EXHIBIT 10.5
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MASTER RESIDUAL LOAN AGREEMENT
AMONG
TRIAD FINANCIAL RESIDUAL SPECIAL PURPOSE LLC,
AS BORROWER
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
AS COLLECTION ACCOUNT BANK
AND
CITIGROUP GLOBAL MARKETS REALTY CORP.,
AS LENDER
DATED AS OF APRIL 29, 2005
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Section 1. Definitions; Construction...................................................................... 1
(a) Definitions.................................................................................... 1
(b) Other Definitional Terms....................................................................... 17
Section 2. Grant of Security Interest; Delivery of Collateral; Remittances on Pledged ABS;
Funding of Loans............................................................................... 17
(a) Grant of Security Interest..................................................................... 17
(b) Delivery of Collateral......................................................................... 17
(c) Grant of Subordinated Security Interest in Other Residual Financing Facility Collateral........ 17
(d) Lender's Duty of Care.......................................................................... 18
(e) Remittances on Collateral...................................................................... 18
(f) Funding of Loans............................................................................... 18
(g) Requirements of Law............................................................................ 19
(h) Indemnity...................................................................................... 20
(i) Illegality; Substituted Interest Rates......................................................... 21
(j) Taxes.......................................................................................... 21
Section 3. Earnings on Collateral; Collection Account..................................................... 22
Section 4. Confirmation Statement......................................................................... 23
Section 5. Margin Determinations and Supplemental Collateral.............................................. 23
Section 6. Release and Addition of Collateral............................................................. 24
Section 7. Conditions To The Loans........................................................................ 24
(a) Conditions to the Effective Date............................................................... 24
(b) Conditions Precedent to All Loans.............................................................. 27
Section 8. Representations and Warranties................................................................. 29
(a) Organization and Good Standing................................................................. 29
(b) Due Qualification.............................................................................. 29
(c) Power and Authority............................................................................ 29
(d) Binding Obligation............................................................................. 29
(e) No Violation................................................................................... 29
(f) Compliance with Law............................................................................ 30
(g) No Consents.................................................................................... 30
(h) No Proceedings................................................................................. 30
(i) Other Obligations.............................................................................. 30
i
(j) Regulation U................................................................................... 30
(k) Investment Company Act, Etc.................................................................... 31
(l) [Reserved]..................................................................................... 31
(m) Collateral Security............................................................................ 31
(n) Ownership of Properties........................................................................ 32
(o) Full Disclosure................................................................................ 32
(p) ERISA.......................................................................................... 32
(q) Ownership of Borrower.......................................................................... 32
(r) No Other Business.............................................................................. 32
(s) No Indebtedness................................................................................ 33
(t) No Fraudulent Conveyance....................................................................... 33
(u) Committed Securitizations...................................................................... 33
Section 9. Affirmative Covenants.......................................................................... 33
(a) Notice of Defaults, Etc........................................................................ 33
(b) Taxes.......................................................................................... 34
(c) Separate Existence; No Commingling............................................................. 34
(d) Financing Statements........................................................................... 35
(e) Books and Records; Other Information........................................................... 35
(f) Continuity of Business and Compliance With Agreement........................................... 36
(g) Ownership of Borrower.......................................................................... 36
(h) Shareholder Reports, Governmental Filings, Etc................................................. 36
(i) Fulfillment of Obligations..................................................................... 36
(j) Covenant Compliance Certificate................................................................ 36
(k) Monthly Collateral Report...................................................................... 36
(l) Changes in Location, Name, Etc................................................................. 36
(m) Compliance with Laws, Etc...................................................................... 37
(n) Collateral Statements.......................................................................... 37
(o) Actions to Preserve Lender's Security Interest................................................. 37
(p) Annual Opinion................................................................................. 37
(q) Registration of and Payments on Pledged ABS.................................................... 37
(r) Parity with Other Residual Financing Facility.................................................. 38
(s) Monthly Servicer's Certificates on Pledged ABS................................................. 38
(t) Monthly Remittance Certificates................................................................ 38
ii
Section 10. Negative Covenants............................................................................. 39
(a) Adverse Transactions........................................................................... 39
(b) Guarantees..................................................................................... 39
(c) Dividends...................................................................................... 39
(d) Investments.................................................................................... 39
(e) Limitations on Loans; Other Advances by Borrower............................................... 39
(f) Further Covenants.............................................................................. 39
(g) Changes in Capital Structure or Business Objectives............................................ 40
(h) Limitation on Modifications.................................................................... 40
(i) Asset Sales.................................................................................... 40
(j) No Disparity with Other Residual Financing Facility............................................ 40
(k) No Indebtedness................................................................................ 41
(l) No Other Business.............................................................................. 41
(m) ERISA.......................................................................................... 41
Section 11. Events of Default.............................................................................. 41
Section 12. Remedies....................................................................................... 44
(a) Remedies for Default........................................................................... 44
(b) Action Regarding Collateral.................................................................... 45
(c) Deficiency..................................................................................... 46
(d) Private Sale................................................................................... 46
(e) Application of Proceeds........................................................................ 46
(f) Default Rate of Interest....................................................................... 47
(g) Power of Attorney.............................................................................. 47
(h) Payments on Collateral to Borrower............................................................. 48
Section 13. Maturity Date; Application of Remittances on Collateral; Payment Dates; Repayment of
Principal...................................................................................... 48
(a) Payment on Maturity Date....................................................................... 48
(b) Application of Remittances Prior to Commitment Termination Date................................ 48
(c) Application of Remittances Following Commitment Termination Date............................... 49
(d) Obligations Unconditional...................................................................... 50
(e) Payment of Principal........................................................................... 50
(f) Event of Default............................................................................... 51
(g) Payments on Pledged ABS........................................................................ 51
iii
Section 14. Payment of Liabilities......................................................................... 51
Section 15. Surety Waivers by Borrower Relating to Warehouse Facility Obligations.......................... 51
Section 16. The Collection Account Bank.................................................................... 54
(a) Rights and Duties of Collection Account Bank................................................... 54
(b) Individual Rights of Collection Account Bank................................................... 55
(c) Collection Account Bank's Fees and Expenses.................................................... 55
(d) Indemnity to Collection Account Bank........................................................... 55
(e) Replacement of Collection Account Bank......................................................... 56
(f) Successor Collection Account Bank.............................................................. 56
(g) Waiver of Setoffs.............................................................................. 57
(h) No Petition.................................................................................... 57
(i) Representations and Warranties of the Collection Account Bank.................................. 57
Section 17. Miscellaneous.................................................................................. 58
(a) Set-Off........................................................................................ 58
(b) Amendments, Waivers, etc....................................................................... 58
(c) No Waiver; Remedies Cumulative................................................................. 58
(d) Payment of Expenses, Indemnity, etc............................................................ 58
(e) Severability................................................................................... 60
(f) Entire Agreement............................................................................... 60
(g) Binding Effect................................................................................. 60
(h) GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY................................................... 60
(i) Headings Descriptive........................................................................... 61
(j) Assignments; Participations.................................................................... 61
(k) Notices, Payments, Deliveries.................................................................. 61
(l) Counterparts................................................................................... 62
(m) Termination.................................................................................... 62
(n) Aggregate Amount of Loans; Disbursement of Funds............................................... 62
(o) Lender's Right to Pledge....................................................................... 63
(p) [Reserved]..................................................................................... 63
(q) Further Assurances............................................................................. 63
(r) Remedies Cumulative............................................................................ 63
(s) Litigation..................................................................................... 63
(t) Confidentiality of Information................................................................. 63
iv
(u) Specific Performance...................................................................... 64
(v) Benefits of Agreement..................................................................... 64
(w) Lender Consent to Transactions............................................................ 64
SCHEDULE I............................................................................................ S-I-1
SCHEDULE II - Expected Loss Curve..................................................................... S-II-1
SCHEDULE III - Representations and Warranties as to Securitizations................................... S-III-1
EXHIBIT A - Form of Note.............................................................................. A-1
EXHIBIT B - Form of Confirmation Statement............................................................ B-1
EXHIBIT C - Form of Opinion of Counsel to Borrower.................................................... C-1
EXHIBIT D - Form of Payment Instructions.............................................................. D-1
EXHIBIT E - Location of Collateral.................................................................... E-1
EXHIBIT F - Form of Monthly Collateral Report......................................................... F-1
EXHIBIT G - Form of Borrowing Request................................................................. G-1
EXHIBIT H - Form of Power of Attorney................................................................. H-1
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THIS MASTER RESIDUAL LOAN AGREEMENT is made as of the 29th day of April,
2005 by any among TRIAD FINANCIAL RESIDUAL SPECIAL PURPOSE LLC, a Delaware
limited liability company ("Borrower"), JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, a national banking association (the "Collection Account Bank"), and
CITIGROUP GLOBAL MARKETS REALTY CORP., a New York Corporation ("Lender"). By
executing this Agreement, the parties agree to be bound by the terms of this
Agreement.
WITNESSETH
WHEREAS the parties elect to enter into this Agreement and, at the request
of Borrower, Lender may from time to time, in accordance with the provisions
hereof, make one or more loans (in each instance, a "Loan") to Borrower, which
Loans shall be limited in outstanding principal amount as provided in Section
2(f), said Loans to be evidenced by Borrower's Note (the "Note") of even date
herewith, maturing on the Maturity Date (as defined herein), a form of which is
attached hereto as Exhibit A; and
WHEREAS, in order to induce Lender to make Loans from time to time to it,
Borrower has agreed to assign and pledge to Lender and grant to Lender a lien
upon and a security interest in the Collateral (as defined herein) for the
purpose of securing the Obligations (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and of the covenants and
agreements hereinafter set forth, Borrower and Lender agree as follows:
Section 1. Definitions; Construction.
