EXHIBIT 10.4
================================================================================
$975,000,000
WAREHOUSE LENDING AGREEMENT
DATED AS OF APRIL 29, 2005
AMONG
TRIAD FINANCIAL CORPORATION,
AS ORIGINATOR AND SERVICER,
TRIAD FINANCIAL WAREHOUSE SPECIAL PURPOSE LLC,
AS SELLER
TRIAD AUTOMOBILE RECEIVABLES WAREHOUSE TRUST,
AS BORROWER
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
AS COLLECTION ACCOUNT BANK
AND
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE COMPANY,
AS LENDER
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions.................................................................................... 1
Section 1.02. Accounting Terms and Determinations............................................................ 31
Section 1.03. Other Definitional Terms....................................................................... 31
ARTICLE II.
AMOUNT AND TERMS OF THE LOANS
Section 2.01. The Loans...................................................................................... 31
Section 2.02. The Notes...................................................................................... 32
Section 2.03. Making the Loans............................................................................... 33
Section 2.04. Borrowings under Other Warehouse Facility...................................................... 34
Section 2.05. Commitment Fee Initial Payment, Commitment Fee Credit Amount and Commitment Fee
Extension Amounts; Renewal Commitment Fees..................................................... 34
Section 2.06. Borrowings in Respect of Clean-up Call Contracts............................................... 35
Section 2.07. Confirmation Statements with Respect to Supplemental Loans..................................... 38
Section 2.08. Post-Closing Borrowing Base Reconciliation..................................................... 38
Section 2.09. Notices of Current Margin Amount and Market Value.............................................. 38
ARTICLE III.
INTEREST, PAYMENTS, ETC.
Section 3.01. Interest on the Loans.......................................................................... 39
Section 3.02. Optional Prepayments........................................................................... 39
Section 3.03. Mandatory Repayments and Prepayments........................................................... 39
Section 3.04. Funds; Manner of Payment....................................................................... 42
Section 3.05. Default Interest............................................................................... 42
Section 3.06. Requirements of Law............................................................................ 43
Section 3.07. Indemnity...................................................................................... 43
Section 3.08. Illegality; Substituted Interest Rates......................................................... 44
Section 3.09. Application of Payments during Event of Default................................................ 44
Section 3.10. Application of Payments, Establishment of Lockbox, Clearing Account, Concentration
Account and Collection Account................................................................. 46
Section 3.11. Collections.................................................................................... 48
Section 3.12. Application of Collections by Borrower......................................................... 48
Section 3.13. [Reserved]..................................................................................... 51
Section 3.14. [Reserved]..................................................................................... 51
Section 3.15. [Reserved]..................................................................................... ▇▇
-▇-
▇▇▇▇▇▇▇ 3.16. Taxes.......................................................................................... 51
ARTICLE IV.
CONDITIONS TO CLOSING AND THE LOANS
Section 4.01. Conditions Precedent to the Closing............................................................ 52
Section 4.02. Conditions Precedent to All Loans.............................................................. 56
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.01. Organization and Good Standing................................................................. 59
Section 5.02. Due Qualification.............................................................................. 59
Section 5.03. Power and Authority............................................................................ 59
Section 5.04. Binding Obligation............................................................................. 59
Section 5.05. No Violation................................................................................... 59
Section 5.06. Compliance with Law............................................................................ 60
Section 5.07. No Consents.................................................................................... 60
Section 5.08. No Proceedings................................................................................. 60
Section 5.09. No Adverse Selection........................................................................... 60
Section 5.10. Other Obligations.............................................................................. 61
Section 5.11. Regulation U................................................................................... 61
Section 5.12. Investment Company Act, Etc.................................................................... 61
Section 5.13. [Reserved]..................................................................................... 61
Section 5.14. Collateral Security............................................................................ 61
Section 5.15. Ownership of Properties........................................................................ 61
Section 5.16. [Reserved]..................................................................................... 61
Section 5.17. [Reserved]..................................................................................... 61
Section 5.18. The Security Agreement......................................................................... 62
Section 5.19. Eligible Contracts............................................................................. 62
Section 5.20. Ownership of Borrower.......................................................................... 62
Section 5.21. No Other Business.............................................................................. 62
Section 5.22. No Indebtedness................................................................................ 62
Section 5.23. No Fraudulent Conveyance....................................................................... 62
ARTICLE VI.
AFFIRMATIVE COVENANTS
Section 6.01. Notice of Defaults, Other Commitment Termination Events, Litigation, Adverse
Judgments, Etc................................................................................. 63
Section 6.02. Taxes.......................................................................................... 64
Section 6.03. Separate Existence; No Commingling............................................................. 64
Section 6.04. Financing Statements........................................................................... 65
Section 6.05. Books and Records; Other Information........................................................... 65
-ii-
Section 6.06. Payment of Fees and Expenses................................................................... 66
Section 6.07. Continuity of Business and Compliance With Agreement........................................... 66
Section 6.08. Ownership of Borrower.......................................................................... 66
Section 6.09. Shareholder Reports, Governmental Filings, Etc................................................. 66
Section 6.10. Fulfillment of Obligations..................................................................... 66
Section 6.11. Changes in Location, Name, Etc................................................................. 66
Section 6.12. Compliance with Laws, Etc...................................................................... 67
Section 6.13. Borrowing Base Certificates.................................................................... 67
Section 6.14. Collateral Statements.......................................................................... 67
Section 6.15. Actions to Preserve Lender's Security Interest................................................. 67
Section 6.16. Actions to Enforce Rights under Contracts...................................................... 67
Section 6.17. Collateral Performance Tests................................................................... 67
Section 6.18. Hedging Strategy............................................................................... 68
Section 6.19. Monthly Servicer's Certificate................................................................. 68
Section 6.20. Notice to Lender of Amendments to Documentation Checklist, Program Guidelines,
Servicing Policies and Procedures or Form-of-Contract Requirements............................. 68
Section 6.21. Conformity to Higher Standards That May Be Specified in Securitizations........................ 68
ARTICLE VII.
NEGATIVE COVENANTS
Section 7.01. Adverse Transactions........................................................................... 69
Section 7.02. Guarantees..................................................................................... 69
Section 7.03. Dividends...................................................................................... 69
Section 7.04. Investments.................................................................................... 69
Section 7.05. [Reserved]..................................................................................... 69
Section 7.06. Limitations on Loans; Other Advances by Borrower............................................... 69
Section 7.07. Changes in Capital Structure or Business Objectives............................................ 69
Section 7.08. Limitation on Modifications, Etc............................................................... 70
Section 7.09. Asset Sales.................................................................................... 70
Section 7.10. No Liens on Equity Interests in Borrower....................................................... 70
Section 7.11. No Petition.................................................................................... 70
Section 7.12. Sale and Contribution Agreement and Receivables Purchase Agreement............................. 71
Section 7.13. No Indebtedness................................................................................ 71
Section 7.14. No Other Business.............................................................................. 71
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.01. Events of Default.............................................................................. 71
Section 8.02. Remedies of Default............................................................................ 74
-iii-
ARTICLE IX.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFC AND SELLER
Section 9.01. Representations, Warranties and Covenants of TFC............................................... 75
Section 9.02. Representations, Warranties and Covenants of Seller............................................ 75
ARTICLE X.
THE COLLECTION ACCOUNT BANK
Section 10.01. Duties and Rights of Collection Account Bank................................................... 76
Section 10.02. Individual Rights of Collection Account Bank................................................... 77
Section 10.03. Collection Account Bank's Fees and Expenses.................................................... 77
Section 10.04. Indemnity to Collection Account Bank........................................................... 77
Section 10.05. Replacement of Collection Account Bank......................................................... 78
Section 10.06. Successor Collection Account Bank.............................................................. 78
Section 10.07. Waiver of Setoffs.............................................................................. 78
Section 10.08. No Petition.................................................................................... 78
Section 10.09. Representations and Warranties of the Collection Account Bank.................................. 79
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Set-off........................................................................................ 79
Section 11.02. Amendments, Waivers, etc....................................................................... 79
Section 11.03. No Waiver; Remedies Cumulative................................................................. 80
Section 11.04. Payment of Expenses, Indemnity, etc............................................................ 80
Section 11.05. Headings Descriptive........................................................................... 81
Section 11.06. Severability................................................................................... 81
Section 11.07. Entire Agreement............................................................................... 81
Section 11.08. Binding Effect................................................................................. 81
Section 11.09. Survival....................................................................................... 81
Section 11.10. GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY................................................... 81
Section 11.11. Notice......................................................................................... 82
Section 11.12. Counterparts................................................................................... 83
Section 11.13. Third-Party Beneficiaries...................................................................... 83
Section 11.14. Future Assurances.............................................................................. 84
Section 11.15. Assignments; Participations.................................................................... 84
Section 11.16. Confidentiality of Information................................................................. 84
Section 11.17. Lender Consent to Transactions................................................................. 85
Section 11.18. Limitation of Liability of Owner Trustee....................................................... 85
SCHEDULES
SCHEDULE 1
-iv-
SCHEDULE A Eligible State Schedule
SCHEDULE B Representations and Warranties of Borrower with Respect
to the Contracts
SCHEDULE C Location of Contract Files and Legal Files
SCHEDULE D Lockbox Schedule
EXHIBITS
EXHIBIT A [RESERVED]
EXHIBIT B FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C [RESERVED]
EXHIBIT D FORMS OF DEALER AGREEMENT
EXHIBIT E DOCUMENTATION CHECKLIST
EXHIBIT F-1 FORM-OF-CONTRACT REQUIREMENTS
EXHIBIT F-2 REPRESENTATIVE SAMPLE FORMS OF CONTRACT
EXHIBIT G [RESERVED]
EXHIBIT H SERVICING POLICIES AND PROCEDURES
EXHIBIT I FORM OF SALE NOTICE
EXHIBIT J PROGRAM GUIDELINES
EXHIBIT K [RESERVED]
EXHIBIT L SECURITY AGREEMENT
EXHIBIT M [RESERVED]
EXHIBIT N-1 FORM OF PROMISSORY NOTE
EXHIBIT N-2 FORM OF SUPPLEMENTAL LOAN PROMISSORY NOTE
EXHIBIT O-1 NOTICE OF WAREHOUSE BORROWING
EXHIBIT O-2 SUPPLEMENTAL BORROWING REQUEST
EXHIBIT P FORM OF CONFIRMATION STATEMENT
EXHIBIT Q FORM OF OPINION OF COUNSEL TO ORIGINATOR, SERVICER, SELLER
AND BORROWER
EXHIBIT R WIRE TRANSFER INSTRUCTIONS
EXHIBIT S RECEIVABLES PURCHASE AGREEMENT
EXHIBIT T SALE AND CONTRIBUTION AGREEMENT
EXHIBIT U SERVICING AGREEMENT
EXHIBIT V WAREHOUSE AFFILIATE GUARANTY
-v-
WAREHOUSE LENDING AGREEMENT, dated as of April 29, 2005, among TRIAD
AUTOMOBILE RECEIVABLES WAREHOUSE TRUST, a Delaware statutory trust ("Borrower"),
TRIAD FINANCIAL WAREHOUSE SPECIAL PURPOSE LLC, a Delaware limited liability
company ("Seller"), TRIAD FINANCIAL CORPORATION, a California corporation
("TFC"), JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a national banking
association (the "Collection Account Bank"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE COMPANY,
a New York limited partnership ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower wishes to borrow certain sums from Lender hereunder in
order to purchase certain motor vehicle retail installment sale contracts; and
WHEREAS, Lender is willing, upon the terms and conditions set forth below,
to lend such sums to Borrower.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. As used herein, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
"Additional Approved Residual Financing Agreement" means (i) a residual
financing agreement related to the Other Residual Facility and (ii) any other
residual financing agreement under which the borrower is TFC or a special
purpose Affiliate of TFC other than Seller, Borrower or Residual Facility
Borrower and the lender is a financial institution other than Lender or Other
Warehouse Lender, loans pursuant to which Lender has agreed in its reasonable
discretion to include in the calculation of the amount specified under clause
(x)(B) of the definition of "Net Securitization Proceeds Percentage"; provided
that, for the purposes of any calculation of the amount specified under clause
(x)(B) of the definition of "Net Securitization Proceeds Percentage", only loans
collateralized by pledged securities that are deemed by Lender in its reasonable
discretion to meet the criteria for Pledged ABS under the Master Residual Loan
Agreement shall be considered, and the amount of any such loan shall be deemed
to be the amount that Lender would loan against such pledged securities on the
basis of the advance rates and market value formulas specified in the Master
Residual Loan Agreement.
"Additional Principal Payment Amount" means, with respect to any
Remittance Date that occurs on or after the Termination Date, and after giving
effect to all payments made pursuant to clauses (i) through (vi) of Section
3.12(c) on such Remittance Date, an amount equal to the sum of (x) the Total
Supplemental Outstandings on such Remittance Date and (y) the excess of the
Total Warehouse Outstandings over the Term Loan Borrowing Base on such
Remittance Date.
1
"Administration Fee" means the fee payable to the Administrator pursuant
to the Trust Agreement.
"Administrator" means TFC in its capacity as administrator under the Trust
Agreement or any successor administrator under the Trust Agreement.
"Advance Rate" means:
(i) with respect to Class 1 Eligible Contracts, initially the percentage
specified in Item 1 of Schedule 1; provided, however, with respect to Class 1
Eligible Contracts, if at any date of determination the then-applicable Advance
Rate is greater than the anticipated Net Securitization Proceeds Percentage for
such date of determination, then Lender may (at its sole option) modify the
Advance Rate with respect to Class 1 Eligible Contracts to such anticipated Net
Securitization Proceeds Percentage; provided further, that the Advance Rate with
respect to Class 1 Eligible Contracts shall not exceed the percentage specified
in Item 1 of Schedule 1;
(ii) with respect to any Ineligible Contract, zero percent (0%); and
(iii) with respect to Class 2 Eligible Contracts, the following
percentage, as applicable:
(a) with respect to Class 2 Eligible Contracts that are delinquent
thirty-one (31) consecutive days or more, but not more than sixty (60)
consecutive days as of the close of business on the last day of the
Collection Period immediately preceding such date of determination (or
for the first Collection Period, as of the initial Cut-off Date), as of
any date of determination, the percentage specified in Item 2 of
Schedule 1, subject to clause (x) of the definition of "Borrowing
Base";
(b) with respect to Class 2 Eligible Contracts that are delinquent
sixty-one (61) consecutive days or more, but not more than ninety (90)
consecutive days as of the close of business on the last day of the
Collection Period immediately preceding such date of determination (or
for the first Collection Period, as of the initial Cut-off Date), the
percentage specified in Item 3 of Schedule 1; or
(c) with respect to Class 2 Eligible Contracts that are delinquent
ninety-one (91) consecutive days or more, but not more than one hundred
twenty (120) consecutive days as of the close of business on the last
day of the Collection Period immediately preceding such date of
determination (or for the first Collection Period, as of the initial
Cut-off Date), the percentage specified in Item 4 of Schedule 1.
"Advance Rate Reduction" means a reduction of the Advance Rate for any
Contract pursuant to the first proviso to the definition of "Advance Rate".
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, control of a Person
means the power, direct or indirect, (i) to vote 20% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise; provided that, for the purposes hereof,
each of the Equity
2
Sponsors and its respective affiliates shall be deemed not to be "Affiliates" of
any Triad Entity, and each Triad Entity shall be deemed not to be an Affiliate
of any of the Equity Sponsors or any of their respective affiliates; provided
further that the Equity Sponsors and the Triad Entities shall be deemed to be
"Affiliates" hereunder solely for purposes of Sections 6.03(b), 6.03(c) and 7.06
hereunder.
"Aggregate Total Outstandings" means, with respect to any date of
determination, the sum of (x) the Total Warehouse Outstandings as of such date
of determination and (y) the Total Supplemental Outstandings as of such date of
determination.
"Agreement" means this Warehouse Lending Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"Amount Financed" means the amount set forth in the underlying Contract as
the "Amount Financed".
"Annual Percentage Rate" or "APR" of a Contract means the annual
percentage rate of finance charges or service charges, as stated in such
Contract; provided that, if the annual rate with respect to such Contract is
reduced pursuant to the Servicemembers Relief Act, formerly known as the
Soldiers' and Sailors' Civil Relief Act of 1940, the Annual Percentage Rate or
APR shall refer to such reduced rate.
"Applicable LIBOR" means, as of any date of determination, for each Loan,
LIBOR as determined on such date.
"Approved Third-Party Vendor" has the meaning set forth in the Servicing
Agreement.
"Authorized Signatory" means, with respect to Borrower, (x) any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to Borrower and who is identified on the list of authorized officers
delivered by the Owner Trustee to Lender on the Closing Date (as such list may
be modified or supplemented from time to time thereafter) and (y), so long as
the Administrator is acting as such, a Responsible Officer of Administrator.
"Auto Loan Purchase and Sale Agreement" means any agreement between a
Third-Party Lender and TFC relating to the acquisition of Contracts from a
Third-Party Lender by TFC.
"Available Commitment" means, as of any date of determination, the amount
by which the Commitment as of such date of determination exceeds the Total
Warehouse Outstandings as of such date of determination.
"Available Supplemental Commitment" means, as of any date of
determination, the amount by which the Supplemental Commitment as of such date
of determination exceeds the Total Supplemental Outstandings as of such date of
determination.
"Backup Servicer" has the meaning set forth in the Servicing Agreement.
3
"Bankruptcy Code" means the law codified and enacted as Title 11 of the
United States Code, entitled "Bankruptcy" and any successor statute thereto, in
either case, as now or hereafter in effect.
"Base Servicing Fee" has the meaning set forth in the Servicing Agreement.
"Blocked Account Agreement" means the Amended and Restated Blocked Account
Agreement, dated as of April 29, 2005, by and among Borrower, TFC, Mellon, and
JPMorgan Chase Bank, National Association, in its capacities as agent and as
trustee under various securitization trust instruments and as agent of Lender
and the Other Warehouse Lender under the Loan Documents, as such agreement may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof and hereof.
"Bloomberg" means Bloomberg Financial Markets Commodities News or its
successors.
"Board" means the Board of Governors of the Federal Reserve System.
"Borrower" shall have the meaning set forth in the preamble hereof.
"Borrower Trust Certificates" means the trust certificates evidencing the
beneficial interest of the Certificateholder in Borrower.
"Borrowing" means a borrowing of a Loan on a Borrowing Date during the
Commitment Period in a minimum amount not less than the applicable Minimum
Borrowing Amount.
"Borrowing Base" means, on any date of determination, an amount equal to
the sum of (a) the product of (x) the then-applicable Advance Rate for all Class
1 Eligible Contracts and (y) the aggregate Principal Balance (as of the
applicable Borrowing Base Reference Date) of all Class 1 Eligible Contracts and
(b) the product of (x) the then-applicable Advance Rate for the Class 2 Eligible
Contracts and (y) the aggregate Principal Balance (as of the applicable
Borrowing Base Reference Date) of all Class 2 Eligible Contracts; provided that,
notwithstanding the foregoing, as of any such date of determination, the
Eligible Contracts that shall be permitted to be included in the foregoing
Borrowing Base calculation shall be subject to the following limitations (unless
otherwise consented to in writing by Lender):
(x) if the portion of the Borrowing Base (computed as described
above) composed of Class 2 Eligible Contracts described in clause
(iii)(a) of the definition of "Advance Rate" (the "31-60 Gross
Contribution") exceeds the applicable dollar amount specified in
Item 5 of Schedule 1 as of such date of determination, then such
portion of the Borrowing Base composed of the 31-60 Gross
Contribution shall be reduced by an amount equal to the percentage
of such excess specified in Item 6 of Schedule 1;
(y) the amount of the Borrowing Base composed of Class 2 Eligible
Contracts described in clauses (iii)(a), (iii)(b) and (iii)(c) of
the definition of "Advance Rate" (after giving effect to the
preceding clause (x)) shall not exceed the applicable dollar amount
specified in Item 7 of Schedule 1 as of such date of determination;
and
4
(z) the amount of the Borrowing Base composed of Class 2 Eligible
Contracts described in clauses (iii)(b) and (iii)(c) of the
definition of "Advance Rate" shall not exceed the applicable dollar
amount specified in Item 8 of Schedule 1 as of such date of
determination.
"Borrowing Base Certificate" means a borrowing base certificate
substantially in the form of Exhibit B hereto (as such Exhibit B may be amended,
supplemented or otherwise modified from time to time by the written consent of
Borrower and Lender).
"Borrowing Base Deficiency" means, as of any date of determination, the
amount by which Total Warehouse Outstandings exceeds the Borrowing Base for such
day.
"Borrowing Base Reference Date" means (a) with respect to any date of
determination and an eligible Clean-up Call Contract to be pledged under the
Security Agreement during the Collection Period in which such date of
determination occurs, the close of business on the last day of the calendar
month immediately preceding the related Clean-up Call Settlement Date (provided
that such Clean-up Call Settlement Date is to occur during the calendar month in
which such date of determination occurs), (b) with respect to any other Eligible
Contract and the Initial Borrowing Base Determination Date for such Eligible
Contract, the later of (i) the beginning of business on the Cut-off Date
specified in the related Notice of Warehouse Borrowing and (ii) the origination
date of such Eligible Contract, and (c) with respect to any other Eligible
Contract and any date of determination other than the Initial Borrowing Base
Determination Date for such Eligible Contract, (i) if such date of determination
is on or prior to the Remittance Date in the month of such date of
determination, the close of business on the last day of the second Collection
Period preceding such date of determination and (ii) if such date of
determination is after the Remittance Date in the month of such date of
determination, the close of business on the last day of the Collection Period
immediately preceding such date of determination. Notwithstanding the foregoing,
for the purposes of the date of determination on the Reconciliation Report Date,
the Borrowing Base Reference Date for all Contracts shall be the close of
business on April 30, 2005.
"Borrowing Date" means any date, during the Commitment Period, on which a
Borrowing occurs hereunder.
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the State of New York, the State of California or
the State of Delaware shall be authorized or obligated by law, executive order,
or governmental decree to be closed. Any action required to be taken on a day
which falls on a day other than a Business Day shall be conducted on the next
Business Day.
"Certificate Distribution Account" has the meaning ascribed to such term
in the Trust Agreement.
"Certificateholder" means the Person in whose name the Borrower Trust
Certificates are registered.
"Change of Control" means any event or circumstance as a result of which
(i) TFC no longer owns 100% of the membership interests in Residual Facility
Borrower, (ii) TFC no longer
5
owns 100% of the membership interests in Seller, (iii) Seller no longer owns
100% of the Borrower Trust Certificates, (iv) unless TFC has completed an
initial public offering of its capital stock, ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd. and its
Affiliates, GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC and its Affiliates and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Investor Group no longer collectively own (A) at least 50% of the capital stock
of TFC and (B) at least 50% of the aggregate voting power of all classes of
Voting Stock of TFC, (v) any other Person and its Affiliates collectively own a
greater percentage of either the capital stock of TFC or the aggregate voting
power of all classes of Voting Stock of TFC than the largest holder of such
capital stock or Voting Stock among (A) ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd. and its
Affiliates, (B) GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC and its Affiliates and (C) ▇▇▇▇▇▇▇ Sachs
Investor Group, or (vi) any of TFC, Seller, Borrower or Residual Facility
Borrower merges or consolidates with, or sells all or substantially all of its
assets to, any other Person. As used in this definition, "Voting Stock" of any
Person shall mean the capital stock or other indicia of equity rights of such
Person which at the time has the power to vote for the election of one or more
members of the Board of Directors (or other governing body) of such Person.
"Class 1 Eligible Contracts" means, for any date of determination, the
Eligible Contracts that are current or delinquent thirty (30) consecutive days
or less as of the close of business on the last day of the Collection Period
immediately preceding such date of determination (or for the first Collection
Period, as of the initial Cut-off Date).
"Class 2 Eligible Contracts" means, for any date of determination,
Eligible Contracts that are delinquent thirty-one (31) consecutive days or more,
but not more than one hundred twenty (120) consecutive days as of the close of
business on the last day of the Collection Period immediately preceding such
date of determination (or for the first Collection Period, as of the initial
Cut-off Date).
"Clean-up Call" means, with respect to any securitization of motor vehicle
loans sponsored by Originator, a contractual right of Originator (in its
capacity as servicer in such securitization) to purchase from the issuer in such
securitization the motor vehicle loans collateralizing or supporting the
securities issued in such securitization when the aggregate principal balance of
such loans has declined to an amount specified in the sale and servicing
agreement or pooling and servicing agreement for such securitization.
"Clean-up Call Contract" means a Contract that (x) was transferred to an
issuer in a securitization sponsored by Originator, (y) was purchased by
Originator (in its capacity as servicer in such securitization) in connection
with a Clean-up Call and (z) is pledged by Borrower to Lender under the Security
Agreement on a Borrowing Date that is no later than one Business Day after the
date of the purchase referenced in clause (y) above.
"Clean-up Call Loan" means any Warehouse Loan with respect to which any
Clean-up Call Contract is listed on the related Notice of Warehouse Borrowing;
provided that the Clean-up Call Loans listed on the Notice of Warehouse
Borrowing with respect to any Clean-up Call Loan shall all relate to the same
Clean-up Call.
"Clean-up Call Differential Amount" means, with respect to any Clean-up
Call Loan, an amount equal to (x) the Optional Redemption Amount for the related
Clean-up Call minus (y)
6
the Clean-up Call Loan Funding Amount for such Clean-up Call Loan minus (z) the
Other Lender Related Clean-up Call Loan Disbursement Amount for such Clean-up
Call Loan (as determined by Borrower after giving effect to the amount of the
Other Lender Related Clean-up Call Loan Funding Amount for such Clean-up Call
Loan).
"Clean-up Call Loan Disbursement Account" means the account designated as
such, established and maintained pursuant to Section 2.06(a).
"Clean-up Call Loan Disbursement Amount" means, with respect to any
Clean-up Call Loan, the sum of (x) the Clean-up Call Loan Funding Amount for
such Clean-up Call Loan and (y) the Clean-up Call Differential Amount for such
Clean-up Call Loan.
"Clean-up Call Loan Funding Amount" means, with respect to any Clean-up
Call Loan, an amount equal to the proceeds of a Borrowing in respect of Clean-up
Call Loan to be made available to Borrower upon fulfillment of all applicable
conditions to such Loan set forth in this Agreement (including, without
limitation, all conditions specified in the applicable Lender Clean-up Call
Disbursement Notice).
"Clean-up Call Settlement Date" means, with respect to any Clean-up Call
Loan, the date on which, in connection with the exercise of the related Clean-up
Call, the servicer in the related securitization is required to deposit the
applicable Optional Redemption Amount into the collection account for such
securitization thereby effecting the satisfaction and discharge of the indenture
and the release by the indenture trustee of the lien of the indenture on the
Clean-up Call Contracts and other collateral.
"Clearing Account" means account number 002-8644, titled "Triad Financial
Corporation," or such other account or accounts designated as such, established
and maintained with Mellon pursuant to the Blocked Account Agreement.
"Closing Date" means the date that all of the conditions precedent set
forth in Section 4.01 hereof have been fulfilled.
"Collateral" has the meaning set forth in the Security Agreement.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 3.10(c).
"Collection Account Bank" has the meaning specified in Section 3.10(c).
The initial Collection Account Bank shall be JPMorgan Chase Bank, National
Association.
"Collection Account Bank Indemnified Expenses" has the meaning set forth
in Section 10.04.
"Collection Account Bank Indemnified Parties" has the meaning set forth in
Section 10.04.
"Collection Period" means, in respect of a Remittance Date, the calendar
month preceding the month in which such Remittance Date occurs; provided that
the Collection Period
7
in respect of the first Remittance Date shall be the period from and including
the Closing Date to and including May 31, 2005.
"Commitment" means (a) as of any date of determination during the period
commencing with the Closing Date and ending on the Commitment Reduction Date, an
amount equal to (1) Nine Hundred Seventy-Five Million Dollars (U.S.
$975,000,000) minus (2) the Total Residual Facility Outstandings as of such date
of determination minus (3) Total Supplemental Outstandings as of such date of
determination, and (b) as of any date of determination during the period
commencing on the Commitment Reduction Date and ending on the Business Day
immediately preceding the Termination Date, an amount equal to (1) Seven Hundred
Fifty Million Dollars (U.S. $750,000,000) minus (2) the Total Residual Facility
Outstandings as of such date of determination minus (3) Total Supplemental
Outstandings as of such date of determination.
"Commitment Fee Credit Amount" means, if the Initial Securitization
Closing Date is within 60 days after the Closing Date, an amount equal to the
product of (i) a fraction, the numerator of which equals (A) 60, minus (B) the
number of days after the Closing Date on which the Initial Securitization
Closing Date occurs and the denominator of which is 60, (ii) the percentage
specified in Item 9 of Schedule 1, (iii) a fraction, the numerator of which is 2
and the denominator of which is 30 and (iv) Two Hundred Twenty-Five Million
Dollars (U.S. $225,000,000).
"Commitment Fee Initial Payment" means an amount equal to the sum of (a)
the product of (i) a fraction, the numerator of which is 2 and the denominator
of which is 30, (ii) the percentage specified in Item 9 of Schedule 1 and (iii)
Eight Hundred Fifty Million Dollars (U.S. $850,000,000) and (b) the product of
(i) a fraction, the numerator of which is 28 and the denominator of which is 30,
(ii) the percentage specified in Item 9 of Schedule 1 and (iii) Six Hundred
Twenty-Five Million Dollars (U.S. $625,000,000).
