Agreement dated as of January 11, 2001 between Ugly
Duckling Corporation ("UDC") and the lenders that become party thereto
(collectively, the "Lenders"), and BNY Midwest Trust Company ("Trustee")
2. Promissory Note dated as of January 11, 2001 by UDC and made payable to KZH
Soleil-2 LLC in the principal amount of Twelve Million and No/100 Dollars
($12,000,000.00)
3. Promissory Note dated as of January 11, 2001 by UDC and made payable to
SunAmerica Life Insurance Company in the principal amount of Six Million
and No/100 Dollars ($6,000,000.00)
4. Promissory Note dated as of January 11, 2001 by UDC and made payable to
Galaxy CLO in the principal amount of Seventeen Million and No/100 Dollars
($17,000,000.00)
5. Guaranty dated as of January 11, 2001 by Ugly Duckling Car Sales and
Finance Corporation ("UDCSFC"), and any future subsidiary of UDC, in favor
of the Lenders and Trustee, as the collateral agent
6. Cash Collateral Account Agreement dated as of January 11, 2001 by UDC and
UDCSFC, as guarantors, and Trustee, as collateral agent for itself and the
Lenders
7. Stock Pledge Agreement dated as of January 11, 2001 by UDCSFC, UDC and
Trustee, as collateral agent for the Lenders
8. Letter Agreement Re: Distribution of Certain Residual Certificate Payments
dated January 11, 2001 by Trustee and agreed to and accepted by Ugly
Duckling Receivables Corp. II, Ugly Duckling Credit Corp., and UDCSFC
9. Letter Agreement Re: Distribution of Certain Residual Certificate Payments
dated January 11, 2001 by Trustee and agreed to and accepted by Ugly
Duckling Receivables Corp. III, Ugly Duckling Credit Corp., and UDCSFC
10. Consent and Subordination Agreement dated as of January 11, 2001 by UDC,
UDCSFC, Trustee, as collateral agent, and General Electric Capital
Corporation
11. Letter Consent Agreement dated as of January 11, 2001 by MBIA Insurance
Corporation, and acknowledged by and agreed to by Trustee, and UDCSFC
12. Letter Agreement dated as of April 13, 2001 by UDC, UDCSFC and Trustee
EXHIBIT A
FORM OF PROMISSORY NOTE
$-------------
April 13, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, each of Ugly Duckling Corporation, Ugly Duckling (as
Sales and Finance Corporation, Ugly Duckling Credit Corporation, Ugly Duckling
Car Sales, Inc., and Ugly Duckling Car Sales Florida, Inc. (collectively, the
"Borrower"), hereby jointly and severally promises to pay to the order of
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC. (the "Lender"), at the principal
office of the Lender at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, in
lawful money of the United States, and in immediately available funds, the
principal sum of [_____________________________] ($___________) (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Advances made
by the Lender to the Borrower under the Loan Agreement), on the dates and in the
principal amounts provided in the Loan Agreement, and to pay interest on the
unpaid principal amount of each such Advance, at such office, in like money and
funds, for the period commencing on the date of such Advance until such Advance
shall be paid in full, at the rates per annum and on the dates provided in the
Loan Agreement.
The date, amount and interest rate of each Advance made by the Lender to
the Borrower, and each payment made on account of the principal thereof, shall
be recorded by the Lender on its books and, prior to any transfer of this Note,
endorsed by the Lender on the schedule attached hereto or any continuation
thereof; provided, that the failure of the Lender to make any such recordation
or endorsement shall not affect the obligations of the Borrower to make a
payment when due of any amount owing under the Loan Agreement or hereunder in
respect of the Advances made by the Lender.
This Note is the Note referred to in the Master Loan and Security Agreement
dated as of April 13, 2001 (as amended, supplemented or otherwise modified and
in effect from time to time, the "Loan Agreement") between the Borrower, and the
Lender, and evidences Advances made by the Lender thereunder. Terms used but not
defined in this Note have the respective meanings assigned to them in the Loan
Agreement.
The Borrower agrees to pay all the Lender's costs of collection and
enforcement (including reasonable attorneys' fees and disbursements of Lender's
counsel) in respect of this Note when incurred, including, without limitation,
reasonable attorneys' fees through appellate proceedings.
Notwithstanding the pledge of the Collateral, the Borrower hereby
acknowledges, admits and agrees that the Borrower's obligations under this Note
are recourse obligations of the Borrower to which the Borrower pledges its full
faith and credit.