(a) Definitions. As used herein, the following terms shall have the
meaning herein specified:
"2005-A Securitization" means the Securitization in which Triad Auto
Receivables Trust 2005-A Asset-Backed Notes are to be issued.
"ABS Issuance Agreements" means, for any Pledged ABS, the agreements
pursuant to which such Pledged ABS has been issued, including without limitation
any agreements relating to the payment or distribution of amounts to the holder
of such Pledged ABS.
"Additional Collateral" shall have the meaning set forth in Section 6
hereof.
"Advance Amount" means, with respect to each Loan made under Section 2(f)
and any Pledged ABS that is then pledged to Lender as Collateral hereunder as of
the Borrowing Date of such Loan (including any additional Pledged ABS pledged to
Lender as Collateral on such Borrowing Date), the sum of (a) the product of (i)
the percentage specified in Item 1(a) of Schedule I and (ii) the Market Value
(for the date such Loan is made) of the Residual Interest Collateral (if any)
and (b) the product of (i) the percentage specified in Item 1(b) of Schedule I
or such other percentage as is listed in the related Confirmation Statement and
(ii) the lesser of the Market Value (for the date such Loan is made) and the
stated principal amount of the Subordinated Note Collateral (if any).
"Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, control of a Person
means the power, direct or indirect, (i) to vote 20% or more of the securities
having ordinary voting power for the election of directors of such Person or
(ii) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise; provided that, for the purposes hereof,
each of the Equity Sponsors and its respective affiliates shall be deemed not to
be "Affiliates" of any Triad Entity, and each Triad Entity shall be deemed not
to be an Affiliate of any of the Equity Sponsors or any of their respective
affiliates; provided further that the Equity Sponsors and the Triad Entities
shall be deemed to be "Affiliates" hereunder solely for purposes of Section
9(c)(ii) hereunder.
"Aggregate Maximum Advance Amount" means, as of any date of determination,
an amount equal to (a) $125,000,000 minus (b) an amount equal to the sum of (i)
the aggregate principal amount of loans outstanding, as of such date of
determination, under each Demand Note, (ii) the Total Outstandings as of such
date of determination, (iii) the Total Supplemental Outstandings under the
Warehouse Lending Agreement as of such date of determination, and (iv) the
aggregate of amounts available to be borrowed, as of such date of determination,
under all Demand Notes.
"Agreement" means this Master Residual Loan Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"Applicable LIBOR Rate" means, as of any date of determination, for each
Loan, LIBOR as determined on such date.
"Bankruptcy Code" means the law codified and enacted as Title 11 of the
United States Code, entitled "Bankruptcy" and any successor statute thereto, in
either case, as now or hereafter in effect.
"Bloomberg" means Bloomberg Financial Markets Commodities News or its
successors.
"Board" means the Board of Governors of the Federal Reserve System.
"Borrowing Base" means, with respect to the Loans at any time outstanding
hereunder and any date of determination, (1) the sum of the Current Margin
Amounts for each Pledged ABS as of such date of determination, plus (2) the sum
of (A) the product of (x) the Market Value of any Supplemental Collateral
pledged hereunder as of such date of determination and (y) a percentage to be
determined by Lender, in its sole discretion, on such date of determination and
(B) the product of (x) the Market Value of any Additional Collateral pledged
hereunder as of such date of determination and (y) a percentage to be determined
by Lender, in its sole discretion, on such date of determination.
"Borrowing Date" means with respect to each Loan, the settlement date set
forth in the Confirmation Statement applicable to such Loan.
"Borrowing Request" means a notice in substantially the form of Exhibit G.
"Borrower" shall have the meaning set forth in the preamble hereof.
2
"Business Day" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the State of New York, the State of California or
the State of Delaware shall be authorized or obligated by law, executive order,
or governmental decree to be closed.
"CGMRC" means Citigroup Global Markets Realty Corp. and its permitted
successors or assigns.
"Change of Control" means any event or circumstance as a result of which
(i) TFC no longer owns 100% of the membership interests in Borrower, (ii) TFC no
longer owns 100% of the membership interests in Warehouse Seller, (iii)
Warehouse Seller no longer owns 100% of the Warehouse Borrower Trust
Certificates, (iv) unless TFC has completed an initial public offering of its
capital stock, ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd. and its Affiliates, GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇,
LLC and its Affiliates and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Investor Group no longer collectively
own (A) at least 50% of the capital stock of TFC and (B) at least 50% of the
aggregate voting power of all classes of Voting Stock of TFC, (v) any other
Person and its Affiliates collectively own a greater percentage of either the
capital stock of TFC or the aggregate voting power of all classes of Voting
Stock of TFC than the largest holder of such capital stock or Voting Stock among
(A) ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd. and its Affiliates, (B) GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC and
its Affiliates and (C) ▇▇▇▇▇▇▇ Sachs Investor Group, or (vi) any of TFC,
Borrower, Warehouse Seller or Warehouse Borrower merges or consolidates with, or
sells all or substantially all of its assets to, any other Person. As used in
this definition, "Voting Stock" of any Person shall mean the capital stock or
other indicia of equity rights of such Person which at the time has the power to
vote for the election of one or more members of the Board of Directors (or other
governing body) of such Person.
"Collateral" shall have the meaning ascribed thereto in Section 2(a)
hereof.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 3(b).
"Collection Account Bank" has the meaning specified in Section 3(b). The
initial Collection Account Bank shall be JPMorgan Chase Bank, National
Association.
"Collection Account Bank Indemnified Expenses" shall have the meaning
ascribed thereto in Section 16(d) hereof.
"Collection Account Bank Indemnified Parties" shall have the meaning
ascribed thereto in Section 16(d) hereof.
"Committed Securitization" means the Prior Securitizations, the 2005-A
Securitization and each other Securitization which Lender agrees in writing to
accept as a Committed Securitization hereunder.
"Commitment Fee" means (x) for the period from the date of this Agreement
to the Initial Commitment Termination Date, the Initial Commitment Fee, and (y)
if the commitment hereunder is renewed by Borrower and Lender by written mutual
agreement as provided in Section 2(f)(iv), thereafter, the Renewal Commitment
Fee.
3
"Commitment Termination Date" means (x) for the period from the date of
this Agreement to the Initial Commitment Termination Date, the Initial
Commitment Termination Date, and (y) if the commitment hereunder is renewed by
Borrower and Lender by written mutual agreement as provided in Section 2(f)(iv),
thereafter, the Renewal Commitment Termination Date.
"Commonly Controlled Entity" means, as to any Person, an entity, whether
or not incorporated, which is under common control with such Person within the
meaning of Section 4001 of ERISA or is part of a group which includes such
Person and which is treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended from time to time.
"Confidential Collateral Proposal Report" means a report, item of
correspondence or other statement of information that relates solely to a
prospective purchase or financing of any Collateral, any Warehouse Facility
Collateral, any Other Warehouse Facility Collateral, or any Other Residual
Financing Facility Collateral, which purchase or financing shall have been
proposed by a financial institution other than Lender or the Other Residual
Financing Facility Lender.
"Confirmation Statement" shall have the meaning set forth in Section 4
hereof.
"Contract" shall have the meaning of "Contract" as set forth in Section
1.01 of the Warehouse Lending Agreement.
"Covenant Compliance Certificate" shall refer to a certificate of Borrower
to the effect that there has not been a breach of the covenant listed in Section
9 or Section 10 and that there has not occurred any of the events listed in
Section 11, as of the date of such certificate.
"Cumulative Loss Assumption" means, with respect to a Committed
Securitization, the assumed cumulative net losses, expressed on a rolling
monthly basis, that will occur in such Committed Securitization. The Cumulative
Loss Assumption for any Committed Securitization will be specified in the
related Confirmation Statement.
"Current Margin Amount" means, with respect to any date of determination
and each Pledged ABS that is then pledged to Lender as Collateral hereunder as
of such date of determination, the sum of (a) the product of (i) the percentage
specified in Item 1(a) of Schedule I and (ii) the Market Value (as of such date)
of the Residual Interest Collateral comprising such Pledged ABS (if any) and (b)
the product of (i) the percentage specified in Item 1(b) of Schedule I or such
other percentage as was listed in the related Confirmation Statement for such
Loan and (ii) the lesser of the Market Value (as of such date) and the stated
principal amount of the Subordinated Note Collateral comprising such Pledged ABS
(if any).
"Default" means any condition, act or event which, with notice or lapse of
time or both, would constitute an Event of Default.
"Default Rate" means the rate specified in Section 12(f) hereof.
4
"Demand Note" means any demand note provided by Lender or an Affiliate of
Lender to the issuing trust in any Securitization as part of the collateral
securing such Securitization.
"Dollar" and the sign "$" mean lawful money of the United States of
America.
"Effective Date" means the date that all of the conditions set forth in
Section 7(a) hereof have been met.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution, or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories that signifies investment
grade.
