EXHIBIT 10.5
EXECUTION COPY
PURCHASE AGREEMENT
between
THE FINANCE COMPANY
as Seller
and
TFC WAREHOUSE CORPORATION I
as Purchaser
Dated as of June 28, 2001
Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.1 General................................................ 1
Section 1.2 Specific Terms......................................... 1
Section 1.3 Certain References..................................... 1
ARTICLE II
CONVEYANCE OF THE CONTRACTS AND THE OTHER COLLATERAL
Section 2.1 Conveyance of the Contracts and the other Collateral... 2
ARTICLE III
CONDITIONS OF SALE
Section 3.1 Conditions Precedent to the Initial Conveyance......... 3
Section 3.2 Conditions Precedent to All Sales...................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of the Seller........... 5
Section 4.2 Representations and Warranties of the Purchaser........ 10
Section 4.3 Indemnification........................................ 11
ARTICLE V
COVENANTS OF THE SELLER
Section 5.1 Protection of Title of the Purchaser................... 12
Section 5.2 Other Liens or Interests............................... 15
Section 5.3 Costs and Expenses..................................... 15
Section 5.4 Financial Covenant..................................... 15
ARTICLE VI
REPURCHASES
Section 6.1 Repurchase of sold Contracts Upon Breach of Warranty... 15
Section 6.2 Reassignment of Purchased Contracts.................... 15
Section 6.3 Waivers................................................ 16
ARTICLE VII
MISCELLANEOUS
Section 7.1 Liability of the Seller................................ 16
Section 7.2 Merger or Consolidation of the Seller or the Purchaser. 16
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Section 7.3 Limitation on Liability of the Seller and Others....... 17
Section 7.4 Amendment.............................................. 17
Section 7.5 Notices................................................ 17
Section 7.6 Merger and Integration................................. 17
Section 7.7 Severability of Provisions............................. 18
Section 7.8 Intention of the Parties............................... 18
Section 7.9 Governing Law.......................................... 18
Section 7.10 Counterparts........................................... 18
Section 7.11 Nonpetition Covenant................................... 18
Section 7.12 Binding Effect; Assignability.......................... 18
Section 7.13 No Proceedings......................................... 19
Section 7.14 Conflicting Directives of Lender and Insurer........... 19
Section 7.15 Third Party Beneficiaries.............................. 19
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PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT, dated as of June 28, 2001 (this "Agreement"),
between The Finance Company, a Virginia corporation, as seller (the "Seller"),
and TFC Warehouse Corporation I, a Delaware corporation, as purchaser (the
"Purchaser").
W I T N E S S E T H:
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WHEREAS, the Purchaser has agreed to purchase from the Seller from time to
time, and the Seller has agreed to sell to the Purchaser from time to time,
certain Contracts and other Collateral (in each case, as hereinafter defined)
related thereto on the terms set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the Purchaser and the Seller, intending
to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
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Section 1.1 General. The specific terms defined in this Article include
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the plural as well as the singular. Words herein importing a gender include the
other gender. References herein to "writing" include printing, typing,
lithography, and other means of reproducing words in visible form. References to
agreements and other contractual instruments include all subsequent amendments
thereto or changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement or the Loan Agreement (as hereinafter
defined). References herein to Persons include their successors and assigns
permitted hereunder or under the Loan Agreement. The terms "include" or
"including" mean "include without limitation" or "including without limitation".
The words "herein", "hereof" and "hereunder" and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section or
other subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of and Schedules and
Exhibits to this Agreement.
Section 1.2 Specific Terms. Whenever used in this Agreement, capitalized
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terms used and not otherwise defined herein shall have the meanings set forth in
Appendix A to the Warehouse and Security Agreement, dated as of June 28, 2001,
among TFC Warehouse Corporation I, The Finance Company, Westside Funding
Corporation and ▇▇▇▇▇ Fargo Bank Minnesota, National Association.
Section 1.3 Certain References. All references to the Principal
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Balance of a Contract as of a Purchase Date shall refer to the close of business
on such day.
ARTICLE II
CONVEYANCE OF THE CONTRACTS
AND THE OTHER COLLATERAL
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Section 2.1 Conveyance of the Contracts and the other Collateral.
(a) Subject to the terms and conditions of this Agreement, on and after the
date of this Agreement, the Seller hereby agrees to (i) sell, transfer, assign,
and otherwise convey, from time to time, to the Purchaser, without recourse
(except to the extent specifically provided herein), and the Purchaser hereby
agrees to purchase, all right, title and interest of the Seller in and to
certain Contracts and the other Collateral with respect thereto originated by
Approved Dealers of the Seller and (ii) transfer, or cause the deposit, into the
Collection Account of all amounts received by the Seller on account of such
Contracts on and after Cut-Off Date related to such Contracts, in each case, not
later than on the Business Day following the receipt thereof. It is the
intention of the Seller and the Purchaser that the sales, transfers,
assignments, conveyances and contributions contemplated by this Agreement shall
constitute sales of such Contracts and other Collateral with respect thereto
from the Seller to the Purchaser, conveying good title thereto free and clear of
any Liens, and such Contracts and other Collateral with respect thereto shall
not be part of the Seller's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy or similar law.
(b) The Seller shall on any Business Day (each a "Purchase Date") deliver
to the Purchaser a notice in the form of a computer print-out, tape or other
form acceptable to the Purchaser (each such notice, a "Request Notice")
identifying all outstanding Eligible Contracts and other Collateral with respect
thereto originated or purchased subsequent to the immediately preceding Purchase
Date and owned by the Seller on the current Purchase Date, which are to be
purchased by and sold to the Purchaser on such Purchase Date. Without limitation
of the foregoing, each Request Notice shall, inter alia, (a) enable the
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Purchaser to identify all Contracts to be sold on the immediately succeeding
Purchase Date by the Seller to the Purchaser and (b) set forth the Purchase
Price for the sold Contracts referred to therein. Each delivery of a Request
Notice shall be accompanied by an updated Schedule of Contracts, which schedule
shall be attached hereto as Schedule A and made a part hereof. Each schedule so
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delivered shall supersede any prior schedules so delivered.
(c) The price paid for sold Contracts and other Collateral related thereto
shall be the Purchase Price. Such Purchase Price shall be paid by means of an
immediate cash payment to the Seller by wire transfer on the applicable Purchase
Date to an account designated by the Seller on or before such Purchase Date or
by means of proper accounting entries being entered upon the accounts and
records of the Seller and the Purchaser on the applicable Purchase Date. On each
Purchase Date, the sold Contracts and the other Collateral related thereto shall
be assigned to the Purchaser, and on such Purchase Date the Purchaser shall pay
the Purchase Price for such Contracts and the other Collateral related thereto.
To the extent that the Purchase Price for sold Contracts is less than the
aggregate Outstanding Principal Balance of such Contracts, the shortfall shall
be deemed to have been contributed by the Seller to the capital of the Purchaser
on the applicable Purchase Date.
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(d) On and after each Purchase Date hereunder, the Purchaser shall own the
sold Contracts and the other Collateral related thereto which have been
identified as being sold to the Purchaser under this Section 2.1 and the Seller
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shall not take any action inconsistent with such ownership and shall not claim
any ownership interest in such sold Contracts and other Collateral.
(e) Until the occurrence of a Servicer Termination Event and the
replacement of the Seller as Servicer pursuant to the terms of the Servicing
Agreement, the Seller, as Servicer, shall conduct the servicing, administration
and collection of the Contracts transferred hereunder and shall take, or cause
to be taken, all such actions as may be necessary or advisable to service,
administer and collect such sold Contracts, from time to time, all in accordance
with the terms of the Loan Agreement and the Servicing Agreement. In accordance
with the Custodial Agreement, certain documents relating to Contracts sold
hereunder shall be delivered to and held in trust by the Collateral Agent for
the benefit of the Purchaser and its assignees, and the Purchaser hereby
instructs the Seller to so deliver such documents to the Collateral Agent. Such
delivery to the Collateral Agent of such documents and the possession thereof by
the Collateral Agent is at the will of the Purchaser and its assignees and in a
custodial capacity for their benefit only.