The Borrower, and any endorsers or guarantors hereof, (a) severally waive
diligence, presentment, protest and demand and also notice of protest, demand,
dishonor and nonpayments of this Note, (b) expressly agree that this Note, or
any payment hereunder, may be extended from time to time, and consent to the
acceptance of further Collateral, the release of any Collateral for this Note,
the release of any party primarily or secondarily liable hereon, and (c)
expressly agree that it will not be necessary for the Lender, in order to
enforce payment of this Note, to first institute or exhaust the Lender's
remedies against the Borrower or any other party liable hereon or against any
Collateral for this Note. No extension of time for the payment of this Note, or
any installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrower, even if the Borrower is not a party to such
agreement; provided, however, that the Lender and the Borrower, by written
agreement between them, may affect the liability of the Borrower.
Any reference herein to the Lender shall be deemed to include and apply to
every subsequent holder of this Note. Reference is made to the Loan Agreement
for provisions concerning optional and mandatory prepayments, Collateral,
acceleration and other material terms affecting this Note.
Any enforcement action relating to this Note may be brought by motion for
summary judgment in lieu of a complaint pursuant to Section 3213 of the New York
Civil Practice Law and Rules. The Borrower hereby submits to New York
jurisdiction with respect to any action brought with respect to this Note and
waives any right with respect to the doctrine of forum non conveniens with
respect to such transactions.
This Note shall be governed by and construed under the laws of the State of
New York (without reference to choice of law doctrine but with reference to
Section 5-1401 of the New York General Obligations Law, which by its terms
applies to this Note) whose laws the Borrower expressly elects to apply to this
Note. The Borrower agrees that any action or proceeding brought to enforce or
arising out of this Note may be commenced in the Supreme Court of the State of
New York, Borough of Manhattan, or in the District Court of the United States
for the Southern District of New York.
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
SCHEDULE OF LOANS
This Note evidences Advances made under the within-described Loan Agreement
to the Borrower, on the dates, in the principal amounts and bearing interest at
the rates set forth below, and subject to the payments and prepayments of
principal set forth below:
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Principal Amount of Amount Paid Unpaid Principal Notation
Date Made Loan or Prepaid Amount Made by
--------------------- ----------------------- --------------------- ----------------------- ------------------------
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EXHIBIT B
FORM OF CUSTODIAL AGREEMENT
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO THE BORROWER]
(date)
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to _______________, a
________ corporation, (the "Borrower"), with respect to certain matters in
connection with that certain Master Loan and Security Agreement, dated as of
[Month] __, 2001 (the "Loan and Security Agreement"), by and between the
Borrower and Greenwich Capital Financial Products, Inc. (the "Lender"), being
executed contemporaneously with a Promissory Note dated ____ _, ____ from the
Borrower to the Lender (the "Note"), a Custodial Agreement, dated as of [Month]
__, 1998 (the "Custodial Agreement"), by and among the Borrower,
________________ (the "Custodian"), and the Lender. Capitalized terms not
otherwise defined herein have the meanings set forth in the Loan and Security
Agreement.
[We] [I] have examined the following documents:
the Loan and Security Agreement;
the Note;
Custodial Agreement;
unfiled copies of the financing statements listed on Schedule 1
(collectively, the "Financing Statements") naming the Borrower as Debtor and the
Lender as Secured Party and describing the Collateral (as defined in the Loan
and Security Agreement) as to which security interests may be perfected by
filing under the Uniform Commercial Code of the States listed on Schedule 1 (the
"Filing Collateral"), which I understand will be filed in the filing offices
listed on Schedule 1 (the "Filing Offices");
the reports listed on Schedule 2 as to UCC financing statements
(collectively, the "UCC Search Report"); and
such other documents, records and papers as we have deemed necessary and
relevant as a basis for this opinion.
To the extent [we] [I] have deemed necessary and proper, [we] [I] have
relied upon the representations and warranties of the Borrower contained in the
Loan and Security Agreement. [We] [I] have assumed the authenticity of all
documents submitted to me as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
documents.
Based upon the foregoing, it is [our] [my] opinion that:
The Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the state of [state] and is qualified to transact
business in, duly licensed and is in good standing under, the laws of each state
in which any Contract is originated to the extent necessary to ensure the
enforceability of each Contract and the servicing of each Contract pursuant to
the Loan and Security Agreement.