"Eligible Institution" means (a) JPMorgan Chase Bank, National Association
or (b) a depository institution organized under the laws of the United States of
America or any one of the States thereof or the District of Columbia (or any
domestic branch of a foreign bank), which (i) has either (A) a long-term
unsecured debt rating of at least AA by Standard & Poor's and Aa2 by Moody's or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 by
Moody's, or any other long-term, short-term or certificate of deposit rating
acceptable to Lender and (ii) whose deposits are insured by the FDIC.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities, having a maturity date as specified in Section 3(c), represented
by instruments in bearer or registered form which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment by, the United States of America;
(ii) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws of
the United States of America or any state thereof (or any domestic branch
of a foreign bank) and subject to supervision and examination by federal
or state banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a short-term credit rating of A-1+ by S&P and
P-1 from Moody's;
(iii) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from Moody's of P-1 and
a rating of A-1+ from S&P;
(iv) investments in money market funds having a rating from Moody's
in the highest investment category granted thereby and a rating of AAA
from S&P;
5
(v) demand deposits, time deposits and certificates of deposit
that are fully insured by the FDIC;
(vi) bankers' acceptances issued by any depository institution or
trust company referred to in clause (ii) above;
(vii) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii) above; and
(viii) any other investments approved in writing by Lender.
"Equity Sponsors" means each Person comprising the ▇▇▇▇▇▇▇ Sachs Investor
Group, GTCR ▇▇▇▇▇▇ ▇▇▇▇▇▇, LLC and ▇▇▇▇▇▇'▇ ▇▇▇▇/Ford, Ltd.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning set forth in Section 11 hereof.
"Expected Loss Curve" means the curve for the relevant Pledged ABS set
forth in Schedule II hereto.
"FDIC" means the Federal Deposit Insurance Corporation.
"GAAP" shall have the meaning specified in Section 1(b) hereof.
"GSMC" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company and its permitted successors
or assigns.
"▇▇▇▇▇▇▇ Sachs Investor Group" means any or all of GS Capital Partners
2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., GS Capital Partners
2000 Offshore, L.P., ▇▇▇▇▇▇▇ ▇▇▇▇▇ Direct Investment Fund 2000, L.P., GS Capital
Partners 2000 GmbH & Co. BETEILIGUNGS KG and MTGLQ Investors, L.P. and the
Affiliates of each of the foregoing.
"Governmental Authority" means any nation, government, or state, or any
political subdivision of any of them, or any court, entity or agency exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Guarantee" means, as to any Person (the "Guaranteeing person"), any
obligation of the Guaranteeing person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
Guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
6
primary obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee shall not include the endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any guarantee of
any Guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect of
which such Guarantee is made and (b) the maximum amount for which such
Guaranteeing person may be liable pursuant to the terms of the instrument
embodying such Guarantee, unless such primary obligation and the maximum amount
for which such Guaranteeing person may be liable are not stated or determinable,
in which case the amount of such Guarantee shall be such Guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined by the
Guaranteeing person in good faith.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person, whether or not contingent, under repurchase
agreements, sales/buy-back agreements or similar arrangements, to repurchase
property from another Person, (d) all obligations of such Person to pay the
deferred or acquisition price of property or services, other than trade accounts
payable (except for borrowed money) arising in the ordinary course of business,
so long as such trade accounts payable are payable within 90 days of the date
the respective goods are delivered or the respective services are delivered to
such Person, (e) all indebtedness of others secured by (or for which the holder
of such indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the obligations secured thereby have been assumed (only to the extent of the
fair market value of such asset if such indebtedness has not been assumed by
such Person), (f) all Guarantees of such Person, (g) all capitalized lease
obligations of such Person, (h) all obligations of such Person as an account
party in respect of letters of credit and similar instruments issued for the
account of such Person, and (i) any of the foregoing which constitute
obligations or indebtedness of a general partnership or a limited liability
partnership for which such Person is liable as a matter of law or contract.
"Initial Commitment Fee" means the product of (a) the percentage specified
in Item 2 of Schedule I and (b) $125,000,000.
"Initial Commitment Termination Date" means the date which is the 730th
day after the date of this Agreement (or if such date is not a Business Day, the
immediately succeeding Business Day).
"Intercreditor Agreement" means the Intercreditor and Lien Subordination
Agreement between CGMRC and GSMC, dated as of April 29, 2005, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Lender" shall have the meaning set forth in the preamble hereof.
"Lender Loan Document" means any Loan Document other than a document
specified in clause (g) or clause (h) of the definition of "Loan Documents".
7
"LIBOR" means the rate determined by Lender daily (or less frequently as
Lender may in its sole discretion determine) on the basis of the London
Inter-Bank Offered Rate for one-month U.S. dollar deposits, as such rate appears
as "BBAM" "Page ▇▇▇ ▇▇" on Bloomberg as of 8:00 a.m. (New York City time) on
such date (rounded up to the nearest whole multiple of 1/16%); provided that if
such rate does not appear on Bloomberg, the rate for such date will be the rate
determined by reference to such other comparable publicly available service
publishing such rates as may be selected by Lender in its sole discretion and
communicated to Borrower; provided further that if the rate will be applied to a
Loan that provides for payment of interest other than monthly, LIBOR shall have
the meaning specified in the Confirmation Statement applicable to such Loan.
"LIBOR Margin" means with respect to the Loans hereunder and any date of
determination (i) with respect to the portion of the outstanding principal
balance of such Loans as of such date of determination that is less than or
equal to 25% of the Market Value as of such date of determination of the Pledged
ABS that is pledged to Lender hereunder as Collateral on the Borrowing Date of
and with respect to such Loans, the percentage specified in Item 3(a) of
Schedule I, (ii) with respect to the portion of the outstanding principal
balance of such Loans as of such date of determination that is greater than 25%
of the Market Value as of such date of determination of such Pledged ABS that is
pledged to Lender hereunder as Collateral on the Borrowing Date of and with
respect to such Loans and less than or equal to 37.5% of the Market Value as of
such date of determination of such Pledged ABS, the percentage specified in Item
3(b) of Schedule I, and (iii) with respect to the portion of the outstanding
principal balance of such Loans as of such date of determination that is greater
than 37.5% of the Market Value as of such date of determination of such Pledged
ABS that is pledged to Lender hereunder as Collateral on the Borrowing Date of
and with respect to such Loans, the percentage specified in Item 3(c) of
Schedule I; provided, that during the Term Loan Extension Period (if any), the
LIBOR Margin shall be, for all Total Outstandings, the percentage specified in
Item 3(d) of Schedule I.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"Loan" shall have the meaning set forth in the preamble hereof.
"Loan Documents" means (a) this Agreement, (b) the Note, (c) each
Confirmation Statement, (d) the Residual Affiliate Guaranty, (e) the Warehouse
Documents, (f) all other instruments and documents now or hereafter executed
and/or delivered pursuant hereto or thereto or in connection herewith or
therewith, (g) all documents and instruments executed and delivered in
connection with the Other Residual Financing Facility and (h) all documents and
instruments executed and delivered in connection with any warehouse financing
facility that Borrower has with the Other Warehouse Facility Lender.
8
"London Banking Day" means any day on which commercial banks and foreign
exchange markets settle payments and are open for general business (including
dealings in foreign exchange and foreign currency deposits) in London, England.
"Margin Stock" shall have the meaning provided in Regulation U of the
Board of Governors of the Federal Reserve System.
"Market Value" means, as of any date of determination, (i) with respect to
any Pledged ABS, the fair market value of such Pledged ABS (measured to the date
that it is first eligible to be redeemed in connection with an optional purchase
under the related ABS Issuance Agreement) as determined by Lender in its
reasonable judgment in accordance with the Valuation Model; provided, however,
that (x) if the actual losses on the pool of motor vehicle loans backing such
Pledged ABS are equal to or greater than 1.05 times, but less than 1.25 times,
the Expected Loss Curve (as calculated pursuant to the related Confirmation
Statement), then Lender may, in its reasonable discretion, adjust the Market
Value through a modification of the Cumulative Loss Assumption for such Pledged
ABS by pro-rating the Expected Loss Curve to the actual performance of such
Pledged ABS, (y) if the actual losses on the pool of motor vehicle loans backing
such Pledged ABS are 1.25 times or greater than the Expected Loss Curve (as
calculated pursuant to the related Confirmation Statement), then such
determination of Market Value shall be at the reasonable discretion of Lender,
and (z) if the actual losses on the pool of motor vehicle loans backing such
Pledged ABS are less than or equal to 0.95 times the Expected Loss Curve (as
calculated pursuant to the related Confirmation Statement), then Lender will
adjust the Market Value through a modification of the Cumulative Loss Assumption
for such Pledged ABS by pro-rating the Expected Loss Curve to the actual
performance of such Pledged ABS, and (ii) with respect to any Supplemental
Collateral or any Additional Collateral, the fair market value of such
Supplemental Collateral or Additional Collateral, as applicable, on such date of
determination as determined by Lender in its sole discretion. The Pricing
Assumptions used by Lender in determining the fair market value of any Pledged
ABS will be set forth in the related Confirmation Statement. The Market Value of
any Pledged ABS which is cross-collateralized with any other securities shall
initially be $0.
"Master Receivables Purchase Agreement" means the Master Receivables
Purchase Agreement, dated as of April 29, 2005, between the Warehouse Seller and
the Warehouse Borrower, as the same may be amended, modified or supplemented
from time to time in accordance with the terms thereof, relating to the purchase
of the Contracts by the Warehouse Borrower from the Warehouse Seller.
"Master Sale and Contribution Agreement" means the Master Sale and
Contribution Agreement, dated as of April 29, 2005, between the Warehouse Seller
and TFC, as the same may be amended, modified or supplemented from time to time
in accordance with the terms thereof, relating to the purchase of the Contracts
by the Warehouse Seller from TFC.