"Commitment Fee Post-60 Add-on Amount" means, if the Initial
Securitization Closing Date is later than sixty (60) days after the Closing
Date, an amount equal to the sum of the product of (i) a fraction, the numerator
of which is 1 and the denominator of which is 30, (ii) the percentage specified
in Item 9 of Schedule 1 and (iii) Two Hundred Twenty-Five Million Dollars (U.S.
$225,000,000).
"Commitment Fee Post-90 Add-on Amount" means, if the Initial
Securitization Closing Date is later than ninety (90) days after the Closing
Date, an amount equal to the sum of the product of (i) a fraction, the numerator
of which is 1 and the denominator of which is 30, (ii) the percentage specified
in Item 9 of Schedule 1 and (iii) Two Hundred Twenty-Five Million Dollars (U.S.
$225,000,000).
"Commitment Period" means the period commencing with the Closing Date and
ending on the Business Day immediately preceding the Termination Date. For the
avoidance of doubt, the Term Loan Extension Period (if any) shall not be part of
the Commitment Period.
"Commitment Reduction Date" means the date that is the earlier of (w) the
closing date of the Initial Securitization, (x) the sixtieth (60th) day after
the Closing Date if any portion of the
8
Commitment Fee Post-60 Add-on Amount is not paid in accordance with Section
2.05, (y) the ninetieth (90th) day after the Closing Date if any portion of the
Commitment Fee Post-90 Add-on Amount is not paid in accordance with Section 2.05
and (z) the one hundred twentieth (120th) day after the Closing Date.
"Commitment Termination Event" means the giving, or deemed giving, by
Lender to Borrower of notice of Lender's termination of the Commitment following
an Event of Default, in accordance with Section 8.02(a).
"Concentration Account" means account number 013-5271, titled "Triad
Financial Corporation," or such other account or accounts designated as such,
established and maintained with Mellon pursuant to the Blocked Account
Agreement.
"Confidential Collateral Proposal Report" means a report, item of
correspondence or other statement of information that relates solely to a
prospective purchase or financing of any Collateral, any Other Warehouse
Financing Facility Collateral, or any collateral under any Residual Financing
Agreement or the Other Residual Facility, which purchase or financing shall have
been proposed by a financial institution other than Lender.
"Confirmation Statement" has the meaning set forth in Section 2.07 hereof.
"Contract" means any retail installment sale contract or loan and security
agreement executed by an Obligor in respect of a Financed Vehicle, (a) under
which the portion of a payment allocable to interest and the portion allocable
to principal is determined in accordance with the Simple Interest Method, the
"actuarial", the "sum of the period balances" or the "sum of the monthly
balances" method (or any equivalent method) and (b) (i) identified on a schedule
delivered to Lender (in electronic format or hard copy substantially in the form
of such schedule delivered on the Closing Date), (ii) which is subject to the
first priority security interest of Lender under the Security Agreement and
(iii) which has not been released from the Lien of Lender as provided in Section
12(b) of the Security Agreement. For the avoidance of doubt, if Borrower or
Servicer shall be obligated to make a mandatory prepayment in the amount of the
Release Consideration for a Contract pursuant to Section 3.03(g) or 3.03(h), as
applicable, Lender shall be obligated to release its Lien on such Contract in
accordance with Section 12(b)(ii) or Section 12(b)(iii) of the Security
Agreement, as applicable.
"Contract Files" means, with respect to any Contract and the related
Financed Vehicle, a copy (which may be maintained as an electronic image) of
each of the following documents:
(a) the fully executed original of the Contract and any related
dealer assignment;
(b) the original credit application fully executed by the Obligor;
(c) the Lien Certificate or such documents that Borrower, or the
Servicer on behalf of Borrower, shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Originator in the
Financed Vehicle;
9
(d) all other documents listed on the Documentation Checklist in
effect on the Borrowing Date relating to such Contract; and
(e) any and all other documents that Borrower, or the Servicer on
behalf of Borrower, shall keep on file, in accordance with its customary
procedures, relating to a Contract, an Obligor or a Financed Vehicle.
"Conveyed Property" shall have the meaning set forth in the Receivables
Purchase Agreement.
"Corresponding Other Lender Clean-up Call Loan" means, with respect to a
Clean-up Call Loan, the Clean-up Call Loan Settlement Date therefor and the
Clean-up Call related thereto, an Other Lender Clean-up Call Loan that (a)
relates to such Clean-up Call and (b) is scheduled to close on such Clean-up
Call Loan Settlement Date.
"Current Margin Percentage" means, on any date of determination, a
percentage equal to (a) the product of (i) the percentage specified in Item 10
of Schedule 1 and (ii) a percentage equal to a fraction, expressed as a
percentage, the numerator of which is the Residual Value of all Class 1 Eligible
Contracts as of such date of determination and the denominator of which is the
aggregate Principal Balance of all Class 1 Eligible Contracts as of such date of
determination minus (b) the Differential Percentage as of such date of
determination.
"Custodian" means Servicer, in its capacity as custodian of the Legal
Files pursuant to the Servicing Agreement; provided, however, that, if any
Rating Agency shall at any time require the appointment of a third-party
custodian of receivables files in connection with any securitization of motor
vehicle loans sponsored by TFC or any Affiliate thereof, Lender, in its sole
discretion, may require that such third-party custodian be appointed as
Custodian of the Legal Files pursuant to a custodial agreement among such
custodian, Lender, Borrower and Servicer.
"Cut-off Date" means, in respect of any Contract, the related Borrowing
Date or such other date, acceptable to Lender in its reasonable discretion, as
may be specified in the related Notice of Warehouse Borrowing (provided that the
Cut-off Date in respect of the Initial Contracts shall be the close of business
on the fifth (5th) Business Day preceding the Closing Date).
"Dealer" means the dealer who sold a Financed Vehicle to an Obligor and
who originated and assigned the Contract relating to such Financed Vehicle to
Originator under an existing Dealer Agreement between such Dealer and
Originator, and any successor to such Dealer.
"Dealer Agreement" means any agreement between Originator and a Dealer
with respect to the origination of Contracts, substantially in a form attached
hereto as Exhibit D or such other form as shall be approved by Lender, which
approval shall not be unreasonably withheld.
"Dealer Recourse" means, with respect to any Contract, all rights arising
under the related Dealer Agreement or otherwise against the Dealer which
originated such Contract.
10
"Dealer Title Addendum" means, with respect to each Contract as to which
the Dealer Title Guaranty, if applicable, is included in the related Dealer
Agreement, a schedule of Dealers delivered to Servicer listing all Dealers for
which the Dealer Title Guaranty is included in the related Dealer Agreement.
"Dealer Title Guaranty" means, where, for reasons that are reasonably
acceptable to Servicer, the relevant Dealer is temporarily unable to furnish a
Lien Certificate, a written guaranty of such Dealer (which may be included in
the related Dealer Agreement if so indicated on the Dealer Title Addendum); each
of such documents having been signed where required by the Dealer in the
appropriate spaces, and with all blanks properly filled in and otherwise
correctly prepared.
"Default" means any condition, act or event which, with notice or lapse of
time or both, would constitute an Event of Default.
"Demand Note" has the meaning set forth in the Master Residual Loan
Agreement.
"Differential Percentage" means, on any date of determination, a
percentage equal to (a) the Advance Rate with respect to Class 1 Eligible
Contracts as of such date of determination minus (b) a percentage equivalent to
(i) an amount equal to (A) the amount specified in clause (x)(A) of the
definition of "Net Securitization Proceeds Percentage" minus (B) the amount
specified in clause (x)(C) of the definition of "Net Securitization Proceeds
Percentage" divided by (ii) the amount specified in clause (y) of the definition
of "Net Securitization Proceeds Percentage" (in each case, with respect to the
anticipated Net Securitization Proceeds Percentage as of such date of
determination).
"Documentation Checklist" means the Documentation Checklist attached
hereto as Exhibit E, as the same may be amended from time to time (provided that
Borrower shall provide Lender with written notice of any such amendment promptly
after such amendment).
"Dollar" and the sign "$" means lawful money of the United States of
America.
"Eligible Contracts" means all Contracts other than Ineligible Contracts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution, or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the States thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories that signifies investment
grade.
"Eligible Institution" means (a) JPMorgan Chase Bank, National Association
or (b) a depository institution organized under the laws of the United States of
America or any one of the States thereof or the District of Columbia (or any
domestic branch of a foreign bank), which (i) has either (A) a long-term
unsecured debt rating of at least AA by Standard & Poor's and Aa2 by ▇▇▇▇▇'▇ or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 by
▇▇▇▇▇'▇, or any other long-term, short-term or certificate of deposit rating
acceptable to Lender
11
and (ii) whose deposits are insured by the FDIC; provided that Mellon shall be
considered an Eligible Institution for the purposes of the second sentence of
Section 3.10(a).
"Eligible Investments" means book-entry securities, negotiable instruments
or securities, having a maturity date as specified in Section 3.10(d),
represented by instruments in bearer or registered form which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any State thereof (or any domestic branch
of a foreign bank) and subject to supervision and examination by federal
or State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a short-term credit rating of A-1+ by S&P and
P-1 from ▇▇▇▇▇'▇;
(iii) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from ▇▇▇▇▇'▇ of P-1 and
a rating of A-1+ from S&P ;
(iv) investments in money market funds having a rating from ▇▇▇▇▇'▇
in the highest investment category granted thereby and a rating of AAA
from S&P ;
(v) demand deposits, time deposits and certificates of deposit that
are fully insured by the FDIC;
(vi) bankers' acceptances issued by any depository institution or
trust company referred to in clause (ii) above;
(vii) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii) above; and
(viii) any other investments approved in writing by Lender.
"Eligible State" means any State listed in Schedule A, and any other State
approved by Lender, which approval shall be deemed to have been granted by
Lender upon Borrower's delivery to Lender of (a) a request to add such
additional State, (b) a copy of a certificate evidencing the good standing of
TFC, dated as of a date no more than 10 days prior to the date of such request,
from the secretary of state (or other appropriate authority) of each such
additional State, and (c) in the case of any State in which Contracts comprising
ten percent (10%) or more of the value of the Collateral (but only such
Collateral that consists of Contracts) have been
12
originated, if the Aggregate Total Outstandings are greater than $200,000,000,
an Opinion of Counsel, who shall not be an employee of or counsel to Borrower,
Originator or Servicer, in form and substance satisfactory to Lender (A) with
respect to the method of perfecting a security interest in the Financed Vehicles
securing Contracts originated in such other State and (B) as to such other
matters as counsel to TFC or any Affiliate of TFC are required to address in
opinions of counsel delivered in connection with any securitization of motor
vehicle receivables sponsored by TFC or an Affiliate of TFC, relating to States
in which ten percent (10%) or more of such receivables have been originated.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Equity Sponsors" means each Person comprising the ▇▇▇▇▇▇▇ Sachs Investor
Group, GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC and ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd.
"Event of Default" shall have the meaning set forth in Section 8.01
hereof.
"Expected Facility Termination Date" means the date that is 30 months
after the Closing Date.
"Facility Parity Violation" shall have the meaning set forth in Section
2.04 hereof.
"Facility Parity Violation Fee" means, with respect to any Facility Parity
Violation and any Remittance Date, a fee equal to the product of (x) 0.5 and (y)
the excess of (1) the interest accrued, during the thirty (30) days prior to
such Remittance Date (or, if less, any portion of such thirty-day period during
which such Facility Parity Violation shall have remained uncured), on the
promissory notes issued under the Other Warehouse Facility over (2) the interest
accrued on the Notes during the thirty (30) days prior to such Remittance Date
(or, if less, any portion of such thirty-day period during which such Facility
Parity Violation shall have remained uncured).
"FDIC" means the Federal Deposit Insurance Corporation.
"Financed Vehicle" means a new or used automobile, van, sport utility
vehicle or light-duty truck, together with all accessions thereto, securing an
Obligor's indebtedness under the related Contract.
"Form-of-Contract Requirements" means, with respect to any form on which a
Contract is originated in any State, all requirements for forms of motor vehicle
retail installment loan contracts originated in such State (including, without
limitation, all requirements applicable to such a contract originated in any
State) listed in Exhibit F-1 hereto, as such list may be amended from time to
time; provided that Originator shall deliver to Lender then-current copies of
the Form-of-Contract Requirements as required pursuant to Section 6.20.
"Form of Contract" means a form of Contract that (a) is substantially
similar in form and substance to the representative sample forms of contract
attached hereto as Exhibit F-2 and (b) meets all applicable Form-of-Contract
Requirements.
"GAAP" means generally accepted accounting principles as in effect in the
United States, as may be in place from time to time, applied on a consistent
basis.
13
"▇▇▇▇▇▇▇ ▇▇▇▇▇ Investor Group" means any or all of GS Capital Partners
2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., GS Capital Partners
2000 Offshore, L.P., ▇▇▇▇▇▇▇ Sachs Direct Investment Fund 2000, L.P., GS Capital
Partners 2000 GmbH & Co. BETEILIGUNGS KG and MTGLQ Investors, L.P. and the
Affiliates of each of the foregoing.
"Governmental Authority" means any nation, government, or State, or any
political subdivision thereof, or any court, stock exchange, entity or agency
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee" means, as to any Person (the "Guaranteeing person"), any
obligation of the Guaranteeing person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
Guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee shall not include the endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any guarantee of
any Guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guarantee is made and (b) the maximum amount for which such
Guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee, unless such primary obligation and the maximum amount
for which such Guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee shall be such Guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Guaranteeing person in good faith.
"Hedging Strategy" means an interest rate hedging strategy implemented by
Borrower for the purpose of providing protection with respect to the Loans
against fluctuations in interest rates.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person, whether or not contingent, under repurchase
agreements, sales/buy-back agreements or similar arrangements, to repurchase
property from another Person, (d) all obligations of such Person to pay the
deferred or acquisition price of property or services, other than trade accounts
payable (except for borrowed money) arising 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 delivered to
such Person, (e) all indebtedness of others secured by (or for which the holder
of such indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed (only to the extent of the
fair market value of such asset if such indebtedness has
14
not been assumed by such Person), (f) all Guarantees of such Person, (g) all
capitalized lease obligations of such Person, (h) all obligations of such Person
as an account party in respect of letters of credit and similar instruments
issued for the account of such Person, and (i) any of the foregoing which
constitute obligations or indebtedness of a general partnership or a limited
liability partnership for which such Person is liable as a matter of law or
contract.
"Ineligible Contract" means any Contract (i) as to which, on any date of
determination, there is a breach of any representation, warranty or covenant set
forth in Schedule B hereto (after giving effect to such representation, warranty
or covenant as if it were made as of, and relates to, such date of
determination, as well as any prior date specified therein), which breach
materially and adversely affects such Contract, (ii) which is a Liquidated
Contract, (iii) as to which the related Financed Vehicle has been liquidated by
repossession and sale thereof or through casualty and receipt of insurance
proceeds thereof or is otherwise reflected properly as a deficiency balance,
(iv) as to which an Obligor thereon is the subject--or, at any time during the
term of such Contract, has been subject--of a bankruptcy proceeding, (v) which
is delinquent more than one hundred twenty (120) consecutive days as of the
close of business on the last day of the Collection Period immediately preceding
the date of determination (or for the first Collection Period, as of the initial
Cut-off Date), (vi) which has been modified in contravention of the Servicing
Policies and Procedures, (vii) as to which there is a breach of any covenant set
forth in the Servicing Agreement, (viii) as to which Servicer has not received
the Lien Certificate for the applicable Financed Vehicle within one hundred
fifty (150) days (or, solely in the case of an Initial Funding Contract, within
one hundred eighty (180) days) after the last day of the month in which the
Contract applicable thereto became subject to the Lien of Lender under the
Security Agreement, (ix) as to which there is an incomplete Legal File (other
than as contemplated in clause (viii) hereof), (x) as to which there is an
incomplete Contract File after the thirtieth (30th) day following the date on
which the Contract became subject to the Lien of the Lender under the Security
Agreement (other than as contemplated in clause (viii) hereof), (xi) as to which
the date of origination of the Contract by the Originator is more than ninety
(90) days earlier than the date on which such Contract was pledged to Lender
under the Security Agreement (except that a Contract shall not be deemed to be
an Ineligible Contract pursuant to this clause (xi) if (A) it is an Initial
Funding Contract or (B) it is a Clean-up Call Contract), (xii) which is
delinquent more than thirty (30) consecutive days as of the date on which such
Contract was pledged to Lender under the Security Agreement (except that a
Contract shall not be deemed to be an Ineligible Contract pursuant to this
clause (xii) if (A) it is an Initial Funding Contract or (B) it is a Clean-up
Call Contract), or (xiii) which has remained subject to the terms of this
Agreement and the Security Agreement for more than two hundred seventy (270)
days (whether or not consecutive), except that a Clean-up Call Contract shall
not be deemed to be an Ineligible Contract pursuant to this clause (xiii);
provided, that if any such event or condition is thereafter cured or remedied,
such Ineligible Contract shall be reinstated as an Eligible Contract; provided
further that a Contract shall not be deemed to be an Ineligible Contract
pursuant to clause (i) through (xiii) above if Lender, in its sole discretion,
consents in writing that such Contract shall not be deemed to be an Ineligible
Contract pursuant to such clauses (i) through (xiii).
"Initial Borrowing Base Determination Date" means, for any Eligible
Contract, the date on which Borrower delivers to Lender the Notice of Warehouse
Borrowing on which such Eligible Contract is listed.
15
"Initial Contracts" means, collectively, the Initial Funding Contracts and
the Initially Pledged Additional Collateral Contracts.
"Initial Cut-off Date" means the Cut-off Date in respect of the Initial
Contracts, which shall be the close of business on the fifth (5th) Business Day
preceding the Closing Date.
"Initial Funding Contract" means a Contract that is pledged by Borrower to
Lender under the Security Agreement on the Borrowing Date for the first
Borrowing hereunder.
"Initial Securitization" means the first securitization of Contracts
consummated by TFC after the Closing Date.
"Initial Securitization Closing Date" means the closing date of the
Initial Securitization.
"Initially Pledged Additional Collateral Contracts" means, collectively,
all motor vehicle retail installment sale contracts originated by Originator
during the period from and including the fourth (4th) day preceding the Closing
Date to and including the Closing Date.
"Insurance Policies" means any comprehensive and collision, fire and theft
and physical damage insurance policies maintained by Obligors (including,
without limitation, the Obligor's comprehensive insurance policy), any credit
policy (including without limitation credit life and credit disability), any
service contracts and any GAP insurance.
"Intercreditor Agreement" means the Amended and Restated Intercreditor
Agreement, dated as of April 29, 2005 among TFC, JPMorgan Chase Bank, National
Association, in its capacities as agent and trustee under various securitization
trust instruments, Lender, the Other Warehouse Lender, MBIA Insurance
Corporation and Ambac Assurance Corporation, as amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.
"Investment Earnings" means, with respect to any Remittance Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Collection Account, which investment earnings are to be deposited
into the Collection Account no later than the Business Day immediately preceding
the related Remittance Date pursuant to Section 3.10(d).
"Legal Files" means, with respect to each Contract, the following
documents held by the Custodian: the fully executed original of such Contract
with fully executed assignment from the related Dealer to Originator (together
with any agreements modifying the Contract, including, without limitation, any
extension agreements), a fully executed assignment in blank from Originator, the
Lien Certificate or the Title Package, the fully executed original of any form
legally required to be executed by a co-signer, evidence of verification of
physical damage insurance coverage and the original of the Obligor's credit
application.
"Lender" shall have the meaning set forth in the preamble hereof.
16
"Lender Clean-up Call Disbursement Notice" has the meaning specified in
Section 2.06(e). A Lender Clean-up Call Disbursement Notice will contain the
conditions precedent specified in Section 2.06(f).
"Lender Deposit Date" means, with respect to any Clean-up Call Loan, the
date specified in the applicable Notice of Warehouse Borrowing that occurs no
earlier than two (2) Business Days before the Clean-up Call Settlement Date for
such Clean-up Call Loan.
"Lender Loan Document" means any Loan Document other than a document
specified in clause (p) or clause (q) of the definition of "Loan Documents".
"Lender Wire Transfer Instructions" means the wire transfer instructions
attached hereto as Exhibit R, as such instructions may be amended from time to
time by written notice from Lender to Borrower and the Collection Account Bank.
"Lenders' Intercreditor Agreement" means the Intercreditor Agreement,
dated as of April 29, 2005, between Lender and Other Warehouse Lender, as
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Liabilities Assumption" means, with respect to any Class 1 Eligible
Contracts, the Residual Valuation Model therefor and any date of determination,
(a) an assumption that collections on such Class 1 Eligible Contracts be applied
to pay all interest and principal due on an asset-backed note rated in the
highest long-term rating category by at least two nationally recognized
statistical rating organizations, issued in a hypothetical securitization that
(i) is collateralized by such Class 1 Eligible Contracts, (ii) has credit
enhancement requirements consistent with the anticipated Net Securitization
Proceeds Percentage as of such date of determination, and (iii) has a Clean-up
Call exercised on the future date as of which the market value of such Class 1
Eligible Contracts is to be measured under such Residual Valuation Model, and/or
(b) any other assumption the that is utilized in such Residual Valuation Model
in the reasonable discretion of Lender with respect to hypothetical or actual
liabilities to be satisfied by collections on such Class 1 Eligible Contracts on
or prior to the future date as of which the market value of such Class 1
Eligible Contracts is to be measured under such Residual Valuation Model.
"LIBOR" means the rate determined by Lender daily (or less frequently as
Lender may in its sole discretion determine) on the basis of the London
Inter-Bank Offered Rate for one-month U.S. dollar deposits, as such rate appears
as "BBAM" "Page ▇▇▇ ▇▇" on Bloomberg as of 8:00 a.m. (New York City time) on
such date (rounded up to the nearest whole multiple of 1/16%); provided that if
such rate does not appear on Bloomberg, the rate for such date will be the rate
determined by reference to such other comparable publicly available service
publishing such rates as may be selected by Lender in its sole discretion and
communicated to Borrower.
"LIBOR Margin" means (i) with respect to Warehouse Loans, the percentage
specified in Item 11(a) of Schedule 1 and (ii) with respect to Supplemental
Loans, the percentage specified in Item 11(b) of Schedule 1; provided that,
during the Term Loan Extension Period (if any), the LIBOR Margin for Warehouse
Loans shall be the percentage specified in Item 11(c) of Schedule
17
1 and the LIBOR Margin for Supplemental Loans shall be the percentage specified
in Item 11(d) of Schedule 1.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"Lien Certificate" means, with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable State to a secured party or such other
evidence acceptable to the Registrar of Titles of the applicable State, in each
case, which indicates that the lien of the secured party on the Financed Vehicle
is recorded on the original certificate of title. In any State in which the
original certificate of title is required to be given to the Obligor, the term
"Lien Certificate" means only a certificate or notification issued to a secured
party.
"Liquidated Contract" means, with respect to any Collection Period, any
Contract with respect to which any of the following has occurred: (i) 10% or
more of any scheduled payment thereon is 120 days or more past due; (ii) (A) at
least 90 days have elapsed since the Servicer repossessed the Financed Vehicle
or (B) the related Financed Vehicle has been sold; or (iii) the Servicer has
determined in good faith that all amounts it expects to be recovered have been
received.
"Liquidation Proceeds" means, with respect to any Liquidated Contract, the
moneys collected in respect thereof during the Collection Period in which such
Contract became a Liquidated Contract, from whatever source (including Dealer
Recourse), net any amount required by law to be remitted to the Obligor on such
Liquidated Contract; provided, however, that the Liquidation Proceeds with
respect to any Contract shall in no event be less than zero.
"List of Contracts" shall have the meaning set forth in Section
4.02(e)(ii) hereof.
"Loan" or "Loans" shall have the respective meanings set forth in Section
2.01(a) hereof.
"Loan Documents" means (a) this Agreement, (b) the Notes, (c) the Security
Agreement, (d) the Sale and Contribution Agreement (and each Sale and
Contribution Supplement related thereto), (e) the Receivables Purchase Agreement
(and each Receivables Purchase Agreement Supplement related thereto), (f) the
Servicing Agreement, (g) the Blocked Account Agreement, (h) the Residual
Financing Agreements, (i) each document and instrument executed and delivered in
connection with the Hedging Strategy, (j) the Warehouse Affiliate Guaranty, (k)
the Residual Affiliate Guaranty, (l) the Intercreditor Agreement, (m) the
Lenders' Intercreditor Agreement, (n) the Trust Agreement, (o) all other
documents and instruments executed and delivered in connection herewith or
therewith, (p) all documents and instruments executed and delivered in
connection with the Other Warehouse Facility and (q) all documents and
instruments executed and delivered in connection with any residual financing
facility that the Residual Facility Borrower has with the Other Warehouse
Lender.
"Lockbox" shall have the meaning set forth in Section 3.10(a) hereof.
18
"Lockbox Depository" means Mellon, or such other financial institutions
appointed from time to time in accordance with the Blocked Account Agreement.
"London Banking Day" means any day on which commercial banks and foreign
exchange markets settle payments and are open for general business (including
dealings in foreign exchange and foreign currency deposits) in London, England.
"Margin Stock" shall have the meaning set forth in Regulation U of the
Board.
"Master Residual Loan Agreement" means the Master Residual Loan Agreement
dated as of April 29, 2005, among the Residual Facility Borrower, the Collection
Account Bank and Lender, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Material Adverse Change" means a material adverse change in, or the
disclosure or discovery of any information not previously disclosed to Lender
which Lender deems material and adverse relating to the business, operations,
properties, condition (financial or otherwise) or prospects of Servicer,
Originator, Seller, Borrower or Residual Facility Borrower, in each case,
individually, or with its respective Affiliates, taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
Contracts or any of the other Collateral (including, without limitation, the
enforceability or collectibility of the Contracts), (b) the business,
operations, properties, condition (financial or otherwise) or prospects of
Servicer, Originator, Seller, Borrower or Residual Facility Borrower, in each
case, individually, or with its respective Affiliates, taken as a whole, (c) the
validity or enforceability of this or any of the other Loan Documents or the
rights or remedies of Lender hereunder or thereunder or the validity, perfection
or priority of any Lien in favor of Lender granted thereunder, (d) the timely
payment of the principal of or interest on any Borrowings or other amounts
payable in connection therewith or (e) the ability of Servicer, Originator,
Seller, Borrower or Residual Facility Borrower to perform its obligations under
any Loan Document to which it is a party.
"Maximum Supplemental Advance Percentage" means, on any date of
determination, a percentage equal to (a) the percentage specified in Item 12 of
Schedule 1 minus (b) the Advance Rate with respect to Class 1 Eligible Contracts
as of such date of determination.
"Mellon" means Mellon Bank, N.A., a national banking association organized
under the laws of the United States of America and Mellon Financial Services
Corporation #1, a Delaware corporation.
"Minimum Borrowing Amount" means (i) with respect to a Warehouse Loan,
$2,000,000, and (ii) with respect to a Supplemental Loan, $1,000,000.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Net Securitization Proceeds Percentage" means, at any date of
determination, with respect to the related Prospective Securitization of
Contracts, a percentage equivalent to (x) an amount equal to (A) the gross sales
price of all investment-grade notes and certificates sold or
19
expected to be sold pursuant to such securitization, plus (B) the amount of any
loan, as reasonably agreed to by Lender, available or expected to be available
to the Residual Facility Borrower under any Residual Financing Agreement or any
Additional Approved Residual Financing Agreement, in each case solely on the
basis of the actual or expected Pledged ABS for such Prospective Securitization
of Contracts, minus (C) any amounts deposited or to be deposited in any spread,
reserve, yield supplement or capitalized interest account, minus (D) all
underwriting discounts or placement agency fees paid or expected to be paid with
respect to the sale of any notes or certificates pursuant to such
securitization, minus (E) all fees, costs and expenses incurred or expected to
be incurred by Borrower and its Affiliates in connection with such
securitization (including residual financing), minus (F) accrued interest under
this Agreement or any other financing agreement on the Contracts to the earlier
of the anticipated date of settlement of such securitization and the next
Remittance Date; divided by (y) the sum of (1) the anticipated aggregate
outstanding principal balance of the motor vehicle loans transferred or expected
to be transferred to the issuer in such securitization and (2) the initial
pre-funding amount, if any, with respect to such securitization.
"Notes" shall have the meaning set forth in Section 2.02(b) hereof.
"Notice of Clean-up Call" means, with respect to any Clean-up Call Loan
and the Clean-up Call related thereto, a notice of the intent of the servicer in
the related securitization to effect such Clean-up Call, the delivery of which
notice to the indenture trustee in such securitization is a condition to such
servicer's exercise of such Clean-up Call pursuant to the transaction documents
for such securitization.
"Notice of Warehouse Borrowing" shall have the meaning set forth in
Section 2.03(a) hereof.
"Obligations" means (i) the unpaid principal of and premium, if any, and
interest (including interest accruing at the then applicable rate provided in
this Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceedings, relating to Borrower whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise and (ii) all other obligations and liabilities of every
nature of Borrower from time to time owing to Lender, in each case whether
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), to
the extent such obligations and liabilities arise under, out of, or in
connection with, this Agreement or any other Loan Document or under any other
document made, delivered or given in connection with any of the foregoing, in
each case whether on account of principal, premium, if any, interest, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to Lender) that are required to be
paid by Borrower pursuant to the terms of this Agreement or any other Loan
Document.
20
"Obligor" means, with respect to a Contract, the purchaser or co-purchaser
of the Financed Vehicle and/or any other person who owes payments under such
Contract.
"Opinion of Counsel" means one or more written opinions of counsel, who,
unless otherwise provided herein, may be an employee of or counsel to
Originator, which counsel shall be acceptable to Lender.