The Borrower has the corporate power to engage in the transactions
contemplated by the Loan and Security Agreement, the Note, and the Custodial
Agreement and all requisite corporate power, authority and legal right to
execute and deliver the Loan and Security Agreement, the Note, and the Custodial
Agreement and observe the terms and conditions of such instruments. The Borrower
has all requisite corporate power to borrow under the Loan and Security
Agreement and to grant a security interest in the Collateral pursuant to the
Loan and Security Agreement.
The execution, delivery and performance by the Borrower of the Loan and
Security Agreement, the Note, and the Custodial Agreement, and the borrowings by
the Borrower and the pledge of the Collateral under the Loan and Security
Agreement have been duly authorized by all necessary corporate action on the
part of the Borrower. Each of the Loan and Security Agreement, the Note and the
Custodial Agreement have been executed and delivered by the Borrower and are
legal, valid and binding agreements enforceable in accordance with their
respective terms against the Borrower, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance, none of which will materially interfere
with the realization of the benefits provided thereunder or with the Lender's
security interest in the Contracts.
No consent, approval, authorization or order of, and no filing or
registration with, any court or governmental agency or regulatory body is
required on the part of the Borrower for the execution, delivery or performance
by the Borrower of the Advance and Security Agreement, the Note and the
Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral, pursuant to the Loan and Security Agreement.
The execution, delivery and performance by the Borrower of, and the
consummation of the transactions contemplated by, the Loan and Security
Agreement, the Note and the Custodial Agreement do not and will not (a) violate
any provision of the Borrower's charter or by-laws, (b) violate any applicable
law, rule or regulation, (c) violate any order, writ, injunction or decree of
any court or governmental authority or agency or any arbitral award applicable
to the Borrower of which I have knowledge (after due inquiry) or (d) result in a
breach of, constitute a default under, require any consent under, or result in
the acceleration or required prepayment of any indebtedness pursuant to the
terms of, any agreement or instrument of which I have knowledge (after due
inquiry) to which the Borrower is a party or by which it is bound or to which it
is subject, or (except for the Liens created pursuant to the Loan and Security
Agreement) result in the creation or imposition of any Lien upon any Property of
the Borrower pursuant to the terms of any such agreement or instrument.
There is no action, suit, proceeding or investigation pending or, to the
best of [our] [my] knowledge, threatened against the Borrower which, in [our]
[my] judgment, either in any one instance or in the aggregate, would be
reasonably likely to have a Material Adverse Effect on the properties, business
or financial condition, or prospects of the Borrower or in any material
impairment of the right or ability of the Borrower to carry on its business
substantially as now conducted or in any material liability on the part of the
Borrower or which would draw into question the validity of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Contracts or of any action
taken or to be taken in connection with the transactions contemplated thereby,
or which would be reasonably likely to impair materially the ability of the
Borrower to perform under the terms of the Loan and Security Agreement, the
Note, the Custodial Agreement or the Contracts.
The Loan and Security Agreement is effective to create, in favor of the
Lender, a valid security interest under the Uniform Commercial Code in all of
the right, title and interest of the Borrower in, to and under the Collateral as
collateral security for the payment of the Secured Obligations (as defined in
the Loan and Security Agreement), except that (a) such security interests will
continue in Collateral after its sale, exchange or other disposition only to the
extent provided in Section 9-306 of the Uniform Commercial Code, (b) the
security interests in Collateral in which the Borrower acquires rights after the
commencement of a case under the Bankruptcy Code in respect of the Borrower may
be limited by Section 552 of the Bankruptcy Code.
When the Contracts are delivered to the Custodian, the security interest
referred to in paragraph 7 above in the Contracts will constitute a fully
perfected first priority security interest in all right, title and interest of
the Borrower therein, in the Contracts evidenced thereby and in the Borrower's
interest in the related Financed Vehicle.
Upon the filing of financing statements on Form UCC-1 naming the Lender as
"Secured Party" and the Borrower as "Debtor", and describing the Collateral, in
the jurisdictions and recording offices listed on Schedule 1 attached hereto,
the security interests referred to in paragraph 8 above will constitute fully
perfected security interests under the Uniform Commercial Code in all right,
title and interest of the Borrower in, to and under such Collateral, which can
be perfected by filing under the Uniform Commercial Code.