"Material Adverse Change" means a material adverse change in, or the
disclosure or discovery of any information not previously disclosed to Lender
which Lender deems material and adverse relating to the business, operations,
properties, condition (financial or otherwise) or prospects of Borrower,
Warehouse Seller, Warehouse Borrower or TFC, in each case, individually, or with
its respective Affiliates, taken as a whole.
9
"Material Adverse Effect" means a material adverse effect on (a) the
Pledged ABS or any of the other Collateral, (b) the business, operations,
properties, condition (financial or otherwise) or prospects of Borrower,
Warehouse Seller, Warehouse Borrower or TFC, in each case, individually, or with
its respective Affiliates, taken as a whole, (c) the validity or enforceability
of this or any of the other Loan Documents or the rights or remedies of Lender
hereunder or thereunder or the validity or perfection of any Lien in favor of
Lender granted thereunder, (d) the timely payment of the Obligations, (e) on the
enforceability or collectibility of Lender's first priority security interest in
the Collateral or junior second priority security interest in the Other Residual
Financing Facility Collateral or (f) the ability of Borrower, Warehouse Seller,
Warehouse Borrower or TFC to perform its obligations under any Loan Document to
which it is a party.
"Maturity Date" means, with respect to the Loans, the Commitment
Termination Date; provided that if Borrower extends the maturity of the Loans in
accordance with Section 2(f)(vi) hereof, the "Maturity Date" for such Loan shall
be the Term Loan Maturity Date.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Multiemployer Plan" means a Plan which is a multiemployer plan as defined
in Section 4001(a)(3) of ERISA.
"Net Worth" means, with respect to any Person, the excess of total assets
of such Person, over total liabilities of such Person, determined in accordance
with GAAP.
"Note" shall have the meaning set forth in the recitals hereof.
"Obligations" means (i) the unpaid principal of and premium, if any, and
interest (including without limitation interest accruing at the then applicable
rate provided in this Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in this Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceedings, relating to Borrower whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding) on the
Loans, when and as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (ii) all other obligations and
liabilities of every nature of Borrower from time to time owing to Lender, in
each case whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred (including monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding), to the extent such obligations and liabilities arise under, out of,
or in connection with, this Agreement or any other Loan Document or under any
other document made, delivered or given in connection with any of the foregoing,
in each case whether on account of principal, premium, if any, interest, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees and disbursements of counsel to Lender) that are required to be
paid by Borrower pursuant to the terms of this Agreement or any other Loan
Document, and (iii) the Warehouse Facility Obligations.
10
"Other Lender Deficiency" means an Other Residual Financing Facility
Deficiency or an Other Warehouse Lending Agreement Deficiency.
"Other Residual Financing Facility" means the residual financing facility
established pursuant to that certain Master Residual Loan Agreement, dated as of
April 29, 2005, among Borrower, as borrower, the Collection Account Bank, as
collection account bank, and the Other Residual Financing Facility Lender, as
lender, as amended, supplemented or otherwise modified from time to time.
"Other Residual Financing Facility Collateral" has the meaning ascribed to
the defined term "Collateral" in the Other Residual Financing Facility.
"Other Residual Financing Facility Deficiency" shall occur whenever GSMC
shall have provided notice of a "Residual Financing Facility Deficiency" (as
defined in the Intercreditor Agreement) to Lender pursuant to Section 3.7 of the
Intercreditor Agreement and shall continue until such deficiency is cured.
"Other Residual Financing Facility Lender" means GSMC, as lender under the
Other Residual Financing Facility.
"Other Residual Financing Facility Loan" has the meaning ascribed to the
defined term "Loan" in the Other Residual Financing Facility.
"Other Residual Financing Facility Pledged ABS" has the meaning ascribed
to the defined term "Pledged ABS" in the Other Residual Financing Facility.
"Other Warehouse Documents" has the meaning ascribed to the defined term
"Warehouse Documents" in the Other Residual Financing Facility.
"Other Warehouse Facility" means the warehouse financing facility
established pursuant to Other Warehouse Lending Agreement and the Other
Warehouse Documents.
"Other Warehouse Facility Collateral" has the meaning ascribed to the
defined term "Collateral" in the Other Warehouse Lending Agreement,
"Other Warehouse Facility Lender" means GSMC, as lender under the Other
Warehouse Lending Agreement.
"Other Warehouse Lending Agreement" means the Warehouse Lending Agreement,
dated as of April 29, 2005, among Warehouse Borrower, Warehouse Seller, TFC, the
Collection Account Bank and the Other Warehouse Facility Lender, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Other Warehouse Lending Agreement Deficiency" shall occur whenever GSMC
shall have provided notice of a "Warehouse Lending Agreement Deficiency" (as
defined in the Intercreditor Agreement) to Lender pursuant to Section 3.7 of the
Intercreditor Agreement and shall continue until such deficiency is cured.
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"Other Warehouse Security Agreement" means the Security Agreement between
Warehouse Borrower, as pledgor, and the Other Warehouse Facility Lender, as
pledgee, dated as of April 29, 2005, a copy of which is attached as Exhibit L to
the Other Warehouse Lending Agreement, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with the terms thereof.
"Payment Date" means, with respect to each Loan, (i) the 12th day of each
calendar month, or, if such day is not a Business Day, the immediately following
Business Day, beginning in June 2005, or (ii) such other date (if any) specified
in the related Confirmation Statement.
"Person" means any individual, partnership, firm, corporation,
association, joint venture, trust, limited liability company or other entity of
whatever nature.
"Pension Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) that is subject to Section 412 of the Code or Title IV of
ERISA.
"Plan" means any Person that is (i) an "employee benefit plan" (as defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a "plan" (as defined in Section 4975(e)(1) of the Code) that is subject to
Section 4975 of the Code or (iii) any entity whose underlying assets include
assets of a plan described in (i) or (ii) above by reason of such plan's
investment in the entity.
"Pledged ABS" means, with respect to the Loans at any time outstanding
hereunder and any Committed Securitization, collectively, the related Residual
Interest Collateral (if any) and the related Subordinate Note Collateral (if
any).
"Pledged ABS Servicer's Certificates" means the monthly servicer's
certificates for each Pledged ABS delivered to Lender and the Collection Account
Bank pursuant to Section 9(s).
"Power of Attorney" means a power of attorney in the form of Exhibit H
hereto.
"Pricing Assumptions" means, with respect to any Loan, the pricing
assumptions enumerated in the related Confirmation Statement.
"Prior Securitizations" means, collectively, TF Auto Receivables Owner
Trust 2002-1 Asset-Backed Notes issued on December 17, 2002, Triad Auto
Receivables Trust 2002-A Asset-Backed Notes issued on August 21, 2002, Triad
Auto Receivables Trust 2003-A Asset-Backed Notes issued on March 26 2003, Triad
Auto Receivables Trust 2003-B Asset-Backed Notes issued on October 29, 2003 and
Triad Auto Receivables Trust 2004-A Asset-Backed Notes issued on March 18, 2004.
"Proceeds" shall have the meaning assigned to it under the UCC and, in any
event, shall include, but not be limited to, (i) any and all Proceeds of any
insurance, indemnity, warranty or guarantee payable to Borrower from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Borrower from time to time in
connection with any reacquisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
and any sale, transfer or other
12
disposition of all or any part of the Collateral, and (iv) any and all other
amounts from time to time paid or payable under or in connection with any of the
Collateral.
"Receivables Purchase Agreement Supplement" has the meaning specified in
the Master Receivables Purchase Agreement.
"Regulation U" means Regulation U promulgated by the Board.
"Relevant Report" means any report, correspondence or other statement of
information related to (a) any Collateral, any Warehouse Facility Collateral,
any Other Warehouse Facility Collateral, or any Other Residual Financing
Facility Collateral (other than a Confidential Collateral Proposal Report), (b)
any secured financing facility under which TFC or any Affiliate thereof is a
borrower (including, but not limited to, the Other Residual Financing Facility,
the Other Warehouse Facility and each facility established pursuant to the
Lender Loan Documents), (c) any securitization of motor vehicle loans or retail
installment sale contracts sponsored or contemplated by TFC, (d) any other
actual or contemplated securities issuance by TFC or any Affiliate of TFC, (e)
the origination policies, procedures or operations of TFC, (f) the servicing
policies, procedures or operations of TFC, or (g) any circumstance, event, or
development relating to the business, operations, properties, condition
(financial or otherwise) or prospects of TFC, Borrower, Warehouse Seller or
Warehouse Borrower that constitutes, or is reasonably likely to constitute, a
Material Adverse Change or that has resulted in, or is reasonably likely to
result in, a Material Adverse Effect.
"Remittance Certificate" means a certificate of a Responsible Officer of
Borrower or TFC delivered pursuant to Section 9(t), substantially in the form of
Exhibit I.
"Renewal Commitment Fee" means with respect to the renewal of the
commitment under this Agreement as provided in Section 2(f)(iv) designating a
Renewal Commitment Termination Date (i) under clause (a) of the definition
thereof, the product of (A) the percentage specified in Item 4(a) of Schedule I
and (B) the Aggregate Maximum Advance Amount specified in clause (a) of the
definition thereof, (ii) under clause (b) of the definition thereof, the product
of (A) the percentage specified in Item 4(b) of Schedule I and (B) the Aggregate
Maximum Advance Amount specified in clause (a) of the definition thereof, (iii)
under clause (c) of the definition thereof, the product of (A) the percentage
specified in Item 4(c) of Schedule I and (B) the Aggregate Maximum Advance
Amount specified in clause (a) of the definition thereof, and (iv) under clause
(d) of the definition thereof, the product of (A) the percentage specified in
Item 4(d) of Schedule I and (B) the Aggregate Maximum Advance Amount specified
in clause (a) of the definition thereof.