"Optional Redemption Amount" means, with respect to any Clean-up Call Loan
and the Clean-up Call related thereto, the amount required to be deposited into
the collection account for the related securitization, by or on behalf of the
servicer in such securitization, to purchase the related Clean-up Call Contracts
(and any other applicable assets of the securitization issuer) in connection
with the exercise by such servicer of such Clean-up Call.
"Originator" means TFC in its capacity as originator of the Contracts.
"Other Lender Clean-up Call Loan" has the meaning ascribed to the term
"Clean-up Call Loan" in the Warehouse Lending Agreement related to the Other
Warehouse Facility.
"Other Lender Clean-up Call Loan Disbursement Amount" has the meaning
ascribed to the term "Clean-up Call Loan Disbursement Amount" in the Warehouse
Lending Agreement related to the Other Warehouse Facility.
"Other Lender Clean-up Call Loan Funding Amount" has the meaning ascribed
to the term "Clean-up Call Loan Funding Amount" in the Warehouse Lending
Agreement related to the Other Warehouse Facility.
"Other Lender Deficiency" means an Other Lender Residual Deficiency or an
Other Lender Warehouse Deficiency.
"Other Lender Related Clean-up Call Loan Disbursement Amount" means, with
respect to a Clean-up Call Loan, the Other Lender Clean-up Call Loan
Disbursement Amount (if any) in respect of the Corresponding Other Lender
Clean-up Call Loan (if any) related to such Clean-up Call Loan.
"Other Lender Related Clean-up Call Loan Funding Amount" means, with
respect to a Clean-up Call Loan, the Other Lender Clean-up Call Loan Funding
Amount (if any) in respect of the Corresponding Other Lender Clean-up Call Loan
(if any) related to such Clean-up Call Loan.
"Other Lender Residual Deficiency" means, with respect to any date of
determination and any residual financing facility that the Residual Facility
Borrower has with the Other Warehouse Lender, any amount that is due and unpaid
under such facility as of such date of determination, and that the Other
Warehouse Lender shall have provided notice of to Lender on or prior to such
date of determination.
"Other Lender Warehouse Deficiency" means, with respect to any date of
determination, any amount that is due and unpaid under the Other Warehouse
Facility as of such date of determination, and that the Other Warehouse Lender
shall have provided notice of to Lender on or prior to such date of
determination.
21
"Other Residual Facility" means the residual financing facility
established pursuant to that certain Master Residual Loan Agreement, dated as of
April 29, 2005, among Residual Facility Borrower, as borrower, the Collection
Account Bank, as collection account bank, and the Other Residual Facility
Lender, as lender, as amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Other Residual Facility Lender" means Citigroup Global Markets Realty
Corp., as lender under the Other Residual Facility.
"Other Warehouse Facility" means the warehouse financing facility
established pursuant to that certain Warehouse Lending Agreement, dated as of
April 29, 2005, among TFC, as originator and servicer, Seller, as seller,
Borrower, as borrower, the Collection Account Bank, as collection account bank,
and the Other Warehouse Lender, as lender as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.
"Other Warehouse Financing Facility Collateral" has the meaning set forth
in the Security Agreement.
"Other Warehouse Lender" means Citigroup Global Markets Realty Corp., as
lender under the Other Warehouse Facility.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement, its successors
in interest or any successor Owner Trustee under the Trust Agreement.
"Payment Determination Date" means (i) with respect to any Regular
Remittance Date, the third Business Day preceding such Remittance Date, and (ii)
with respect to any Special Remittance Date, the second Business Day preceding
such Remittance Date.
"Permitted Borrowing Date" means (i) in the case of a Warehouse Loan, the
Business Day following Borrower's delivery of a Notice of Warehouse Borrowing
during the Commitment Period and (ii) in the case of a Supplemental Loan, the
Borrowing Date specified in the related Confirmation Statement during the
Commitment Period.
"Person" means any individual, partnership, firm, corporation,
association, joint venture, trust, limited liability company or other entity of
whatever nature.
"Pledged ABS" has the meaning specified in Section 1.1 of the Master
Residual Loan Agreement (provided that, solely for the purposes of any
calculation of the amount specified under clause (x)(B) of the definition of
"Net Securitization Proceeds Percentage", Pledged ABS shall also include
securities pledged under Additional Approved Residual Financing Agreements,
which securities are deemed by Lender in its reasonable discretion to meet the
criteria for Pledged ABS under the Master Residual Loan Agreement).
"Precomputed Contract" means any Contract under which the portion of a
payment allocable to earned interest (which may be referred to in the related
Contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the
22
"actuarial", the "sum of periodic balances" or the "sum of monthly balances"
method (or any equivalent method).
"Pricing Assumptions" means, with respect to the Class 1 Eligible
Contracts on any date of determination, the pricing assumptions (including,
without limitation, the discount rate, the prepayment rate and the cumulative
loss assumption) enumerated in the Relevant Confirmation Statement for such date
of determination.
"Prime Rate" means the prime rate (or if a range is given, the average of
such prime rates) listed under "Money Rates" in The Wall Street Journal for such
date or, if The Wall Street Journal is not published on such date, then in The
Wall Street Journal most recently published.
"Principal Balance" means, as of the close of business on the last day of
a Collection Period and as to any Contract, the Amount Financed minus the
portion of all payments actually collected from or on behalf of the related
Obligor on or prior to such day and allocable to principal using the Simple
Interest Method.
"Program Guidelines" means the Triad Financial Corporation Program
Guidelines, a copy of which is attached hereto as Exhibit J, as such Program
Guidelines may be amended from time to time; provided, that Originator shall
give Lender at least ten (10) Business Days prior written notice of any
amendment to the Program Guidelines.
"Prospective Securitization of Contracts" means, with respect to a
reasonable determination by Lender of the Net Securitization Proceeds Percentage
as of any date of determination, a proposed or hypothetical securitization of
Class 1 Eligible Contracts on or about such date of determination.
"Rating Agency" means each of Moody's and Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by Lender, notice of which designation shall be given to Borrower.
"Receivables Purchase Agreement" means the Master Receivables Purchase
Agreement between Borrower, as purchaser, and Seller, as seller, dated as of
April 29, 2005, a copy of which is attached as Exhibit S hereto, as supplemented
by the applicable Receivables Purchase Agreement Supplements between Borrower,
as purchaser, and Seller, as seller, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Receivables Purchase Agreement Supplement" shall have the meaning set
forth in the Receivables Purchase Agreement.
"Reconciliation Report Date" has the meaning specified in Section 2.08(a).
"Recoveries" means, with respect to any Contract that becomes a Liquidated
Contract, monies collected in respect thereof during any Collection Period
following the Collection Period in which such Contract became a Liquidated
Contract, from whatever source (including Dealer
23
Recourse), net of any amount required by law to be remitted to the Obligor;
provided, however, that the Recoveries with respect to any Contract shall in no
event be less than zero.
"Regular Remittance Date" means the twelfth (12th) day of each month, or
if such day is not a Business Day, the Business Day immediately succeeding such
day, beginning in June 2005.
"Regulation U" means Regulation U promulgated by the Board.
"Related Assets" means (i) Borrower's security interest in Financed
Vehicles, (ii) Borrower's rights, remedies, powers and privileges under the
Contracts, including any personal guaranty thereof, (iii) Borrower's rights,
remedies, powers and privileges under the Sale and Contribution Agreement, (iv)
Borrower's rights, remedies, powers and privileges under the Servicing
Agreement, (v) Borrower's rights, remedies, powers and privileges under the
Dealer Agreements, including but not limited to Dealer Recourse and any holdback
amounts, (vi) insurance proceeds or rebates under Insurance Policies and (vii)
all proceeds of the foregoing, in each case, only to the extent such items
relate to the Contracts.
"Release Consideration" means, with respect to any Contract that (i) is
repurchased by Seller from Borrower pursuant to Section 6.2 of the Receivables
Purchase Agreement, is repurchased by TFC from Seller pursuant to Section 6.2 of
the Sale and Contribution Agreement, and Lender's security interest in which is
released pursuant to Section 12(b)(ii) of the Security Agreement or (ii) is
purchased by the Servicer from Borrower pursuant to Section 2.07 of the
Servicing Agreement and Lender's security interest in which is released pursuant
to Section 12(b)(iii) of the Security Agreement, an amount equal to the
outstanding Principal Balance of such Contract as of the date of such purchase
or repurchase, as applicable, plus all accrued but unpaid interest thereon.
"Relevant Confirmation Statement" means, with respect to any date of
determination, the Confirmation Statement that is to be delivered (or, if
already delivered, the Confirmation Statement that was delivered) in connection
with the Supplemental Loan requested in the most recent Supplemental Borrowing
Request as of such date of determination; provided that the Pricing Assumptions
set forth in such Relevant Confirmation Statement shall apply to the calculation
of the Supplemental Advance Rate, as of such date of determination, for both
such Supplemental Loan and all other Supplemental Loans that are outstanding on
such date of determination.
"Relevant Report" means any report, correspondence or other statement of
information related to (a) any Collateral, any Other Warehouse Financing
Facility Collateral, or any collateral under any Residual Financing Agreement or
the Other Residual Facility (other than a Confidential Collateral Proposal
Report), (b) any secured financing facility under which TFC or any Affiliate
thereof is a borrower (including, but not limited to, the Other Warehouse
Facility, the Other Residual Facility and each facility established pursuant to
the Lender Loan Documents), (c) any securitization of motor vehicle loans or
retail installment sale contracts sponsored or contemplated by TFC, (d) any
other actual or contemplated securities issuance by TFC or any Affiliate of TFC,
(e) the origination policies, procedures or operations of TFC, (f) the servicing
policies, procedures or operations of TFC, or (g) any circumstance, event, or
development relating to the business, operations, properties, condition
(financial or otherwise) or
24
prospects of TFC, Seller, Borrower or Residual Facility Borrower that
constitutes, or is reasonably likely to constitute, a Material Adverse Change or
that has resulted in, or is reasonably likely to result in, a Material Adverse
Effect.
"Remittance Date" means a Regular Remittance Date or a Special Remittance
Date.
"Renewal Commitment Fee" means with respect to any renewal of the
commitment under this Agreement referenced in the last sentence of Section
2.05(a), an amount equal to the product of (a) Six Hundred Twenty-Five Million
Dollars (U.S. $625,000,000) and (b)(i) if the Renewal Commitment Termination
Date is as specified in clause (a) of the definition thereof, the percentage
specified in Item 13(a) of Schedule 1, (ii) if the Renewal Commitment
Termination Date is as specified in clause (b) of the definition thereof, the
percentage specified in Item 13(b) of Schedule 1, (iii) if the Renewal
Commitment Termination Date is as specified in clause (c) of the definition
thereof, the percentage specified in Item 13(c) of Schedule 1, and (iv) if the
Renewal Commitment Termination Date is as specified in clause (d) of the
definition thereof, the percentage specified in Item 13(d) of Schedule 1.
"Renewal Commitment Termination Date" means if the commitment under this
Agreement is renewed by written mutual agreement of Lender and Borrower, any one
of the following to which Lender and Borrower mutually agree in writing: (a) the
date which is the 365th day after the Initial Commitment Termination Date (or if
such date is not a Business Day, the immediately succeeding Business Day), (b)
the date which the 548th day after related Initial Commitment Termination Date
(or if such date is not a Business Day, the immediately succeeding Business
Day), (c) the date which is the 730th day after related Initial Commitment
Termination Date (or if such date is not a Business Day, the immediately
succeeding Business Day), or (d) the date which is the 913th day after related
Initial Commitment Termination Date (or if such date is not a Business Day, the
immediately succeeding Business Day); provided, however, that in no event shall
Lender or Borrower be required to enter into any such renewal agreement.
"Repurchase Date" has the meaning specified in Section 6.2 of the Sale and
Contribution Agreement.
"Required Audit Report" means any report required to be delivered pursuant
to Section 2.11(a) of the Servicing Agreement.
"Required Cure of Breach Date" has the meaning specified in Section
3.03(g).
"Required Remittance Amount" means, for any Remittance Date, the sum of
(i) all amounts received from Obligors or from any other sources on or in
respect of the Contracts during the immediately preceding Collection Period (and
during the period since the immediately preceding Remittance Date, in the case
of a Special Remittance Date) and (ii) all Investment Earnings with respect to
such Remittance Date. For the avoidance of doubt, no amount received in respect
of any Contract shall be part of the Required Remittance Amount for any Special
Remittance Date if such amount was part of the Required Remittance Amount for
the immediately preceding Remittance Date.
25
"Requirement of Law" means, as to any Person, any law, statute, rule,
treaty, regulation, or determination of an arbitrator, court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its properties or to which any such Person or any of its properties
may be bound or affected.
"Residual Affiliate Guaranty" has the meaning set forth in the Master
Residual Loan Agreement.
"Residual Facility" means the residual financing facility established
pursuant to the Master Residual Loan Agreement.
"Residual Facility Borrower" means Triad Financial Residual Special
Purpose LLC, a Delaware limited liability company, as borrower under the Master
Residual Loan Agreement, any other Residual Financing Agreement and any residual
financing facility with the Other Warehouse Lender.
"Residual Financing Agreement Deficiency" means, with respect to any date
of determination and any Residual Financing Agreement, any amount that is due
and unpaid under such agreement as of such date of determination.
"Residual Financing Agreements" means, collectively, the Master Residual
Loan Agreement and each other loan or credit and security agreement between
Lender and the Residual Facility Borrower secured by Pledged ABS and listed on a
Schedule thereto (as such Schedule may be amended from time to time in
accordance with the terms of the related Residual Financing Agreement), as each
such agreement may be amended, supplemented or otherwise modified from time to
time in accordance with the terms thereof.
"Residual Valuation Model" means a computer program utilized by Lender to
establish the present value, as of any date of determination, of the residual
portion of Class 1 Eligible Contracts, based upon the applicable Pricing
Assumptions, the applicable expected loss curve, and the applicable Liabilities
Assumption. Lender and Borrower acknowledge that Lender delivered a sample of
such a computer program to Borrower prior to the Closing Date; provided that
Lender and Borrower further acknowledge that such delivery of such sample shall
in no way constrain or otherwise affect Lender's right to modify any such
computer program in Lender's reasonable discretion in accordance with the terms
of this Agreement.
"Residual Value" means, with respect to the Class 1 Eligible Contracts on
any date of determination, the present value, as of such date of determination,
of the residual portion of such Class 1 Eligible Contracts, as such value is
determined by Lender in its reasonable judgment in accordance with the Residual
Valuation Model. The Pricing Assumptions used by Lender in determining such
present value of the residual portion of Class 1 Eligible Contracts on any date
of determination will be as set forth in the Relevant Confirmation Statement for
such date of determination.
"Responsible Officer" means any of the president, chief executive officer,
chief financial officer, any executive vice president, treasurer, controller or
secretary of Originator, Servicer, Administrator or Seller, as the case may be.
26
"Rolling 60-Day Aggregate Total Outstandings" means, with respect to the
last day of any calendar month during the Commitment Period, the average of
Aggregate Total Outstandings calculated as of such day and as of each of the
previous 59 days.
"Rolling 60-Day Other Warehouse Facility Aggregate Total Outstandings"
means, with respect to the last day of any calendar month during the Commitment
Period, the average of the aggregate principal amount of warehouse loans and
supplemental loans outstanding under the Other Warehouse Facility calculated as
of such day and as of each of the previous 59 days.
"Sale" means a sale of Contracts either through (a) a securitization of
such Contracts or (b) a "whole loan" sale of such Contracts.
"Sale and Contribution Agreement" means the Master Sale and Contribution
Agreement between Seller, as purchaser, and Originator, as seller, dated as of
April 29, 2005, a copy of which is attached as Exhibit T hereto, as supplemented
by the applicable Sale and Contribution Agreement Supplements between Seller, as
purchaser, and Originator, as seller, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.
"Sale and Contribution Agreement Supplement" shall have the meaning set
forth in the Sale and Contribution Agreement.
"Sale Notice" means a sale notice substantially in the form of Exhibit I
hereto.
"Scheduled Payment" means the payment required to be made by the Obligor
during the related Collection Period as set forth in the related Contract.
"Securitization LLC" means Triad Financial Special Purpose, LLC, a
Delaware limited liability company.
"Security Agreement" means the Security Agreement between Borrower, as
pledgor, and Lender, as pledgee, dated as of April 29, 2005, a copy of which is
attached as Exhibit L hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Seller" shall have the meaning set forth in the preamble hereof.
"Servicer" means TFC in is capacity as servicer of the Contracts pursuant
to the Servicing Agreement.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 2.09 of the Servicing Agreement, substantially in
the form of Exhibit A of the Servicing Agreement.
"Servicer Termination Event" has the meaning set forth in Section 4.01 of
the Servicing Agreement.
27
"Servicing Agreement" means the Servicing Agreement among Lender,
Borrower, Servicer and the Backup Servicer, dated as of April 29, 2005, a copy
of which is attached as Exhibit U hereto, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Servicing Fee" has the meaning set forth in the Servicing Agreement.
"Servicing Policies and Procedures" means the Servicing Policies and
Procedures attached hereto as Exhibit H, as the same may be amended from time to
time with the prior written consent of Lender.
"Simple Interest Contract" means any Contract under which the portion of a
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the date through which the preceding payment of interest was
applied and the remainder of such payment is allocable to principal.
"Special Remittance Date" means (a) each Business Day designated by Lender
as a Remittance Date during the continuation of an Event of Default and (b) the
later of (i) the Termination Date and (ii) any Term Loan Maturity Date (or, if
such later date is not a Business Day, the Business Day immediately succeeding
such date).
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor.
"State" means any State of the United States of America, or the District
of Columbia.
"Stock Purchase Agreement" means the Stock Purchase Agreement, dated as of
December 23, 2004, among Fairlane Credit LLC, Ford Motor Credit Company, Triad
Acquisition Corp. and Triad Holdings, Inc.
"Subsidiary" means, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Successor Servicer" has the meaning set forth in the Servicing Agreement.
"Supplemental Advance Percentage" means, on any date of determination, the
lesser of (x) the Current Margin Percentage as of such date of determination and
(y) the Maximum Supplemental Advance Percentage as of such date of
determination.
28
"Supplemental Borrowing Base" means, on any date of determination, an
amount equal to the product of (x) the Supplemental Advance Percentage as of
such date of determination and (y) the aggregate Principal Balance (as of the
applicable Borrowing Base Reference Date) of all Class 1 Eligible Contracts.
"Supplemental Borrowing Base Deficiency" means, as of any date of
determination, the amount by which Total Supplemental Outstandings exceeds the
Supplemental Borrowing Base as of such date of determination.
"Supplemental Borrowing Request" shall have the meaning set forth in
Section 2.03(b) hereof.
"Supplemental Commitment" means, as of any date of determination, the
lesser of (x) an amount equal to (1) One Hundred Twenty-Five Million Dollars
(U.S. $125,000,000) minus (2) the Total Residual Facility Outstandings as of
such date of determination and (y) the aggregate Principal Balance (as of the
applicable Borrowing Base Reference Date) of all Class 1 Eligible Contracts.
"Supplemental Interest Payment Amount" has the meaning set forth in
Section 3.01(b)(i).
"Supplemental Loan" or "Supplemental Loans" shall have the respective
meanings set forth in Section 2.01(a) hereof.
"Supplemental Loan Note" shall have the meaning set forth in Section
2.02(b) hereof.
"Supplemental Regular Principal Payment Amount" has the meaning set forth
in Section 3.03(b)(ii).
"Supplemental Servicing Fee" has the meaning set forth in the Servicing
Agreement.
"Termination Date" means the earlier to occur of (x) the Expected Facility
Termination Date and (y) the date on which a Commitment Termination Event
occurs.
"Term Loan Borrowing Base" means, with respect to any date of
determination during the Term Loan Extension Period, a percentage of the
Borrowing Base as of such date of determination equal to the percentage
specified in Item 14 of Schedule 1.
"Term Loan Commitment Fee" means a fee in an amount equal to the product
of (x) the percentage specified in Item 15 of Schedule 1 and (y) the Aggregate
Total Outstandings on the Termination Date.
"Term Loan Extension Period" means, with respect to a Termination Date
that occurs on the Expected Facility Termination Date, the period commencing
with such Termination Date and ending on the Term Loan Maturity Date.
"Term Loan Maturity Date" means, with respect to a Termination Date that
occurs on the Expected Facility Termination Date, the date that is 180 days
following such Termination Date.
29
"TFC" has the meaning set forth in the preamble hereof.
"Third-Party Lender" means an entity that originated a loan to a consumer
or was the original assignee of a motor vehicle retail installment sale contract
from a dealer for the purchase of a motor vehicle and sold the loan or motor
vehicle retail installment sale contract to TFC pursuant to an Auto Loan
Purchase and Sale Agreement.
"Third-Party Lender Assignment" means, with respect to a Contract, the
assignment executed by a Third-Party Lender conveying the Contract to TFC.
"Title" shall have the meaning set forth in the Security Agreement.
"Title Package" means (i) evidence that documentation has been submitted
to the appropriate State motor vehicle authority to obtain a Lien Certificate
noting the first priority lien of Originator or (ii) a Dealer Title Guaranty, if
any.
"Total Residual Facility Outstandings" means, with respect to any date of
determination, the sum of (x) the unpaid principal amount of all borrowings
outstanding under any and all of the Residual Financing Agreements as of such
date of determination and (y) an amount equal to the sum of (i) the aggregate
principal amount of loans outstanding, as of such date of determination, under
each Demand Note issued by Lender or any Affiliate of Lender and (ii) the
aggregate of amounts available to be borrowed, as of such date of determination,
under all such Demand Notes.
"Total Supplemental Outstandings" means, with respect to any date of
determination, the unpaid principal amount of all Supplemental Loans outstanding
hereunder as of such date of determination.
"Total Warehouse Outstandings" means, with respect to any date of
determination, the unpaid principal amount of all Warehouse Loans outstanding
hereunder as of such date of determination.
"Transferred Property" shall have the meaning set forth in the Sale and
Contribution Agreement.
"Triad Entities" means each of Triad Holdings L.L.C. and its subsidiaries.
"True-up Payment Rights and Receipts" means Borrower's rights, remedies,
powers and privileges under Section 2.07(c) of the Stock Purchase Agreement and
all amounts received in accordance therewith.
"Trust Agreement" means the Trust Agreement dated as of April 29, 2005
between Seller, as depositor, and the Owner Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Unsecured TFC Noteholder" means a holder of Triad Financial Corporation
11.125% Senior Notes due 2013 or a holder of any other unsecured corporate debt
of TFC or any Affiliate of TFC.
30
"Warehouse Affiliate Guaranty" means, the written guaranty made by TFC, as
guarantor, in favor of Lender, dated as of April 29, 2005, a copy of which is
attached as Exhibit V hereto.
"Warehouse Interest Payment Amount" has the meaning set forth in Section
3.01(b)(i).
"Warehouse Loan" or "Warehouse Loans" shall have the respective meanings
set forth in Section 2.01(a) hereof.
"Warehouse Loan Note" shall have the meaning set forth in Section 2.02(a)
hereof.
"Warehouse Regular Principal Payment Amount" has the meaning set forth in
Section 3.03(b)(i).
Section 1.02. Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP.
Section 1.03. Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, schedule, exhibit and like references are to
this Agreement unless otherwise specified.
Any defined term which relates to a document shall include within its
definition any amendments, modifications, renewals, restatements, extensions,
supplements or substitutions which may have been heretofore or may be hereafter
executed in accordance with the terms thereof.
ARTICLE II.
AMOUNT AND TERMS OF THE LOANS
Section 2.01. The Loans.
(a) Lender agrees, upon the terms and subject to the conditions and
relying upon the representations and warranties hereinafter set forth, to make
one or more loans (each, a "Warehouse Loan" and, together, the "Warehouse
Loans") to Borrower up to a maximum principal amount at any one time outstanding
equal to the Commitment, during the Commitment Period. Lender further agrees,
upon the terms and subject to the conditions and relying upon the
representations and warranties hereinafter set forth, to make one or more loans
in addition to the Warehouse Loans (each, a "Supplemental Loan" and, together,
the "Supplemental Loans" and, together with the Warehouse Loans, the "Loans") to
Borrower up to a maximum principal amount at any one time outstanding equal to
the Supplemental Commitment, during the Commitment Period.
(b) Notwithstanding Section 2.01(a), no Loan shall be made:
(i) on a day other than a Permitted Borrowing Date;
31
(ii) in an amount less than the applicable Minimum Borrowing
Amount;
(iii) in the case of a Warehouse Loan, in an amount which
would exceed the Available Commitment on such day;
(iv) in the case of a Warehouse Loan on or prior to the
Reconciliation Report Date (or in the case of a Warehouse Loan after such
date if the conditions specified in Section 2.08(d) are not satisfied), if
any of the Contracts that are listed in the related Notice of Warehouse
Borrowing are Initially Pledged Additional Collateral Contracts;
(v) in the case of a Warehouse Loan, in an amount which, when
added to the Total Warehouse Outstandings on such day (before giving
effect to the amount of such Borrowing), would result in a Borrowing Base
Deficiency;
(vi) in the case of a Supplemental Loan, in an amount which
would exceed the Available Supplemental Commitment on such day; or
(vii) in the case of a Supplemental Loan, in an amount which,
when added to the Total Supplemental Outstandings on such day (before
giving effect to the amount of such Borrowing), would result in a
Supplemental Borrowing Base Deficiency.
(c) All Loans may be borrowed, repaid and reborrowed in accordance
with the terms of this Agreement; provided that no Loans shall be made hereunder
during the Term Loan Extension Period.
Section 2.02. The Notes. (a) The Warehouse Loans shall be evidenced by a
promissory note substantially in the form of Exhibit N-1 hereto, duly executed
by Borrower, dated the date hereof, payable to the order of Lender in the
maximum principal amount equal to NINE HUNDRED SEVENTY-FIVE MILLION DOLLARS
(U.S. $975,000,000) (the "Warehouse Loan Note"). Lender is hereby authorized to
record the dates and amounts of all Warehouse Loans made by Lender to Borrower
under this Agreement and the dates and amounts of all payments and prepayments
of the principal of the Warehouse Loans on the schedule (and each continuation
thereof) attached to and constituting part of the Warehouse Loan Note. Such
recordation shall be conclusive in the absence of manifest error; provided that
the failure of Lender to make any such recordation or any error in such
recordation shall not affect the obligations of Borrower hereunder and/or under
the Warehouse Loan Note.
(b) The Supplemental Loans shall be evidenced by a promissory note
substantially in the form of Exhibit N-2 hereto, duly executed by Borrower,
dated the date hereof, payable to the order of Lender in the maximum principal
amount equal to ONE HUNDRED TWENTY-FIVE MILLION DOLLARS (U.S. $125,000,000) (the
"Supplemental Loan Note" and, together with the Warehouse Loan Note, the
"Notes"). Lender is hereby authorized to record the dates and amounts of all
Supplemental Loans made by Lender to Borrower under this Agreement and the dates
and amounts of all payments and prepayments of the principal of the Supplemental
Loans on the schedule (and each continuation thereof) attached to and
constituting part of the Supplemental Loan Note. Such recordation shall be
conclusive in
32
the absence of manifest error; provided that the failure of Lender to make any
such recordation or any error in such recordation shall not affect the
obligations of Borrower hereunder and/or under the Supplemental Loan Note.
(c) The outstanding principal amount of the Loans shall be payable
as set forth in Article III hereof. Borrower shall pay interest on the
outstanding principal amount of the Loans, for each day from and including the
date of the making of such Loans to but excluding the date the principal amount
thereof shall be paid in full, at the rates and pursuant to the terms set forth
in Article III hereof.
Section 2.03. Making the Loans. (a) Each Borrowing with respect to a
Warehouse Loan shall be made on notice (a "Notice of Warehouse Borrowing"),
substantially in the form of Exhibit O-1 hereto, appropriately completed and
executed by an Authorized Signatory of Borrower, which Notice of Warehouse
Borrowing must be received by Lender not later than 2:00 p.m. (New York City
time) on the Business Day prior to the proposed Borrowing Date by Borrower to
Lender; provided that, if any of the Eligible Contracts to be pledged in
connection with a Warehouse Loan are Clean-up Call Contracts, the related Notice
of Warehouse Borrowing must be received by Lender not later than 2:00 p.m. (New
York City time) on the third (3rd) Business Day of the month of the Borrowing
Date proposed by Borrower to Lender; provided further, that there shall be no
more than one Notice of Warehouse Borrowing per Business Day and no more than
five (5) Notices of Warehouse Borrowing per week (except that there may be one
additional Notice of Warehouse Borrowing delivered on a Business Day on which a
Notice of Warehouse Borrowing with respect to a Clean-up Call Loan is delivered
and, if such an additional Notice of Warehouse Borrowing is delivered on such a
Business Day, a total of six (6) Notices of Warehouse Borrowing may be delivered
during the week in which such Business Day falls). Each such Notice of Warehouse
Borrowing shall be irrevocable. In the case of any Clean-up Call Loan, Borrower
shall deliver to Lender a copy of the related Notice of Clean-up Call, together
with a notice to Lender of Borrower's intent to deliver a Notice of Warehouse
Borrowing with respect to such Clean-up Call Loan, no later than the Business
Day immediately following the date on which such Notice of Clean-up Call shall
have been delivered to the indenture trustee in the related securitization. Upon
fulfillment of the applicable conditions set forth in Article IV hereof, Lender
shall make the proceeds of a Borrowing made on notice in accordance with this
Section 2.03(a) available to Borrower in immediately available funds to such
account or accounts as Borrower shall designate to Lender in writing. Except in
the case of Borrowings with respect to Clean-up Call Loans pursuant to Section
2.06, proceeds of a Borrowing in accordance with the preceding sentence shall be
made on the proposed Borrowing Date, but in no event earlier than 2:00 p.m. (New
York City time) on such Borrowing Date.