The UCC Search Report sets forth the proper filing offices and the proper
debtors necessary to identify those Persons who have on file in the
jurisdictions listed on Schedule 1 financing statements covering the Filing
Collateral as of the dates and times specified on Schedule 2. Except for the
matters listed on Schedule 2, the UCC Search Report identifies no Person who has
filed in any Filing Office a financing statement describing the Filing
Collateral prior to the effective dates of the UCC Search Report.
The Borrower is duly registered as a [____________] in each state in which
Contracts were originated to the extent such registration is required by
applicable law, and has obtained all other licenses and governmental approvals
in each jurisdiction to the extent that the failure to obtain such licenses and
approvals would render any Contract unenforceable or would materially and
adversely affect the ability of the Borrower to perform any of its obligations
under, or the enforceability of, the Loan Documents.
Assuming that all other elements necessary to render a Contract legal,
valid, binding and enforceable were present in connection with the execution,
delivery and performance of each Contract (including completion of the entire
Contract fully, accurately and in compliance with all applicable laws, rules and
regulations) and assuming further that no action was taken in connection with
the execution, delivery and performance of each Contract (including in
connection with the sale of the related Financed Vehicle) that would give rise
to a defense to the legality, validity, binding effect and enforceability of
such Contract, nothing in the forms of such Contracts, as attached hereto as
Exhibit A, would render such Contracts other than legal, valid, binding and
enforceable.
Assuming their validity, binding effect and enforceability in all other
respects (including completion of the entire Contract fully, accurately and in
compliance with all applicable laws, rules and regulations), the forms of
Contracts attached hereto as Exhibit A are in sufficient compliance with
________ law and Federal consumer protection laws so as not to be rendered void
or voidable at the election of the Contract Debtor thereunder.
Very truly yours,
EXHIBIT D
FORM OF NOTICE OF BORROWING AND PLEDGE
[insert date]
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: _______________________
Notice of Borrowing and Pledge No.:_____________________
Ladies/Gentlemen:
Reference is made to (i) that certain Custodial Agreement, dated as of
April 13, 2001 (as amended from time to time, the "Custodial Agreement") by and
between BNY Midwest Trust Company (the "Custodian") and Greenwich Capital
Financial Products, Inc. (the "Lender") and Ugly Duckling Corporation, a
Delaware corporation ("Ugly Duckling"), Ugly Duckling Car Sales and Finance
Corporation, an Arizona corporation ("UDCSFC"), Ugly Duckling Credit
Corporation, an Arizona corporation ("UDCC"), Ugly Duckling Car Sales, Inc., an
Arizona corporation ("Car Sales"), Ugly Duckling Car Sales Florida, Inc., a
Florida corporation ("Car Sales Florida") and Ugly Duckling Finance Corporation,
an Arizona corporation ("UDFC") (Ugly Duckling, UDCSFC, UDCC, Car Sales and Car
Sales Florida are collectively referred to therein as the "Borrower"; UDCC is
sometimes referred to therein as the "Servicer") and to (ii) that certain Loan
and Security Agreement dated as of April 13, 2001 by and between the Borrower
and the Lender (as amended from time to time, the "Loan Agreement").
Capitalized terms used herein but not otherwise defined herein shall have
the meaning assigned to such terms in the Loan Agreement and the Custodial
Agreement.
In accordance with Section 2.03(a) of the Loan Agreement, the undersigned
Borrower hereby requests that you, the Lender, make Advances to us in connection
with our delivery of Contracts on ____________________ (the requested Funding
Date), in connection with which we have pledged to you as Collateral the
Contracts. The Eligible Contracts that are subject to this Notice of Borrowing
and Pledge are set forth on the Contract Schedule attached hereto.
The Borrower hereby certifies, as of such Funding Date, that:
(a) no Default or Event of Default has occurred and is continuing on the
date hereof nor will occur after giving effect to such Advance as a
result of such Advance;
(b) each of the representations and warranties made by the Borrower in or
pursuant to the Loan Documents is true and correct in all material
respects on and as of such date as if made on and as of the date
hereof (or, if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date);
(c) the Borrower has satisfied all conditions precedent in Section 5.02 of
the Loan Agreement and all other requirements of the Loan Agreement.