"Renewal Commitment Termination Date" means if the commitment under this
Agreement is renewed by written mutual agreement of Lender and Borrower, any one
of the following to which Lender and Borrower mutually agree in writing, as
provided in Section 2(f)(iv): (a) the date which is the 365th day after the
Initial Commitment Termination Date (or if such date is not a Business Day, the
immediately succeeding Business Day), (b) the date which the 548th day after
related Initial Commitment Termination Date (or if such date is not a Business
Day, the immediately succeeding Business Day), (c) the date which is the 730th
day after related Initial Commitment Termination Date (or if such date is not a
Business Day, the immediately
13
succeeding Business Day), or (d) the date which is the 913th day after related
Initial Commitment Termination Date (or if such date is not a Business Day, the
immediately succeeding Business Day).
"Requirement of Law" means, as to any Person, any law, statute, rule,
treaty, regulation, or determination of an arbitrator, court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its properties or to which any such Person or any of its properties
may be bound or affected.
"Residual Affiliate Guaranty" means the Guaranty, dated as of April 29,
2005, by TFC, as the guarantor, in favor of Lender, with respect to this
Agreement.
"Residual Interest Collateral" means any residual or interest-only strip
class of asset backed securities that are (i) issued in connection with a
Committed Securitization and (ii) pledged by Borrower hereunder and accepted by
Lender in connection with the Loans hereunder.
"Residual Interests Purchase and Sale Agreement" means the Residual
Interests Purchase and Sale Agreement, dated as of April 29, 2005, relating to
the Pledged ABS, among TFC, Triad Financial Special Purpose LLC and Borrower, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Responsible Officer" means any of the president, chief executive officer,
chief financial officer, any executive vice president, treasurer, controller or
secretary of Borrower or TFC.
"Sale and Contribution Agreement Supplement" has the meaning specified in
the Master Sale and Contribution Agreement.
"Securitization" means a securitization involving Borrower or an Affiliate
of Borrower.
"Securitization LLC" means Triad Financial Special Purpose, LLC, a
Delaware limited liability company.
"Security Agreement" has the meaning ascribed to such term in the
Warehouse Lending Agreement.
"Servicing Agreement" has the meaning ascribed to such term in the
Warehouse Lending Agreement.
"Standard & Poor's" or "S&P" means Standard & Poor's Ratings Service, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, or its successor.
"Subordinated Notes" means (i) with respect to any Prior Securitization,
any subordinated class of asset backed securities issued in connection with such
Prior Securitization that is designated as a "Class B" Note, and (ii) with
respect to any other Committed Securitization, any subordinated class of
asset-backed securities issued in connection with such Committed Securitization
(not including any residual interests or other class of securities without a
principal balance) which, as determined by Lender in its reasonable discretion,
has structural
14
characteristics that are substantially similar to those of the Class B Notes
issued in a Prior Securitization.
"Subordinated Note Collateral" means any class of Subordinated Note (i)
issued in connection with a Committed Securitization and (ii) pledged by
Borrower hereunder and accepted by Lender in connection with the Loans
hereunder, other than any Residual Interest Collateral.
"Subsidiary" means, as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Supplemental Collateral" means any security issued in connection with an
asset-backed securitization originated by TFC or any of its Subsidiaries
acceptable to Lender in accordance with the provisions of Section 5 hereof.
"Term Loan Commitment Fee" means a fee in an amount equal to the product
of (x) the percentage specified in Item 5 of Schedule I and (y) the Total
Outstandings on the Commitment Termination Date.
"Term Loan Extension Period" means the period commencing with the
Commitment Termination Date and ending on the Term Loan Maturity Date.
"Term Loan Maturity Date" means the date that is 180 days following the
Commitment Termination Date.
"TFC" means Triad Financial Corporation, a California corporation.
"Total Outstandings" means, with respect to any date of determination, the
unpaid principal amount of all Loans outstanding hereunder as of such date of
determination.
"Total Supplemental Outstandings" has the meaning ascribed to such term in
the Warehouse Lending Agreement.
"Triad Entities" means each of Triad Holdings L.L.C. and its subsidiaries.
"UCC" means the Uniform Commercial Code in effect from time to time in the
applicable jurisdiction.
"Unsecured TFC Noteholder" means a holder of Triad Financial Corporation
11.125% Senior Notes due 2013 or a holder of any other unsecured corporate debt
of TFC or any Affiliate of TFC.
"Valuation Model" means a computer program utilized by Lender to establish
the fair market value of the Pledged ABS from each Committed Securitization,
based upon the
15
applicable Pricing Assumptions and Expected Loss Curve. Lender and Borrower
acknowledge that Lender delivered a sample of such a computer program to
Borrower prior to the date of this Agreement; provided that Lender and Borrower
further acknowledge that such delivery of such sample shall in no way constrain
or otherwise affect Lender's right to modify any such computer program in
Lender's reasonable discretion in accordance with the terms of this Agreement.
"Warehouse Affiliate Guaranty" has the meaning ascribed to such term in
the Warehouse Lending Agreement.
"Warehouse Borrower" means Triad Automobile Receivables Warehouse Trust, a
Delaware statutory trust, as borrower under the Warehouse Lending Agreement and
the Other Warehouse Lending Agreement.
"Warehouse Borrower Trust Certificates" has the meaning ascribed to the
defined term "Borrower Trust Certificates" in the Warehouse Lending Agreement.
"Warehouse Documents" means the Warehouse Lending Agreement, each
promissory note delivered in connection with the Warehouse Lending Agreement,
the Security Agreement, the Master Sale and Contribution Agreement (and each
Sale and Contribution Agreement Supplement related thereto), the Master
Receivables Purchase Agreement (and each Receivables Purchase Agreement
Supplement related thereto), the Servicing Agreement, the Interest Rate Hedging
Agreement (and each confirmation relating thereto), the Warehouse Affiliate
Guaranty and all other documents and instruments executed and delivered in
connection with the Warehouse Lending Agreement or therewith.
"Warehouse Facility" means the warehouse financing facility established
pursuant to Warehouse Lending Agreement and the other Warehouse Documents.
"Warehouse Facility Collateral" has the meaning ascribed to the defined
term "Collateral" in the Warehouse Lending Agreement.
"Warehouse Facility Obligations" means all obligations and liabilities of
every nature of the Warehouse Borrower from time to time owing to Lender, in
each case whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred (including monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding), to the extent such obligations and liabilities arise under, out of,
or in connection with, any Warehouse Document or any other document made,
delivered or given in connection with any of the foregoing, in each case whether
on account of principal, premium, if any, interest, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to lender).
"Warehouse Lending Agreement" means the Warehouse Lending Agreement, dated
as of April 29, 2005, among Warehouse Borrower, Warehouse Seller, TFC, the
Collection Account Bank and Lender, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
16
"Warehouse Lending Agreement Deficiency" means, with respect to any
remittance date under the Warehouse Lending Agreement, an amount equal to the
excess of (x) all amounts payable on such remittance date under the Warehouse
Lending Agreement over (y) the amount on deposit in the collection account for
the Warehouse Lending Agreement, immediately prior to such remittance date.
"Warehouse Seller" means Triad Financial Warehouse Special Purpose LLC, a
Delaware limited liability company, its successors and assigns.
(b) Other Definitional Terms. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, schedule, exhibit and like references are to
this Agreement unless otherwise specified. Any defined term which relates to a
document shall include within its definition any amendments, modifications,
renewals, restatements, extensions, supplements or substitutions which may have
been heretofore or may be hereafter executed in accordance with the terms
hereof.
Section 2 Grant of Security Interest; Delivery of Collateral; Remittances
on Pledged ABS; Funding of Loans.
(a) Grant of Security Interest. Borrower hereby pledges, assigns and
transfers to Lender, and grants to Lender a Lien upon and continuing security
interest in all of Borrower's right, title and interest in, to and under all of
the following whether now owned or existing, or at any time hereafter acquired
or arising, by Borrower or in which Borrower now has or at any time in the
future may acquire any right, title or interest (all of which being hereinafter
collectively called the "Collateral"): (i) all Pledged ABS, (ii) all rights of
Borrower under the Residual Interests Purchase and Sale Agreement (but none of
Borrower's obligations under the Residual Interests Purchase and Sale
Agreement), (iii) all Supplemental Collateral, (iv) all Additional Collateral,
(v) all books, records and documents in respect of any of the foregoing and (vi)
all Proceeds, distributions and other amounts realized in respect of any of the
foregoing. The security interest created hereby in the Collateral constitutes
continuing collateral security for all Obligations whether now existing or
hereafter incurred.
(b) Delivery of Collateral. On or prior to the date of pledge thereof,
Borrower shall physically deliver to Lender in a manner acceptable to Lender (in
its reasonable discretion) all security certificates and instruments evidencing
each Pledged ABS, in each case registered in the name of Lender. For any Pledged
ABS that is uncertificated, Borrower shall cause the issuer of such Pledged ABS
to register Lender as the registered owner of such Pledged ABS on books of the
issuer. Borrower shall deliver to Lender all Supplemental Collateral and
Additional Collateral as directed by Lender in order to give Lender sole
"control" (as such term is used in Articles 8 and 9 of the UCC) thereof, or as
otherwise agreed to by Lender in its sole discretion.