(b) Subject to the terms and conditions of this Agreement, Lender
shall make Supplemental Loans pursuant to the provisions of the related
Confirmation Statement, and any Supplemental Loan hereunder shall be made upon a
written Borrowing request (a "Supplemental Borrowing Request"), substantially in
the form of Exhibit O-2 hereto, appropriately completed and executed by an
Authorized Signatory of Borrower, which Supplemental Borrowing Request must be
received by Lender not later than 2:00 p.m. (New York City time) on the Business
Day prior to the Borrowing Date for such Supplemental Loan proposed by Borrower
to Lender in such Supplemental Borrowing Request; provided, that there shall be
no more than one Supplemental Borrowing Request per week and no more than four
(4) Borrowing Dates per
33
calendar month on which a Supplemental Borrowing Request is delivered. Each such
Supplemental Borrowing Request shall be irrevocable. Upon execution and delivery
by Borrower of the related Confirmation Statement in accordance with Section
2.07 hereof (and fulfillment of the applicable conditions set forth in Article
IV hereof), but in no event earlier than 2:00 p.m. (New York City time) on the
proposed Borrowing Date, Lender shall make the proceeds of a Borrowing requested
in accordance with this Section 2.03(b) available to Borrower in immediately
available funds to such account or accounts as Borrower shall designate to
Lender in writing.
Section 2.04. Borrowings under Other Warehouse Facility. Subject to the
requirements for, and limitations on, Borrowings set forth in Section 2.03, the
Rolling 60-Day Aggregate Total Outstandings as of the last day of any calendar
month during the Commitment Period shall not be either $40 million greater or
$40 million less than the Rolling 60-Day Other Warehouse Facility Aggregate
Total Outstandings as of such date. Each Notice of Warehouse Borrowing and each
Supplemental Borrowing Request shall contain a statement as to the Rolling
60-Day Other Warehouse Facility Aggregate Total Outstandings and the Rolling
60-Day Aggregate Total Outstandings, in each case as of the last day of the
immediately preceding calendar month. In the event that Borrower shall fail to
perform or observe any provision of this Section 2.04 (any such failure, a
"Facility Parity Violation"), and such Facility Parity Violation shall not have
been cured within ten (10) Business Days after discovery by Lender thereof,
Borrower shall pay Lender a Facility Parity Violation Fee on each Remittance
Date until such Facility Parity Violation shall have been cured; provided that,
if such Facility Parity Violation shall not have been cured within thirty (30)
days after discovery by Lender thereof, such Facility Parity Violation shall
constitute an Event of Default pursuant to Section 8.01(j). Notwithstanding the
foregoing, a Facility Parity Violation shall not have occurred if or to the
extent that the cause of the disparity between the Aggregate Total Outstandings
and the aggregate principal amount of loans outstanding under the Other
Warehouse Facility results from any or all of the foregoing: (i) the termination
of the Other Warehouse Facility; (ii) the utilization of Demand Notes on a
disproportionate basis between the Other Residual Facility and the Residual
Financing Agreements; (iii) a difference in the amount outstanding under the
Other Residual Facility and the amount outstanding under the Residual Financing
Agreements; and (iv) a difference between the Advance Rate with respect to Class
1 Eligible Contracts and the analogous advance rate under the Other Warehouse
Facility.
Section 2.05. Commitment Fee Initial Payment, Commitment Fee Credit Amount
and Commitment Fee Extension Amounts; Renewal Commitment Fees. On the Closing
Date, Borrower shall pay Lender the Commitment Fee Initial Payment. The
Commitment Fee Initial Payment shall be nonrefundable; provided, however, that,
if the Initial Securitization Closing Date occurs on or before the sixtieth
(60th) day after the Closing Date and prior to the payment in full of the
Obligations, Borrower shall be entitled to credit the Commitment Fee Credit
Amount against funds otherwise available to pay the Warehouse Interest Payment
Amount on succeeding Remittance Dates in accordance with Section 3.12(c);
provided further, that no such credit may be taken if an Event of Default shall
have occurred and be continuing on any Remittance Date on which such credit
would otherwise be applied. If the Initial Securitization Closing Date does not
occur on or before the sixtieth (60th) day after the Closing Date, Borrower
shall pay Lender, on the first Remittance Date following such sixtieth (60th)
day, the Commitment Fee Post-60 Add-on Amount in accordance with Section
3.12(c). If the Initial Securitization Closing Date does
34
not occur on or before the ninetieth (90th) day after the Closing Date, Borrower
shall pay Lender, on the first Remittance Date following such ninetieth (90th)
day, the Commitment Fee Post-90 Add-on Amount in accordance with Section
3.12(c). If the commitment to make Loans under this Agreement is renewed past
the Expected Facility Termination Date to a Renewal Commitment Termination Date
by mutual written agreement between Borrower and Lender, Borrower shall pay
Lender the related Renewal Commitment Fee on or prior to the Expected Facility
Termination Date; provided that in no event shall Lender or Borrower be required
to enter into any such renewal agreement.
Section 2.06. Borrowings in Respect of Clean-up Call Contracts. In
addition to the satisfaction of all other requirements for Warehouse Loans
specified in this Article II and such requirements specified in Article IV, the
following requirements shall also be satisfied in connection with any Clean-up
Call Loan:
(a) The Collection Account Bank (as defined in Section 3.10(c)), for
the benefit of Lender, shall cause to be established and maintained at the
Collection Account Bank, or such other financial institution as determined by
Lender upon written notice to the Collection Account Bank, in the name of Lender
an Eligible Deposit Account (the "Clean-up Call Loan Disbursement Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of Lender (and with the Lender as the sole "customer" (as
defined in Section 4-104 of the UCC) or sole "entitlement holder" (as defined in
Section 8-102(a)(7) of the UCC), as applicable, with respect to the Clean-up
Call Loan Disbursement Account). Lender hereby revocably authorizes the
Collection Account Bank to make payments and disbursements from any amounts on
deposit in the Clean-up Call Disbursement Account in connection with a proposed
Clean-up Call Loan in accordance with the provisions of and subject to the
conditions specified in this Agreement and the Lender Clean-up Call Disbursement
Notice with respect thereto. Lender may, in its sole discretion, revoke at any
time such authority and appoint a successor entity (and successors thereto from
time to time) to make such payments and disbursements. Funds on deposit in the
Clean-up Call Loan Disbursement Account shall be invested by the Collection
Account Bank in Eligible Investments upon the same terms as those specified in
Section 3.10(d) with respect to such investments in respect of the Collection
Account.
(b) No later than the Lender Deposit Date for a Clean-up Call Loan,
Borrower shall deliver to the Collection Account Bank in immediately available
funds, for deposit into the Clean-up Call Loan Disbursement Account, the
Clean-up Call Differential Amount for such Clean-up Call Loan. Borrower hereby
authorizes the Collection Account Bank to make payments and disbursements from
any Clean-up Call Differential Amounts on deposit in the Clean-up Call
Disbursement Account in connection with a proposed Clean-up Call Loan in
accordance with the provisions and subject to the conditions specified in this
Agreement and the applicable Lender Clean-up Call Disbursement Notice with
respect thereto. The Collection Account Bank shall hold such Clean-up Call
Differential Amount for such Clean-up Call Loan until it receives disbursement
instructions from Lender with respect to such Clean-up Call Differential Amount
pursuant to Section 2.06(f) or withdrawal instructions from Lender pursuant to
Section 2.06(g).
35
(c) In the Notice of Warehouse Borrowing delivered in connection
with any Clean-up Call Loan, Borrower shall specify (i) the Clean-up Call
Settlement Date for such Clean-up Call Loan and (ii) the Lender Deposit Date for
such Clean-up Call Loan; provided that the Lender Deposit Date for a Clean-up
Call Loan shall be no earlier than two (2) Business Days prior to the Clean-up
Call Settlement Date for such Clean-up Call Loan.
(d) On the Lender Deposit Date for a Clean-up Call Loan (as
specified in the related Notice of Warehouse Borrowing pursuant to Section
2.06(c)), Lender shall deposit into the Clean-up Call Loan Disbursement Account
in immediately available funds the related Clean-up Call Loan Funding Amount.
The Collection Account Bank shall hold such Clean-up Call Loan Funding Amount
uninvested in the Collection Account until it receives disbursement instructions
from Lender with respect to such Clean-up Call Loan Funding Amount pursuant to
Section 2.06(f) or withdrawal instructions from Lender pursuant to Section
2.06(g).
(e) On the Lender Deposit Date for a Clean-up Call Loan, Lender will
deliver to the Collection Account Bank a notice with respect to the proposed
Clean-up Call Loan (a "Lender Clean-up Call Disbursement Notice"), which notice
will specify the following:
(i) the name of the securitization trust subject to the
proposed Clean-up Call;
(ii) the "Optional Redemption Amount" for such Clean-up Call
(based solely upon information provided to Lender by the Servicer);
(iii) the Clean-up Call Settlement Date;
(iv) the Clean-up Call Loan Funding Amount;
(v) the Clean-up Call Differential Amount then on deposit in
the Clean-up Call Disbursement Account;
(vi) the conditions precedent to Lender's instruction to the
Collection Account Bank to disburse the Clean-up Call Disbursement Amount;
and
(vii) such other information as Lender may reasonably deem
necessary or appropriate.
(f) On the Clean-up Call Settlement Date for a Clean-up Call Loan
(as specified in the related Notice of Warehouse Borrowing pursuant to Section
2.06(c)), Lender shall instruct the Collection Account Bank to withdraw from the
Clean-up Call Loan Disbursement Account the related Clean-up Call Disbursement
Amount (including, without limitation, the related Clean-up Call Loan Funding
Amount and the Clean-up Call Differential Amount) and to deposit such Clean-up
Call Loan Disbursement Amount into the collection account for the related
securitization, on behalf of the servicer in such securitization, as
consideration for the purchase by the servicer of the related Clean-up Call
Contracts (and any other applicable assets of the related securitization issuer)
in connection with the exercise of the related Clean-up Call; provided, however,
that Lender shall so instruct the Collection Account
36
Bank only if each of the conditions precedent set forth in the related Lender
Clean-up Call Disbursement Notice shall have been satisfied on or prior to such
Clean-up Call Settlement Date.
Each Lender Clean-up Call Disbursement Notice will specify the applicable
conditions precedent, including the following:
(i) Lender shall have received a fully executed copy of the
Sale and Contribution Agreement Supplement transferring the Clean-up Call
Contracts to the Borrower pursuant to the Sale and Contribution Agreement;
(ii) Lender shall have received a fully executed copy of the
Notice of Warehouse Borrowing pledging the Clean-up Call Contracts to the
Lender pursuant to this Agreement, together with any other documents
required by or provided for in this Agreement, including, without
limitation, the applicable Borrowing Base Certificate;
(iii) If a Clean-up Call Loan is also being made under the
Other Warehouse Facility, then Lender shall receive copies of Other
Lender's Clean-up Call Disbursement Notice and evidence reasonably
acceptable to Lender of satisfaction of all conditions precedent to
disbursement of the clean-up call disbursement amount under the Other
Warehouse Facility;
(iv) Lender shall have received an Opinion of Counsel of the
issuer or the servicer in the related securitization, dated the Clean-up
Call Settlement Date, addressed to Lender and in form and substance
reasonably acceptable to Lender, containing an opinion that all conditions
precedent to the exercise of the Clean-up Call (in accordance with all
applicable documents for such securitization) have been satisfied;
(v) the indenture trustee in the related securitization shall
have delivered to Lender evidence of the satisfaction and discharge of the
relevant indenture, together with a written release of all of its right,
title and interest in and to such Clean-up Call Contracts;
(vi) Lender shall have received the UCC-3 Partial Release
Statements referenced in Section 4.02(e)(iv)(2) with respect to such
Clean-up Call Contracts; and
(vii) Lender shall have received such other opinions,
documents and instruments as Lender or its counsel shall reasonably
request.
(g) If Lender has not instructed the Collection Account Bank by
11:00 a.m. (New York City time) on the Clean-up Call Settlement Date that the
conditions precedent specified in the Lender Clean-up Call Disbursement Notice
have been satisfied or waived, then the Collection Account Bank shall, prior to
1:00 p.m. (New York City time) on such date, withdraw the related Clean-up Call
Loan Disbursement Amount from the Clean-up Call Loan Disbursement Account and
deliver the Clean-up Call Loan Funding Amount to the order of Lender and the
Clean-up Call Differential Amount to the order of Borrower, unless Lender shall
have otherwise instructed the Collection Account Bank in writing.
37
Section 2.07. Confirmation Statements with Respect to Supplemental Loans.
Lender shall, with respect to each Supplemental Loan, prepare and deliver a
completed confirmation statement substantially in form and substance attached
hereto as Exhibit P (in each case, the "Confirmation Statement") to Borrower
confirming the agreement between Borrower and Lender as to the specific terms of
the applicable Supplemental Loan. Each such Confirmation Statement shall, when
duly executed and delivered by Borrower, constitute a binding agreement between
Borrower and Lender, and this Agreement is hereby incorporated in its entirety
into each such Confirmation Statement and made a part thereof as if it were set
out in full in each such Confirmation Statement. In case of any inconsistency
between any provisions of a Confirmation Statement and any provisions of this
Agreement, the provisions of such Confirmation Statement shall control.
Section 2.08. Post-Closing Borrowing Base Reconciliation.
(a) No later than 2:00 p.m. (New York City time) on May 9, 2005 (the
date of delivery being the "Reconciliation Report Date"), Borrower shall deliver
to Lender a Borrowing Base Certificate as of the close of Business on April 30,
2005. For the purposes of such Borrowing Base Certificate, the Borrowing Base
Reference Date for all Contracts shall be the close of business on April 30,
2005.
(b) If any Borrowing Base Deficiency or any Supplemental Borrowing
Base Deficiency shall have occurred as of April 30, 2005 and such Borrowing Base
Deficiency or Supplemental Borrowing Base Deficiency shall not have been
previously cured, then Borrower shall cure such Borrowing Base Deficiency or
Supplemental Borrowing Base Deficiency in accordance with Section 3.03(d) no
later than one (1) Business Day after the Reconciliation Report Date.
(c) If no Borrowing Base Deficiency or Supplemental Borrowing Base
Deficiency shall have occurred as of April 30, 2005, Lender shall be obligated
to release its Lien on the True-up Payment Rights and Receipts in accordance
with Section 12(d) of the Security Agreement.
(d) If, as of any date of determination after the Reconciliation
Report Date, the Borrowing Base shall exceed the Aggregate Total Outstandings,
Borrower may list Initially Pledged Additional Collateral Contracts with an
aggregate outstanding Principal Balance equal to or less than the amount of such
excess on a Notice of Warehouse Borrowing as proffered Collateral for the
Warehouse Loan related to such Notice of Warehouse Borrowing; provided that any
Initially Pledged Additional Collateral Contract so listed on any such Notice of
Warehouse Borrowing must be an Eligible Contract; provided further that no
Contract shall be so listed on more than one Notice of Warehouse Borrowing.
Section 2.09. Notices of Current Margin Amount and Market Value. Promptly
following Lender's receipt from Servicer of a Servicer's Certificate delivered
pursuant to Section 2.09 of the Servicing Agreement and Section 6.19 hereof,
Lender shall provide Borrower with notice of Lender's most recent determination
of (i) the Net Securitization Proceeds Percentage and (ii) the Supplemental
Borrowing Base.
38
ARTICLE III.
INTEREST, PAYMENTS, ETC.
Section 3.01. Interest on the Loans. (a) Except as otherwise provided
herein, each Loan shall bear interest on the outstanding principal amount
thereof, for each day from and including the date of the making of such Loan to
but excluding the date the principal amount thereof shall be paid in full, at a
rate per annum equal to the Applicable LIBOR rate for such day, plus the
applicable LIBOR Margin (computed on the basis of the actual number of days
elapsed in a year of 360 days).
(b) Except as otherwise provided herein, all accrued and unpaid
interest on the Loans shall be payable in arrears:
(i) on each Remittance Date (the amount of such accrued and
unpaid interest on the Warehouse Loans, the "Warehouse Interest Payment
Amount" for such Remittance Date, and the amount of such accrued and
unpaid interest on the Supplemental Loans, the "Supplemental Interest
Payment Amount" for such Remittance Date);
(ii) pursuant to Section 3.03(f); and
(iii) on the Termination Date.
(b) If, by the terms of this Agreement or either Note, Borrower at
any time is required or obligated to pay interest at a rate in excess of the
maximum rate permitted by applicable law, the rate of interest shall be deemed
to be immediately reduced to such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments made in reduction of the principal amount due
hereunder and under the applicable Note and shall be applied, in the case of the
Warehouse Loans, to Total Warehouse Outstandings and, in the case of the
Supplemental Loans, to Total Supplemental Outstandings.
Section 3.02. Optional Prepayments. Borrower may, at its sole option,
prepay the Loans on any day, in whole or in part, at any time upon two (2)
Business Days' prior written notice to Lender and the Collection Account Bank.
Any such prepayment shall be accompanied by all other obligations due and owing
in respect of such prepayment, including, without limitation, with respect to
interest, fees and payments pursuant to this Article III. Any prepayment of the
Loans in part shall be applied first to the Total Supplemental Outstandings
until the Total Supplemental Outstandings are paid in full and second to the
Total Warehouse Outstandings until the Total Warehouse Outstandings are paid in
full, unless otherwise agreed to by Lender. In addition, in selecting the
Collateral to be released from the lien of the Security Agreement upon a partial
prepayment, unless such partial prepayment relates to a securitization of the
Contracts so to be released, no selection procedures adverse to the interest of
Lender, in Lender's reasonable discretion, shall be utilized by Borrower.
Section 3.03. Mandatory Repayments and Prepayments. (a) If the Termination
Date shall occur as a result of a Commitment Termination Event, Borrower shall
pay to Lender the
39
Aggregate Total Outstandings in full on the Termination Date. If the Termination
Date occurs on the Expected Facility Termination Date and Borrower pays Lender
the Term Loan Commitment Fee no later than the Termination Date, Borrower shall
pay to Lender the Aggregate Total Outstandings in full no later than the Term
Loan Maturity Date; provided that, if Borrower shall not have paid such Term
Loan Commitment Fee by the Termination Date, the Aggregate Total Outstandings
shall be due and payable in full on the Termination Date.
(b) On each Remittance Date:
(i) Borrower shall prepay the Total Warehouse Outstandings by
an amount equal to the Borrowing Base Deficiency, if any, which occurred
as of the last day of the immediately preceding calendar month, which have
not been prepaid pursuant to clauses (d) or (e) below (the required amount
of any such prepayment on any Remittance Date pursuant to this Section
3.03(b)(i), the "Warehouse Regular Principal Payment Amount" for such
Remittance Date); and
(ii) Borrower shall prepay the Total Supplemental Outstandings
by an amount equal to the Supplemental Borrowing Base Deficiency, if any,
which occurred as of the last day of the immediately preceding calendar
month, which have not been prepaid pursuant to clause (d) below (the
required amount of any such prepayment on any Remittance Date pursuant to
this Section 3.03(b)(ii), the "Supplemental Regular Principal Payment
Amount" for such Remittance Date).
(c) On the date of any Sale, Borrower shall prepay an amount equal
to the sum of (A) the difference between (i) the Total Warehouse Outstandings as
of such date and (ii) the Borrowing Base of the Eligible Contracts remaining
subject to the Lien of Lender under the Security Agreement after giving effect
to such Sale, and (B) the difference between (i) the Total Supplemental
Outstandings as of such date and (ii) the Supplemental Borrowing Base after
giving effect to such Sale. Borrower hereby agrees to provide to Lender a Sale
Notice at least five (5) Business Days prior to any Sale. Notwithstanding the
foregoing, in the event that the Cut-off Date with respect to any Contracts
subject to a Sale is the first day of the calendar month in which such Sale
occurs: (x) the amount of the Total Warehouse Outstandings to be prepaid on the
date of such Sale shall equal the product of (A) the aggregate Principal Balance
of the Contracts to be included in such Sale and released from the Lien of
Lender, as of the first day of the calendar month in which such Sale occurs (or
any later date in such month on which a Borrowing shall have been made to
acquire the Contracts subject to such Sale), times (B) the then-applicable
Advance Rate for such Contracts; and (y) the amount of the Total Supplemental
Outstandings to be prepaid on the date of such Sale shall equal the product of
(A) the aggregate Principal Balance of the Class 1 Eligible Contracts to be
included in such Sale and released from the Lien of Lender, as of the first day
of the calendar month in which such Sale occurs (or any later date in such month
on which a Borrowing shall have been made to acquire such Class 1 Eligible
Contracts subject to such Sale), times (B) the then-applicable Supplemental
Advance Percentage.
(d) If a Borrowing Base Deficiency has occurred on any day (other
than the last day of the immediately preceding calendar month), Borrower shall
prepay the Total Warehouse Outstandings, or shall provide additional Eligible
Contracts to Lender, in an amount
40
equal to such Borrowing Base Deficiency within one (1) Business Day after the
occurrence of such Borrowing Base Deficiency. If a Supplemental Borrowing Base
Deficiency has occurred on any day (other than the last day of the immediately
preceding calendar month), Borrower shall prepay the Total Supplemental
Outstandings in an amount equal to such Supplemental Borrowing Base Deficiency
within one (1) Business Day after the occurrence of such Supplemental Borrowing
Base Deficiency.
(e) In the event that, in the reasonable determination of Lender
(which, in Lender's discretion, may be based without limitation on Lender's
consultation with any Rating Agency and/or any third-party credit enhancement
provider), the Advance Rate with respect to Class 1 Eligible Contracts is higher
than the Net Securitization Proceeds Percentage, Lender may notify Borrower that
an Advance Rate Reduction applicable thereto will be made (either in connection
with the closing of a securitization or in advance thereof) and Borrower shall,
within one (1) Business Day of the receipt of such notice, prepay the Total
Warehouse Outstandings by an amount equal to any Borrowing Base Deficiency
(after giving effect to such Advance Rate Reduction) and prepay the Total
Supplemental Outstandings by an amount equal to any Supplemental Borrowing Base
Deficiency (after giving effect to such Advance Rate Reduction).
(f) All payments and prepayments made pursuant to paragraphs (a)
through (e) above shall be accompanied by payment of all accrued and unpaid
interest due and owing on the amount of Aggregate Total Outstandings so paid or
prepaid.
(g) In the event of any breach of any representation and warranty of
Borrower set forth in Schedule B hereto with respect to any Contract, unless
such breach shall have been cured within twenty (20) Business Days of the
discovery by or notice (from any Person) to Borrower of such breach (such
twentieth Business Day, the "Required Cure of Breach Date"), Borrower shall, no
later than 2:00 p.m., New York City time, on the Required Cure of Breach Date,
deposit (or cause to the Servicer to deposit) into the Collection Account the
Release Consideration for each Contract to which such breach relates. In the
event that such breach relates to a representation regarding a characteristic of
the Contracts in the aggregate, unless the breach shall have been cured by the
Required Cure of Breach Date, Borrower shall, no later than 2:00 p.m., New York
City time, on the Required Cure of Breach Date, deposit (or cause the Servicer
to deposit) into the Collection Account the aggregate Release Consideration for
Contracts such that, following the release of such Contracts from the Lien of
the Security Agreement, such representation shall be true and correct with
respect to the remainder of the Contracts, in the aggregate, pledged to Lender
under the Security Agreement. Any Contract for which a release is required to be
obtained pursuant to this Section 3.03(g) shall be repurchased from Borrower by
Seller in accordance with Section 6.2 of the Receivables Purchase Agreement and
shall be repurchased from Seller by TFC in accordance with Section 6.2 of the
Sale and Contribution Agreement. Upon receipt by Lender of a certificate from an
authorized officer of the Servicer, certifying that the Servicer has received
the Release Consideration for each such Contract from TFC in accordance with
Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale
and Contribution Agreement and that the Servicer has deposited such Release
Consideration into the Collection Account in accordance with this Section
3.03(g) and Section 3.10(f) of this Agreement, Lender shall release its security
interest in such Contract (and the Collateral related thereto) in accordance
with Section 12(b)(ii) of the Security Agreement; provided, however, that, if a
Borrowing Base Deficiency or a Supplemental Borrowing Base
41
Deficiency would otherwise occur as a result of such release and payment of the
related Release Consideration, Borrower shall, on the date of such release, cure
such prospective Borrowing Base Deficiency or Supplemental Borrowing Base
Deficiency in the manner set forth in Section 3.03(d); provided further that, if
Borrower shall have prepaid the Total Warehouse Outstandings and/or the Total
Supplemental Outstandings pursuant to Section 3.03(d) to cure a Borrowing Base
Deficiency and/or Supplemental Borrowing Base Deficiency arising from a breach
of a representation and warranty of Borrower set forth in Schedule B hereto with
respect to a Contract, prior to the payment by Borrower of the Release
Consideration for such Contract pursuant to this Section 3.03(g), then the
amount of such prepayment (equal to the amount of such Borrowing Base Deficiency
or Supplemental Borrowing Base Deficiency caused by such breach in respect of
such Contract) shall be credited toward Borrower's payment of the Release
Consideration for such Contract.
(h) If any Contract is required to be purchased from Borrower by the
Servicer pursuant to Section 2.07 of the Servicing Agreement, Borrower, shall,
no later than 2:00 p.m., New York City time, on the date of such purchase,
deposit (or cause the Servicer to deposit) into the Collection Account the
Release Consideration for such Contract. Upon receipt by Lender of a certificate
from an authorized officer of the Servicer, certifying that the Servicer has
deposited such Release Consideration into the Collection Account in accordance
with this Section 3.03(h) and Section 3.10(g) of this Agreement, Lender shall
release its security interest in such Contract (and the Collateral related
thereto) in accordance with Section 12(b)(iii) of the Security Agreement;
provided, however, that, if a Borrowing Base Deficiency or a Supplemental
Borrowing Base Deficiency would otherwise occur as a result of such release and
payment of the related Release Consideration, Borrower shall, on the date of
such release, cure such prospective Borrowing Base Deficiency or Supplemental
Borrowing Base Deficiency in the manner set forth in Section 3.03(d).
Section 3.04. Funds; Manner of Payment. Each payment and each prepayment
of principal of and interest on any Loan, and each payment on account of all
other Obligations shall be paid by Borrower without set-off or counterclaim to
Lender pursuant to the Lender Wire Transfer Instructions, in Federal or other
immediately available funds in lawful money of the United States of America, not
later than 2:00 p.m. (or 4:30 p.m. in the case of any prepayment required to be
made pursuant to Section 3.03(c) hereof from a Sale), New York City time, on the
date on which any such payment or prepayment is payable. If any payment
hereunder or under either Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day. If the date for any payments or prepayments of principal is
extended by operation of law or otherwise, interest thereon shall be payable at
the then applicable rate during such extension.
Section 3.05. Default Interest. If Borrower shall default in the payment
of the principal of or interest on any Loan or any other Obligation, Borrower
shall on demand pay interest on such overdue principal or other amount and, to
the extent permitted by applicable law, on such overdue interest and any other
overdue amount, for each day at a rate per annum equal to three hundred (300)
basis points in excess of the interest rate for such Loans or other Obligations
that would otherwise be applicable hereunder. In each case, such interest shall
be calculated on the basis of the actual number of days elapsed in a year of 360
days and shall accrue from the date such payment was due until such amount is
paid in full.
42
Section 3.06. Requirements of Law. (a) If any Requirement of Law or any
change in the interpretation or application thereof or compliance by 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 Lender to any tax of any kind whatsoever
with respect to this Agreement, either Note or any Loan made by it
(excluding net income taxes) or change the basis of taxation of payments
to Lender in respect thereof;
(ii) shall subject Lender to any tax of any kind whatsoever
with respect to this Agreement, either Note or any Loan made by it
(excluding net income taxes) or change the basis of taxation of advances,
loans or other extensions of credit by, or any other acquisition of funds
by, any office of Lender which is not otherwise included in the
determination of the Applicable LIBOR rate hereunder; or
(iii) shall impose on Lender any other condition;
and the result of any of the foregoing is to increase the cost to Lender, by an
amount which Lender deems to be material, of making, continuing or maintaining
any Loan or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, Borrower shall promptly pay Lender such additional amount or
amounts as will compensate Lender on an after-tax basis for such increased cost
or reduced amount receivable.
(b) If Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Lender or any corporation
controlling 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 Lender's or such corporation's capital as a consequence of its
obligations hereunder to a level below that which Lender or such corporation
(taking into consideration Lender's or such corporation's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, then from
time to time, Borrower shall promptly pay to Lender such additional amount or
amounts as will compensate Lender on an after-tax basis for such reduction.
(c) If Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify Borrower of the event by
reason of which it has become so entitled. A certificate as to any additional
amounts payable pursuant to this Section submitted by Lender to Borrower shall
be conclusive in the absence of manifest error.