(f) With respect to any Contract, the Seller shall deliver to the
Collateral Agent on behalf of the Purchaser and any assignee thereof the related
Contract File in the manner set forth in Section 2 of the Custodial Agreement.
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ARTICLE III
CONDITIONS OF SALE
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Section 3.1 Conditions Precedent to the Initial Conveyance. The initial
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conveyance hereunder is subject to the condition precedent that the Purchaser
shall have received on or before the date of the initial conveyance under this
Agreement, in form and substance satisfactory to the Purchaser:
(i) an Assignment executed by the Seller and setting forth the
Contracts to be sold on the date of the initial conveyance under this
Agreement;
(ii) a copy of resolutions duly adopted by the members of the Seller
approving this Agreement, the Assignments and the other documents to be
delivered by it hereunder and the transactions and matters contemplated
hereby and thereby, certified by the Seller's Secretary or Assistant
Secretary or by such other person so authorized by the Seller's articles of
incorporation or by-laws;
(iii) the articles of incorporation, as amended, of the Seller,
certified by the Secretary of State of Virginia, dated as of a recent date
prior to the date hereof;
(iv) a good standing certificate for the Seller issued by the
Secretary of State of Virginia, dated not earlier than 30 days prior to the
date hereof;
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(v) a copy of the Seller's articles of incorporation, as amended,
certified by its Secretary or Assistant Secretary or by such other person
as is authorized to do so by its articles of incorporation or by-laws;
(vi) a certificate of the Secretary or Assistant Secretary or by such
other person as is authorized to do so by the articles of incorporation or
by-laws of the Seller certifying the names and true signatures of the
officers authorized on its behalf to sign this Agreement, the Assignments,
and the other documents to be delivered by it hereunder (on which
certificate the Purchaser may conclusively rely until such time as the
Purchaser shall receive from the Seller a revised certificate meeting the
requirements of this subsection) and certifying that all representations
and warranties made by the Seller in this Agreement are true and correct in
all material respects;
(vii) copies of proper financing statements (on Form UCC-1) naming the
Seller as the assignor of the sold Contracts and the other Collateral
related thereto and the Purchaser as assignee, or other similar instruments
or documents, in form and substance sufficient for filing under the UCC or
any comparable law of any and all jurisdictions as may be necessary or, in
the opinion of the Purchaser or any assignee thereof, desirable to perfect
the Purchaser's ownership interest in all sold Contracts and the other
Collateral related thereto;
(viii) copies of properly executed termination statements or
statements of release (on Form UCC-3) or other similar instruments or
documents, if any, in form and substance satisfactory for filing under the
UCC or any comparable law of any and all jurisdictions as may be necessary
or, in the opinion of the Purchaser and its assigns, desirable to release
all security interests and similar rights of any Person in the sold
Contracts and other Collateral related thereto previously granted by the
Seller;
(ix) certified copies of requests for information or copies (on Form
UCC-11) (or a similar search report certified by a party acceptable to the
Purchaser and any assignee thereof), dated a date reasonably near and prior
to the date of such initial conveyance, listing all effective financing
statements and other similar instruments and documents which name the
Seller (under its present name and any previous name) as debtor and which
are filed in the jurisdictions in which filings are to be made pursuant to
subsections (vii) and (viii) above, together with copies of such financing
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statements, none of which, except those filed pursuant to subsections (vii)
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and (viii), above, shall cover any sold Contracts or other Collateral
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related thereto;
(x) any necessary third party consents to the closing of the
transactions contemplated hereby, in the form and substance satisfactory to
the Purchaser and its assignees; and
(xi) one or more favorable opinions of Weil, Gotshal & ▇▇▇▇▇▇ and
Williams, Mullen, ▇▇▇▇▇, ▇▇▇▇▇▇▇ P.C., counsel to the Seller, in form and
substance satisfactory to the Purchaser and its assignees, with respect to
such matters as the Purchaser or any assignee thereof may reasonably
request.
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Section 3.2 Conditions Precedent to All Sales. The obligation of the
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Purchaser to pay for each sold Contract and the other Collateral related thereto
on each Purchase Date (including the initial Purchase Date) shall be subject to
the further conditions precedent that on such Purchase Date:
(a) The following statements shall be true:
(i) the representations and warranties of the Seller contained in
Section 4.1 shall be correct on and as of such Purchase Date, before
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and after giving effect to the conveyance to take place on such Purchase
Date and to the application of proceeds therefrom, as though made on and as
of such date; and
(ii) the Seller is in compliance in all material respects with each of
its covenants and other agreements set forth herein.
(b) The Purchaser shall have received an Assignment, dated the date of
such Purchase Date, executed by the Seller, listing each Contract being sold on
such Purchase Date and designating each such Contract as an Eligible Contract.
(c) The Seller shall have delivered to the Collateral Agent on behalf of
the Purchaser and any assignee thereof the related Contract File in the manner
set forth in Section 2 of the Custodial Agreement.
(d) The Seller shall have taken such other action, including delivery of
approvals, consents, opinions, documents and instruments to the Purchaser, as
the Purchaser or any assignee thereof may reasonably request.
(e) The Seller shall have taken all steps necessary under all applicable
law in order to assign to the Purchaser the Seller's perfected security interest
in the Financed Vehicle securing such Contract and, upon the sale of such
Contract from the Seller to the Purchaser, there shall exist in favor of the
Purchaser, a valid, subsisting and enforceable first priority perfected security
interest in the Financed Vehicle securing such Contract, and such security
interest is and shall be prior to all other liens upon and security interests in
such Financed Vehicle that now exist or may hereafter arise or be created
(except, as to priority, for any tax liens or mechanic's liens that may arise
after the applicable Purchase Date).
(f) There shall have been no material adverse change in the condition
(financial or otherwise), business, or results of operations of the Seller since
the preceding Purchase Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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Section 4.1 Representations and Warranties of the Seller. The Seller
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makes the following representations and warranties, on which the Purchaser
relies in purchasing the sold Contracts and the other Collateral related thereto
and in granting a security interest in the Contracts and the other Collateral
related thereto to the Collateral Agent, for the benefit of the
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Lender, the Hedge Counterparty and the Insurer, under the Loan Agreement. Such
representations are made as of the execution and delivery of this Agreement and
as of each additional time specified in the Schedule of Representations, and
shall survive the sale, transfer and assignment or contribution of the sold
Contracts and the other Collateral related thereto hereunder and the grant of a
security interest to the Collateral Agent, for the benefit of the Lender, the
Hedge Counterparty and the Insurer, under the Loan Agreement.
(a) Schedule of Representations. The representations and warranties made
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by the Seller, as seller hereunder, with respect to any Contract and as set
forth on the Schedule of Representations are true and correct as of the date of
the Assignment with respect to such Contract.
(b) Organization and Good Standing. The Seller has been duly incorporated
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and is validly existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times and now has power, authority
and legal right to acquire and own the sold Contracts and the other Collateral
related thereto and to transfer the sold Contracts and the other Collateral
related thereto to the Purchaser and to enter into and perform its obligations
under this Agreement.
(c) Due Qualification. The Seller is duly qualified to do business as a
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foreign corporation 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 requires such qualification, licenses
and/or approvals.
(d) Power and Authority. The Seller has the power and authority to execute
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and deliver this Agreement, the Loan Agreement and the other Loan Documents to
which it is a party and to carry out its terms and their terms, respectively;
the Seller has full power and authority to sell and assign the sold Contracts
and other Collateral related thereto to be sold and assigned to the Purchaser
hereunder and has duly authorized such sale and assignment to the Purchaser by
all necessary corporate action and the execution, delivery and performance of
this Agreement, the Loan Agreement and the Loan Documents to which it is a party
have been duly authorized by the Seller by all necessary corporate action.