(c) Grant of Subordinated Security Interest in Other Residual Financing
Facility Collateral. Subject to the Other Residual Financing Facility Lender's
first priority and senior security interest and Lien in the Other Residual
Financing Facility Collateral, Borrower hereby pledges, assigns and transfers to
Lender, and grants to Lender a second priority subordinate Lien upon and
continuing second priority subordinate security interest in all of Borrower's
right, title
17
and interest in, to and under the Other Residual Financing Facility Collateral
whether now owned or existing, or at any time hereafter acquired or arising. The
security interest created hereby in the Other Residual Financing Facility
Collateral constitutes continuing collateral security for all Obligations
whether now existing or hereafter incurred. Lender hereby acknowledges its
security interest and Lien in the Other Residual Financing Facility Collateral
shall be, in all respects, subject to and subordinate and junior to the first
priority senior security interest and Lien of the Other Residual Financing
Facility Lender in the Other Residual Financing Facility Collateral. For the
avoidance of doubt, the grant of a security interest in the Other Residual
Financing Facility Collateral pursuant to this Section 2(c) is in addition to
the grant of a security interest in the Collateral pursuant to Section 2(a) of
this Agreement.
(d) Lender's Duty of Care. Lender's sole duty with respect to the
Collateral shall be to use reasonable care in the custody of the Collateral in
its possession or control. Lender shall incur no liability to Borrower for any
act of government, act of God, or other destruction in whole or in part or
negligence or wrongful act of custodians or agents selected by and supervised by
Lender with reasonable care, or Lender's failure to provide adequate protection
or insurance for the Collateral. Borrower hereby waives the defense of
impairment of the Collateral. Borrower agrees that all remittances from the
Collateral shall be applied as provided in Section 12(e) and Section 13(b) of
this Agreement, as applicable, and Borrower hereby approves such application of
remittances and agrees such application is reasonable in all respects. Neither
Lender nor any of its respective directors, officers, employees, Affiliates or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
Borrower or any other Person. The Other Residual Interest Collateral shall be
held and controlled by the Other Residual Financing Facility Lender.
(e) Remittances on Collateral. Borrower shall, with respect to each
Loan, no later than two (2) Business Days prior to the related Borrowing Date,
irrevocably instruct, in the case of any Pledged ABS, the paying agent under the
related ABS Issuance Agreements, pursuant to an instruction substantially in the
form of Exhibit D hereto (with a copy to Lender), providing for, among other
things, all payments payable in respect of the related Pledged ABS to be paid
directly to the Collection Account for the benefit of Lender. Prior to the
pledge by Borrower under this Agreement of any Supplemental Collateral or
Additional Collateral, Borrower shall irrevocably instruct in writing the paying
agent or other Person(s) making distributions thereon (if any), to make all
payments payable in respect of such Supplemental Collateral or Additional
Collateral, as the case may be, directly to the Collection Account for the
benefit of Lender. On each date on which any payment in respect of any Pledged
ABS or any other Collateral is received in the Collection Account in accordance
with this Section 2(e), Collection Account Bank shall inform Lender of such
receipt and shall request from Lender instructions as to the application of such
amounts pursuant to Section 13(b), Section 13(c) or Section 12(e), as
applicable.
(f) Funding of Loans.
(i) Loans. Subject to the terms and conditions of this Agreement,
including without limitation the satisfaction of the conditions for each
Loan specified in Section 7(b), Lender shall make Loans hereunder related
to each Committed Securitization in
18
accordance with the provisions hereof and the related Confirmation
Statement on or prior to the Commitment Termination Date, and any Loan
hereunder shall be made by Lender upon written request in the form of a
Borrowing Request delivered by Borrower to Lender no later than 2:00 P.M.
(New York City time) on the Business Days prior to the Borrowing Date
proposed in such Borrowing Request; provided, that (A) there shall be no
more than one Borrowing Date per week during each calendar month and in no
event shall there be more than four (4) Borrowing Dates in any calendar
month and (B) no Loan shall be made to the extent that the principal
amount of such Loan, together with the aggregate principal amount of all
other Loans outstanding as of the related Closing Date, would exceed (I)
the Aggregate Maximum Advance Amount or (II) the Borrowing Base.
(ii) Loan Advances. In accordance with the related Confirmation
Statement and subject to clause (i) above, Lender shall advance a Loan to
Borrower in a principal amount up to the applicable Advance Amount. Each
Loan advance hereunder shall be recorded as such by Lender and be
evidenced by the "Loan Schedule" attached to the Note, and any repayments
of each such Loan shall be recorded as such by Lender and be evidenced by
such "Loan Schedule"; provided, however, that the failure of such
recordation by Lender shall not affect the rights of the parties hereunder
with respect to such Loan.
(iii) Interest Rate. Loans shall bear interest on the outstanding
principal amount thereof, for each day from and including the Borrowing
Date for such Loans to but excluding the date the principal amount thereof
shall be paid in full, at a rate per annum equal to the Applicable LIBOR
Rate for such day, plus the LIBOR Margin (computed on the basis of the
actual number of days elapsed in a year of 360 days).
(iv) Initial Commitment Termination Date; Renewals. The initial
commitment to make Loans in respect of the Committed Securitizations as
provided in clauses (i) and (ii) above shall expire on the Initial
Commitment Termination Date. The commitment to make Loans as provided in
clauses (i) and (ii) above may be renewed by (x) mutual written agreement
between Borrower and Lender designating the Renewal Commitment Termination
Date and (y) payment of the related Renewal Commitment Fee by Borrower to
Lender on or prior to the Initial Commitment Termination Date.
(v) Maturity Date. Subject to Section 2(f)(vi) below, all Loans
shall be required to be repaid in full on the Commitment Termination Date.
(vi) Extension of Maturity Date to Term Loan Maturity Date. If
Borrower pays Lender the Term Loan Commitment Fee no later than the
Commitment Termination Date, Borrower shall pay to Lender the Total
Outstandings in full no later than the Term Loan Maturity Date; provided
that, if Borrower shall not have paid such Term Loan Commitment Fee by the
Commitment Termination Date, the Total Outstandings shall be due and
payable in full on the Commitment Termination Date; provided further that
no Loans shall be made hereunder during the Term Loan Extension Period (if
any).
(g) Requirements of Law.
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(i) If any Requirement of Law or any change in the interpretation
or application thereof or compliance by Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority made subsequent to the date hereof,
a. shall subject Lender to any tax of any kind whatsoever
with respect to this Agreement, the Note or any Loan
made by it (excluding net income taxes) or change the
basis of taxation of payments to Lender in respect
thereof;
b. shall subject Lender to any tax of any kind whatsoever
with respect to this Agreement, the Note or any Loan
made by it (excluding net income taxes) or change the
basis of taxation of advances, loans or other extensions
of credit by, or any other acquisition of funds by, any
office of Lender which is not otherwise included in the
determination of the Applicable LIBOR rate hereunder; or
c. shall impose on Lender any other condition;
and the result of any of the foregoing is to increase the cost to Lender,
by an amount which Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, Borrower shall promptly pay
Lender such additional amount or amounts as will compensate Lender on an
after-tax basis for such increased cost or reduced amount receivable
(ii) If Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by Lender or any
corporation controlling Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the date hereof shall have the
effect of reducing the rate of return on Lender's or such corporation's
capital as a consequence of its obligations hereunder to a level below
that which Lender or such corporation (taking into consideration Lender's
or such corporation's policies with respect to capital adequacy) by an
amount deemed by Lender to be material, then from time to time, Borrower
shall promptly pay to Lender such additional amount or amounts as will
compensate Lender on an after-tax basis for such reduction.
(iii) If Lender becomes entitled to claim any additional amounts
pursuant to this Section, it shall promptly notify Borrower of the event
by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this Section submitted by Lender to
Borrower shall be conclusive in the absence of manifest error
(h) Indemnity. Borrower agrees to indemnify Lender and to hold it
harmless from any cost, loss or expense which Lender may sustain or incur as a
consequence of (a) Borrower making any payment or prepayment of principal of any
Loan on a day which is not a Business
20
Day, (b) any failure by Borrower to make a Borrowing hereunder after notice of
such Borrowing has been given pursuant to this Agreement, (c) any default by
Borrower in making any payment of the Total Outstandings on the due date
therefor, or (d) any acceleration of the maturity of any Loans by Lender in
accordance with the terms of this Agreement, including, but not limited to, any
cost, loss or expense arising in liquidating the Loans and from interest or fees
payable by Lender to lenders of funds obtained by it in order to maintain the
Loans hereunder. In the event Borrower is required to make any payment pursuant
to this Section 2(h), Lender shall provide to Borrower in writing the basis upon
which such charges were calculated in reasonable detail, which calculation shall
be conclusive in the absence of manifest error by Lender. Indemnification
pursuant to this Section shall survive the termination of this Agreement and
shall include reasonable fees and expenses of counsel and expenses of
litigation.