Section 3.07. Indemnity. Borrower agrees (with respect to clause (d)
below) and Borrower, Seller and Originator, jointly and severally, agree (with
respect to clauses (a), (b), (c) and (e) below) to indemnify Lender and to hold
it harmless from any cost, loss or expense which Lender may sustain or incur as
a consequence of (a) Borrower making any payment or prepayment (other than
pursuant to Section 3.03 hereof) of principal of any Loan on a day which is not
a Business Day, (b) Borrower making any optional prepayment of any Loan pursuant
to Section 3.02 hereof on any day other than two (2) Business Days after prior
written notice to Lender, (c) any failure by Borrower to make a Borrowing
hereunder after notice of such
43
Borrowing has been given pursuant to this Agreement, (d) any default by Borrower
in making any payment of Total Warehouse Outstandings or Total Supplemental
Outstandings on a due date therefor, or (e) any acceleration of the maturity of
any Loans by Lender in accordance with the terms of this Agreement, including,
but not limited to, any cost, loss or expense arising in liquidating the Loans
and from interest or fees payable by Lender to lenders of funds obtained by it
in order to maintain the Loans hereunder. In the event Borrower is required to
make any payment pursuant to this Section 3.07, Lender shall provide to Borrower
in writing the basis upon which such charges were calculated in reasonable
detail, which calculation shall be conclusive in the absence of manifest error
by Lender. Indemnification pursuant to this Section shall survive the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation.
Section 3.08. Illegality; Substituted Interest Rates. Notwithstanding any
other provisions herein, (a) if any Requirement of Law or any change therein or
in the interpretation or application thereof shall make it unlawful for Lender
to make or maintain any Loans at the LIBOR rate as contemplated by this
Agreement, or (b) in the event that Lender shall have determined (which
determination shall be conclusive and binding upon Borrower) that by reason of
circumstances affecting the LIBOR interbank market neither adequate nor
reasonable means exist for ascertaining the LIBOR rate, or (c) Lender shall have
determined (which determination shall be conclusive and binding on Borrower)
that the Applicable LIBOR rate will not adequately and fairly reflect the cost
to Lender of maintaining or funding the Loans based on such Applicable LIBOR
rate (provided that the parties hereto acknowledge and agree that Lender shall
only make such determination if the published LIBOR rate used by Lender does not
accurately reflect the actual LIBOR rate), (x) the obligation of Lender to make
or maintain Loans at the LIBOR rate shall forthwith be suspended and Lender
shall promptly notify Borrower thereof (by telephone confirmed in writing) and
(y) each Loan then outstanding, if any, shall, from and including the date that
is forty-five (45) days after Borrower's receipt of notice from Lender of the
occurrence of any condition set forth in clauses (a) , (b) or (c), or at such
earlier date as may be required by law, until payment in full thereof, bear
interest at the rate per annum equal to the greater of the Prime Rate and the
rate of interest (including the applicable LIBOR Margin) in effect on the date
immediately preceding the date any event described in clause (a), (b) or (c)
occurred (calculated on the basis of the actual number of days elapsed in a year
of 360 days). If subsequent to such suspension of the obligation of Lender to
make or maintain the Loans at the LIBOR rate it becomes lawful for Lender to
make or maintain the Loans at the LIBOR rate, or the circumstances described in
clause (b) or (c) above no longer exist, Lender shall so notify Borrower and its
obligation to do so shall be reinstated effective as of the date it becomes
lawful for Lender to make or maintain the Loans at the LIBOR rate or the
circumstances described in clause (b) or (c) above no longer exist.
Section 3.09. Application of Payments during Event of Default. Upon the
occurrence and during the continuance of an Event of Default, all payments made
hereunder and under the other Lender Loan Documents (including from the proceeds
of any Collateral) shall be applied as follows:
(a) First, to the Servicer, any accrued and unpaid Servicing Fees
due to the Servicer in accordance with the Servicing Agreement; provided that,
so long as TFC is Servicer, amounts payable to Servicer pursuant to this Section
3.09(a) shall be paid first to the Backup
44
Servicer to the extent that the Servicer has not paid any fees and expenses due
and payable to the Backup Servicer pursuant to Section 2.18(f) of the Servicing
Agreement (it being understood that amounts payable to the Backup Servicer
pursuant to this Section 3.09(a) shall be limited solely to the extent of
amounts otherwise payable to the Servicer pursuant to this Section 3.09(a));
(b) Second, to the Successor Servicer (if any), any accrued and
unpaid servicer transition expenses of any incoming servicer then due to such
Successor Servicer, up to the maximum amount of $150,000 in the aggregate;
(c) Third, to all costs and expenses incurred by Lender in
connection with any Default or Event of Default including without limitation
those described in Section 11.04 hereof;
(d) Fourth, to Lender, any fees or reimbursements due to Lender
pursuant to this Agreement or any other Lender Loan Document and previously
unpaid, including, without limitation, any due and unpaid Facility Parity
Violation Fees, Commitment Fee Post-60 Add-on Amounts or Commitment Fee Post-90
Add-on Amounts;
(e) Fifth, to Lender, with the same priority and ratably in
proportion to the Total Warehouse Outstandings and the Total Supplemental
Outstandings, (x) the aggregate amount due and payable hereunder on account of
accrued and unpaid interest on the Supplemental Loans and (y) the aggregate
amount due and payable hereunder on account of accrued and unpaid interest on
the Warehouse Loans;
(f) Sixth, to Lender, the Total Supplemental Outstandings;
(g) Seventh, to Lender, the Total Warehouse Outstandings;
(h) Eighth, to Lender, any other Obligation not otherwise paid
pursuant to clauses (a) through (g) above; and
(i) Ninth, to Lender, amounts due and unpaid pursuant to any
Residual Financing Agreement, if an event of default shall have occurred and be
continuing under such Residual Financing Agreement;
(j) Tenth, to the Other Warehouse Lender, for amounts due and unpaid
pursuant to the Other Warehouse Facility, if an event of default shall have
occurred and be continuing under the Other Warehouse Facility;
(k) Eleventh, to the Other Warehouse Lender, for amounts due and
unpaid pursuant to any residual financing facility that the Residual Facility
Borrower has with the Other Warehouse Lender, if an event of default shall have
occurred and be continuing under such residual financing facility;
(l) Twelfth, to the Backup Servicer, (A) any fees and expenses due
and payable to the Backup Servicer pursuant to Section 2.18(f) of the Servicing
Agreement (solely to the extent that such fees and/or expenses shall not have
been paid directly by Servicer as required under Section 2.18(f) of the
Servicing Agreement or Section 3.09(a) of this Agreement) and (B)
45
any indemnity payments due and payable to the Backup Servicer pursuant to
Section 2.15 of the Servicing Agreement;
(m) Thirteenth, to the Collection Account Bank, (A) any fees and
expenses due and payable to the Collection Account Bank (solely to the extent
that such fees and/or expenses shall not have been paid directly by Originator
as required under Section 10.03) and (B) any Collection Account Bank Indemnified
Expenses due and payable pursuant to Section 10.04 (solely to the extent that
such Collection Account Bank Indemnified Expenses shall not have been paid
directly by Originator as required under Section 10.04);
(n) Fourteenth, to Administrator, any Administration Fees due and
payable to Administrator; and
(o) Fifteenth, upon payment in full of all amounts due by Borrower
under the Loan Documents, any excess to the Owner Trustee for deposit in the
Certificate Distribution Account and distribution to the Certificateholder
pursuant to the Trust Agreement, or to any Person who shall be lawfully entitled
to such excess.
Section 3.10. Application of Payments, Establishment of Lockbox, Clearing
Account, Concentration Account and Collection Account. (a) In accordance with
the Blocked Account Agreement, Servicer has established and maintains with the
Lockbox Depository the lockbox identified in the Blocked Account Agreement as
number 10104 (such lockbox, together with any other lockbox established under
the Blocked Account Agreement, collectively, the "Lockbox") and the Clearing
Account and the Concentration Account. Each of the Clearing Account and the
Concentration Account shall at all times be an Eligible Deposit Account. In
connection with the origination of each Contract, Servicer shall instruct the
Obligor to direct all payments and other amounts in respect of the Contracts to
the Lockbox, the Clearing Account or the Concentration Account. All Scheduled
Payments actually collected and other amounts received from Obligors or other
sources on or in respect of the Contracts shall initially be deposited to the
Clearing Account or to the Concentration Account. No later than the close of
each Business Day, the remittances then on deposit in the Clearing Account will
be deposited to the Concentration Account. Notwithstanding the Blocked Account
Agreement or any of the provisions of this Agreement relating to the Lockbox or
the Blocked Account Agreement or the Lockbox Account, the Clearing Account or
the Concentration Account, Servicer shall remain obligated and liable to Lender
and Borrower for servicing and administering the Contracts and the other
Collateral in accordance with the provisions of this Agreement, the Servicing
Agreement and the other Lender Loan Documents without diminution of such
obligation or liability by virtue thereof. All expenses incurred in connection
with the Lockbox, the Clearing Account, the Concentration Account and the
Collection Account, including, without limitation, all fees and expenses of
JPMorgan Chase Bank, N.A., as Collection Account Bank and as agent under the
Intercreditor Agreement, all fees and expenses of the Lockbox Depository and all
insufficient funds charges imposed by the Lockbox Depository, shall be borne by
Servicer; provided that, if Servicer shall fail to pay such fees and expenses to
the Collection Account Bank, such fees and expenses shall be among the fees and
expenses payable to the Collection Account Bank pursuant to Section
3.12(c)(xiii) or Section 3.09(m), as applicable, provided further that that any
such payment pursuant to Section 3.12(c)(xiii) or section 3.09(m), as
applicable, shall not relieve Servicer of its obligation for the payment of such
fees and expenses.
46
(b) As funds relating to the Contracts become available in the
Concentration Account and in no event later than two Business Days after
receipt, all such collections shall be swept from the Concentration Account to
the Collection Account pursuant to daily wire instructions from Servicer. All
collections relating to the Contracts received by the Servicer but not deposited
to the Clearing Account or the Concentration Account pursuant to this Section
3.10(a) and (b) shall be held in trust by the Servicer and promptly, but in no
event later than two Business Days after receipt, deposited to the Collection
Account.
(c) Servicer, for the benefit of Lender, shall cause to be
established and maintained at JPMorgan Chase Bank, National Association, or such
other financial institution as determined by Lender with the prior written
consent of Servicer, such consent not to be unreasonably withheld (the
"Collection Account Bank"), in the name of Lender an Eligible Deposit Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of Lender (and with the Lender
as the sole "customer" (as defined in Section 4-104 of the UCC) or sole
"entitlement holder" (as defined in Section 8-102(a)(7) of the UCC), as
applicable, with respect to the Collection Account). Lender hereby revocably
authorizes the Collection Account Bank to make payments and distributions from
the Collection Account required under this Agreement. Lender may, in its sole
discretion, revoke at any time such authority and appoint a successor entity
(and successors thereto from time to time) to make such payments and
distributions.
(d) Funds on deposit in the Collection Account shall be invested by
the Collection Account Bank in Eligible Investments selected in writing by
Borrower (pursuant to standing instructions or otherwise); provided that, in the
absence of such a direction, amounts on deposit in the Collection Account shall
remain uninvested. All such Eligible Investments shall be held by the Collection
Account Bank for the benefit of Lender in a manner sufficient to provide Lender
a perfected first priority security interest in such Eligible Investments
pursuant to documentation reasonably acceptable to Lender. On the Business Day
immediately preceding each Remittance Date, all interest and other investment
income (net of losses and investment expenses) on funds on deposit in the
Collection Account shall be deposited into the Collection Account and shall
constitute amounts available for such Remittance Date. Other than as instructed
in writing by Borrower, funds on deposit in the Collection Account shall be
invested in Eligible Investments that will mature (i) not later than the
Business Day immediately preceding the next Remittance Date or (ii) on such next
Remittance Date if such investment is held in the trust department of the
Collection Account Bank and is invested in a time deposit of the Collection
Account Bank rated at least A-1 by Standard & Poor's and P-1 by ▇▇▇▇▇'▇ (such
accounts being maintained initially at JPMorgan Chase Bank, National
Association). Funds deposited in the Collection Account on a day which
immediately precedes a Remittance Date upon the maturity of any Eligible
Investments are not required to be invested overnight. Upon Lender's inquiry to
Borrower or the Collection Account Bank, Borrower or the Collection Account
Bank, the case may be, shall inform of Lender of all Eligible Investments in
which amounts on deposit in the Collection Account are then invested. The
Collection Account Bank shall not be liable for the amount of any loss incurred
in respect of any investment or lack of investment of funds held in the
Collection Account made in accordance with this Section 3.10(d), except for
losses attributable to the Collection Account Bank's failure to make payments on
such Eligible Investments issued by the Collection Account Bank, in its
commercial capacity as principal obligor and not as Collection Account Bank, in
accordance with their terms.
47
(e) [Reserved].
(f) On the Required Cure of Breach Date on which Borrower is
required to deliver to Lender the Release Consideration for any Contract
pursuant to Section 3.03(g) of this Agreement, Borrower shall deposit (or cause
the Servicer to deposit on its behalf) in the Collection Account such Release
Consideration for each such Contract, in accordance with (and within the time
specified under) Section 3.03(g) of this Agreement and in accordance with
Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale
and Contribution Agreement (it being understood that the Servicer shall, on the
Repurchase Date on which it receives any such Release Consideration from TFC, on
behalf of Borrower pursuant to Section 6.2 of the Receivables Purchase Agreement
and on behalf of Seller pursuant to Section 6.2 of the Sale and Contribution
Agreement, deposit such amount in the Collection Account).
(g) On the date of any purchase by the Servicer of a Contract from
Borrower pursuant to Section 2.07 of the Servicing Agreement, in satisfaction of
the payment to Borrower of the Release Consideration for such Contract, the
Servicer shall, on behalf of Borrower, deposit such Release Consideration into
the Collection Account in accordance with (and within the time specified under)
Section 3.03(h).
Section 3.11. Collections. Servicer shall remit within two Business Days
of receipt thereof to the Collection Account all payments by or on behalf of the
Obligors with respect to the Contracts and all Liquidation Proceeds and
Recoveries, in each case as collected during the related Collection Period. For
purposes of this Article III the phrase "payments by or on behalf of Obligors"
means payments made with respect to the Contracts by Persons other than
Servicer.
Section 3.12. Application of Collections by Borrower. (a) With respect to
each Contract, Scheduled Payments actually collected from or on behalf of the
Obligor shall be applied by Servicer to interest and principal in accordance
with the Simple Interest Method, in each case in accordance with Section 2.16 of
the Servicing Agreement.
(a) [Reserved].
(b) On each Remittance Date (subject to the last paragraph of this
Section 3.12(c)), Servicer shall instruct the Collection Account Bank in writing
(no later than 1:00 p.m. New York City time on such Remittance Date) to withdraw
from the Collection Account the Required Remittance Amount for such Remittance
Date and to apply such Required Remittance Amount (based solely on the
information contained in the Servicer's Certificate delivered on the related
Payment Determination Date pursuant to Section 2.09 of the Servicing Agreement
and Section 6.19 hereof) in the following order of priority:
(i) first, to Lender, any fees or reimbursements due to Lender
pursuant to this Agreement or any other Lender Loan Document and
previously unpaid, including, without limitation, any Facility Parity
Violation Fee, Commitment Fee Post-60 Add-on Amount or Commitment Fee
Post-90 Add-on Amount for such Remittance Date (plus any past-due Facility
Parity Violation Fees, Commitment Fee Post-60 Add-on Amounts and
Commitment Fee Post-90 Add-on Amounts not previously paid);
48
(ii) second, to Servicer, the Base Servicing Fee for such
Remittance Date (plus any past-due Base Servicing Fees not previously
paid); provided that, so long as TFC is Servicer, amounts payable to
Servicer pursuant to this clause (ii) shall be paid first to the Backup
Servicer to the extent that the Servicer has not paid any fees and
expenses due and payable to the Backup Servicer pursuant to Section
2.18(f) of the Servicing Agreement (it being understood that amounts
payable to the Backup Servicer pursuant to this clause (ii) on any
Remittance Date shall be limited solely to the extent of amounts otherwise
payable to the Servicer pursuant to this clause (ii) on such Remittance
Date);
(iii) third, to the Successor Servicer (if any), any accrued
and unpaid servicer transition expenses of any incoming servicer then due
to such Successor Servicer, up to the maximum amount of $150,000 in the
aggregate for such Remittance Date and all prior Remittance Dates;
(iv) fourth, to Lender, with the same priority and ratably in
proportion to the Total Warehouse Outstandings and the Total Supplemental
Outstandings, (x) the Supplemental Interest Payment Amount for such
Remittance Date and (y) the excess, if any, of (1) the Warehouse Interest
Payment Amount for such Remittance Date over (2) the Commitment Fee Credit
Amount, if any, not applied in reduction of amounts described under this
clause (y) on all prior Remittance Dates;
(v) fifth, to Lender, the Supplemental Regular Principal
Payment Amount for such Remittance Date;
(vi) sixth, to Lender, the Warehouse Regular Principal Payment
Amount for such Remittance Date;
(vii) seventh, if such Remittance Date is on or after the
Termination Date, to Lender, the Additional Principal Payment Amount for
such Remittance Date (which amount shall be applied first to the repayment
of principal of the Supplemental Loans until the Total Supplemental
Outstandings are reduced to zero and second to the repayment of principal
of the Warehouse Loans until the Total Warehouse Outstandings are equal to
the Term Loan Borrowing Base);
(viii) eighth, to the Backup Servicer, the fees and expenses
due and payable to the Backup Servicer as of such Remittance Date pursuant
to Section 2.18(f) of the Servicing Agreement (solely to the extent that
such fees and/or expenses shall not have been paid directly by Servicer as
required under Section 2.18(f) of the Servicing Agreement and shall have
not been paid pursuant to clause (ii) above);
(ix) ninth, to Lender, all amounts due and unpaid pursuant to
any Residual Financing Agreement, if a Residual Financing Agreement
Deficiency shall have occurred and be continuing as of such Remittance
Date;
(x) tenth, to the Other Warehouse Lender, for amounts due and
unpaid pursuant to the Other Warehouse Facility, if an Other Lender
Warehouse Deficiency shall have occurred and be continuing as of such
Remittance Date;
49
(xi) eleventh, to the Other Warehouse Lender, for amounts due
and unpaid pursuant to any residual financing facility that the Residual
Facility Borrower has with the Other Warehouse Lender, if an Other Lender
Residual Deficiency shall have occurred and be continuing as of such
Remittance Date;
(xii) twelfth, to the Servicer, any Supplemental Servicing Fee
for such Remittance Date (plus any past-due Supplemental Servicing Fees
not previously paid);
(xiii) thirteenth, to the Collection Account Bank, (A) the
fees and expenses due and payable to the Collection Account Bank on such
Remittance Date (solely to the extent that such fees and/or expenses shall
not have been paid directly by Originator as required under Section 10.03)
and (B) any Collection Account Bank Indemnified Expenses due and payable
pursuant to Section 10.04 as of such Remittance Date (solely to the extent
that such Collection Account Bank Indemnified Expenses shall not have been
paid directly by Originator as required under Section 10.04 and shall not
have been paid pursuant to clause (ii) above);
(xiv) fourteenth, to the Backup Servicer, any indemnity
payments due and payable to the Backup Servicer pursuant to Section 2.15
of the Servicing Agreement (solely to the extent that such payments shall
not have been made directly by Servicer as required under Section 2.15 of
the Servicing Agreement);
(xv) fifteenth, to Administrator, the Administration Fee for
such Remittance Date (plus any past-due Administration Fees not previously
paid) and the reimbursement of reasonable expenses incurred by
Administrator in connection with its performance of its obligations
pursuant to the Trust Agreement, to the extent not previously reimbursed;
and
(xvi) any excess to the Owner Trustee for deposit in the
Certificate Distribution Account and distribution to the Certificateholder
pursuant to the Trust Agreement (or to such other Person as Borrower shall
direct, unless a Default or an Event of Default shall have occurred and be
continuing).
Lender may independently verify the information contained in the Servicer's
Certificate delivered on any Payment Determination Date. If Lender reasonably
determines that there are errors or inaccuracies with respect to the information
in any such Servicer's Certificate, on the basis of which the Collection Account
Bank would otherwise be required apply the Required Remittance Amount on the
related Remittance Date pursuant to this Section 3.12(c), Lender shall inform
Servicer and the Collection Account Bank of such determination in writing no
later than 11:00 a.m. (New York City time) on the Business Day immediately
preceding such Remittance Date. In such case, Lender shall instruct the
Collection Account Bank in writing (no later than 1:00 p.m. New York City time
on such Remittance Date) to withdraw from the Collection Account the Required
Remittance Amount for such Remittance Date and to apply such Required Remittance
Amount in the order of priority set forth in this Section 3.12(c), based solely
on information provided by Lender to the Collection Account Bank. If Servicer
fails to deliver a completed Servicer's Certificate to Lender and the Collection
Account Bank on any Payment Determination Date, then, no later than 1:00 p.m.
(New York City time) on the Remittance Date
50
to which such Payment Determination Date relates, Lender shall instruct the
Collection Account Bank in writing to withdraw from the Collection Account the
Required Remittance Amount for such Remittance Date and to apply such Required
Remittance Amount in the order of priority set forth in this Section 3.12(c),
based solely on information provided by Lender to the Collection Account Bank.
Section 3.13. [Reserved].
Section 3.14. [Reserved].
Section 3.15. [Reserved].
Section 3.16. Taxes. All payments made by Borrower under this Agreement
and each Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes, gross receipt taxes and
franchise taxes (imposed in lieu of net income taxes) imposed on Lender as a
result of a present or former connection between Lender and the jurisdiction of
the Governmental Authority imposing such tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or either Note). If any
such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be imposed on Lender
hereunder or under either Note, Borrower shall pay such taxes by having the
amounts so payable to Lender increased to the extent necessary to yield to
Lender (after payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the applicable Note. Whenever any Non-Excluded Taxes are payable
by Borrower, promptly as possible thereafter Borrower shall send to Lender a
certified copy of an original official receipt received by Borrower showing
payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to Lender the required receipts
or other required documentary evidence, Borrower shall indemnify Lender for any
incremental taxes, interest or penalties that may become due by Servicer as a
result of any such failure.
51
ARTICLE IV.
CONDITIONS TO CLOSING AND THE LOANS
Section 4.01. Conditions Precedent to the Closing. The effectiveness of
the obligations of Lender under this Agreement is subject to fulfillment of the
following conditions precedent, on or before the Closing Date:
(a) Receipt of Documents. Receipt by Lender of the following
documents, each dated as of the Closing Date, where applicable, in form and
substance satisfactory to Lender and its counsel:
(i) This Agreement, executed and delivered on behalf of TFC,
the Collection Account Bank, Seller and Borrower;
(ii) Each Note, executed and delivered on behalf of Borrower;
(iii) The Warehouse Affiliate Guaranty, executed and delivered
on behalf of TFC;
(iv) The Servicing Agreement, executed and delivered on behalf
of Servicer, Backup Servicer and Borrower;
(v) The Lenders' Intercreditor Agreement, executed and
delivered on behalf of Lender and Other Warehouse Lender;
(vi) The Blocked Account Agreement, executed and delivered on
behalf of Borrower, TFC, Mellon, and JPMorgan Chase Bank, National
Association;
(vii) The Intercreditor Agreement, executed and delivered on
behalf of TFC, JPMorgan Chase Bank, National Association, Lender, Other
Warehouse Lender, MBIA Insurance Corporation and Ambac Assurance
Corporation;
(viii) The Security Agreement, executed and delivered on
behalf of Borrower and Lender, together with:
1) Results of lien searches in the records of the Secretary of State
and any other appropriate official in each applicable jurisdiction;
2) UCC-1 financing statements delivered by (a) Originator naming
Originator as "debtor", Seller as "secured party" and Borrower as
"assignee", with evidence of filing in all jurisdictions as may be
necessary in the reasonable opinion of Lender, to perfect the
security interest contemplated under the Sale and Contribution
Agreement (together with UCC-3 amendments to such UCC-1 financing
statements, listing the Lender as assignee, in each jurisdiction in
which such UCC-1 financing statements are filed), (b) Seller naming
Seller as "debtor", Borrower as "secured party" and Lender as
"assignee", with evidence of filing in all jurisdictions as may be
necessary in the reasonable opinion of Lender, to
52
perfect the security interest contemplated under the Receivables
Purchase Agreement, and (c) Borrower naming Borrower as "debtor" and
Lender as "secured party," with evidence of filing in all
jurisdictions as may be necessary in the reasonable opinion of
Lender, to perfect the security interest contemplated under the
Security Agreement;
3) Evidence that all other actions necessary to perfect the security
interest contemplated under the Security Agreement have been taken;
(ix) The Sale and Contribution Agreement, executed and
delivered on behalf of Originator and Seller;
(x) The Receivables Purchase Agreement, executed and delivered
on behalf of Seller and Borrower;
(xi) A copy of the resolutions of each of Originator,
Servicer, Seller and Borrower authorizing (A) the execution, delivery and
performance of the Loan Documents by each of Originator, Servicer, Seller
and Borrower, (B) with respect to Borrower, the borrowings contemplated
hereunder, with respect to Seller, the sales contemplated under the
Receivables Purchase Agreement, with respect to the Originator, the sales
contemplated under the Sale and Contribution Agreement and with respect to
Servicer, the servicing contemplated under the Servicing Agreement and (C)
with respect to Borrower, the granting of the security interest
contemplated under the Security Agreement, with respect to Seller, the
granting of the security interest contemplated under the Receivables
Purchase Agreement and with respect to the Originator, the granting of the
security interest contemplated under the Sale and Contribution Agreement,
certified by the Secretary or an Assistant Secretary of Borrower, Seller,
Originator or Servicer, as applicable, as of the Closing Date, which
certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded as of the date of such
certificate;
(xii) Certificates of the Secretary or an Assistant Secretary
of Seller, Originator and Servicer certifying the names and the signatures
of the officers of Seller, Originator or Servicer, as applicable,
authorized to sign the Loan Documents to be delivered hereunder;
(xiii) (A) copy of the Certificate of Incorporation of each of
Originator and Servicer and each amendment thereto certified under recent
date by the Secretary of State of California, (B) copy of the Certificate
of Formation of Seller certified under recent date by the Secretary of
State of Delaware, (C) copy of the By-Laws of each of Originator and
Servicer and each amendment thereto, certified by the Secretary or an
Assistant Secretary of Servicer or Originator, as applicable, as being
true, complete and correct as of the Closing Date, (D) copy of the limited
liability company operating agreement of Seller and each amendment
thereto, certified by the Secretary or an Assistant Secretary of Seller as
being true, complete and correct as of the Closing Date, (E) copy of the
Certificate of Trust of Borrower certified under recent date by the
Secretary of State of Delaware, and (F) copy of the Trust Agreement and
each
53
amendment thereto, certified by the Secretary or an Assistant Secretary of
Seller as being true, complete and correct as of the Closing Date;
(xiv) Copies of certificates (long form) or other evidence
from the Secretary of State or other appropriate authority of the State of
California and of each jurisdiction where Servicer or Originator is
qualified to do business, evidencing the good standing of Originator and
Servicer in the State of California and such other jurisdictions, in each
case, dated no earlier than 30 days prior to the Closing Date;
(xv) Copies of certificates (long form) or other evidence from
the Secretary of State or other appropriate authority of the State of
Delaware and of each jurisdiction where Seller is qualified to do
business, evidencing the good standing of Seller in the State of Delaware
and such other jurisdictions, in each case, dated no earlier than 30 days
prior to the Closing Date;
(xvi) Copies of certificates (long form) or other evidence
from the Secretary of State or other appropriate authority of the State of
Delaware and of each jurisdiction where Borrower is qualified to do
business, evidencing the good standing of Borrower in the State of
Delaware and such other jurisdictions, in each case, dated no earlier than
30 days prior to the Closing Date;
(xvii) Opinions of counsel to Borrower, Seller, Originator and
Servicer addressing (A) the matters set forth in the form of Exhibit Q
hereto, (B) the true-sale of the Transferred Property from TFC to Seller
and (C) substantive consolidation of TFC, Residual Facility Borrower,
Seller and Borrower, in each case in form and substance that is reasonably
satisfactory to Lender;
(xviii) Copies of any commitment or agreement between Seller
or Borrower and any lender or other financial institution, other than any
such commitment or agreement (or portion thereof) which Lender
specifically agrees are not required to be delivered hereunder;
(xix) A schedule prepared and certified to by an Authorized
Signatory of Borrower, listing each Initially Pledged Additional
Collateral Contract, all of which shall be pledged to Lender under the
Security Agreement on the Closing Date (it being understood that delivery
of such schedule shall be at the close of business on the Closing Date);
(xx) A certificate of an officer of the Backup Servicer
certifying as to the successful completion, on or prior to the Closing
Date, of the test data mapping of servicing data referenced in Section
4.01(l); and
(xxi) Such other opinions, documents and instruments as Lender
or its counsel shall reasonably request.
(b) Representation and Warranties. Each of the representations and
warranties made by or on behalf of Borrower, Seller, Originator or Servicer
herein or in any other Loan Document to which any such Person is a party shall
be true and correct on and as of
54
the Closing Date (except to the extent that such representations and warranties
relate solely to a Cut-off Date, in which case such representations and
warranties shall be true and correct as of such Cut-off Date).
(c) No Default or Event of Default. No Default or Event of Default
(or no event that given the lapse of time would result in a Default or Event of
Default) shall have occurred and be continuing on and as of the Closing Date.
(d) Commitment Fee Initial Payment. On the Closing Date, Borrower
shall have paid the Commitment Fee Initial Payment to Lender.
(e) Expenses of Lender. On the Closing Date, Borrower shall have
paid all fees and expenses incurred by Lender in connection herewith as to which
Lender shall have advised Borrower at least five (5) Business Days prior to the
Closing Date.
(f) [Reserved].
(g) No Material Adverse Change. No Material Adverse Change shall
have occurred since December 31, 2004.