(e) Valid Sale; Binding Obligations. This Agreement, the Loan Agreement,
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each Assignment and the Loan Documents to which the Seller is party have been
and will be duly executed and delivered by the Seller, and this Agreement shall
effect a valid sale, transfer and assignment of the sold Contracts and the other
Collateral related thereto, enforceable against the Seller and creditors of and
purchasers from the Seller, and this Agreement, the Loan Agreement and such Loan
Documents shall constitute legal, valid and binding obligations of the Seller
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, conservatorship,
receivership, liquidation or other 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.
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(f) No Violation. The consummation of the transactions contemplated by
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this Agreement and the other Loan Documents to which it is a party, and the
fulfillment of the terms of this Agreement and the other Loan Documents to which
it is a party, shall not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time) a
default under, articles of incorporation or by-laws of the Seller, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Seller is a party or by which it is bound or 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 such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement, or violate any law, order, rule
or regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or investigations pending or,
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to the Seller's knowledge, threatened against the Seller before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any of the other Loan Documents to
which it is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the other Loan Documents
to which it is a party, (iii) seeking any determination or ruling that could
have a Material Adverse Effect on the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement or any
of the other Loan Documents to which it is a party or (iv) that could have a
material adverse effect on the sold Contracts.
(h) No Consents. The Seller is not required to obtain the consent of any
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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
Agreement except those which may have been obtained and except where failure to
obtain the same could not have a Material Adverse Effect upon the rights of the
Purchaser hereunder.
(i) Approvals. All approvals, authorizations, orders or other actions of
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any person, corporation or other organization, or of any court, governmental
agency or body or official, required in connection with the execution and
delivery by the Seller of this Agreement and the consummation of the
transactions contemplated hereby (including the sale, transfer and assignment of
sold Contracts to the Purchaser) have been or will be taken or obtained on or
prior to the date hereof or the applicable Purchase Date except where failure to
obtain the same could not have a Material Adverse Effect upon the rights of the
Purchaser hereunder.
(j) Chief Executive Office. The chief executive office of the Seller is
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located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The Seller has
not been known by any name other than The Finance Company and is not known by
any trade names other than those listed on Schedule C hereto.
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(k) Solvency. The Seller is solvent and will not become insolvent after
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giving effect to the transactions contemplated by this Agreement and the Loan
Documents. The Seller,
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after giving effect to the transactions contemplated by this Agreement and the
Loan Documents, will have an adequate amount of capital to conduct its business
in the foreseeable future.
(l) Accounting Treatment. For accounting purposes, the Seller will treat
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the sale or absolute assignment of each sold Contract pursuant to this Agreement
as a sale or absolute assignment of the Seller's full right, title and ownership
interest in such sold Contracts to the Purchaser; it being understood that
Advances to the Purchaser under the Loan Agreement secured by the sold Contracts
will be treated as debt on the consolidated financial statements of the Seller.
(m) Compliance With Laws. The Seller has complied and will comply in all
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material respects with all applicable laws, rules, regulations, judgments,
agreements, decrees and orders with respect to its business and properties.
(n) Taxes. The Seller has filed on a timely basis all tax returns
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(including, without limitation, foreign, federal, state, local and otherwise)
required to be filed, is not liable for taxes payable by any other Person and
has paid or made adequate provisions for the payment of all taxes, assessments
and other governmental charges due from the Seller. No tax lien or similar
adverse claim has been filed, and no claim is being asserted, with respect to
any such tax, assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Seller in connection with the execution and
delivery of this Agreement and the Loan Documents and the transactions
contemplated hereby or thereby have been paid or shall have been paid if and
when due at or prior to the related Purchase Date.
(o) Request Notices. Each Request Notice is accurate in all material
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respects.
(p) Assignments. Each Assignment is accurate in all material respects.
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(q) No Liens, Etc. The Contracts and other Collateral related thereto to
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be sold and assigned to the Purchaser hereunder are owned by the Seller free and
clear of any Lien or restrictions on transferability and the Seller has the full
right, corporate power and lawful authority to assign, transfer and pledge the
same and interests therein, and upon transfer hereunder the Purchaser will have
acquired good and marketable title to and a valid and perfected ownership
interest in the sold Contracts and other Collateral related thereto, free and
clear of any adverse claim or restrictions on transferability. No effective
financing statement or other instrument similar in effect covering all or any
part of the sold Contracts and other Collateral related thereto is on file in
any recording office, except such as may have been filed in favor of the Lender
as "Secured Party" or "Assignee" or except as shall be released upon purchase of
such sold Contracts and other Collateral by the Purchaser.
(r) Information True and Correct. All information heretofore or hereafter
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furnished by or on behalf of the Seller to the Purchaser in connection with this
Agreement or any transaction contemplated hereby is and will be true and
complete in all material respects and does not and will not omit to state a
material fact necessary to make the statements contained therein not misleading.
(s) ERISA Compliance. The Seller is in compliance with ERISA and has not
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incurred and does not expect to incur any liabilities (except for premium
payments arising in the
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ordinary course of business) to the Pension Benefit Guaranty Corporation (or any
successor thereto) under ERISA.
(t) No Material Adverse Effect; No Default. (i) The Seller is not a party
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to any indenture, loan or credit agreement or any lease or other agreement or
instrument or subject to any charter or corporate restriction that could have,
and no provision of applicable law or governmental regulation is reasonably
likely to have, a material adverse effect on the condition (financial or
otherwise), business, operations, results of operations or properties of the
Seller, or could have such an effect on the ability of the Seller to carry out
its obligations under this Agreement and the other Loan Documents to which the
Seller is a party and (ii) the Seller is not in default under or with respect to
any contract, agreement, lease or other instrument to which the Seller is a
party and which is material to the Seller's condition (financial or otherwise),
business, operations or properties, and the Seller has not delivered or received
any notice of default thereunder.
(u) Financial Statements. The unaudited balance sheets of the Seller as at
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April 30, 2001 and the related statements of income for the fiscal periods ended
on such date, heretofore furnished to Lender and the Insurer, are complete and
correct in all material respects and fairly present the financial condition of
the Seller as at said date (subject to normal year-end audit adjustments), all
in accordance with GAAP. On said date, the Seller had no material contingent
liabilities, liabilities for taxes, unusual or anticipated losses from any
unfavorable commitments, except as referred to or reflected in said balance
sheet as at said date. Since April 30, 2001, there has been no Material Adverse
Change.
(v) Investment Company Status. The Seller is not an "investment company"
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or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. The consummation of the transactions contemplated by this
Agreement and the other Loan Documents to which the Seller is a party will not
violate any provision of such Act or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder.
(w) No Shared Obligations. There is not now, nor will there be at any time
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in the future, any agreement or understanding between the Seller and the
Purchaser (other than as expressly set forth herein or in the other Loan
Documents) providing for the allocation or sharing of obligations to make
payments or otherwise in respect of any taxes, fees, assessments or other
governmental charges.
(x) Representation and Warranties True and Correct. Each of the
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representations and warranties of the Seller contained in this Agreement and the
other Loan Documents to which it is a party is true and correct in all material
respects and the Seller hereby makes each such representation and warranty to,
and for the benefit of, the Purchaser as if the same were set forth in full
herein.
(y) Intent of Seller. The Seller has not transferred any interest in any
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Contract (or the other Collateral related thereto) to the Purchaser with any
intent to hinder, delay or defraud any of the Seller's creditors.
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(z) Consideration. The Seller has received fair consideration and
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reasonably equivalent value in exchange for the sale of the sold Contracts
hereunder.
Section 4.2 Representations and Warranties of the Purchaser. The
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Purchaser makes the following representations and warranties, on which the
Seller relies in selling, assigning, transferring and conveying sold Contracts
and the other Collateral related thereto to the Purchaser hereunder. Such
representations are made as of the execution and delivery of this Agreement, but
shall survive the sale, transfer and assignment of sold Contracts and the other
Collateral related thereto hereunder and the grant of a security interest in
sold Contracts by the Purchaser under the Loan Agreement.