The undersigned is a duly authorized officer of the Borrower. The
undersigned further represents and warrants that (1) the documents constituting
the Contract Delivery Documents with respect to the Contracts that are the
subject of the Advance requested herein and more specifically identified on the
Contract Delivery Schedule delivered to both the Lender and the Custodian in
connection herewith have been delivered to Custodian and such Contract Delivery
Documents are to be held by the Custodian subject to Lender's first priority
security interest thereon, (2) all other documents related to such Contracts
(including, but not limited to, insurance policies, loan applications and
appraisals) have been or will be created and held by Borrower in trust for
Lender, (3) all documents related to such Receipted Contracts withdrawn from the
Custodian pursuant to the Custodial Agreement shall be held in trust by Borrower
for Lender, and Borrower will not attempt to pledge, hypothecate or otherwise
transfer such Receipted Contracts to any other party until (A) the Advance to
which such Contracts are related has been paid in full by Borrower and (B) an
officer's certificate has been delivered to the Custodian by the Servicer
pursuant to the requirements of the Custodial Agreement and (4) Borrower has
granted a first priority perfected security interest in and Lien on the
Receipted Contracts.
Borrower hereby represents and warrants that (x) the Contracts delivered
pursuant to this Notice of Borrowing and Pledge have an unpaid principal balance
as of the date hereof of $__________ and (y) the total number of such Contracts
is ______.
Very truly yours,
By: _____________________________
Name: _____________________________
Title: _____________________________
Schedule I to Notice of
Borrowing and Pledge
[CONTRACTS PROPOSED TO BE PLEDGED
TO LENDER ON FUNDING DATE]
[attach Contract Schedule]
EXHIBIT E
UNDERWRITING GUIDELINES
[TO BE PROVIDED BY BORROWER]
EXHIBIT F
REQUIRED FIELDS FOR SERVICING TRANSMISSION
SERVICING REPORT CASH COLLECTIONS SUBSTANTIALLY
IN THE FORM OF BLANK IN EXCEL SPREAD SHEET
EXHIBIT G
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED BY LENDER ]
EXHIBIT H
FORM OF CONFIDENTIALITY
AGREEMENT
In connection with your consideration of a possible or actual acquisition
of a participating interest (the "Transaction") in an advance, note or
commitment of Greenwich Capital Financial Products, Inc. ("Greenwich") pursuant
to a Master Loan and Security Agreement between Greenwich and
____________________ (the "Borrower"") dated _____________, 2001, you have
requested the right to review certain non-public information regarding the
Borrower that is in the possession of Greenwich. In consideration of, and as a
condition to, furnishing you with such information and any other information
(whether communicated in writing or communicated orally) delivered to you by
Greenwich or its affiliates, directors, officers, employees, advisors, agents or
"controlling persons" (within the meaning of the Securities Exchange Act of
1934, as amended (the "1934 Act")) (such affiliates and other persons being
herein referred to collectively as Greenwich "Representatives") in connection
with the consideration of a Transaction (such information being herein referred
to as "Evaluation Material"), Greenwich hereby requests your agreement as
follows:
The Evaluation Material will be used solely for the purpose of evaluating a
possible Transaction with Greenwich involving you or your affiliates, and unless
and until you have completed such Transaction pursuant to a definitive agreement
between you or any such affiliate and Greenwich, such Evaluation Material will
be kept strictly confidential by you and your affiliates, directors, officers,
employees, advisors, agents or controlling persons (such affiliates and other
persons being herein referred to collectively as "your Representatives"), except
that the Evaluation Material or portions thereof may be disclosed to those of
your Representatives who need to know such information for the purpose of
evaluating a possible Transaction with Greenwich (it being understood that prior
to such disclosure your Representatives will be informed of the confidential
nature of the Evaluation Material and shall agree to be bound by this
Agreement). You agree to be responsible for any breach of this Agreement by your
Representatives.
The term "Evaluation Material" does not include any information which (i)
at the time of disclosure or thereafter is generally known by the public (other
than as a result of its disclosure by you or your Representatives), (ii) was or
becomes available to you from a person that, to your knowledge, is not
prohibited from transmitting the information to you, or (iii) information that
meets the requirements described in clauses (i) and (ii) above that is currently
in your possession. As used in this Agreement, the term "person" shall be
broadly interpreted to include, without limitation, any corporation, company,
joint venture, partnership or individual.