(i) Illegality; Substituted Interest Rates. Notwithstanding any other
provisions herein, (a) if any Requirement of Law or any change therein or in the
interpretation or application thereof shall make it unlawful for Lender to make
or maintain any Loans at LIBOR as contemplated by this Agreement, or (b) in the
event that Lender shall have determined (which determination shall be conclusive
and binding upon Borrower) that by reason of circumstances affecting the LIBOR
interbank market neither adequate nor reasonable means exist for ascertaining
LIBOR, or (c) Lender shall have determined (which determination shall be
conclusive and binding on Borrower) that the Applicable LIBOR rate will not
adequately and fairly reflect the cost to Lender of maintaining or funding the
Loans based on such Applicable LIBOR rate (provided that the parties hereto
acknowledge and agree that Lender shall only make such determination if the
published LIBOR rate used by Lender does not accurately reflect the actual LIBOR
rate), (x) the obligation of Lender to make or maintain Loans at the LIBOR rate
shall forthwith be suspended and Lender shall promptly notify Borrower thereof
(by telephone confirmed in writing) and (y) each Loan then outstanding, if any,
shall, from and including the date that is forty-five (45) days after Borrower's
receipt of notice from Lender of the occurrence of any condition set forth in
clauses (a) , (b) or (c), or at such earlier date as may be required by law,
until payment in full thereof, bear interest at the rate per annum equal to the
greater of the Prime Rate and the rate of interest (including the LIBOR Margin)
in effect on the date immediately preceding the date any event described in
clause (a), (b) or (c) occurred (calculated on the basis of the actual number of
days elapsed in a year of 360 days). If subsequent to such suspension of the
obligation of Lender to make or maintain the Loans at the LIBOR rate it becomes
lawful for Lender to make or maintain the Loans at the LIBOR rate, or the
circumstances described in clause (b) or (c) above no longer exist, Lender shall
so notify Borrower and its obligation to do so shall be reinstated effective as
of the date it becomes lawful for Lender to make or maintain the Loans at the
LIBOR rate or the circumstances described in clause (b) or (c) above no longer
exist.
(j) Taxes. All payments made to Lender under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes, gross receipt taxes and franchise taxes (imposed in lieu of net
income taxes) imposed on Lender as a result of a present or former connection
between Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such connection arising solely
21
from Lender having executed, delivered or performed its obligations or received
a payment under, or enforced, this Agreement). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be imposed on Lender hereunder, Borrower
shall pay such taxes by having the amounts so payable to Lender increased to the
extent necessary to yield to Lender (after payment of all Non-Excluded Taxes)
interest or any such other amounts payable hereunder at the rates or in the
amounts specified in this Agreement. Whenever any amounts payable to Lender are
increased pursuant to this Section 2(j) in respect of any Non-Excluded Taxes
that are payable by Borrower, promptly as possible thereafter Borrower shall
send to Lender a certified copy of an original official receipt received by
Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to Lender
the required receipts or other required documentary evidence, Borrower shall
indemnify Lender for any incremental taxes, interest or penalties that may
become due by Servicer as a result of any such failure.
(k) Notices of Current Margin Amount and Market Value. Promptly
following Lender's receipt from Borrower of the Pledged ABS Servicer's
Certificates for each Pledged ABS pursuant to Section 9(s), Lender shall provide
Borrower with notice of Lender's most recent determination of (i) the Market
Value of each Pledged ABS, (ii) the Market Value of any Supplemental Collateral,
and (iii) the Market Value of any Additional Collateral.
Section 3. Earnings on Collateral; Collection Account.
(a) All payments and distributions, whether in cash or in kind, made on
or with respect to the Collateral shall be paid to the Collection Account Bank,
for the benefit of Lender, directly by the applicable paying agent, and Lender
shall apply such payments and distributions in accordance with Section 12(e),
Section 13(b) and Section 13(c) hereof, as applicable. All payments and
distributions, whether in cash or in kind, made on or with respect to the Other
Residual Financing Collateral shall be paid to the collection account bank under
the Other Residual Financing Facility, for the benefit of the Other Residual
Financing Facility Lender, directly by the applicable paying agent, and the
Other Residual Financing Facility Lender shall apply such payments and
distributions in accordance with the Other Residual Financing Facility and the
Intercreditor Agreement.
(b) Lender, for its own benefit, shall establish and maintain at
JPMorgan Chase Bank, National Association, or such other financial institution
as determined by Lender with the prior written consent of Borrower, such consent
not to be unreasonably withheld (the "Collection Account Bank"), in the name of
Lender an Eligible Deposit Account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of Lender. Lender hereby revocably authorizes the Collection Account
Bank to make the payments and distributions from the Collection Account required
under this Agreement as instructed time to time by Lender. Lender may, in its
sole discretion, revoke at any time such authority and appoint a successor
entity (and successors thereto from time to time) to make such payments and
distributions.
(c) Funds on deposit in the Collection Account shall be invested by the
Collection Account Bank in Eligible Investments selected in writing by Borrower
(pursuant to standing instructions or otherwise) ; provided that, in the absence
of such a direction, amounts on deposit
22
in the Collection Account shall remain uninvested. All such Eligible Investments
shall be held by the Collection Account Bank for the benefit of Lender in a
manner sufficient to provide Lender a perfected first priority security interest
in such Eligible Investments pursuant to documentation reasonably acceptable to
Lender. On the Business Day immediately preceding each Payment Date, all
interest and other investment income (net of losses and investment expenses) on
funds on deposit in the Collection Account shall be deposited into the
Collection Account and shall constitute amounts available for such Payment Date.
Other than as instructed in writing by Borrower, funds on deposit in the
Collection Account shall be invested in Eligible Investments that will mature
(i) not later than the Business Day immediately preceding the next Payment Date
or (ii) on such next Payment Date if such investment is held in the trust
department of the Collection Account Bank and is invested in a time deposit of
the Collection Account Bank rated at least A-1 by Standard & Poor's and P-1 by
▇▇▇▇▇'▇ (such accounts being maintained initially at JPMorgan Chase Bank,
National Association). Funds deposited in the Collection Account on a day which
immediately precedes a Payment Date upon the maturity of any Eligible
Investments are not required to be invested overnight. Upon Lender's inquiry to
Borrower or the Collection Account Bank, Borrower or the Collection Account
Bank, the case may be, shall inform of Lender of all Eligible Investments in
which amounts on deposit in the Collection Account are then invested. The
Collection Account Bank shall not be liable for the amount of any loss incurred
in respect of any investment or lack of investment of funds held in the
Collection Account made in accordance with this Section 3(c), except for losses
attributable to the Collection Account Bank's failure to make payments on such
Eligible Investments issued by the Collection Account Bank, in its commercial
capacity as principal obligor and not as Collection Account Bank, in accordance
with their terms.
Section 4. Confirmation Statement.
Lender shall, with respect to each Loan, deliver a completed confirmation
statement substantially in form and substance attached hereto as Exhibit B (in
each case, the "Confirmation Statement") to Borrower confirming the agreement
between Borrower and Lender as to the specific terms of the applicable Loan.
Each such Confirmation Statement shall, when duly executed and delivered by
Borrower, constitute a binding agreement between Borrower and Lender, and this
Agreement is hereby incorporated in its entirety into each such Confirmation
Statement and made a part thereof as if it were set out in full in each such
Confirmation Statement. In case of any inconsistency between any provisions of a
Confirmation Statement and any provisions of this Agreement, the provisions of
such Confirmation Statement shall control.
Section 5. Margin Determinations and Supplemental Collateral. If Lender
shall at any time reasonably determine, in accordance with the applicable
Pricing Assumptions and the Valuation Model, that the aggregate unpaid principal
amount of all Loans is greater than the Borrowing Base, Lender may in its
discretion notify Borrower of such fact, and Borrower shall, on the Business Day
next succeeding the day of such notice, deliver to Lender cash and/or
Supplemental Collateral acceptable to Lender in its sole discretion as
Collateral hereunder, which cash shall be applied to reduce the principal
balance of the Loans and which Supplemental Collateral shall, in the aggregate,
have a Market Value such that, after giving effect to the application of such
cash and the delivery of such Supplemental Collateral, the unpaid principal
amount of the Loans will be equal to or less than the Borrowing Base. Delivery
of Supplemental
23
Collateral pursuant to this Section 5 shall be in such manner as is acceptable
to, and under such additional conditions as may be required by, Lender in its
reasonable discretion.
Section 6. Release and Addition of Collateral.
(a) So long as (i) no Default or Event of Default has occurred and is
continuing and (ii) no deficiency in the Borrowing Base would occur as a result,
Borrower may obtain the release from Lender of the security interest in and Lien
on all or any part of the Collateral at any time, and from time to time, by
paying to Lender as a repayment the amount outstanding, including any principal,
interest or other amounts owed hereunder, with respect to the Loan in connection
with which such Collateral so to be released was pledged hereunder, and Lender
shall effect such release upon such repayment. Any release of the security
interest in and Lien on all or any part of the Collateral as a result of a
repayment pursuant to this Section shall be evidenced by the prompt execution
and delivery by Lender of appropriate documentation to evidence such release.
Unless a Default, an Event of Default or a default or event of default
under the Warehouse Lending Agreement shall have occurred and be continuing, in
the event Other Residual Financing Facility Lender has released its security
interest in and Lien on any part of the Other Residual Financing Facility
Collateral pursuant to Section 6(a) of the master residual loan agreement
relating to the Other Residual Financing Facility, Lender shall release its
second priority subordinate security interest in such part of the Other Residual
Facility Financing Collateral without delivering any instrument or performance
of any act of any party.
Notwithstanding the two preceding paragraphs, if any payment (or any part
of any payment) of any of the Obligations is rescinded or must otherwise be
restored or returned by Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Borrower or any other Person, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or a
trustee or similar officer for, Borrower or any other Person or any substantial
part of its property, or otherwise, this Agreement, all rights hereunder and the
Liens created hereby shall continue to be effective, or be reinstated, as though
such payments had not been made.
(b) Borrower may from time to time pledge additional collateral
("Additional Collateral"); provided that such Additional Collateral is
acceptable to Lender, in Lender's sole discretion. All security certificates or
instruments representing such Additional Collateral shall be accompanied by duly
executed instruments of transfer or assignments in blank, all in form and
substance satisfactory to Lender, in Lender's reasonable discretion.