(a) Organization and Good Standing. The Purchaser has been duly
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incorporated and is validly existing and in good standing as a corporation 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 currently conducted, and had at all relevant times, and
has, full power, authority and legal right to acquire and own the sold Contracts
and the other Collateral related thereto, and to grant a security interest in
the sold Contracts and the other Collateral related thereto to the Collateral
Agent, for the benefit of the Lender, the Hedge Counterparty and the Insurer,
pursuant to the Loan Agreement.
(b) Due Qualification. The Purchaser is duly qualified to do business as a
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foreign corporation 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 requires such qualification, licenses
and/or approvals.
(c) Power and Authority. The Purchaser has the power, authority and legal
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right to execute and deliver this Agreement and to carry out the terms hereof
and to acquire the sold Contracts and the other Collateral related thereto
hereunder; and the execution, delivery and performance of this Agreement and all
of the documents required pursuant hereto have been duly authorized by the
Purchaser by all necessary action.
(d) No Consent Required. The Purchaser is not required to obtain the
-------------------
consent of any other Person, or any consent, license, approval or authorization
or registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery or performance of this
Agreement and the other Loan Documents to which it is a party, except for such
as have been obtained, effected or made and except where failure to obtain the
same could not have a Material Adverse Effect upon the rights of the Purchaser
hereunder.
(e) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, conservatorship, receivership,
liquidation or other 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.
(f) No Violation. The execution, delivery and performance by the Purchaser
------------
of this Agreement, the consummation of the transactions contemplated by this
Agreement and
10
the other Loan Documents to which it is a party and the fulfillment of the terms
of this Agreement and the other Loan Documents to which it is a party do not and
will not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default under, the
certificate of incorporation or by-laws of the Purchaser, or conflict with or
breach any of the terms or provisions of, or constitute (with or without notice
or lapse of time) a default under, any indenture, agreement, mortgage, deed of
trust or other instrument to which the Purchaser is a party or by which the
Purchaser 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 such indenture, agreement, mortgage, deed of trust or other
instrument (other than the Loan Agreement), or violate any law or, to the best
of its knowledge any order, rule or regulation, applicable to the Purchaser or
its properties, of any federal or state regulatory body, any court,
administrative agency, or other governmental instrumentality having jurisdiction
over the Purchaser or any of its properties.
(g) No Proceedings. There are no proceedings or investigations pending,
--------------
or, to the knowledge of the Purchaser, threatened against the Purchaser before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over the Purchaser or its
properties: (i) asserting the invalidity of this Agreement or any of the other
Loan Documents to which it is a party, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any of the other
Loan Documents to which it is a party, (iii) seeking any determination or ruling
that could have a Material Adverse Effect on the performance by the Purchaser of
its obligations under, or the validity or enforceability of, this Agreement or
any of the other Loan Documents to which it is a party or (iv) that may
adversely affect the federal or state income tax attributes of, or seeking to
impose any excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the sold Contracts and the other Collateral related thereto
hereunder or the grant by the Purchaser of a security interest in the sold
Contracts and the other Collateral related thereto to the Collateral Agent, for
the benefit of the Lender, the Hedge Counterparty and the Insurer, pursuant to
the Loan Agreement.
(h) Consideration. The Purchaser has given fair consideration and
-------------
reasonably equivalent value in exchange for the sale of the sold Contracts
hereunder.
In the event of any breach of a representation and warranty made by the
Purchaser hereunder, the Seller covenants and agrees that the Seller will not
take any action to pursue any remedy that it may have hereunder, in law, in
equity or otherwise, until a year and a day have passed since all obligations of
the Purchaser under the Loan Agreement and any other Loan Document have been
paid in full. The Seller and the Purchaser agree that damages will not be an
adequate remedy for a breach of this covenant and that this covenant may be
specifically enforced by the Purchaser.
Section 4.3 Indemnification.
---------------
(a) The Seller shall defend, indemnify and hold harmless the Purchaser,
the Collateral Agent, the Backup Servicer, the Lender, the Hedge Counterparty
and the Insurer from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or
11
resulting from any breach of any of the Seller's representations and warranties
and covenants contained herein.
(b) The Seller will defend and indemnify the Purchaser, the Collateral
Agent, the Backup Servicer, the Lender, the Hedge Counterparty and the Insurer
against any and all costs, expenses, losses, damages, claims and liabilities
arising out of or resulting from any action taken by it in respect of any
portion of the sold Contracts or the other Collateral related to a sold Contract
other than in accordance with this Agreement or the Loan Agreement.
(c) The Seller agrees to pay, and shall defend, indemnify and hold
harmless the Purchaser, the Collateral Agent, the Backup Servicer, the Lender,
the Hedge Counterparty and the Insurer from and against, any taxes that may at
any time be asserted against the Purchaser, the Collateral Agent, the Backup
Servicer, the Lender, the Hedge Counterparty or the Insurer with respect to the
transactions contemplated in this Agreement, including, without limitation, any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege, or license taxes and costs and expenses in defending
against the same, arising by reason of the acts to be performed by the Seller
under this Agreement and imposed against such Persons.
(d) The Seller shall defend, indemnify, and hold harmless the Purchaser,
the Collateral Agent, the Backup Servicer, the Lender, the Hedge Counterparty
and the Insurer from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Purchaser, the
Collateral Agent, the Backup Servicer, the Lender, the Hedge Counterparty and
the Insurer through the negligence, willful misfeasance, or bad faith of the
Seller in the performance of its duties under this Agreement or by reason of
reckless disregard of the Seller's obligations and duties under this Agreement.
(e) The Seller shall indemnify, defend and hold harmless the Purchaser,
the Collateral Agent, the Backup Servicer, the Lender, the Hedge Counterparty
and the Insurer from and against any loss, liability or expense imposed upon, or
incurred by, the Purchaser, the Collateral Agent, the Backup Servicer, the
Lender, the Hedge Counterparty or the Insurer as result of the failure of any
sold Contract, or the sale or financing of the related Financed Vehicle, to
comply with all requirements of applicable law.
Indemnification under this Section 4.3 shall include reasonable fees and
-----------
expenses of counsel and expenses of litigation. The indemnity obligations
hereunder shall be in addition to any obligation that the Seller may otherwise
have under applicable law or any other Loan Document and shall survive the
termination of this Agreement and the other Loan Documents.
ARTICLE V
COVENANTS OF THE SELLER
-----------------------
Section 5.1 Protection of Title of the Purchaser.
------------------------------------
(a) On or prior to the date hereof, the Seller shall have filed or caused
to be filed UCC-1 financing statements, executed by the Seller as seller or
debtor, naming the
12
Purchaser as purchaser or secured party, naming the Collateral Agent, as
assignee and describing the sold Contracts and the other Collateral being sold
by it to the Purchaser as collateral, with the office of the Secretary of State
of each of the Commonwealth of Virginia and the State of Delaware and in such
other locations as the Purchaser or the Lender shall have required. From time to
time thereafter, the Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law (or deemed desirable by the
Purchaser or any assignee thereof) to fully perfect, preserve, maintain and
protect the interest of the Purchaser under this Agreement, and the security
interest of the Collateral Agent, for the benefit of the Lender the Hedge
Counterparty and the Insurer, under the Loan Agreement, in the sold Contracts
and the other Collateral related thereto, as the case may be, and in the
proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Purchaser, the Collateral Agent, the Backup Servicer and the Lender file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing. In the event that the Seller fails to
perform its obligations under this subsection, the Purchaser or the Collateral
Agent may perform such obligations, at the expense of the Seller, and the Seller
hereby grants to the Purchaser and the Collateral Agent an irrevocable power of
attorney and license to take any and all steps in order to perform such
obligations in the Seller's or in its own name, as applicable, and on behalf of
the Seller, as are necessary or desirable, in the determination of the Purchaser
or the Collateral Agent or any assignee thereof.