(h) Servicing Audit Report. Lender shall have received a copy of the
most recent report of independent accountants with respect to TFC's servicing of
motor vehicle loans, delivered pursuant to the sale and servicing agreements
under the then-outstanding term securitizations sponsored by TFC, plus a copy of
any more recent servicing reports prepared in connection with the purchase and
sale referenced in Section 4.01(k) hereof.
(i) Other Warehouse Facility. All documents necessary to the
establishment of the Other Warehouse Facility shall have been duly executed and
delivered by all parties thereto and shall be in full force and effect, and each
other condition precedent to the funding under such facility shall have been
completed.
(j) Residual Facility; Other Residual Facility. All documents
necessary to the establishment of the Residual Facility and the Other Residual
Facility shall have been duly executed and delivered by all parties thereto and
be in full force and effect, and each other condition precedent to the funding
under such facility shall have been completed.
(k) Conditions Precedent Concerning Purchase and Sale of TFC.
(i) Each condition precedent to the sale of TFC by Fairlane
Credit LLC to Triad Acquisition Corp. shall have been satisfied.
(ii) Lender shall have received a copy of the final,
fully-executed version of the purchase and sale agreement and each other
agreement related to such sale.
(iii) The sale of TFC by Fairlane Credit LLC to Triad
Acquisition Corp. shall occur simultaneously with the consummation of the
transactions contemplated hereunder on the initial Borrowing Date, and all
other transactions in
55
connection with the consummation of such acquisition shall be completed,
prior to, or simultaneously on such Borrowing Date.
(iv) Lender shall have received a copy of a payoff letter of
Ford Motor Credit Company relating to the Loan Agreement dated March 3,
2003 between TFC and Ford Motor Credit Company.
(l) Test Mapping by Backup Servicer. The Backup Servicer shall have
performed a test data mapping of the servicing data with respect to a sample of
Contracts (which sample shall be reasonably acceptable to Lender) to the Backup
Servicer's servicing system, based upon servicing data with respect to such
sample of Contracts that shall have been provided by Servicer to the Backup
Servicer in an electronic format reasonably acceptable to the Backup Servicer.
Section 4.02. Conditions Precedent to All Loans. Lender's obligation to
make any Loan hereunder is subject to the following conditions precedent and the
delivery by Borrower of a Notice of Warehouse Borrowing pursuant to Section
2.03(a) or a Supplemental Borrowing Request and a related fully-executed
Confirmation Statement pursuant to Sections 2.03(b) and 2.07, as applicable, and
the acceptance of the proceeds of any Borrowing by Borrower shall be deemed
certification by Borrower that the following conditions shall have been met:
(a) No Commitment Termination Event. No Commitment Termination Event
shall have occurred, and no Commitment Termination Event will occur as a result
of making such Loan.
(b) Representation and Warranties. Each of the representations and
warranties made by or on behalf of Borrower, Seller, Originator or Servicer
herein or in any other Loan Document to which any such Person is a party, shall
be true and correct in all respects on and as of the Borrowing Date, before and
after giving effect to the Borrowing to be made on such date and the application
of the proceeds therefrom, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to a Cut-off Date,
in which case such representations and warranties shall be true and correct as
of such Cut-off Date).
(c) No Default or Event of Default. After giving effect to such
Borrowing and the application of proceeds therefrom, no Default or Event of
Default shall have occurred and be continuing on and as of such Borrowing Date.
(d) Contract Eligibility Criteria. On and as of the Borrowing Date,
each of the representations and warranties set forth in Schedule B hereto is
true and correct (except to the extent that such representations and warranties
relate solely to a Cut-off Date, in which case such representations and
warranties shall be true and correct as of such Cut-off Date) for all Contracts
pledged by Borrower to Lender under the Security Agreement on such date and no
such Contract is an Ineligible Contract. No Contract was originated in any
jurisdiction in which Borrower is required to be licensed in order to own such
Contract and such license has not been obtained prior to Borrower owning such
Contract. With respect to each Contract, the applicable Dealer
56
has either been paid or received credit from Originator for all proceeds from
the sale of such Contract to Originator.
(e) Deliveries. Lender shall have received the following:
(i) Borrower shall have delivered to Lender a Notice of
Warehouse Borrowing in compliance with Section 2.03(a) hereof (and, in the
case of any Clean-up Call Loan, Section 2.06 hereof) or a Supplemental
Borrowing Request in compliance with Section 2.03(b) hereof and a related
fully-executed Confirmation Statement in compliance with Section 2.07
hereof, as applicable.
(ii) In the case of any Warehouse Loan, Borrower shall have
delivered to Lender and Servicer not later than 2:00 p.m. (New York City
time) on the Business Day prior to the proposed Borrowing Date (or the
third (3rd) Business Day of the month of the proposed Borrowing Date, in
the case of a Clean-up Call Loan) in computer readable form, a detailed
listing of all Contracts to be pledged by Borrower to Lender under the
Security Agreement in connection with the Borrowing (the "List of
Contracts") and such other data relating to the Contracts and the Related
Assets as Lender may reasonably request.
(iii) Lender shall have received from the Custodian a
certification from Servicer that all items required to be delivered to the
Custodian pursuant to Section 3.01 of the Servicing Agreement with respect
to the Contracts to be pledged by Borrower to Lender under the Security
Agreement on such Borrowing Date have been delivered.
(iv) Lender shall have received UCC-3 Partial Release
Statements (or other appropriate forms) in appropriate form for filing,
together with a release letter reasonably satisfactory to Lender, in each
case duly executed by (1) any other warehouse lender releasing the
Contracts to be pledged by Borrower to Lender under the Security Agreement
on such Borrowing Date from the security interest of such other warehouse
lender or (2) in the case of a Clean-up Call Contract, the secured party
in the related securitization releasing such Contract to be pledged by
Borrower to Lender under the Security Agreement on such Borrowing Date
from the security interest pursuant to such securitization.
(v) Lender shall have received the most recent Servicer's
Certificate required to be delivered in accordance with Section 2.09 of
the Servicing Agreement and Section 6.19 hereof.
(vi) Lender shall have received the most recent Borrowing Base
Certificate required to be delivered in accordance with Section 6.13
hereof.
(vii) In the case of any Clean-up Call Loan, Lender shall have
received all opinions, documents and instruments required pursuant to
Section 2.06.
(viii) If an Opinion of Counsel is required to be delivered in
connection with such Loan pursuant to the requirements for Opinions of
Counsel set forth in the
57
definition of "Eligible State" herein, Borrower shall have delivered such
Opinion of Counsel to Lender.
(f) Borrowing Base. The Total Warehouse Outstandings shall not
exceed the Borrowing Base and the Total Supplemental Outstandings shall not
exceed the Supplemental Borrowing Base (in each case, after giving effect to
such Loan, in the case of a Warehouse Loan, after giving effect to the new
Contracts being pledged to Lender under the Security Agreement on such date).
(g) No Material Adverse Change or Material Adverse Effect. There
shall not have occurred one or more events that constitutes, or is reasonably
likely to constitute, a Material Adverse Change or that results in, or is
reasonably likely to result in, a Material Adverse Effect.
(h) Filings, Registrations, Recordings. All documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create, in favor of Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created under the Security Agreement or any other Loan Document, shall have been
properly prepared (and if required, executed) for filing, registration or
recording in each office in each jurisdiction in which such filings,
registrations and recordations are required to perfect such first-priority
security interest.
(i) Lender Licenses. Lender shall not be required solely as a result
of financing the Collateral or the pledge to Lender of the Collateral to be
licensed, registered or approved or to obtain permits or otherwise qualify (i)
to do business in any State in which it is not currently so required or (ii)
under any State consumer lending, fair debt collection or other applicable State
statute or regulation.
(j) Audit Reports. Lender shall have timely received each Required
Audit Report and each other report required pursuant to Section 2.11 of the
Servicing Agreement.
(k) Hedging Strategy. Borrower shall have implemented and maintained
a Hedging Strategy that is reasonably acceptable to Lender. For the avoidance of
doubt, the obligation of Borrower to implement and maintain a reasonably
acceptable Hedging Strategy under this Section 4.02(k) shall not derogate from
the right of Lender to make a determination resulting in an Advance Rate
Reduction.
(l) Other Conditions. Borrower shall have satisfied all other
conditions that Lender may reasonably require, if Lender shall have given
Borrower reasonable advance notice of such conditions.
58
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BORROWER
In order to induce Lender to enter into this Agreement and to make the
Loans hereunder, Borrower hereby represents and warrants to Lender as follows:
Section 5.01. Organization and Good Standing. Borrower is duly organized
and validly existing as a statutory trust in good standing under the laws of the
State of Delaware, with the power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, the power,
authority and legal right to acquire and own the Contracts and the other
Collateral and to pledge the Contracts and the other Collateral to Lender
pursuant to the Security Agreement and to enter into and perform its other
obligations under this Warehouse Lending Agreement, each Note, the Security
Agreement, the Receivables Purchase Agreement, each Receivables Purchase
Agreement Supplement and each other Loan Document to which it is a party.
Section 5.02. Due Qualification. Borrower is duly qualified to do business
as a foreign entity in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of its
property or the conduct of its business (including, without limitation, the
purchase of the Contracts from Seller under the Receivables Purchase Agreement
and each Receivables Purchase Agreement Supplement, the pledge of the Contracts
by Borrower to Lender pursuant to the Security Agreement, and the performance of
its other obligations under the Receivables Purchase Agreement, each Receivables
Purchase Agreement Supplement, this Warehouse Lending Agreement, each Note, the
Security Agreement and the other Loan Documents to which it is a party) shall
require such qualifications, licenses and/or approvals.
Section 5.03. Power and Authority. Borrower has the power and authority to
execute and deliver this Warehouse Lending Agreement, each Note, the Security
Agreement, the Receivables Purchase Agreement, each Receivables Purchase
Agreement Supplement and each other Loan Document to which it is a party and to
carry out its terms and their terms, respectively. The execution, delivery and
performance of this Warehouse Lending Agreement, each Note, the Security
Agreement, the Receivables Purchase Agreement, each Receivables Purchase
Agreement Supplement and each other Loan Document to which it is a party have
been duly authorized by Borrower by all necessary action.
Section 5.04. Binding Obligation. Each of this Warehouse Lending
Agreement, each Note, the Security Agreement, the Receivables Purchase
Agreement, each Receivables Purchase Agreement Supplement and each other Loan
Document to which Borrower is a party shall constitute a legal, valid and
binding obligation of Borrower enforceable 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.
Section 5.05. No Violation. The execution, delivery and performance by
Borrower of this Warehouse Lending Agreement, each Note, the Security Agreement,
the Receivables Purchase Agreement, each Receivables Purchase Agreement
Supplement and each other Loan Document to which Borrower is a party and the
consummation of the transactions contemplated
59
hereby and thereby and the fulfillment of the terms hereof and thereof do not
conflict with, result in a material breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default under,
Borrower's organizational documents, or any indenture, agreement, mortgage, deed
of trust, or other instrument to which Borrower is a party or by which it is
bound or to which any of its properties are subject; or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any indenture, agreement, mortgage, deed of trust, or other instrument (other
than the Lender Loan Documents); or violate any law, order, rule or regulation
applicable to Borrower of any court or of any Federal or State regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over Borrower or its properties.
Section 5.06. Compliance with Law. Borrower is conducting its business and
operations in compliance with all applicable laws, regulations, ordinances and
directives of governmental authorities, except to the extent that any
noncompliance results from the failure of Lender to be licensed or qualified
where necessary and except to the extent that any such noncompliance could not
reasonably be expected to have a Material Adverse Effect. Borrower has filed all
tax returns required to be filed and has paid all taxes due in respect of the
ownership of its assets or the conduct of its operations except to the extent
that the payment of such taxes is being contested in good faith by it in
appropriate proceedings and adequate reserves have been provided for the payment
thereof.
Section 5.07. No Consents. Borrower is not required to obtain the consent
of any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Warehouse Lending Agreement, either Note, the Security
Agreement, the Receivables Purchase Agreement, any Receivables Purchase
Agreement Supplement or any other Loan Document to which Borrower is a party,
except those which may have been obtained and are in full force and effect.
Section 5.08. No Proceedings. There are no proceedings or investigations
pending or, to Borrower's best knowledge, threatened against Borrower before any
court, regulatory body, administrative agency, other government instrumentality,
arbitral tribunal or other tribunal having jurisdiction over Borrower or its
properties (i) asserting the invalidity of this Warehouse Lending Agreement,
either Note, the Security Agreement, the Receivables Purchase Agreement, any
Receivables Purchase Agreement Supplement or any other Loan Document to which
Borrower is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Warehouse Lending Agreement, either Note, the
Security Agreement, the Receivables Purchase Agreement, any Receivables Purchase
Agreement Supplement or any other Loan Document to which Borrower is a party, or
(iii) seeking any determination or ruling that could have a Material Adverse
Effect.
Section 5.09. No Adverse Selection. Borrower has not selected Contracts to
be pledged to Lender in accordance with the terms of the Security Agreement and
the other Loan Documents through a process that is intended to be, or could be
expected to be, adverse to Lender.
60
Section 5.10. Other Obligations. Borrower is not in default in the
performance, observance or fulfillment of any obligation, covenant or condition
in any of the Loan Documents to which it is a party or in any agreement or
instrument to which it is a party or by which it is bound the result of which
could have a Material Adverse Effect.
Section 5.11. Regulation U. No proceeds of any Loan will be used, directly
or indirectly, by Borrower for the purpose of purchasing or carrying any Margin
Stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry Margin Stock or for any other
purpose which might cause any Loan to be a "purpose credit" within the meaning
of Regulation U.
Section 5.12. Investment Company Act, Etc. Borrower is not an "investment
company" or a company "controlled" by an investment company within the meaning
of the Investment Company Act of 1940, as amended. Borrower is not subject to
regulation under any Requirement of Law (other than Regulation X of the Board)
which limits its ability to incur Indebtedness.
Section 5.13. [Reserved].
Section 5.14. Collateral Security. (a) Borrower owns and will own each
item which it pledges as Collateral, free and clear of any and all Liens
(including, without limitation, any tax liens), other than Liens created in
favor of Lender pursuant to the Security Agreement or in favor of Lender or the
Other Warehouse Lender under any other Loan Document. No security agreement,
financing statement or other public notice similar in effect with respect to all
or any part of the Collateral is or will be on file or of record in any public
office, except such as have been or may hereinafter be filed pursuant to this
Agreement and the Security Agreement and except such as shall be terminated as
to the Collateral no later than immediately prior to the pledge of such
Collateral to Lender under the Security Agreement.
(b) The Security Agreement is effective to create, as collateral
security for the Obligations hereunder, valid and enforceable Liens on the
Collateral in favor of Lender.
(c) Upon filing of the financing statement delivered to Lender by
Borrower on or prior to the Closing Date with the Secretary of State of the
State of Delaware (which financing statement is in proper form for filing in
such jurisdiction), the Liens created pursuant to this Agreement and the
Security Agreement will constitute a perfected security interest in the
Collateral in favor of Lender, which Liens will be prior to all other Liens of
all other Persons which may be perfected by filing a financing statement under
Article 9 of the Uniform Commercial Code and which Liens are enforceable as such
as against all other Person.
Section 5.15. Ownership of Properties. Borrower has good and marketable
title to any and all of its properties and assets, subject only to a Lien under
any Loan Document.
Section 5.16. [Reserved].
Section 5.17. [Reserved].
61
Section 5.18. The Security Agreement. Each of the representations and
warranties of Borrower contained in the Security Agreement is true and correct.
Section 5.19. Eligible Contracts. All Contracts included in the Borrowing
Base are Eligible Contracts. All Contracts included in the Supplemental
Borrowing Base are Class 1 Eligible Contracts.
Section 5.20. Ownership of Borrower. Seller owns beneficially and of
record 100% of the Borrower Trust Certificates free and clear of all Liens.
Section 5.21. No Other Business. Borrower engages in no other business
activities other than the purchase of non-prime consumer new or used automobile,
van, sport utility vehicle and light-duty truck loans, pledging such loans to
Lender and the Other Warehouse Lender, transferring such loans in connection
with securitizations and in connection with whole-loan sales, and other
activities relating to the foregoing to the extent permitted by the
organizational documents of Borrower as in effect on the date hereof, or as
amended with the prior written consent of Lender. Without limitation of the
foregoing, Borrower is not a borrower under any loan or financing agreement,
facility or other arrangement other than the facility established pursuant to
this Agreement and the Other Warehouse Facility.
Section 5.22. No Indebtedness. Borrower has no Indebtedness, other than
Indebtedness incurred under (or contemplated by) the terms of this Agreement and
the Other Warehouse Facility.
Section 5.23. No Fraudulent Conveyance. As of the Closing Date and
immediately after giving effect to each Borrowing, the fair value of the assets
of Borrower is greater than the fair value of its liabilities (including,
without limitation, contingent liabilities of Borrower), and Borrower is and
will be solvent, does and will pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. Borrower does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Borrower is not in default under any material obligation to pay money to
any Person. Borrower is not 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
Borrower or any of its assets. Borrower is not transferring any Collateral with
any intent to hinder, delay or defraud any of its creditors. Borrower will not
use the proceeds from the transactions contemplated by this Warehouse Lending
Agreement or any other Loan Document to give any preference to any creditor or
class of creditors. Borrower has given fair consideration and reasonably
equivalent value in exchange for the sale of the Contracts by Seller under the
Receivables Purchase Agreement.
62
ARTICLE VI.
AFFIRMATIVE COVENANTS
Until all of the Obligations have been paid in full, the Commitment has
been terminated and this Agreement has been terminated:
Section 6.01. Notice of Defaults, Other Commitment Termination Events,
Litigation, Adverse Judgments, Etc. TFC, Seller or Borrower, as applicable,
shall give notice to Lender promptly:
(a) upon TFC, Seller or Borrower, as the case may be, becoming aware
of, and in any event within one (1) Business Day after, the occurrence of any
Default or any event of default or default under any other Loan Document, any
Residual Financing Agreement, the Other Warehouse Facility, any residual
financing agreement with the Other Warehouse Lender, or any other material
agreement of TFC, Seller, Borrower or the Residual Facility Borrower;
(b) upon TFC, Seller or Borrower, as the case may be, becoming aware
of, and in any event within one (1) Business Day after, the occurrence of any
other Commitment Termination Event,
(c) upon, and in any event within one (1) Business Day after,
service of process on TFC, Seller or Borrower (as the case may be), or any agent
thereof for service of process, in respect of any legal or arbitrable
proceedings affecting TFC, Seller or Borrower (i) that questions or challenges
the validity or enforceability of any of the Loan Documents, (ii) in which the
amount in controversy exceeds $1,000,000 or (iii) that could reasonably be
expected to have a Material Adverse Effect;
(d) upon, and in any event within one (1) Business Day after, TFC,
Seller or Borrower, as the case may be, becoming aware of any Rating Agency
requirement for the appointment of a third-party custodian of receivables files
in connection with any securitization of Contracts,
(e) upon, and in any event within one (1) Business Day after, TFC,
Seller or Borrower, as the case may be, becoming aware of any event or change in
circumstances that could reasonably be expected to have a Material Adverse
Effect, to constitute a Material Adverse Change or to cause a Default; and
(f) upon, and in any event within one (1) Business Day after, TFC,
Seller or Borrower, as the case may be, becoming aware of entry of a judgment or
decree in respect of TFC, Seller or Borrower, its respective assets or the
Collateral in an amount in excess of $1,000,000.
Each notice pursuant to this Section 6.01 shall be accompanied by a statement of
an officer of TFC or Seller or a statement of Borrower, as applicable, setting
forth details of the occurrence referred to therein and stating what action TFC,
Seller and Borrower, as the case may be, have taken or propose to take with
respect thereto.
63
Section 6.02. Taxes. Borrower shall pay and discharge all taxes and
governmental charges upon it or against any of its properties or assets or its
income prior to the date after which penalties attach for failure to pay, except
(a) to the extent that Borrower shall be contesting in good faith in appropriate
proceedings its obligation to pay such taxes or charges, adequate reserves
having been set aside for the payment thereof, or (b) with respect to such taxes
and charges which are not material in either nature or amount such that any
failure to pay or discharge them, and any resulting penalties, either in any one
instance or in the aggregate, would not materially and adversely affect the
financial condition, operations, business or prospects of Borrower.
Section 6.03. Separate Existence; No Commingling. (a) Each of Seller and
Borrower shall, and TFC shall cause itself and any other Affiliates of Borrower
to, maintain the truth and accuracy of all facts assumed by ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
in the true-sale and non-consolidation opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP;
provided that in the event that any request is made for Lender to consent to or
approve any matter that, if effectuated or consummated, would result in a change
to the continuing truth and accuracy of any of the factual assumptions in the
true-sale or non-consolidation opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, such request
shall be accompanied by an opinion of counsel that the conclusions set forth in
the true-sale and non-consolidation opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP will be
unaffected by such change.
(b) Seller will (i) own no assets, and not engage in any business,
other than the assets and transactions specifically contemplated by this
Agreement and the other Loan Documents, (ii) not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent,
other than as contemplated by this Agreement and the other Loan Documents, (iii)
not make any loans or advances to any third party, and shall not acquire
obligations or securities of any Affiliate, (iv) pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) only from its
own assets, (v) do all things necessary under applicable law and its
organizational documents to observe organizational formalities and to preserve
its existence, and will not amend, modify or otherwise change its certificate of
incorporation or bylaws, or suffer the same to be amended, modified or otherwise
changed, in a manner that will have a Material Adverse Effect, (vi) maintain all
of its books, records, financial statements and bank accounts separate from
those of any Affiliate, (vii) be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate), correct any known misunderstanding regarding its status as a
separate entity, conduct business in its own name, not identify itself or any
Affiliate as a division or part of the other and maintain and utilize separate
stationery, (viii) maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations, (ix) not engage in or suffer any
dissolution, winding-up, liquidation, consolidation or merger in whole or in
part, (x) not commingle its funds or other assets with those of any Affiliate or
any other Person, (xi) maintain its assets in such a manner that it will not be
costly or difficult to segregate, ascertain or identify its individual assets
from those of any Affiliate or any other Person, (xii) not and will not hold
itself out to be responsible for the debts or obligations of any other Person
and (xiii) be formed and organized solely for the purpose of purchasing and
selling non-prime consumer new and used automobile, van, sport utility vehicle
and light-duty truck loans, transferring such loans to Borrower under the
Receivables Purchase Agreement, transferring such loans in connection with
securitizations and in connection with whole-loan sales, and other activities
relating to the foregoing.
64
(c) Borrower will (i) own no assets, and not engage in any business,
other than the assets and transactions specifically contemplated by this
Agreement and the other Loan Documents, (ii) not incur any indebtedness or
obligation, secured or unsecured, direct or indirect, absolute or contingent,
other than as contemplated by this Agreement and the other Loan Documents, (iii)
not make any loans or advances to any third party, and shall not acquire
obligations or securities of any Affiliate, (iv) pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) only from its
own assets, (v) do all things necessary under applicable law and its
organizational documents to observe organizational formalities and to preserve
its existence, and will not amend, modify or otherwise change its certificate of
incorporation or bylaws, or suffer the same to be amended, modified or otherwise
changed, in a manner that will have a Material Adverse Effect, (vi) maintain all
of its books, records, financial statements and bank accounts separate from
those of any Affiliate, (vii) be, and at all times will hold itself out to the
public as, a legal entity separate and distinct from any other entity (including
any Affiliate), correct any known misunderstanding regarding its status as a
separate entity, conduct business in its own name, not identify itself or any
Affiliate as a division or part of the other and maintain and utilize separate
stationery, (viii) maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in light of
its contemplated business operations, (ix) not engage in or suffer any
dissolution, winding-up, liquidation, consolidation or merger in whole or in
part, (x) not commingle its funds or other assets with those of any Affiliate or
any other Person (other than in the Lockbox, the Clearing Account and the
Concentration Account), (xi) maintain its assets in such a manner that it will
not be costly or difficult to segregate, ascertain or identify its individual
assets from those of any Affiliate or any other Person, (xii) not and will not
hold itself out to be responsible for the debts or obligations of any other
Person and (xiii) be formed and organized solely for the purpose of purchasing
and selling non-prime consumer new and used automobile, van, sport utility
vehicle and light-duty truck loans, pledging such loans to Lender and the Other
Warehouse Lender, transferring such loans in connection with securitizations and
in connection with whole-loan sales, and other activities relating to the
foregoing.
Section 6.04. Financing Statements. At Lender's request, Originator,
Seller and Borrower shall execute such financing statements as Lender reasonably
determines may be required by law to perfect, maintain and protect the interest
of Lender in the Collateral and in the proceeds thereof.
Section 6.05. Books and Records; Other Information. (a) Borrower shall
maintain accurate and complete books and records with respect to the Collateral
and Borrower's business. Seller shall maintain accurate and complete books and
records with respect to the Conveyed Property and Seller's business. All
accounting books and records shall be maintained in accordance with GAAP.
(b) Originator, Servicer, Seller and Borrower shall, and shall cause
each of their respective Affiliates to, permit any representative of Lender to
visit and inspect any of the properties of Borrower and such Affiliates to
examine the books and records of Originator, Servicer, Seller or Borrower and
such Affiliates, as applicable, and to make copies and take extracts therefrom,
and to discuss the business, operations, properties, condition (financial or
otherwise) or prospects of Originator, Servicer, Seller or Borrower and each
such Affiliate, as applicable, or any of the Collateral with the officers and
independent public accountants thereof
65
and as often as Lender may reasonably request, and so long as no Default or
Event of Default shall have occurred and be continuing, all at such reasonable
times during normal business hours upon reasonable notice; provided that, after
a Default or Event of Default shall have occurred and be continuing, Lender
shall make such inspections, examine such documents and conduct such discussions
at such times as it may determine in its sole discretion.
(c) Each of Seller and Borrower shall promptly provide to Lender all
information regarding its respective operations and practices as Lender shall
reasonably request.
Section 6.06. Payment of Fees and Expenses. Servicer shall pay to Lender,
on demand, any and all fees, costs or expenses which Lender pays to a bank or
other similar institution arising out of or in connection with the return of
payments from Borrower deposited for collection by Lender.
Section 6.07. Continuity of Business and Compliance With Agreement.
Borrower shall continue in business in a prudent, reasonable and lawful manner
with all licenses, permits, and qualifications necessary to perform its
respective obligations under this Agreement, except where such failure could not
be expected to materially and adversely affect such performance or the
enforceability of Lender's security interest in the Collateral.
Section 6.08. Ownership of Borrower. Seller shall own beneficially and of
record 100% of the Borrower Trust Certificates free and clear of all Liens.
Section 6.09. Shareholder Reports, Governmental Filings, Etc. TFC, Seller
and Borrower shall furnish to Lender, as soon as available, copies of (w) any
and all Relevant Reports that TFC, Seller or Borrower sends to its respective
shareholders, members or Certificateholder, (x) all reports, correspondence and
other information provided by Triad Acquisition Corp. or TFC to the Unsecured
TFC Noteholders, (y) copies of all (if any) regular, periodic and special
reports, and all registration statements publicly filed by TFC or any Affiliate
of TFC with the Securities and Exchange Commission or any Governmental Authority
that supervises the issuance of securities by TFC, Seller, Borrower or any other
Affiliate of TFC, and (z) any press releases concerning TFC, Seller or Borrower.
Section 6.10. Fulfillment of Obligations. Borrower shall pay and perform,
as and when due, all of its obligations of whatever nature, except where the
amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of Borrower, and except to the extent
that the failure to do so could not, individually or in the aggregate, be
expected to have a Material Adverse Effect.
Section 6.11. Changes in Location, Name, Etc. Borrower will not (i) change
its "location" as defined in Section 9-307 of the UCC, (ii) change its form of
organization, or (iii) change its name or identity in any manner that would,
could or might make any financing statement or continuation statement filed in
accordance with this Agreement or any other Lender Loan Document seriously
misleading within the applicable provisions of the UCC, unless, in any such
case, Borrower shall have given Lender at least thirty (30) days prior written
notice thereof and shall have delivered to Lender all UCC financing statements,
continuation statements and
66
amendments thereto and taken all other actions as are necessary (or as are
requested by the Secured Party) to continue Lender's perfected senior first
priority security interest in the Collateral or Lender's perfected junior second
priority security interest in the Other Warehouse Financing Facility Collateral.
Section 6.12. Compliance with Laws, Etc. Each of TFC, Seller and Borrower
shall, and shall cause each of its Subsidiaries to, comply (i) in all material
respects with all Requirements of Law and any change therein or in the
application, administration or interpretation thereof (including, without
limitation any request, directive, guideline or policy, whether or not having
the force of law) by any Governmental Authority charged with the administration
or interpretation thereof; and (ii) with all indentures, mortgages, deeds of
trust, agreements, or other instruments or contractual obligations to which it
is a party, including without limitation, each Loan Document to which it is a
party, or by which it or any of its properties may be bound or affected, or
which may affect the Contracts, if the failure to comply therewith could,
individually or in the aggregate, be expected to have a Material Adverse Effect.
Section 6.13. Borrowing Base Certificates. Borrower shall deliver to
Lender no later than 4:00 p.m. (New York City time) two (2) Business Days prior
to each Remittance Date during the term hereof, a Borrowing Base Certificate as
of the close of business on the last day of the immediately preceding calendar
month.
Section 6.14. Collateral Statements. Borrower will furnish to Lender from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as Lender
may reasonably request, all in reasonable detail.