In the event that you receive a request to disclose all or any part of the
information contained in the Evaluation Material under the terms of a valid and
effective subpoena or order issued by a court of competent jurisdiction, you
agree to (i) immediately notify Greenwich and the Borrower of the existence,
terms and circumstances surrounding such a request, (ii) consult with the
Borrower on the advisability of taking legally available steps to resist or
narrow such request, and (iii) if disclosure of such information is required,
exercise your best efforts to obtain an order or other reliable assurance that
confidential treatment will be accorded to such information.
Unless otherwise required by law in the opinion of your counsel, neither
you nor your Representative will, without our prior written consent, disclose to
any person the fact that the Evaluation Material has been made available to you.
You agree not to initiate or maintain contact (except for those contacts
made in the ordinary course of business) with any officer, director or employee
of the Borrower regarding the business, operations, prospects or finances of the
Borrower or the employment of such officer, director or employee, except with
the express written permission of the Borrower.
You understand and acknowledge that the Borrower is not making any
representation or warranty, express or implied, as to the accuracy or
completeness of the Evaluation Material or any other information provided to you
by Greenwich. Neither the Borrower, its respective affiliates or
Representatives, nor any of its respective officers, directors, employees,
agents or controlling persons (within the meaning of the ▇▇▇▇ ▇▇▇) shall have
any liability to you or any other person (including, without limitation, any of
your Representatives) resulting from your use of the Evaluation Material.
You represent and agree that you will not use any Evaluation Material to
trade in any securities of Borrower.
You agree that neither Greenwich or the Borrower has not granted you any
license, copyright, or similar right with respect to any of the Evaluation
Material or any other information provided to you by Greenwich.
If you determine that you do not wish to proceed with the Transaction, you
will promptly deliver to Greenwich all of the Evaluation Material, including all
copies and reproductions thereof in your possession or in the possession of any
of your Representatives.
Without prejudice to the rights and remedies otherwise available to the
Borrower, the Borrower shall be entitled to equitable relief by way of
injunction if you or any of your Representatives breach or threaten to breach
any of the provisions of this Agreement. You agree to waive, and to cause your
Representatives to waive, any requirement for the securing or posting of any
bond in connection with such remedy. You agree to pay all costs and expenses of
the Borrower in enforcing this Agreement.
The validity and interpretation of this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York
applicable to agreements made and to be fully performed therein (excluding the
conflicts of law rules). You submit to the jurisdiction of any court of the
State of New York or the United States District Court for the Southern District
of the State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement.
The benefits of this Agreement shall inure to the respective successors and
assigns of the parties hereto, and the obligations and liabilities assumed in
this Agreement by the parties hereto shall be binding upon the respective
successors and assigns; provided that the foregoing shall not be deemed to allow
you to transfer or assign any of the Evaluation Materials.
If it is found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) that any term or provision hereof is invalid or
unenforceable, (i) the remaining terms and provisions hereof shall be unimpaired
and shall remain in full force and effect and (ii) the invalid or unenforceable
provision or term shall be replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of such invalid
or unenforceable term or provision.
This Agreement embodies the entire agreement and understanding of the
parties hereto and supersedes any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No alteration,
waiver, amendments, or change or supplement hereto shall be binding or effective
unless the same is set forth in writing by a duly authorized representative of
each party and may be modified or waived only by a separate letter executed by
the Borrower and you expressly so modifying or waiving such Agreement.
For the convenience of the parties, any number of counterparts of this
Agreement may be executed by the parties hereto. Each such counterpart shall be,
and shall be deemed to be, an original instrument, but all such counterparts
taken together shall constitute one and the same Agreement.
The Borrower is an express third party beneficiary of this Agreement and
this Agreement may not be modified or waived in any respect without the prior
express written consent of the Borrower.
Kindly execute and return one copy of this letter which will constitute our
Agreement with respect to the subject matter of this letter.
By: ____________________________________
Greenwich Capital Financial Products, Inc.
Confirmed and agreed to this
_____ day of
___________________, ______.
By: _________________________
Name: ________________________
Title: _______________________
EXHIBIT I
FORM OF CONTRACT
[TO BE PROVIDED BY BORROWER]
EXHIBIT J
MASTER AGENCY AGREEMENT
EXHIBIT K
FORM OF SUBORDINATION AGREEMENT
[TO BE PROVIDED BY LENDER]
EXHIBIT L
COLLECTION POLICIES AND PROCEDURES
EXHIBIT M
FORM OF POWER OF ATTORNEY