(b) On or prior to each Purchase Date hereunder, the Seller shall have
taken all steps required under applicable law in order to obtain and assign
outright to the Purchaser a first priority perfected security interest in each
Financed Vehicle securing the Contracts being transferred to the Purchaser on
such Purchase Date. On or prior to each Purchase Date hereunder, the Seller
shall have taken all steps required under applicable law in order for the
Purchaser to grant to the Collateral Agent, for the benefit of the Lender, the
Hedge Counterparty and the Insurer, a first priority perfected security interest
in the Purchaser's first priority perfected security interest in each of the
Financed Vehicles securing the Contracts being transferred to the Purchaser on
such Purchase Date and from time to time thereafter, the Seller shall take all
such actions as may be required by law (or deemed desirable by the Lender) to
fully preserve, maintain and protect the Purchaser's first priority perfected
security interest in each of the Financed Vehicles and the Collateral Agent's
first priority perfected security interest in the Purchaser's first priority
perfected security interest in such Financed Vehicle. Upon the occurrence of an
Event of Default under the Loan Agreement, the Lender and (provided that no
Insurer Default shall have occurred and be continuing) the Insurer may instruct
the Seller to take all additional steps, if any, as are necessary or desirable,
in the determination of the Lender or the Insurer to create and/or maintain
perfection of the security interest in the Financed Vehicle related to each sold
Contract on behalf of the Purchaser and to create and/or maintain perfection of
the security interest in the security interest of the Purchaser in the Financed
Vehicle related to each sold Contract on behalf of the Collateral Agent,
including having a notation of the Purchaser's and/or the Collateral Agent's
security interest recorded on such Financed Vehicle's certificate of title and,
if the Seller fails to take all such steps, the Lender or the Insurer may take
such steps at the sole expense of the Seller, and the Seller hereby grants to
the Collateral Agent an irrevocable power of attorney and license to take any
and all such steps in the Seller's or its own name, as applicable, and on behalf
of the Seller, as are necessary or desirable, in the determination of the Lender
and, as applicable, the Insurer to create and/or maintain perfection of
13
such security interests of the Purchaser and the Collateral Agent (including, if
required under applicable law, with respect to any such Financed Vehicles,
having a notation of the Purchaser's and/or the Collateral Agent's lien recorded
on such Financed Vehicle's certificate of title).
(c) The Seller shall not change its name, identity, corporate structure or
jurisdiction of incorporation in any manner that would or could make any
financing statement or continuation statement filed by the Seller (or by the
Purchaser on behalf of the Seller) in accordance with paragraph (a) above
-------------
seriously misleading within the meaning of the UCC, unless the Seller shall have
given the Purchaser, the Collateral Agent, the Backup Servicer, the Lender and
the Insurer at least 60 days prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing statements and
continuation statements.
(d) The Seller shall give the Purchaser, the Collateral Agent, the Backup
Servicer, the Lender and the Insurer at least 60 days prior written notice of
(i) any relocation of its chief executive office or (ii) any change in the
jurisdiction of its incorporation if, as a result of such relocation or change
in jurisdiction of organization, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The Seller shall at
all times maintain each office from which it services Contracts and its chief
executive office within the United States of America.
(e) The Seller shall maintain its computer systems so that, from and after
the time of sale or contribution under this Agreement of sold Contracts to the
Purchaser and the grant of a security interest in such sold Contracts by the
Purchaser to the Collateral Agent, the Seller's master computer records
(including archives) that shall refer to a sold Contract indicate clearly that
such sold Contract has been pledged under the Loan Agreement. Indication of the
Collateral Agent's security interest in a sold Contract shall be deleted from or
modified on the Seller's computer systems when, and only when, such sold
Contract shall be (i) transferred from the ownership of the Purchaser in
connection with any Securitization or otherwise, (ii) paid off by the related
Obligor, (iii) liquidated by the Servicer, or (iv) purchased by the Seller in
accordance with Section 6.1 or 6.2 hereof.
----------- ---
(f) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle contracts to
any prospective purchaser, lender or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from archives) that, if they shall refer
in any manner whatsoever to any sold Contract sold or contributed hereunder
shall indicate clearly that such sold Contract has been so sold or contributed
to the Purchaser and is subject to a security interest in favor of the
Collateral Agent.
(g) With respect to each sold Contract, if a Lien Certificate for the
related Financed Vehicle showing the Seller named as a secured party is not in
the possession of the Seller on the Purchase Date related to such sold Contract,
proper application for such Lien Certificate shall have been made with the
appropriate Registrar of Titles by the applicable Dealer on or before such
Purchase Date and the Seller shall take all steps necessary in order to obtain
such Lien Certificate as promptly as possible and shall, upon receipt of such
Lien Certificate, promptly deliver such Lien Certificate to the Collateral
Agent.
14
Section 5.2 Other Liens or Interests. Except for the conveyances
------------------------
hereunder, the Seller will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any lien on the sold
Contracts, the other Collateral or any interest therein, and the Seller shall
defend the right, title, and interest of the Purchaser and the Collateral Agent
in and to the sold Contracts and the other Collateral related thereto against
all claims of third parties claiming through or under the Seller.
Section 5.3 Costs and Expenses. The Seller shall pay all reasonable
------------------
costs and disbursements in connection with the performance of its obligations
hereunder and the Loan Documents to which it is a party.
Section 5.4 Financial Covenant. Seller shall not permit its Tangible
------------------
Net Worth, at any time, calculated as of the close of Seller's then most
recently concluded fiscal quarter and commencing with the quarter commencing on
April 1, 2001, to be less than the sum of (i) $38,000,000 plus (ii) 50% of the
net earnings (after taxes) of Seller for the period commencing on April 1, 2001
and ending at the end of Seller's then most recently concluded fiscal quarter
(treated for this purpose as a single accounting period). For purposes of this
clause, if net earnings of Seller for any period shall be less than zero, the
amount calculated pursuant to clause (ii) in the immediate preceding sentence
for such period shall be zero.
ARTICLE VI
REPURCHASES
-----------
Section 6.1 Repurchase of sold Contracts Upon Breach of Warranty. Upon
----------------------------------------------------
the occurrence of a Seller Repurchase Event, the Seller shall, unless such
Seller Repurchase Event shall have been cured in all material respects,
repurchase the sold Contract or the sold Contracts related to the occurrence of
such Seller Repurchase Event from the Purchaser within two (2) Business Days of
the discovery by or notice (from any Person) to the Seller of such Seller
Repurchase Event for the Release Price of such Contract. On the date of such
purchase, in satisfaction of the payment to the Borrower of such Release Price,
the Seller shall, on behalf of the Borrower, deliver such Release Price to the
Collateral Agent for deposit into the Collection Account in accordance with
Section 2.07(b) of the Loan Agreement and Section 4.02(a) of the Servicing
--------------- ---------------
Agreement. Notwithstanding any other provision of this Agreement or the Loan
Agreement to the contrary, the obligation of the Seller under this Section shall
not terminate upon a termination of the Seller as Servicer under the Loan
Agreement and shall be performed in accordance with the terms hereof
notwithstanding the failure of the Servicer or the Purchaser to perform any of
their respective obligations with respect to such sold Contract under the Loan
Agreement. The Seller hereby acknowledges the pledge of the Purchaser's rights
under this Agreement to Collateral Agent, for the benefit of the Lender, the
Hedge Counterparty and the Insurer, pursuant to the Loan Agreement and that each
of the Collateral Agent, the Lender and (provided that no Insurer Default shall
have occurred and be continuing) the Insurer shall have the right to enforce
directly against the Seller the Seller's repurchase obligations under this
Section 6.1 and the Seller's indemnity obligations under Section 4.3.