Section 6.15. Actions to Preserve Lender's Security Interest. TFC, Seller
and 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 the Security
Agreement or any other Loan Document, and TFC, Seller and Borrower will defend
the right, title and interest of Lender in and to any of the Collateral against
the claims and demands of all Persons whomsoever. At the Lender's request, TFC,
Seller or Borrower, as applicable, shall prepare (and execute, if required) such
financing statements as Lender reasonably determines are required by law to
perfect, maintain and protect the security interest of Lender in the Collateral
and in the proceeds thereof.
Section 6.16. Actions to Enforce Rights under Contracts. TFC, Seller and
Borrower shall take such reasonable and lawful actions as Lender shall request
to enforce Borrower's rights under the Contracts, and, following the occurrence
of a Default, shall take such reasonable and lawful actions as are necessary to
enable Lender to exercise such rights in Lender's own name.
Section 6.17. Collateral Performance Tests. There shall not occur any
"Event of Default" or similar event arising out of or otherwise relating to the
"Delinquency Rate", the "Cumulative Net Loss Rate" or any similar concept (as
each such term is defined or concept is specified in the Insurance and Indemnity
Agreement or any similar agreement relating to any securitization transaction
relating to automotive receivables similar to the Contracts entered into by
Originator or any of its Affiliates after the date hereof). On each Payment
Determination
67
Date, a Responsible Officer of TFC shall deliver to Lender an officer's
certificate certifying as to (i) whether any such "Event of Default" or similar
event has occurred and is then continuing with respect to any such
securitization and (ii) the steps being taken to cure or correct each such
"Event of Default" or similar event that has occurred and is then continuing;
provided that, to the extent that such information is contained in the most
recent monthly servicer's certificate for any such securitization, the
requirements set forth in this sentence may be satisfied by the delivery of a
copy of such monthly servicer's certificate to Lender.
Section 6.18. Hedging Strategy. Borrower shall implement and maintain a
Hedging Strategy that is reasonably acceptable to Lender.
Section 6.19. Monthly Servicer's Certificate. Borrower shall, or shall
cause TFC (so long as TFC is Servicer) to, deliver to Lender, the Collection
Account Bank and the Backup Servicer, no later than 4:00 p.m., New York City
time, on each Payment Determination Date, in a computer-readable format
reasonably acceptable to each such Person, a Servicer's Certificate executed by
a Responsible Officer or agent of Servicer containing, among other things
(without duplication), (i) all information on the basis of which Servicer makes
any withdrawal and deposit required by Section 3.12, (ii) all information
necessary to enable the Collection Account Bank to make the allocations required
to be made on the next Remittance Date pursuant to Section 3.12(c) or Section
3.09, as applicable, (iii) a listing of all Contracts repurchased by Seller
(pursuant to Section 6.2 of the Receivables Purchase Agreement), by TFC
(pursuant to Section 6.2 of the Sale and Contribution Agreement) or by Servicer
(pursuant to Section 2.07 of the Servicing Agreement) during the related
Collection Period and each Contract that became a Liquidated Contract or that
was paid in full during the related Collection Period, identified by account
number (as set forth in the schedule of contracts delivered to Lender), (iv) the
Borrowing Base as of the last day of the related Collection Period, and (v) the
Supplemental Borrowing Base as of the last day of the related Collection Period
(based on the latest Supplemental Advance Percentage communicated in writing by
Lender to Borrower during such Collection Period). In addition to the
information set forth in the preceding sentence, each Servicer's Certificate
shall also contain the following information: (a) whether a Servicer Termination
Event has occurred; and (b) such other information reasonably requested by
Lender. Servicer shall deliver to Lender, Borrower, the Collection Account Bank
and the Backup Servicer a hard copy of any such Servicer's Certificate upon
request of such Person.
Section 6.20. Notice to Lender of Amendments to Documentation Checklist,
Program Guidelines, Servicing Policies and Procedures or Form-of-Contract
Requirements. Promptly after any amendment to the Documentation Checklist,
Borrower shall provide Lender with written notice of such amendment. Originator
shall give Lender at least ten (10) Business Days prior written notice of any
amendment to the Program Guidelines. Originator shall give Lender prior written
notice of any proposed amendment to the Servicing Policies and Procedures, and
Lender's prior written consent shall be required for any such amendment. No
later than the last day of each calendar quarter, and on each additional date as
Lender shall reasonably request upon five (5) days prior written notice,
Originator shall deliver to Lender a copy of the Form-of-Contract Requirements
that are current as of such date.
Section 6.21. Conformity to Higher Standards That May Be Specified in
Securitizations. With respect to any duty, obligation, covenant or agreement of
Borrower, Seller, Originator or
68
Servicer (so long as TFC is Servicer) hereunder or under any other Lender Loan
Document, if TFC or any Affiliate of TFC becomes required to perform an
analogous duty, obligation, covenant or agreement under any securitization of
motor vehicle loans or retail installment sale contracts to a standard that is
higher, stricter or more exacting than the standard to which Borrower, Seller,
Originator or Servicer, as the case may be, is held with respect to such duty,
obligation, covenant or agreement under the applicable Lender Loan Documents,
then, upon Lender's reasonable request, Borrower, Seller, Originator and/or
Servicer (so long as TFC is Servicer), as applicable, shall thereafter perform
such duty, obligation, covenant or agreement to such higher, stricter or more
exacting standard.
ARTICLE VII.
NEGATIVE COVENANTS
Until all of the Obligations have been paid in full, the Commitment has
been terminated and this Agreement has been terminated:
Section 7.01. Adverse Transactions. Borrower shall not enter into any
transaction which adversely affects the Collateral or Lender's rights under this
Agreement, either Note or the Security Agreement.
Section 7.02. Guarantees. Borrower shall not Guarantee or otherwise in any
way become liable with respect to the obligations or liabilities of any other
Person, except (a) for the obligations of Borrower to Lender, the Other
Warehouse Lender and the Other Residual Financing Facility Lender and (b) by
customary endorsement of instruments or items of payment for deposit to the
general account of Borrower or for delivery to Lender.
Section 7.03. Dividends. Borrower shall not declare or pay any dividends
except to the extent of funds legally available therefor from payments received
by Borrower pursuant to Section 3.12(c)(xvi). Notwithstanding the foregoing,
Borrower shall not declare or pay any dividends on any date as of which any of a
Default, a Residual Financing Agreement Deficiency or an Other Lender Deficiency
shall have occurred and be continuing.
Section 7.04. Investments. Borrower shall not make any investment in any
Person through the direct or indirect holding of securities or otherwise, other
than in the ordinary course of business or in connection with the future
securitization of Contracts.
Section 7.05. [Reserved].
Section 7.06. Limitations on Loans; Other Advances by Borrower. Borrower
shall not make any unsecured loans or other advances of money to officers,
directors, employees, stockholders, or Affiliates in excess of $50,000 in the
aggregate. Other than the indebtedness under this Agreement and the Notes,
Borrower shall not incur any long term or working capital debt if such action
would constitute a breach of a covenant contained herein.
Section 7.07. Changes in Capital Structure or Business Objectives.
Borrower shall not do any of the following if it will adversely affect the
payment or performance of, or Borrower's
69
ability to pay and/or perform, its obligations to Lender with respect to this
Agreement or any other Loan Document to which it is a party, or either Note: (i)
cancel any of the Borrower Trust Certificates, or (ii) make any material change
in any of its business objectives, purposes or operations which could adversely
affect the payment or performance of, or Borrower's ability to pay and/or
perform, its obligations to Lender with respect to this Agreement or any other
Loan Document to which it is a party, or either Note.
Section 7.08. Limitation on Modifications, Etc. (a) Without the prior
written consent of Lender, none of TFC, Seller or Borrower will, nor will TFC,
Seller or Borrower permit or allow others to, amend, modify, terminate or waive
any material provision of any Contract document, except to the extent otherwise
expressly permissible under the Loan Documents. Notwithstanding the foregoing,
TFC (in its capacity as Servicer) may, without the prior written consent of
Lender, waive any assumption fees, late payment charges, charges for checks
returned for insufficient funds, or other fees which may be collected in the
ordinary course of servicing the Contracts and that the Servicer is entitled to
retain pursuant to the Servicing Agreement.
(b) Neither Seller nor Borrower shall amend, supplement or otherwise
modify any document related to the Other Warehouse Facility without prior
written notice to Lender. In the event of any such amendment, supplement or
other modification to the Other Warehouse Facility, Lender may, in its sole
discretion, either require or reject a parallel amendment, supplement or other
modification to the applicable Lender Loan Document.
Section 7.09. Asset Sales. Prior to the termination of this Agreement and
each other Loan Document and the payment of all amounts payable pursuant hereto
and thereto, Borrower will not sell all or any material portion of the Contracts
and other Collateral related thereto if, following such sale, either the Total
Warehouse Outstandings would exceed the Borrowing Base or the Total Supplemental
Outstandings would exceed the Supplemental Borrowing Base, in either case after
giving effect to the application of proceeds of such sale; provided that in the
event that Borrower, Seller or TFC shall intend to sell any Contracts in a
whole-loan transfer to any third party, Borrower, Seller or TFC shall inform
Lender of such prospective sale and Lender shall be permitted to bid on such
Contracts in the same bidding process as that in which any third party is
permitted to bid on such Contracts.
Section 7.10. No Liens on Equity Interests in Borrower. Seller shall not
grant or otherwise create any Lien on the Borrower Trust Certificates (or any
other equity interest in Borrower), except to the extent otherwise expressly
permitted under the Loan Documents.
Section 7.11. No Petition.
(a) TFC shall not prior to the date that is one year and one day
after the termination of this Agreement and the payment in full of all Loans,
all other amounts payable hereunder and all amounts payable under the other Loan
Documents, petition or otherwise invoke or cause Seller or Residual Facility
Borrower to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against Seller or Residual Facility
Borrower under any federal or State bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar
70
official of Seller or any substantial part of the property of Seller or Residual
Facility Borrower, or ordering the winding up or liquidation of the affairs of
Seller or Residual Facility Borrower.
(b) Neither TFC nor Seller shall, prior to the date that is one year
and one day after the termination of this Agreement and the payment in full of
all Loans, all other amounts payable hereunder and all amounts payable under the
other Loan Documents, petition or otherwise invoke or cause Borrower to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against Borrower under any federal or State bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of Borrower or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of Borrower.
Section 7.12. Sale and Contribution Agreement and Receivables Purchase
Agreement. TFC will not amend, modify, waive or terminate any terms or
conditions of the Sale and Contribution Agreement without the prior written
consent of Lender, and shall perform its obligations thereunder. Seller will not
amend, modify, waive or terminate any terms or conditions of the Receivables
Purchase Agreement without the prior written consent of Lender, and shall
perform its obligations thereunder.
Section 7.13. No Indebtedness. Borrower will not at any time incur any
Indebtedness, other than Indebtedness incurred under (or contemplated by) the
terms of this Agreement and the Other Warehouse Facility.
Section 7.14. No Other Business. Borrower will not at any time engage in
any other business activities than the purchase of non-prime consumer
automobile, van, sport utility vehicle and light-duty truck loans, pledging such
loans to Lender and the Other Warehouse Lender, transferring such loans in
connection with securitizations and in connection with whole-loan sales, and
other activities relating to the foregoing to the extent permitted by the
organizational documents of Borrower as in effect on the date hereof, or as
amended with the prior written consent of Lender. Without limitation of the
foregoing, Borrower will not at any time be a borrower under any loan or
financing agreement, facility or other arrangement other than the facility
established pursuant to this Agreement and the Other Warehouse Facility.
ARTICLE VIII.
EVENTS OF DEFAULT
Section 8.01. Events of Default. Each of the following events and
occurrences shall constitute an Event of Default under this Agreement:
(a) (i) Any payment by or on behalf of Borrower shall fail to be
made to Lender when due of principal or interest on the Loans or (ii) any
payment by or on behalf of Borrower of any other Obligation shall fail to be
made on its due date;
(b) Originator, Servicer, Seller, Borrower or Residual Facility
Borrower shall fail to perform or observe in any material respect any term,
covenant or agreement under this Agreement (other than any term, covenant or
agreement referred to in another subsection of this Section 8.01), either Note
or any other Lender Loan Document to which it is a party, which
71
failure is (i) curable by payment of money and continues unremedied for a period
of three (3) Business Days, (ii) curable by means other than payment of money
and continues unremedied for a period of fifteen (15) Business Days; or (iii) is
not curable;
(c) Any representation or warranty made or deemed to be made by
Originator, Servicer, Seller, Borrower or Residual Facility Borrower, or any of
their respective officers, under or in connection with this Agreement or any
other Lender Loan Document, any remittance report or other information or report
delivered pursuant hereto or any other Lender Loan Document shall prove to have
been false or incorrect in any material respect when made which failure is (i)
curable by payment of money and continues unremedied for a period of three (3)
Business Days, (ii) curable by means other than payment of money and continues
unremedied for a period of fifteen (15) Business Days; or (iii) is not curable;
(d) TFC, Seller, Borrower, Servicer, Originator, Residual Facility
Borrower or any Affiliate of TFC shall fail to pay any money due under any other
agreement, note, indenture or instrument evidencing, securing, Guaranteeing or
otherwise relating to Indebtedness of Borrower, Seller, Servicer, Originator,
Residual Facility Borrower or such Affiliate of TFC (including, without
limitation, Indebtedness relating to any Residual Financing Agreement,
Indebtedness relating to any securitization and Indebtedness to the Other
Warehouse Lender), which failure to pay constitutes an event of default under
any such agreement, note, indenture or instrument or constitutes a default
thereunder and such default shall continue unremedied for three (3) Business
Days; or TFC, Seller, Borrower, Servicer, Originator, Residual Facility Borrower
or any Affiliate of TFC shall otherwise fail to perform or observe any term,
covenant, agreement or representation and warranty under any such other
agreement, note, indenture or instrument, which failure constitutes an event of
default under any such agreement, note, indenture or instrument or constitutes a
default thereunder and such default shall result in the acceleration of such
Indebtedness; or any other event under any such agreement or instrument shall
occur or condition shall exist if the effect of such event or condition is to
accelerate the maturity of such Indebtedness; provided that, if such
Indebtedness is solely Indebtedness of TFC, Originator and/or Servicer (and not
in whole or in part Indebtedness of Seller, Borrower, Residual Facility Borrower
or any other Affiliate of TFC), such Indebtedness must be in an aggregate amount
of at least $500,000 in order for an event described in this clause (d) to
constitute an Event of Default;
(e) The Collateral or any other material assets of Borrower, Seller,
Servicer, Originator or Residual Facility Borrower are attached, seized, levied
upon or subjected to a writ or distress warrant, or come within the possession
of any receiver, trustee, custodian or assignee for the benefit of Borrower,
Seller, Servicer, Originator or Residual Facility Borrower and the same is not
dissolved or dismissed within thirty (30) days thereafter; an application is
made by any Person other than Borrower, Seller, Servicer, Originator or Residual
Facility Borrower for the appointment of a receiver, trustee, or custodian for
the Collateral or a material portion of the assets of, Borrower, Seller,
Servicer, Originator or Residual Facility Borrower and the same is not dismissed
within thirty (30) days after the application thereof, or Borrower, Seller,
Servicer, Originator or Residual Facility Borrower shall have concealed, removed
or permitted to be concealed or removed any part of its property with intent to
hinder, delay or defraud its creditors or made or suffered a transfer of any of
its property which is fraudulent under any bankruptcy, fraudulent conveyance or
other similar law;
72
(f) An application is made by Borrower, Seller, Servicer, Originator
or Residual Facility Borrower for the appointment of a receiver, trustee or
custodian for the Collateral or any other material assets of Borrower, Seller,
Servicer, Originator or Residual Facility Borrower; a petition under any section
or chapter of the Bankruptcy Code or federal or State law or regulation shall be
filed by Borrower, Seller, Servicer, Originator or Residual Facility Borrower;
Borrower, Seller, Servicer, Originator or Residual Facility Borrower shall make
an assignment for the benefit of its creditors, or any case or proceeding shall
be filed by Borrower, Seller, Servicer, Originator or Residual Facility Borrower
for its dissolution, liquidation, or termination; or Borrower, Servicer or
Originator ceases to conduct its business;
(g) Borrower, Seller, Servicer, Originator or Residual Facility
Borrower is enjoined, restrained or prevented by court order from conducting all
or any material part of its business affairs, or a petition under any section or
chapter of the Bankruptcy Code or any similar federal or State law or regulation
is filed against Borrower, Seller, Servicer, Originator or Residual Facility
Borrower, or any case or proceeding is filed against Borrower, Seller, Servicer,
Originator or Residual Facility Borrower, for its dissolution or liquidation,
and such injunction, restraint, petition, case or proceeding is not dismissed
within sixty (60) days after the entry of filing thereof;
(h) Borrower, Seller, Servicer, Originator or Residual Facility
Borrower admits in writing to its inability to pay its debts as they mature;
(i) Lender shall for any reason cease to have a first priority
perfected security interest in any Collateral free and clear of all Liens (other
than a Lien under any Loan Document); provided, however, that if an event
described in this clause (i) is cured by the repurchases of Contracts pursuant
to Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale
and Contribution Agreement and the corresponding payment of the applicable
Release Consideration pursuant to Section 3.03(g) of this Agreement, such event
shall cease to constitute an Event of Default; provided further that, if an
event described in this clause (i) relates only to a de minimis portion of the
Collateral, such event shall constitute an Event of Default solely to the extent
that such condition is not cured within ten (10) Business Days of such cessation
by the repurchases of Contracts pursuant to Section 6.2 of the Receivables
Purchase Agreement and Section 6.2 of the Sale and Contribution Agreement and
the corresponding payment of the applicable Release Consideration pursuant to
Section 3.03(g) of this Agreement;
(j) Any Facility Parity Violation shall have occurred and remained
uncured for at least thirty (30) consecutive days;
(k) Lender, in its reasonable, good faith judgment, has cause to
believe that (i) there has been a Material Adverse Effect or (ii) Originator,
Servicer, Seller, Borrower or Residual Facility Borrower shall have suffered any
Material Adverse Change;
(l) (i) TFC shall at any time resign, or be terminated, as a
servicer under any securitization; or (ii) there shall be a default or
termination event (regardless of whether such default or termination event has
been waived) on the part of TFC as servicer under any securitization;
73
(m) Borrower shall have failed to cure a Supplemental Borrowing Base
Deficiency in the manner, and within the time period, set forth in Section
3.03(b)(ii), Section 3.03(d) or Section 3.03(e), as applicable;
(n) Borrower shall have failed to cure a Borrowing Base Deficiency
in the manner, and within the time period, set forth in Section 3.03(b)(i),
Section 3.03(d) or Section 3.03(e), as applicable;
(o) Any Change of Control shall occur with respect to Originator,
Servicer, Seller, Borrower or Residual Facility Borrower, unless Lender shall
have expressly consented to such Change of Control in writing;
(p) A final, nonappealable judgment by any competent court in the
United States of America for the payment of money in an amount in excess of
$1,000,000 shall be rendered against Originator, Servicer, Seller, Borrower or
Residual Facility Borrower, and the same remains undischarged and unstayed for a
period of thirty (30) days after the entry thereof;
(q) Originator, Servicer, Seller, Borrower or Residual Facility
Borrower shall pay an amount in excess of $1,000,000 in connection with the
settlement of any action filed in any competent court in the United States of
America, in which action such Person is a named defendant, if such action
contains undismissed allegations of fraud, wrongful conduct in connection with
such Person's lending, servicing or origination practices or other wrongdoing
that could have a Material Adverse Effect;
(r) [Reserved];
(s) A Servicer Termination Event (if TFC is the Servicer) other than
the Servicer Termination Event set forth in Section 4.01(k) of the Servicing
Agreement, shall have occurred and be continuing;
(t) [Reserved];
(u) Any Loan Document shall be terminated or cease to be in full
force and effect, or the enforceability thereof shall be (i) reasonably
contested by Lender, (ii) contested by any other party thereto, or (iii)
contested by an indenture trustee on behalf of Unsecured TFC Noteholders; or
(v) Borrower shall fail to have implemented and maintained a Hedging
Strategy that is reasonably acceptable to Lender and such failure shall have
remained uncured for at least five (5) Business Days.
Section 8.02. Remedies of Default. (a) If not cured within the cure
period, if any, provided within the relevant provision, then upon the
continuance of such Event of Default Lender may, by notice to Borrower (which
notice shall be deemed given automatically upon occurrence of an Event of
Default referred to in paragraph (e), (f), (g) or (h) of Section 8.01),
terminate its Commitment to make any Loans hereunder, and declare immediately
due and payable all principal, interest and other Obligations payable hereunder
and under each Note by Borrower then due and payable that would otherwise be due
after the date specified in the notice
74
(or the date such notice is deemed given), whereupon all those amounts shall
become immediately due and payable, all without further diligence, presentment,
demand of payment, protest or notice of any kind, all of which are expressly
waived by Borrower. If any Event of Default shall occur and be continuing,
Lender may exercise all rights and remedies of a secured party under the UCC,
and, to the extent permitted by law, all other rights and remedies granted to
Lender in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations. Without limitation to the foregoing,
such actions may include selling the Collateral in a commercially reasonable
manner as determined by Lender, instituting suit in equity or instituting other
appropriate proceedings, whether for the specific performance of any agreement
contained herein, or for an injunction against a violation of any of the terms
hereof, or in aid of the exercise of any power granted hereby or by law. If
Lender opts to sell or otherwise dispose of the Collateral as one of its
remedies upon an Event of Default, Borrower shall remain liable for any
remaining deficiency upon applying the proceeds of such sale or other
disposition against any and all Obligations, including, without limitation, the
reasonable fees and disbursements of any attorneys employed by Lender to collect
such deficiency.
(b) (i) Without limitation to any of the provisions or remedies set
forth in Section 8.02(a), if any Event of Default shall have occurred and be
continuing, Borrower may, with the consent of Lender in Lender's sole
discretion, (A) make a principal payment on the Loans in such amount as Lender
shall specify or (B) pledge additional Collateral having such value, as
determined by Lender in its sole discretion, as Lender shall specify. If Lender
consents to Borrower's taking such action as is described in this Section
8.02(b) upon an Event of Default, Borrower shall remain liable for any remaining
deficiency between the amount of the Obligations and the amount of the principal
payment or pledge of additional Collateral made pursuant hereto, and under no
circumstances shall Lender's consent to such action be construed as a waiver of
such deficiency or a modification of the Obligations.
(i) In the event that Borrower shall hereinafter pledge any
additional Collateral to Lender as specified in Section 8.02(b)(i),
Borrower shall, concurrently with such pledge, deliver to Lender an
opinion of counsel in form and substance reasonably satisfactory to Lender
regarding priority, perfection and the absence of Liens in respect of such
Collateral.
ARTICLE IX.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFC AND SELLER
Section 9.01. Representations, Warranties and Covenants of TFC. In order
to induce Lender to enter into this Agreement and to make the Loans hereunder,
TFC hereby makes to Lender each representation and warranty set forth in Section
3.2 of the Sale and Contribution Agreement and each covenant set forth in
Article V of the Sale and Contribution Agreement.
Section 9.02. Representations, Warranties and Covenants of Seller. In
order to induce Lender to enter into this Agreement and to make the Loans
hereunder, TFC hereby makes to Lender each representation and warranty set forth
in Section 3.2 of the Receivables Purchase Agreement and each covenant set forth
in Article V of the Receivables Purchase Agreement.
75
ARTICLE X.
THE COLLECTION ACCOUNT BANK
Section 10.01. Duties and Rights of Collection Account Bank.
(a) The Collection Account Bank accepts the trusts under this
Agreement in accordance with the provisions of this Agreement and agrees to
perform its duties required under this Agreement in accordance with the terms of
hereof to the end that the interests of Lender may be adequately and effectively
protected.
(b) Notwithstanding the foregoing:
(i) the Collection Account Bank undertakes to perform such
duties and only such duties as are specifically set forth in this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Collection Account Bank; and
(ii) in the absence of bad faith on its part, the Collection
Account Bank may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon the face value of
the certificates, reports, resolutions, documents, orders, opinions or
other instruments furnished to the Collection Account Bank and conforming
to the requirements of this Agreement; provided, however, that the
Collection Account Bank shall not be responsible for the accuracy or
content of any such resolution, certificate, statement, opinion, report,
document, order or other instrument; provided further, however, that the
Collection Account Bank shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Agreement. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Collection Account Bank
shall notify Lender in the event that the Collection Account Bank, after
so requesting, does not receive a satisfactorily corrected instrument.
(c) The Collection Account Bank may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section; and
(ii) the Collection Account Bank shall not be liable with
respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to the terms of this
Agreement.
(d) No provision of this Agreement shall require the Collection
Account Bank to advance, expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder, if it
shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
76
(e) The Collection Account Bank shall have no obligation to seek
enforcement with respect to the Contracts or to determine the sufficiency of any
payment thereunder.
Section 10.02. Individual Rights of Collection Account Bank. The
Collection Account Bank in its individual or any other capacity may deal with
Borrower and/or its Affiliates with the same rights it would have if it were not
Collection Account Bank.
Section 10.03. Collection Account Bank's Fees and Expenses. The Collection
Account Bank shall receive as compensation for its services hereunder such fees
as have been separately agreed upon before the date hereof between Originator
and the Collection Account Bank (as outlined in the fee letter from the
Collection Account Bank to Triad Financial Corporation, dated April 29, 2005),
and the Collection Account Bank shall be entitled to be reimbursed by Originator
for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Collection Account Bank may employ in connection with
the exercise and performance of its rights and its duties hereunder. If any fees
and/or expenses due to the Collection Account Bank as of any Remittance Date
shall not have been paid by Originator, the Collection Account Bank shall be
entitled to receive such outstanding fees and expenses from Borrower on such
Remittance Date, in the priority set forth in Section 3.12(c)(xiii) or Section
3.09(m), as applicable. Any amounts paid pursuant to the immediately preceding
sentence shall be payable solely in the priority set forth in Section
3.12(c)(xiii) or Section 3.09(m), as applicable, and shall be deemed not to be a
part of the Collateral immediately after such payment.
Section 10.04. Indemnity to Collection Account Bank. Originator shall be
liable as primary obligor for, and shall indemnify the Collection Account Bank
and its successors, assigns, agents and servants (collectively, the "Collection
Account Bank Indemnified Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and suits, and any and all
reasonable costs, expenses and disbursements (including reasonable legal fees
and expenses) of any kind and nature whatsoever (collectively, "Collection
Account Bank Indemnified Expenses") which may at any time be imposed on,
incurred by, or asserted against the Collection Account Bank or any Collection
Account Bank Indemnified Party in any way relating to or arising out of this
Agreement, except only that Originator shall not be liable for or required to
indemnify a Collection Account Bank Indemnified Party from and against
Collection Account Bank Indemnified Expenses arising or resulting from the
Collection Account Bank's own willful misconduct, negligence or bad faith. The
indemnities contained in this Section 10.04 shall survive the resignation or
termination of the Collection Account Bank or the termination of this Agreement.
In any event of any claim, action or proceeding for which indemnity will be
sought pursuant to this Section 10.04, the Collection Account Bank Indemnified
Party's choice of legal counsel shall be subject to the approval of Originator,
which approval shall not be unreasonably withheld. If any Collection Account
Bank Indemnified Expenses due to any Collection Account Bank Indemnified Party
as of any Remittance Date shall not have been paid by Originator, the Collection
Account Bank, on behalf of such Collection Account Bank Indemnified Party, shall
be entitled to receive such Collection Account Bank Indemnified Expenses from
Borrower on such Remittance Date, in the priority set forth in Section
3.12(c)(xiii) or Section 3.09(m), as applicable. Any amounts paid pursuant to
the immediately preceding sentence shall be payable solely in the priority set
forth in Section
77
3.12(c)(xiii) or Section 3.09(m), as applicable, and shall be deemed not to be a
part of the Collateral immediately after such payment.
Section 10.05. Replacement of Collection Account Bank.
(a) No resignation or removal of the Collection Account Bank and no
appointment of a successor Collection Account Bank shall become effective until
the acceptance of appointment by the successor Collection Account Bank pursuant
to this Section 10.05(a). The Collection Account Bank may resign at any time by
so notifying Lender and Borrower. Lender may remove the Collection Account Bank
by so notifying the Collection Account Bank and may appoint a successor
Collection Account Bank. If the Collection Account Bank resigns or is removed or
if a vacancy exists in the office of Collection Account Bank for any reason (the
Collection Account Bank in such event being referred to herein as the retiring
Collection Account Bank), Lender shall promptly appoint a successor Collection
Account Bank.
(b) Notwithstanding the replacement of the Collection Account Bank
pursuant to this Section, Originator's and Borrower's obligations under Section
10.03 and Section 10.04 shall continue for the benefit of the retiring
Collection Account Bank. Without limitation of the foregoing, the retiring
Collection Account Bank shall be paid all amounts owed to it upon its
resignation or removal, by Originator or Borrower in accordance with Section
10.03 and Section 10.04. The retiring Collection Account Bank shall not be
liable for the acts or omissions of any Successor Collection Account Bank.
Section 10.06. Successor Collection Account Bank. If the Collection
Account Bank consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Collection Account Bank.
Section 10.07. Waiver of Setoffs. The Collection Account Bank hereby
expressly waives any and all rights of setoff that the Collection Account Bank
may otherwise at any time have under applicable law with respect to the
Collection Account and agrees that amounts in the Collection Account shall at
all times be held and applied solely in accordance with the provisions hereof
and of the other Lender Loan Documents.
Section 10.08. No Petition.