----------- -----------
Section 6.2 Reassignment of Purchased Contracts. Upon deposit in the
-----------------------------------
Collection Account of the price paid to the Purchaser for any sold Contract
repurchased by the
15
Seller under Section 6.1, the Purchaser shall (and shall request the Lender to)
-----------
take such steps as may be reasonably requested by the Seller, at the expense of
the Seller, in order to assign to the Seller all of the Purchaser's and the
Collateral Agent's right, title and interest in and to such sold Contract and
all security and documents and all other Collateral conveyed to the Purchaser
and the Collateral Agent, for the benefit of the Lender, the Hedge Counterparty
and the Insurer, directly relating thereto, without recourse, representation or
warranty. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a sold Contract, in any enforcement
suit or legal proceeding, it is held that the Seller may not enforce any such
sold Contract on the ground that it shall not be a party in interest or a holder
entitled to enforce the sold Contract, the Purchaser shall, at the expense of
the Seller, take such steps as the Seller, deems reasonably necessary to enforce
the sold Contract, including bringing suit in the Purchaser's name.
Section 6.3 Waivers. No failure or delay on the part of the Purchaser
-------
or any assignee thereof, in exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VII
MISCELLANEOUS
-------------
Section 7.1 Liability of the Seller. The Seller shall be liable in
-----------------------
accordance herewith only to the extent of the obligations in this Agreement
specifically undertaken by the Seller and its representations and warranties
hereunder.
Section 7.2 Merger or Consolidation of the Seller or the Purchaser. Any
------------------------------------------------------
corporation or other entity (i) into which the Seller or the Purchaser may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Seller or the Purchaser is a party or (iii) succeeding to the business of
the Seller or the Purchaser (in the case of the Purchaser, which corporation has
a certificate of incorporation containing provisions relating to limitations on
business and other matters substantively identical to those contained in the
Purchaser's certificate of incorporation), provided that in any of the foregoing
cases such corporation shall execute an agreement of assumption to perform every
obligation of the Seller or the Purchaser, as the case may be, under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Seller or the Purchaser, as the case may be, hereunder
(without relieving the Seller or the Purchaser of its responsibilities
hereunder, if it survives such merger or consolidation) without the execution or
filing of any document or any further act by any of the parties to this
Agreement.
Notwithstanding the foregoing, neither the Seller nor the Purchaser shall
merge or consolidate with any other Person or permit any other Person to become
the successor to the Purchaser's business without the prior written consent of
the Lender and, provided that no Insurer Default shall have occurred and be
continuing, the Insurer. The Seller or the Purchaser shall promptly inform the
other party, the Collateral Agent, the Backup Servicer, the Lender and the
Insurer of such merger, consolidation or purchase and assumption.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii)
16
and (iii) above, (x) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Sections 4.1 or 4.2 or covenant made
------------ ---
pursuant to Section 4.3, shall have been breached in any material respect (for
-----------
purposes hereof, such representations and warranties shall speak as of the date
of the consummation of such transaction), (y) the Seller or the Purchaser, as
applicable, shall have delivered to Lender and, provided that no Insurer Default
shall have occurred and be continuing, the Insurer an Officer's Certificate and
an Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 7.2 and that all
-----------
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and (z) the Seller or the Purchaser, as
applicable, shall have delivered to the Lender and, provided that no Insurer
Default shall have occurred and be continuing, the Insurer an Opinion of
Counsel, stating, in the opinion of such counsel, either (A) all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary to preserve and protect the security interest of
the Lender in the sold Contracts and the other Collateral related thereto and
reciting the details of the filings or (B) no such action shall be necessary to
preserve and protect such interest.
Section 7.3 Limitation on Liability of the Seller and Others. The
------------------------------------------------
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel respecting any matters arising under this
Agreement. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its obligations under this
Agreement, the Loan Agreement or the Loan Documents to which it is a party.
Section 7.4 Amendment. This Agreement (including each Exhibit and
---------
Schedule hereto other than Schedule A) may be amended by the Seller and the
Purchaser only with the prior written consent of the Lender and, so long as no
Insurer Default shall have occurred and be continuing, the Insurer.
Section 7.5 Notices. All demands, notices and communications to the
-------
Seller or the Purchaser hereunder shall be in writing, personally delivered, or
sent by telecopier (subsequently confirmed in writing), reputable overnight
courier or mailed by certified mail, return receipt requested, and shall be
deemed to have been given upon receipt (a) in the case of the Seller at the
following address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. Tray, Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or such other address
as shall be designated by the Seller in a written notice delivered to the
Purchaser and (b) in the case of the Purchaser at the following address: ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇-▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. Tray,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ or such other address as shall be designated by a
party in a written notice delivered to the other party.
Section 7.6 Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement, the Loan Agreement and the other Loan
Documents set forth the entire understanding of the parties relating to the
subject matter hereof and thereof, and all prior understandings, written or
oral, are superseded by this Agreement, the Loan Agreement and the Loan
Documents. This Agreement may not be modified, amended, waived or supplemented
except as provided herein.
17
Section 7.7 Severability of Provisions. If any one or more of the
--------------------------
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 7.8 Intention of the Parties. The execution and delivery of
------------------------
this Agreement shall constitute an acknowledgment by the Seller and the
Purchaser that they intend that each assignment and transfer herein contemplated
constitutes a sale and assignment outright, and not for security, of the sold
Contracts and the other Collateral related thereto conveying good title thereto
free and clear of any liens, from the Seller to the Purchaser, and that the sold
Contracts and the other Collateral related thereto shall not be a part of the
Seller's estate in the event of the bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, or the occurrence of another similar event, of,
or with respect to, the Seller. In the event that any or all such assignments
and transfers are determined to be made as security for a loan made by the
Purchaser to the Seller (or are otherwise determined not to be sales and
assignments outright or contributions of capital), the parties intend that the
Seller shall have granted to the Purchaser a security interest in all right,
title and interest in and to the sold Contracts and the other Collateral
conveyed pursuant to Section 2.1, and that this Agreement shall constitute a
-----------
security agreement under applicable law.
Section 7.9 Governing Law. THIS AGREEMENT SHALL, IN ACCORDANCE WITH
-------------
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY
CONFLICTS OF LAW PRINCIPLES THEREOF.
Section 7.10 Counterparts. For the purpose of facilitating the execution
------------
of this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 7.11 Nonpetition Covenant. Until one year and one day after the
--------------------
latest Advance by the Lender and all other Secured Obligations under the Loan
Agreement shall be repaid in full, the Seller shall not petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Purchaser under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Purchaser or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Purchaser.
Section 7.12 Binding Effect; Assignability.
-----------------------------
18
(a) This Agreement shall be binding upon and inure to the benefit of the
Seller, the Purchaser and their respective successors and assigns; provided,
--------
however, that the Seller may not assign its rights or obligations hereunder or
-------
any interest herein without the prior written consent of the Lender and, so long
as no Insurer Default shall have occurred and be continuing, the Insurer. The
Purchaser may assign all of its rights hereunder to an assignee, and such
assignee shall have all rights of the Purchaser under this Agreement (as if such
assignee were the Purchaser hereunder); provided, however, that any such
-------- -------
assignment shall require the prior written consent of the Lender and, so long as
no Insurer Default shall have occurred and be continuing, the Insurer.
(b) This Agreement shall create and constitute the continuing obligation
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until such time, when all of the sold Contracts are collected
in full; provided, however, that rights and remedies with respect to any breach
-------- -------
of any representation and warranty made by the Seller pursuant to Article IV
hereof and the provisions of Article V and Section 7.11 shall be continuing and
------------
shall survive any termination of this Agreement.
Section 7.13 No Proceedings. Each of the Seller and the Purchaser
--------------
agrees not to institute against, or join any other person in instituting
against, the Lender any bankruptcy, reorganization, arrangement, insolvency,
liquidation or similar proceeding for one year and a day after the amounts owing
under this Agreement and all other credit agreements executed by the Lender have
been paid in full.
Section 7.14 Conflicting Directives of Lender and Insurer. With respect
--------------------------------------------
to any instruction, declaration, consent or other direction to be given by the
Lender and the Insurer under this Agreement, if the respective instructions,
declarations, consents or other directions of the Lender and the Insurer
conflict with one another, then, so long as no Insurer Default shall have
occurred and be continuing, the instruction, declaration, consent or other
direction of the Insurer shall be determinative; provided, that, if any Insurer
--------
Default shall have occurred and be continuing, the instruction, declaration,
consent or other direction of the Lender shall be determinative.
Section 7.15 Third Party Beneficiaries. Each of the parties hereto
-------------------------
hereby acknowledges that the Purchaser intends to assign all of its rights and
benefits, but none of its obligations or burdens, under this Agreement to the
Lender and the Seller hereby consents to such assignment. Each of the Insurer
and the Lender shall be a third party beneficiary of, and shall be entitled to
enforce the Purchaser's rights and remedies under, this Agreement to the same
extent as if it were a party hereto. The Hedge Counterparty shall also be an
intended third-party beneficiary of this Agreement.
19
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
THE FINANCE COMPANY,
as Seller
By:_______________________________
Name:
Title:
TFC WAREHOUSE CORPORATION I,
as Purchaser
By:_______________________________
Name:
Title:
[Signature Page to Purchase Agreement]
EXHIBIT A
FORM OF ASSIGNMENT
ASSIGNMENT, dated as of ___________ between The Finance Company (the
"Seller") and TFC Warehouse Corporation I (the "Purchaser").
1. We refer to the Purchase Agreement (the "Purchase Agreement") dated as
of June 28, 2001 between the Seller and the Purchaser. All provisions
of the Purchase Agreement are incorporated herein by reference. All
capitalized terms used herein and not defined herein shall have the
meanings set forth in the Purchase Agreement.
2. The Seller does hereby sell, transfer, assign and otherwise convey to
the Purchaser, without recourse (except to the extent specifically
provided in the Purchase Agreement), and the Purchaser hereby
purchases, all right, title and interest of Seller in and to the sold
Contracts identified on Annex A hereto and the other Collateral
related thereto (including, without limitation, the Seller's security
interest in each Financed Vehicle related to each such sold Contract)
pursuant to the Purchase Agreement.
3. The Seller does hereby represent and warrant that the sold Contracts
identified in Annex A hereto are Eligible Contracts.
4. The Seller does hereby remake the representations and warranties set
forth in Section 4.1 of the Purchase Agreement with full force and
effect as if the same were made as of the date hereof and fully set
forth herein.
IN WITNESS WHEREOF, the parties have caused this Assignment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
THE FINANCE COMPANY,
as Seller
By:_______________________________
Name:
Title:
TFC WAREHOUSE CORPORATION I,
as Purchaser
By:_______________________________
Name:
Title:
Exh. A-1
ANNEX A
(TO ASSIGNMENT)
Exh. A-2
SCHEDULE A
SCHEDULE OF CONTRACTS
Sch. A-1
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER WITH RESPECT TO
CONTRACTS NOTED AS ELIGIBLE CONTRACTS ON ANY ASSIGNMENT
-------------------------------------------------------
The following representations and warranties are made with respect to only
the Contracts which are designated as being Eligible Contracts on an Assignment
delivered by the Seller to the Purchaser.
1. Characteristics of Contracts. Each Contract (A) was originated
----------------------------
pursuant to either the Military Finance Program or the Auto Centers Program
by a Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business in accordance with the Underwriting
Guidelines (which policies shall not be amended thereafter without the
consent of the Lender and, so long as no Insurer Default shall have
occurred and be continuing, the Insurer, such consent not to be
unreasonably withheld), and such Dealer had all necessary licenses and
permits to originate Contracts in the state where such Dealer was located,
was fully and properly executed by the parties thereto, was purchased by
TFC from such Dealer under an existing Dealer Agreement or pursuant to a
Dealer Assignment, was validly assigned by such Dealer to TFC pursuant to
the Dealer Agreement or the Dealer Assignment, was validly assigned by TFC
to the Borrower pursuant to the Purchase Agreement, and was validly pledged
by the Borrower to the Collateral Agent, for the benefit of the Lender, the
Hedge Counterparty and the Insurer, pursuant to the Loan Agreement, (B)
contains customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for realization against the
collateral security, (C) is a Contract which provides for level Scheduled
Contract Payments (provided that the payment in the first monthly
collection period and the payment in the final monthly collection period of
the Contract may be minimally different from the normal period and level
payment) which, if made when due, shall fully amortize the Amount Financed
over the original term, (D) provides for, in the event that the related
Contract is prepaid, a prepayment that fully pays the Principal Balance of
such related Contract and includes accrued but unpaid interest through the
date of prepayment in an amount at least equal to the Annual Percentage
Rate, (E) has not been amended or rewritten, or collections with respect to
which deferred or waived, other than as expressly permitted pursuant to
clause (J) below and as evidenced in the Contract Documents relating
thereto, (F) has an original term of eleven (11) to sixty (60) months, (G)
that has been acquired by TFC and, on the related Funding Date for such
Contract, is not a Delinquent Contract and, on such date or at any time
thereafter, is not an Over-60 Contract, a Repossessed Contract or a
Liquidated Contract, and the related Obligor does not have other Contracts
owing to TFC that are Delinquent Contracts, Over-60 Contracts, Repossessed
Contracts or Liquidated Contracts, (H) has an Annual Percentage Rate of not
less than 9.9%, (I) has a remaining Principal Balance of not more than
$25,000, (J) has not been extended beyond its original term, except in
keeping with TFC's Deferment Policy, a copy of which is attached as Exhibit
S hereto, which allows for up to two, one-month deferments in any twelve
month period not to exceed up to four, one-month deferments over the life
of a monthly-pay contract, (K) was purchased through an Approved Dealer,
(L) is due from a U.S. citizen in the case of a Contract that was
Sch. B-1
originated pursuant to the Military Finance Program and a U.S. resident in
the case of a Contract that was originated pursuant to the Auto Centers
Program and is denominated in U.S. dollars, (M) is secured by a Financed
Vehicle and a valid first priority perfected security interest is in effect
with respect to such Financed Vehicle, (N) is owned solely by the Borrower
free and clear of any lien, claim, or other encumbrance, excluding liens
that will be released no later than the applicable Funding Date, (O) with
respect to the related security interest in the related Financed Vehicle is
perfected and with clear legal right of repossession, (P) was secured by a
vehicle with Total Loss Protection coverage or covered by an Insurance
Policy, and naming TFC and its assigns as loss payee on the date the loan
was purchased from an Approved Dealer by TFC, (Q) meets, in all material
respects, all applicable requirements of federal, state, and local laws and
regulations, (R) is not subject to any right of setoff by the Obligor, (S)
will be clearly marked in the books and records of TFC and the Borrower, as
applicable, as being sold to the Borrower, and pledged by the Borrower to
the Collateral Agent, (T) 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) originated by any one Dealer to exceed 10% (it being
understood that commonly owned dealerships shall be considered as one
Dealer for the purposes of such calculation), (U) 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) with Obligors located in any one State to exceed
30%, (V) 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 were
originated pursuant to the Auto Centers Program to exceed 30% of the
Aggregate Principal Balance of all Eligible Contracts, and (W) was
originated on an applicable Form of Contract.
2. No Fraud or Misrepresentation. Each Contract (A) was originated by
-----------------------------
a Dealer, (B) was sold by the Dealer to TFC, (C) was sold by TFC to the
Borrower and (D) was pledged by the Borrower to the Collateral Agent
without any fraud or misrepresentation in any case.
3. Compliance with Law. All requirements of applicable federal, state
-------------------
and local laws, and regulations thereunder (including usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the ▇▇▇▇-▇▇▇▇▇▇▇▇ Warranty
Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and
- -
Sailors' Civil Relief Act of 1940, as amended, 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, the Financed Vehicles and the sale of any physical damage,
credit life and credit accident and health insurance and any extended
service contracts, have been complied with in all material respects by TFC
and the Borrower, as applicable, and each Contract, the sale of the
Financed Vehicle evidenced by each Contract and the sale of any physical
damage, credit life and credit accident and health insurance and any
extended service contracts
Sch. B-2
complied at the time it was originated or made in all material respects and
now complies in all material respects with all applicable legal and
regulatory requirements.