(a) The Collection Account Bank shall not, prior to the date that is
one year and one day after the termination of this Agreement and the payment in
full of all Loans, all other amounts payable hereunder and all amounts payable
under the other Loan Documents, petition or otherwise invoke or cause either
Seller or Borrower to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against Seller or Borrower
under any federal or State bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of Seller or Borrower or any substantial part of the property
of Seller or Borrower, or ordering the winding up or liquidation of the affairs
of Seller or Borrower.
(b) Lender shall not petition or otherwise invoke or cause
Securitization LLC to invoke the process of any court or government authority
for the purpose of commencing or
78
sustaining a case against Securitization LLC under any federal or State
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of
Securitization LLC or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of Securitization LLC.
Section 10.09. Representations and Warranties of the Collection Account
Bank. The Collection Account Bank represents and warrants to Lender, Borrower
and Originator as follows:
(a) Due organization. The Collection Account Bank is a national
banking association and is duly authorized and licensed under applicable law to
conduct its business as presently conducted.
(b) Power and Authority. The Collection Account Bank has all
requisite right, power and authority to execute and deliver this Agreement and
to perform all of its duties as Collection Account Bank hereunder.
(c) Due Authorization. The execution and delivery by the Collection
Account Bank of this Agreement, and the performance by the Collection Account
Bank of its duties hereunder, have been duly authorized by all necessary banking
association proceedings and no further approvals or filings, including any
governmental approvals, are required for the valid execution and delivery by the
Collection Account Bank, or the performance by the Collection Account Bank, of
this Agreement.
(d) Valid and Binding Agreement. The Collection Account Bank has
duly executed and delivered this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of the Collection Account Bank, enforceable
against the Collection Account Bank in accordance with its terms, except as (i)
such enforceability may be limited by insolvency, reorganization and similar
laws relating to or affecting the enforcement of creditors' rights generally and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
ARTICLE XI.
MISCELLANEOUS
Section 11.01. Set-off. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder Lender is hereby authorized at any
time and from time to time, without notice to Borrower, or to any other person
or entity, any such notice being hereby expressly waived, to set-off against any
obligation owing by Lender or any affiliate of Lender to Borrower, or against
any funds or other property of Borrower or any of its Subsidiaries held by or
otherwise in the possession of Lender or any affiliate of Lender, the
obligations and liabilities of Borrower or any of its Subsidiaries to Lender
under this Agreement irrespective of whether Lender shall have made any demand
hereunder.
Section 11.02. Amendments, Waivers, etc. None of the Lender Loan Documents
or any terms thereof may be amended, modified or otherwise supplemented except
in writing signed by
79
the parties thereto. In the case of any waiver of a Default or Event of Default,
any Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon.
Section 11.03. No Waiver; Remedies Cumulative. No failure or delay on the
part of Lender in exercising any right, remedy, power or privilege under any
Lender Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of, or any abandonment or discontinuance of steps to enforce
any right, remedy, power or privilege under any Lender Loan Document preclude
any other or further exercise thereof or the exercise of any other rights,
remedies or privileges thereunder. The rights, remedies, powers and privileges
provided in the Lender Loan Documents are cumulative and may be exercised
singularly or concurrently and are not exclusive of any other rights, remedies,
powers or privileges provided by law.
Section 11.04. Payment of Expenses, Indemnity, etc. Borrower, Seller and
Originator, jointly and severally, agree to:
(a) pay or reimburse Lender on the Closing Date and thereafter
within 30 days following presentment of invoices for all its out-of-pocket fees,
costs and expenses incurred in connection with the development, preparation and
execution of, and any amendment, modification or supplement to, or any waiver
under, any Lender Loan Document and any other document prepared in connection
therewith, and the consummation and administration of the transactions
contemplated thereby, including, without limitation, the reasonable fees and
disbursements of counsel to Lender with respect to any of the foregoing,
including, without limitation, such fees and disbursements incurred in advising
Lender from time to time as to its rights and remedies under any Loan Document;
(b) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements of counsel to
Lender, in connection with the occurrence or continuance of a Default or Event
of Default and the enforcement, collection, protection or preservation (whether
through negotiations, legal proceedings or otherwise) of this Agreement or any
other Loan Document, the Collateral, any Obligation or any right, remedy, power
or privilege of Lender hereunder or under any other Loan Document;
(c) except as otherwise set forth in Section 3.16, pay and hold
Lender harmless from and against any and all present and future stamp, excise,
recording or other similar taxes or fees payable in connection with the
execution, delivery, recording and filing of any Loan Document and hold Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission by Borrower to pay such taxes or fees; and
(d) indemnify Lender and its Affiliates and each of their respective
directors, officers, employees and agents and hold each of them harmless from
and against, any and all liabilities, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements, including without
limitation the reasonable fees and disbursement of counsel to Lender and such
other parties, incurred by any of them in connection with, arising out of or in
any way relating to any investigation, claim, litigation or other proceeding,
pending or threatened (whether or not any of them is designated a party
thereto), in connection with, arising out of or in
80
any way related to this Agreement or any other Loan Document or any of the
transactions contemplated herein or therein or any use of the proceeds of any
Loan by Borrower or the Contracts (including without limitation, the
underwriting, origination and servicing of such Contracts); provided that Lender
shall not be entitled to any indemnification for any of the foregoing to the
extent resulting from the gross negligence, willful misconduct or bad faith on
the part of Lender or any of its agents, officers, directors, employees or
representatives.
If and to the extent that the indemnity obligations of Borrower, Seller or
Originator, as applicable, under this Section 11.04 may be unenforceable for any
reason, Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of each of such indemnity obligations which is permissible
under applicable law.
Section 11.05. Headings Descriptive. The headings of the several articles
and sections of this Agreement, and the Table of Contents, are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provisions of this Agreement.
Section 11.06. Severability. Any provision of this Agreement or any other
Lender Loan Document which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating the
remaining provisions hereof or thereof to the extent permitted by law or
affecting the validity, enforceability or legality of such provisions in any
other jurisdiction.
Section 11.07. Entire Agreement. This Agreement and the other Lender Loan
Documents constitute the entire agreement among the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect to
the subject matter hereof is superseded by this Agreement and the other Lender
Loan Documents. Except to the extent otherwise provided in Section 11.13,
nothing in this Agreement or in the other Lender Loan Documents, express or
implied, is intended to confer upon any party other than the parties hereto and
thereto any rights, remedies, obligations or liabilities under or by reason of
this Agreement or the other Lender Loan Documents. Notwithstanding the
foregoing, nothing in this Section 11.07 shall supersede, nullify, derogate from
or otherwise affect any rights of Lender under any document or instrument
related to the Other Warehouse Facility or any residual financing agreement
between Borrower, Seller, the Residual Facility Borrower or TFC, on one hand,
and the Other Warehouse Lender, on the other.
Section 11.08. Binding Effect. This Agreement shall be binding upon and
shall be enforceable by Borrower and Lender and their respective successors and
permitted assigns.
Section 11.09. Survival. The provisions of Sections 3.07, 3.16, 10.04 and
11.04 shall survive the execution and delivery of this Agreement and the payment
in full of the Obligations.
Section 11.10. GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY. (a) THIS
AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK
81
AND OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE NOTE, ANY OTHER LENDER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE OTHER PARTY IN ANY OTHER
JURISDICTION.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
PERSONALLY DELIVERED OR TRANSMITTED BY REGISTERED MAIL TO THE ADDRESS SET FORTH
FOR NOTICES IN SECTION 11.09; PROVIDED THAT UPON ANY SUCH SERVICE BY REGISTERED
MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH, SEND NOTICE OF SUCH
SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION. NOTHING IN THIS AGREEMENT
WILL AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
Section 11.11. Notice. Any notice hereunder shall be in writing and shall
be personally delivered, transmitted by postage prepaid registered airmail, by
facsimile telegram or cable to the parties as follows:
To Lender: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Originator/Servicer: Triad Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
82
To Seller: Triad Financial Warehouse Special Purpose LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Borrower: Triad Automobile Receivables Warehouse Trust
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Triad Automobile Receivables Warehouse Trust
c/o Triad Financial Corporation, as Administrator
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Collection Account Bank: JPMorgan Chase Bank, National Association
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Worldwide Securities Services/Global
Debt -- Triad Financial
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and other communications shall be deemed to have been duly
given on the date of receipt if delivered personally; the date five (5) calendar
days after posting if transmitted by mail; or in the case of a facsimile,
telegram or cable, at the time sent. Either party may change its address for
purposes hereof by notice to the other.
Section 11.12. Counterparts. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute a full and original
agreement for all purposes.
Section 11.13. Third-Party Beneficiaries. The Other Warehouse Lender is an
express third-party beneficiary of Sections 3.09(j), 3.09(k), 3.12(c)(x) and
3.12(c)(xi) of this Agreement. Each of the parties to the Sale and Contribution
Agreement hereby agrees that Lender shall be permitted but not obligated to
enforce the rights of Seller directly thereunder in the place and
83
stead of Seller, but Lender shall not have any obligations under the Sale and
Contribution Agreement. Each of the parties to the Receivables Purchase
Agreement hereby agrees that Lender shall be permitted but not obligated to
enforce the rights of Borrower directly thereunder in the place and stead of
Borrower, but Lender shall not have any obligations under the Receivables
Purchase Agreement.
Section 11.14. Future Assurances. At its sole cost and without expense to
Lender, on demand, Borrower shall do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, assignments, notices of assignment,
transfers and assurances as Lender shall from time to time reasonably require
for better assuring, conveying, assigning, transferring and confirming unto
Lender the property and rights pledged or assigned or intended now or hereafter
so to be, or which Borrower may be or may hereafter become bound to convey,
pledge or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement or any of the other Loan
Documents, or for filing, registering or recording of the Loan Documents.
Section 11.15. Assignments; Participations. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. None of Borrower, Seller, TFC, Originator or
Servicer may assign any of its rights or obligations hereunder, under either
Note or under any other Loan Document without the prior written consent of
Lender. Lender may assign, participate or otherwise transfer (including, without
limitation, by pledge or hypothecation) to any Affiliate of Lender or any other
Person all or any of its rights or obligations under this Agreement and the
other Loan Documents. Each of Borrower, Seller, TFC, Originator and Servicer
agrees to cooperate with Lender in connection with any such assignment or
transfer, to execute and deliver such replacement notes, and to enter into such
restatements of, and amendments, supplements and other modifications to, this
Agreement and the other Loan Documents in order to give effect to such
assignment or transfer.
Section 11.16. Confidentiality of Information. Each of Lender, Borrower,
Seller and TFC agrees to keep information obtained by it pursuant hereto and the
other Loan Documents confidential in accordance with its customary practices. It
further agrees that it shall only use such information in connection with the
transactions contemplated by this Agreement and/or the other Loan Documents,
including for the purposes of its legal, credit or compliance review in
connection with any such transactions, or as required by law or regulation and
not disclose any such information other than (a) to its affiliates, officers,
directors, employees, representatives, counsel and agents that are, or are
expected to be, involved in the evaluation of such information in connection
with (i) the transactions contemplated by this Agreement and/or the other Loan
Documents, (ii) its legal or compliance or credit review in connection with any
such transactions or (iii) enforcing its rights and performing under the terms
of this Agreement and/or the other Loan Documents and are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes (i) available to such party from a source
other than the party hereto to which such information relates or any of its
affiliates, and such disclosing party does not know that such information is
disclosed in violation of a confidentiality agreement or is otherwise
unauthorized or (ii) available to the public other than as a result of a breach
by such party of this Section 11.16, (c) to the extent disclosure is required by
law, regulation or judicial order or requested or required by bank or other
regulators or auditors, as long as, to the extent permitted by Requirements of
Law, notice is given to the party hereto to
84
which such information relates by the disclosing party prior to (or, in the
event that prior notice is not reasonably practicable or in case of a judicial
order, promptly after) such disclosure, or (d) to current or prospective
assignees, participants and contractual counterparties in connection with the
transactions contemplated by this Agreement and/or the other Loan Documents or
in any hedging contract permitted under the Loan Documents and to their
respective representatives and legal or financial advisors, in each case and to
the extent such assignees, participants, grantees or counterparties agree to be
bound by, and to cause their advisors to comply with, the provisions of this
Section 11.16 (unless, in the case of counterparties in any hedge, the terms of
the applicable hedging contract between Lender and TFC and/or Borrower permits
otherwise). Notwithstanding any other provision in this Agreement, TFC, Seller
and Borrower hereby agree that Lender (and each of its officers, directors,
employees, accountants, attorneys and other advisors) may disclose to any and
all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions and other tax analyses) that are provided to Lender relating
to such U.S. tax treatment and U.S. tax structure, other than any information
for which nondisclosure is reasonably necessary in order to comply with
applicable securities laws. The provisions of this Section 11.16 shall survive
termination of this Agreement for a period of two years.
Section 11.17. Lender Consent to Transactions. Notwithstanding any
provision of this Warehouse Lending Agreement or any of the other Loan
Documents, any requirement in this Warehouse Lending Agreement for TFC, Seller
or Borrower to obtain the prior consent of Lender to any action or transaction
shall not be effective or binding, to the extent the Obligations shall have been
indefeasibly repaid in full (other than any indemnification or expense claims
which have not been made) and each of the Loan Documents shall have been
terminated prior to such action or transaction.
Section 11.18. Limitation of Liability of Owner Trustee. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Wilmington Trust Company, not individually or personally but
solely in its trustee capacity, in the exercise of the powers and authority
conferred and vested in it under the Trust Agreement, (b) each of the
representations, undertakings and agreements herein made on the part of Borrower
is made and intended not as a personal representation, undertaking or agreement
by Wilmington Trust Company but is made and intended for the purpose of binding
only Borrower and (c) under no circumstances shall Wilmington Trust Company be
personally liable for the payment of any indebtedness or expenses of Borrower or
be liable for the breach or failure of any obligation, representation, warranty
or covenant made or undertaken by Borrower under this Agreement or any other
Loan Documents.
[Signature Page Follows]
85
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives on the date first written
above.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE COMPANY,
Lender
By: ▇▇▇▇▇▇▇ SACHS REAL ESTATE
FUNDING CORP., its general partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
TRIAD AUTOMOBILE RECEIVABLES
WAREHOUSE TRUST,
Borrower
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Financial Services Officer
86
TRIAD FINANCIAL WAREHOUSE SPECIAL
PURPOSE LLC,
Seller
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
TRIAD FINANCIAL CORPORATION,
Originator
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
TRIAD FINANCIAL CORPORATION,
Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION,
Collection Account Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
87
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF BORROWER
WITH RESPECT TO THE CONTRACTS.
Borrower makes the following representations and warranties as to each
Contract in which a Lien is granted to Lender. Such representations and
warranties speak, unless otherwise specifically provided therein, as of the
related Borrowing Date and as to the Contracts being pledged to Lender on such
Borrowing Date.
1. Characteristics of Contracts. Each Contract (A) was originated (i) by
the Originator, (ii) by a Dealer for the retail sale of a Financed Vehicle in
the ordinary course of such Dealer's business and purchased by the Originator
from such Dealer under an existing Dealer Agreement or pursuant to a Dealer
Assignment with the Originator and was validly assigned by such Dealer to the
Originator pursuant to a Dealer Assignment, or (iii) by a Third-Party Lender and
purchased by the Originator from such Third-Party Lender under an existing Auto
Loan Purchase and Sale Agreement or pursuant to a Third-Party Lender Assignment
with the Originator and was validly assigned by such Third-Party Lender to the
Originator pursuant to a Third-Party Lender Assignment, (B) was originated by
the Originator, such Dealer or such Third-Party Lender for the retail sale,
consumer-to-consumer sale or refinancing of a Financed Vehicle in the ordinary
course of the Originator's, the Dealer's or the Third-Party Lender's business,
in each case, in accordance with the Originator's credit policies and was fully
and properly executed by the parties thereto, and the Originator, each Dealer
and each Third-Party Lender had all necessary licenses and permits to originate
Contracts in the State where the Originator, each such Dealer or each such
Third-Party Lender was located, (C) has not been amended or collections with
respect to which waived, other than as evidenced in the Legal File relating
thereto, (D) contains customary and enforceable provisions such that the rights
and remedies of the holder thereof are adequate for realization against the
collateral of the benefits of the security, (E) provides for level monthly
payments (provided, that the payment in the first or last month in the life of
the Contract may be minimally different from the level payments) that, if made
when due, will fully amortize the Amount Financed by maturity and yield interest
at the Annual Percentage Rate, (F) was originated in accordance with the Program
Guidelines, (G) shall have been originated on a Form of Contract that meets all
applicable Form-of-Contract Requirements, (H) shall be originated in an Eligible
State and (I) will not, as a result of the addition of such Contract to the pool
of Eligible Contracts, cause the percentage of Eligible Contracts (by aggregate
Principal Balance as of any date of determination) that are Precomputed
Contracts to exceed one percent (1%).
2. Fraud or Misrepresentation. Each Contract was originated (i) by the
Originator, (ii) by a Dealer and was sold by the Dealer to the Originator, or
(iii) by a Third-Party Lender and was sold by the Third-Party Lender to the
Originator, and was transferred by the Originator to Seller, transferred by
Seller to Borrower and pledged by Borrower to Lender without any fraud or
misrepresentation on the part of the Originator, Seller, Borrower, such Dealer
or Third-Party Lender in any case.
SB-1
3. Origination. Each Contract was originated in the United States and the
related Obligor is a resident of the United States.
4. List of Contracts. The information set forth in the related List of
Contracts has been produced from the Electronic Ledger and is true and correct
in all material respects as of the beginning of business on the related Cut-off
Date.
5. Compliance with Law. 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" (including amendments to the
Federal Reserve's Official Staff Commentary to Regulation Z, effective October
1, 1998, concerning negative equity loans), the Servicemembers Civil Relief Act,
each applicable State Motor Vehicle Retail Installment Sales Act, and State
adaptations of the National Consumer Act and of the Uniform Consumer Credit Code
and other consumer credit laws and equal credit opportunity and disclosure laws)
in respect of the Contracts and the Financed Vehicles, have been complied with
in all material respects, and each Contract and the sale of the Financed Vehicle
evidenced by each Contract complied at the time it was originated or made and
now complies in all material respects with all applicable legal requirements.
6. Binding Obligation. Each Contract represents the genuine, legal, valid
and binding payment obligation of the Obligor thereon, enforceable by the holder
thereof in accordance with its terms, except (A) as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law and (B) as such Contract may be
modified by the application after the applicable Cut-off Date of the
Servicemembers Civil Relief Act, as amended; and all parties to each 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.
7. No Government, Corporate or Fleet Obligor. None of the Contracts is due
from the United States of America or any State or from any agency, department or
instrumentality of the United States of America or any State. All of the
Contracts are due from Obligors who are natural persons or, if any Obligor is
not a natural person, (a) such entity is an obligor with respect to five or
fewer financed vehicles and (b) the related Contract or Contracts have the
benefit of the personal guaranty of a natural person or persons. No Contract has
been included in a "fleet" sale (i.e., a sale to any single Obligor of more than
five Financed Vehicles).
8. Security Interest in Financed Vehicle. Each Contract created or will
create a valid, binding and enforceable first priority security interest in
favor of the Originator in the Financed Vehicle. The Lien Certificate and
original certificate of title for each Financed Vehicle show, or if a new or
replacement Lien Certificate is being applied for with respect to such Financed
Vehicle the Lien Certificate will be received within one hundred fifty (150)
days (or, solely in the case of an Initial Funding Contract, within one hundred
eighty (180) days) of the Contract origination date and will show, the
Originator as the original secured party under each Contract,
SB-2
or that such Contract has been assigned to the Originator, as the holder of a
first priority security interest in such Financed Vehicle. With respect to each
Contract for which the Lien Certificate has not yet been returned from the
Registrar of Titles, the Originator has a Title Package for the related Financed
Vehicle. In the case of each Financed Vehicle, the Originator's security
interest has been validly assigned by the Originator to Seller pursuant to the
Sale and Contribution Agreement, by Seller to Borrower pursuant to the
Receivables Purchase Agreement and by Borrower to Lender pursuant to the
Warehouse Lending Agreement. Immediately after (x) the sale, transfer and
assignment thereof by the Originator to Seller and by Seller to Borrower and (y)
the pledge by Borrower to Lender pursuant to the Warehouse Lending Agreement,
each Contract will be secured by an enforceable and perfected first priority
security interest in the Financed Vehicle in favor of Lender as secured party,
which security interest is prior to all other Liens upon and security interests
in such Financed Vehicle which now exist or may hereafter arise or be created
(except, as to priority, for any lien for taxes, labor or materials affecting a
Financed Vehicle arising subsequent to the applicable Borrowing Date); provided
that, for the purposes of clause (i) of the definition of "Ineligible Contract"
in the Warehouse Lending Agreement but not for the purposes of Section 3.03(g)
of the Warehouse Lending Agreement, Section 6.2 of the Receivables Purchase
Agreement or Section 6.2 of the Sale and Contribution Agreement, if any lien
referenced in the preceding parenthetical shall arise or be created as to any
Loan subsequent to the applicable Borrowing Date, such occurrence shall be
deemed to constitute a breach of the representation and warranty set forth in
this paragraph 8.
9. Contracts in Force. No Contract has been satisfied, subordinated or
rescinded, and the Financed Vehicle securing each such Contract has not been
released from the lien of the related Contracts in whole or in part. No terms of
any Contract have been waived, altered or modified in any respect since its
origination, except by instruments or documents identified in the Legal File. No
Contract has been modified as a result of application of the Servicemembers
Civil Relief Act, as amended. All funds payable to or on behalf of the Obligors
with respect to the Contracts have been fully disbursed.
10. No Amendments. No Contract has been amended since the related Cut-off
Date such that the amount of the Obligor's scheduled payments has been
increased, except as required by law.
11. No Defenses. No Contract is subject to any right of rescission,
setoff, counterclaim or defense and no such right has been asserted or
threatened with respect to any Contract.
12. No Liens. As of the Cut-off Date, no liens or claims have been filed
for work, labor or materials relating to a Financed Vehicle that are liens prior
to, or equal to or coordinate with, the security interest in the Financed
Vehicle granted by any Contract.
13. No Default. There has been no default, breach, violation or event
permitting acceleration under the terms of any Contract (other than payment
delinquencies of not more than 29 days calculated on the basis of a 360-day year
of twelve 30 day months), and no condition exists or event has occurred and is
continuing that with notice, the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
any Contract, and there has been no waiver of, and Servicer shall not waive, any
of the foregoing.
SB-3
14. Insurance. At the time of an origination of a Contract by the
Originator or a purchase of a Contract by the Originator from a Dealer or
Third-Party Lender, each Financed Vehicle was covered by a comprehensive and
collision insurance policy (i) subject to maximum deductibles of $1,000 for
collision coverage and $1,000 for comprehensive coverage, (ii) naming the
Originator as loss payee and (iii) insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage. Each Contract requires the Obligor to
maintain physical loss and damage insurance, naming the Originator and its
successors and assigns as additional insured parties, and each Contract permits
the holder thereof to obtain physical loss and damage insurance at the expense
of the Obligor if the Obligor fails to do so. No Financed Vehicle is insured
under a policy of force-placed insurance on the Cut-off Date.
15. Good Title. No Contract has been sold, transferred, assigned or
pledged by the Dealer or Third-Party Lender, the Originator, Seller or Borrower,
as the case may be, to any Person other than the Originator, Seller, Borrower
and Lender, as the case may be. Immediately prior to the conveyance of the
Contracts to Seller pursuant to the Sale and Contribution Agreement, the
Originator was the sole owner thereof and had good title thereto, free of any
Lien and, upon execution and delivery of the Sale and Contribution Agreement by
the Originator, Seller will have good title to and will be the sole owner of
such Contracts, free of any Lien. Immediately prior to the conveyance of the
Contracts to Borrower pursuant to the Receivables Purchase Agreement, Seller was
the sole owner thereof and had good title thereto, free of any Lien and, upon
execution and delivery of the Receivables Purchase Agreement by Seller, Borrower
will have good title to and will be the sole owner of such Contracts, free of
any Lien. No Dealer or Third-Party Lender has any participation in, or other
right, title or interest in any Contract or the proceeds thereof. Neither the
Originator nor Seller has taken any action to convey any right to any Person
that would result in such Person having a right to payments received under the
related Insurance Policies or the related Dealer Agreements, Auto Loan Purchase
and Sale Agreements, Dealer Assignments or Third-Party Lender Assignments or to
payments due under such Contracts.
16. Lawful Assignment; No Consent Required. No Contract was originated in,
or is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such Contract
and the other Transferred Property by the Originator to Seller under the Sale
and Contribution Agreement, the sale, transfer and assignment of such Contract
and the other Conveyed Property by Seller to Borrower under the Warehouse
Lending Agreement or the pledge of the Contracts and the other Collateral by
Borrower to Lender pursuant to the Warehouse Lending Agreement or pursuant to
transfers of the Notes. For the validity of (x) the sales, transfers and
assignments of the Contracts and other Transferred Property to Originator and
Seller, respectively, (y) the sale, transfer and assignment of the Contracts and
other Conveyed Property to Borrower, and (z) the pledge of the Contracts and the
other Collateral by Borrower to Lender, no consent by any Dealer, Third-Party
Lender, Obligor or any other Person is required under any agreement or
applicable law.
17. All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person, and actions required to be taken or
performed by any Person in any jurisdiction to give Lender a first priority
perfected lien on, or ownership interest in, the Contracts and the proceeds
thereof and the other Collateral have been made, taken or performed.
SB-4
18. One Original. There is only one original executed copy of each
Contract and dealer assignment thereof.
19. [Reserved].
20. Remaining Principal Balance. At the Cut-off Date the Principal Balance
of each Contract set forth in the List of Contracts is true and accurate in all
material respects.
21. Scheduled Payments. Each Contract has a first Scheduled Payment due no
later than 45 days after the date of origination of such Contract.
22. Simple Interest Contracts. Except in the case of Precomputed Contracts
that collectively satisfy the criterion set forth in paragraph 1(I) of this
Schedule B, each Contract is a Simple Interest Contract and provides that all
allocations of payments with respect to principal and interest, and the
determination of periodic charges and the like, are made using the Simple
Interest Method, based on the actual number of days elapsed and the actual
number of days in the calendar year.
23. Location of Contract Files. The Contract Files are maintained either
in hard copy or in an electronic format at one or more of the locations listed
in Schedule C to the Warehouse Lending Agreement.
24. [Reserved].
25. No Bankruptcies. Other than as expressly permitted by the Program
Guidelines, as of the related Cut-off Date no Obligor on any Contract filed for
bankruptcy that was neither discharged nor dismissed.
26. No Repossessions. As of the Cut-off Date, no Financed Vehicle securing
any Contract is in repossession status.
27. Tangible Chattel Paper. Each Contract constitutes "tangible chattel
paper" as defined in the UCC as in effect in the States of New York, California,
Delaware and Texas.
28. Marking Records. By the applicable Borrowing Date, the Originator will
have caused the portions of the Electronic Ledger relating to the Contracts to
be clearly and unambiguously marked to show that the Contracts have been sold to
Seller by the Originator, sold to Borrower by Seller, and pledged by Borrower to
Lender in accordance with the terms of the Warehouse Lending Agreement.
29. Computer Tape. The computer tape made available by the Originator to
Lender one (1) Business Day before the proposed Borrowing Date (or, in the case
of any computer tape listing any Clean-up Call Contracts, on the third (3rd)
Business Day of the month of the proposed Borrowing Date), pursuant to Section
4.02(e)(ii) of the Warehouse Lending Agreement, was complete and accurate as of
the Cut-off Date and includes a description of the same Contracts that are
described in the List of Contracts.
SB-5
30. Adverse Selection. No selection procedures adverse to Lender were
utilized in selecting the Contracts from those receivables owned by the
Originator which met the selection criteria contained in the Warehouse Lending
Agreement.
31. Legal Files Complete. There exists a Legal File pertaining to each
Contract and such Legal File contains (a) a fully executed original of the
Contract, (b) in the case of retail installment sale contracts, the original
executed credit application, or a paper or electronic copy thereof and (c) the
original Lien Certificate or application therefor. Each of such documents which
is required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces. All blanks on any form have been properly filled in and each
form has otherwise been correctly prepared. The complete Legal File for each
Contract currently is in the possession of the Custodian or in the possession of
an Approved Third-Party Vendor.
32. No Impairment. The Originator has not done anything to convey any
right to any Person that would result in such Person having a right to payments
due under the Contract or otherwise to impair the rights of Seller, Borrower or
Lender in any Contract or the proceeds thereof. Seller has not done anything to
convey any right to any Person that would result in such Person having a right
to payments due under the Contract or otherwise to impair the rights of Borrower
or Lender in any Contract or the proceeds thereof. Borrower has not done
anything to convey any right to any Person that would result in such Person
having a right to payments due under the Contract or otherwise to impair the
rights of Lender in any Contract or the proceeds thereof.
33. Contract Not Assumable. No Contract is assumable by another Person in
a manner which would release the Obligor thereof from such Obligor's obligations
to the Originator with respect to such Contract.
34. No Advances. No funds have been advanced by Borrower, Seller, the
Servicer, any Dealer, or anyone acting on behalf of any of them in order to
cause any Contract to qualify as an Eligible Contract as of the applicable
Borrowing Date.
SB-6
SCHEDULE C
LOCATION OF CONTRACT FILES AND LEGAL FILES
Contract Files: Triad Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or, at such other or additional locations in the United
States as Borrower may specify in writing to Lender from
time to time, ten Business Days prior to first use of such
location.
Legal Files: Triad Financial Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or, at such other or additional locations in the United
States as Borrower may specify in writing to Lender from
time to time, ten Business Days prior to first use of such
location.
SC-1