4. 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 Funding Date of the Soldiers' and Sailors'
Civil Relief Act of 1940, 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.
5. No Government, Corporate or Fleet Obligor. No Contract 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).
6. Obligor Bankruptcy. At the applicable Funding Date, no Obligor had
------------------
been the subject of a current bankruptcy proceeding.
7. Contract Schedule. The information set forth in each Contract
-----------------
Schedule has been produced from the Electronic Ledger and was true and
correct in all material respects, with respect to each Contract, as of the
close of business on the Funding Date of such Contract.
8. Marking Records. By the Funding Date with respect to each
---------------
Contract, TFC will have caused the portions of the Electronic Ledger
relating to such Contract to be clearly and unambiguously identified to
show that such Contract has been sold to the Borrower by TFC pursuant to
the Purchase Agreement and pledged by the Borrower to the Collateral Agent
in accordance with the terms of the Loan Agreement.
9. Adverse Selection. No selection procedures adverse to the Lender,
-----------------
the Hedge Counterparty or the Insurer were utilized in selecting the
Contracts from those contracts owned by TFC or the Borrower.
10. Chattel Paper. The Contracts constitute chattel paper within the
-------------
meaning of the UCC as in effect in the State of New York, Delaware,
Virginia and Minnesota.
11. One Original. There is only one original executed copy of each
------------
Contract.
Sch. B-3
12. Contract Files Complete. There exists a Contract File pertaining
-----------------------
to each Contract and such Contract File contains the related Contract
Documents including, without limitation, (a) a fully executed original of
the Contract and (b) no later than 120 days after the Funding Date for such
Contract, the original Lien Certificate for such Contract. 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 described in
clauses (a) and (b) above have been properly filled in and each form has
otherwise been correctly prepared. Notwithstanding the above, a copy of the
complete Contract File for each Contract, which fulfills the documentation
requirements of the Underwriting Guidelines as in effect at the time of
purchase has been delivered to the Collateral Agent by TFC, on behalf of
the Borrower by the related Funding Date.
13. 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 Contract in whole or in part. No
terms of any Contract have been waived, altered or modified in any respect
since its origination, except as expressly permitted pursuant to paragraph
1(J) above by instruments or documents identified in the Contract File. No
Contract has been modified as a result of application of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended.
14. Lawful Assignment. 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 under the
Purchase Agreement or the pledge thereof pursuant to this Loan Agreement or
pursuant to transfers of the Note. The Borrower has not entered into any
agreement with any account debtor that prohibits, restricts or conditions
the assignment of any portion of the Contracts.
15. Good Title. No Contract has been sold, transferred, assigned or
----------
pledged by TFC to any Person other than the Borrower; immediately prior to
the conveyance of the Contracts to the Borrower pursuant to the Purchase
Agreement, TFC was the sole owner thereof and had good and indefeasible
title thereto, free of any Lien; provided, however, that, with respect to
-------- -------
each Previously Financed Contract subject to a Lien in favor of an Other
Lender, such Lien shall be released by such Other Lender simultaneously
with the conveyance of such Contract to the Borrower pursuant to the
Purchase Agreement. Upon execution and delivery of the applicable
Assignment by TFC, the Borrower shall have good and indefeasible title to
and will be the sole owner of such Contracts, free of any Lien, other than
the Lien of the Collateral Agent, for the benefit of the Lender, the Hedge
Counterparty and the Insurer. No Dealer has a participation in, or other
right to receive, proceeds of any Contract. TFC has not 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 or Dealer Assignments or to payments due under
such Contracts.
16. Security Interest in Financed Vehicle. Each Contract creates or
-------------------------------------
will create a valid, binding and enforceable first priority security
interest in favor of TFC 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
Sch. B-4
respect to such Financed Vehicle the Lien Certificate will be received
within 120 days of the applicable Funding Date, and will show TFC named as
the original secured party under each Contract 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, TFC has received written evidence from the related
Dealer that such Lien Certificate showing TFC or the Collateral Agent as
first lienholder has been applied for and (i) TFC's security interest has
been validly assigned to the Borrower pursuant to the Purchase Agreement
and (ii) the Borrower's security interest has been validly pledged to the
Collateral Agent pursuant to the Loan Agreement. Immediately after the
sale, transfer and assignment thereof by TFC to the Borrower, each Contract
will be secured by an enforceable and perfected first priority security
interest in the Financed Vehicle in favor of the Borrower 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
Funding Date). Immediately after the pledge of a security interest therein
by the Borrower to the Collateral Agent, for the benefit of the Lender, the
Hedge Counterparty and the Insurer, each Contract will be secured by an
enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Collateral Agent as secured party, for the benefit
of the Lender, the Hedge Counterparty and the Collateral Agent, 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 Funding
Date). As of the applicable Funding Date, there were no Liens or claims for
taxes, work, labor or materials affecting a Financed Vehicle which are or
may be Liens prior or equal to the Liens of the related Contract.
17. All Filings Made. All filings (including 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 the Collateral Agent a first priority
perfected security interest in the Contracts and the proceeds thereof and
the other Collateral have been made, taken or performed.
18. No Impairment. Neither TFC nor the Borrower has 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 the Lender, the Hedge Counterparty or the Insurer in any Contract or the
proceeds thereof.
19. 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 Borrower with respect to such Contract.
20. No Default. As of the applicable Funding Date, no Contract was in
----------
default and no condition existed or event occurred that constituted a
default, breach, violation or event permitting acceleration under the terms
of any Contract, and no continuing condition that with notice or the lapse
of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Contract has arisen, and
Sch. B-5
there has been no waiver of any of the foregoing. As of the applicable
Funding Date, no Financed Vehicle had been repossessed.
21. No Defenses. As of the applicable Funding Date, no right of
-----------
rescission, setoff, counterclaim or defense has been asserted or threatened
with respect to any Contract.
22. Insurance. At the time of origination of each Contract, the
---------
related Financed Vehicle was covered by an Insurance Policy which was (i)
in an amount at least equal to the lesser of, excluding any deductible, (a)
its maximum insurable value or (b) the principal amount due from the
Obligor under the related Contract, (ii) naming TFC and its successors and
assigns as loss payee and (iii) insuring against loss and damage due to
fire, theft, transportation, collision and other risks generally covered by
either a physical loss and damage Insurance Policy or the combination of
TFC's Total Loss Protection and GAP coverage. No Financed Vehicle is
insured under a policy of force-placed insurance on the applicable Funding
Date.
23. Certain Characteristics of Contracts. (i) No Contract was more
------------------------------------
than 30 days past due as of the applicable Funding Date; (ii) no funds have
been advanced by TFC, the Borrower, the Servicer, any Dealer, or anyone
acting on behalf of any of them in order to cause any Contract to qualify
under subclause (i) of this clause 23; (iii) the Principal Balance of each
Contract set forth in the related Contract Schedule is true and correct as
of the applicable Funding Date.
24. Allotment Processor. As of the Closing Date, Fort ▇▇▇▇ National
-------------------
Bank ("FKNB") has been directed by TFC, and evidence of FKNB's
----
acknowledgment has been received to directly transfer to the Collection
Account all amounts received by it in respect of the Contracts pursuant to
TFC's allotment processor program.
25. No Bulk Product. None of the Contracts constitute Bulk Product.
---------------
26. No Civilian Finance Contracts. None of the Contracts were
-----------------------------
originated under the Civilian Finance Program.
Sch. B-6
SCHEDULE C
TRADE NAMES OF SELLER
---------------------
Old Dominion Acceptance
Old Dominion Acceptance, Inc.
(used in the conduct of TFC's business in the following States: Alaska, Arizona,
California, Minnesota, Nebraska, Nevada, New Hampshire, New Mexico, New York,
Oklahoma, Pennsylvania, Texas and Washington)
Sch. C-1