Section 7. Conditions To The Loans.
(a) Conditions to the Effective Date. The effectiveness of the
obligations of Lender under this Agreement is subject to fulfillment of the
following conditions on or before the Effective Date:
(i) Receipt of Documents. Receipt by Lender of the following
documents, each dated as of the Effective Date, where applicable, in form
and substance reasonably satisfactory to Lender and its counsel:
24
a. this Agreement, executed and delivered on behalf of
Borrower,
b. the Note, executed and delivered on behalf of Borrower
by a duly authorized officer of Borrower,
c. the Residual Affiliate Guaranty, executed and delivered
on behalf of TFC;
d. the Intercreditor Agreement, executed and delivered on
behalf of Lender and Other Financing Facility Lender,
e. the security certificates evidencing the related
Collateral and other instruments and documents required
to be delivered under Section 2(b) of this Agreement for
the Borrowing Date that corresponds with the Effective
Date,
f. UCC-1 financing statements delivered by (1) Borrower
naming Borrower as "debtor" and Lender as "secured
party", with evidence of filing in all jurisdictions as
may be necessary in the reasonable opinion of Lender, to
perfect the security interest in the Collateral and (2)
Borrower naming Borrower as "debtor" and Lender as
"secured party," with evidence of filing in all
jurisdictions as may be necessary in the reasonable
opinion of Lender, to perfect the security interest in
the Other Residual Financing Facility Collateral,
g. evidence that all other actions necessary to perfect the
security interests contemplated under this Agreement
have been taken,
h. a copy of the resolution of Borrower authorizing (1) the
execution, delivery and performance of the Loan
Documents by Borrower, (2) the borrowings contemplated
hereunder and (3) the granting of the security interest
contemplated under this Agreement, certified by the
Secretary or an Assistant Secretary of Borrower as of
the Effective Date, which certificate shall state that
the resolutions thereby certified have not been amended,
modified, revoked or rescinded as of the date of such
certificate,
i. certificate of the Secretary or an Assistant Secretary
of Borrower certifying the names and the signatures of
the officers of Borrower authorized to sign the Loan
Documents to be delivered hereunder,
j. (1) copy of the certificate of formation of Borrower
certified under recent date by the Secretary of State of
Delaware and (2) copy of the limited liability company
operating agreement of Borrower and each amendment
thereto, certified by the Secretary or an Assistant
Secretary of Borrower as being true, complete and
correct as of the Borrowing Date,
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k. copies of certificates (long form) or other evidence
from the Secretary of State or other appropriate
authority of the State of Delaware and of each
jurisdiction where Borrower is qualified to do business,
evidencing the good standing of Borrower in the State of
Delaware and such other jurisdictions, in each case,
dated no earlier than 30 days prior to the Effective
Date,
l. an opinion of counsel to Borrower (which counsel may be
internal counsel for Borrower and shall be reasonably
satisfactory to Lender), in substantially the form
attached hereto as Exhibit C or such other form as
Lender and Borrower may mutually agree,
m. one or more legal opinions of external counsel to
Borrower, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, addressing: (1) the
true-sale of the Pledged ABS and the other Collateral
from Triad Financial Special Purpose LLC to Borrower;
(2) substantive consolidation of Triad Financial Special
Purpose LLC and Borrower; (3) substantive consolidation
of TFC and Borrower; and (4) the creation, perfection
and priority of Lender's first priority security
interest in the Collateral and Lender's second priority
security interest in the Other Residual Facility
Collateral, in each case in form and substance
reasonably satisfactory to Lender and its counsel,
n. copies of any commitment or agreement between Borrower
and any lender or other financial institution, other
than any such commitment or agreement (or portion
thereof) which Lender specifically agrees are not
required to be delivered hereunder, and
o. such other opinions, documents and instruments as Lender
or its counsel shall reasonably request.
(ii) Representation and Warranties. Each of the representations and
warranties made by or on behalf of Borrower herein or in any other Loan
Document to which Borrower is a party shall be true and correct on and as
of the Effective Date.
(iii) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing on and as of the Effective Date.
(iv) Commitment Fee. On the Effective Date, Borrower shall have
paid the Initial Commitment Fee to Lender.
(v) Expenses of Lender. On the Effective Date, Borrower shall have
paid all fees and expenses incurred by Lender in connection herewith as to
which Lender shall have advised Borrower at least five (5) Business Days
prior to the Effective Date.
(vi) [Reserved].
26
(vii) Other Residual Financing Facility. All documents necessary to
the establishment of the Other Residual Financing Facility shall have been
duly executed and delivered by all parties thereto and be in full force
and effect, and each other action necessary to the establishment of such
facility shall have been completed, and all conditions precedent to the
effectiveness of the obligations thereunder shall have been satisfied.
(viii) Warehouse Facility; Other Warehouse Facility. All documents
necessary to the establishment of the Warehouse Facility and the Other
Warehouse Facility shall have been duly executed and delivered by all
parties thereto and be in full force and effect, and each other action
necessary to the establishment of such facility shall have been completed,
and all conditions precedent to the effectiveness of the obligations
thereunder shall have been satisfied.
(ix) Conditions Precedent to Purchase and Sale of TFC.
a. Each condition precedent to the sale of TFC by Fairlane
Credit LLC to Triad Acquisition Corp. shall have been
satisfied.
b. Lender shall have received a copy of the final,
fully-executed version of the purchase and sale
agreement and each other agreement related to such sale.
c. The sale of TFC by Fairlane Credit LLC to Triad
Acquisition Corp. shall occur simultaneously with the
consummation of the transactions contemplated hereunder
on the initial Borrowing Date, and all other
transactions in connection with the consummation of such
acquisition shall be completed, prior to, or
simultaneously on such Borrowing Date.
(b) Conditions Precedent to All Loans. Lender's obligation to make any
Loan hereunder is subject to the following conditions precedent, and the
acceptance of the proceeds of any Loan by Borrower shall be deemed certification
by Borrower that the following conditions shall have been met:
(i) Representations and Warranties. Each of the representations
and warranties made by or on behalf of Borrower herein or in any other
Loan Document to which Borrower is a party, shall be true and correct in
all respects on and as of the Borrowing Date, before and after giving
effect to the Loan to be made on such date and the application of the
proceeds therefrom, as though made on and as of such date.
(ii) No Default or Event of Default. After giving effect to such
Loan and the application of proceeds therefrom, no Default or Event of
Default shall have occurred and be continuing on and as of such Borrowing
Date.
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(iii) Deliveries. Lender shall have received a Confirmation
Statement in compliance with Section 4 hereof.
(iv) Borrowing Base. The Total Outstandings shall not exceed the
Borrowing Base (after giving effect to such Loan and the Collateral being
pledged on such date).
(v) No Material Adverse Change or Material Adverse Effect. There
shall not have occurred one or more events that constitutes, or is
reasonably likely to constitute, a Material Adverse Change or that results
in, or is reasonably likely to result in, a Material Adverse Effect.
(vi) Filings, Registrations, Recordings. All documents (including,
without limitation, financing statements) required to be filed, registered
or recorded in order to perfect the Lender's, first priority security
interest in the Collateral and in order to perfect Lender's second
priority security interest in the Other Residual Financing Facility
Collateral, in each case subject to no Liens other than those created
under this Agreement or any other Loan Document, shall have been properly
prepared (and if required, executed) for filing, registration or recording
in each office in each jurisdiction in which such filings, registrations
and recordations are required to perfect such first-priority security
interest.
(vii) Good Standing Certificates. On or prior to the initial
Borrowing Date hereunder and from time to time thereafter as Lender may
request (but so long as no Event of Default shall have occurred and be
continuing, not more frequently than annually), Lender shall have received
original certificates, in form and substance satisfactory to Lender and
its counsel, from the Secretary of State or other appropriate authority of
such jurisdiction, evidencing the good standing of Borrower in its
jurisdiction of organization and in each other jurisdiction where the
ownership of its respective property or the conduct of its business
requires such qualification.
(viii) Reliance Letters re: True-Sale/Non-Consolidation Opinions.
Lender shall have received a reliance letter addressed to Lender from the
counsel to the related Committed Securitization (other than a Prior
Securitization) permitting Lender to rely on the
true-sale/non-consolidation opinion delivered by such counsel in
connection with such Committed Securitization.
(ix) Payment Instructions. An instruction to the paying agent under
the ABS Issuance Agreements signed by Borrower and substantially in the
form set forth in Exhibit D hereto shall have been delivered to such
paying agent, with a copy to Lender.
(x) Delivery of Pledged ABS. Any Pledged ABS for such Loan shall
have been delivered to Lender as provided in Section 2(b) hereof.
(xi) Parity of Other Residual Financing Facility. An Other Residual
Financing Facility Loan secured by Other Residual Financing Facility
Pledged ABS relating to such Loan shall be made under the Other Residual
Financing Facility in an equal principal amount as such Loan on the same
date such Loan is made hereunder (except as otherwise provided in Section
9(r) hereof).
28
(xii) Other Conditions. Borrower shall have satisfied all other
conditions that Lender may reasonably require, if Lender shall have given
Borrower reasonable advance notice of such conditions.
Section 8. Representations and Warranties.
In order to induce Lender to enter into this Agreement and to make the
Loans hereunder, Borrower hereby represents and warrants to Lender, and shall on
and as of the date hereof and the Borrowing Date of each Loan and each date on
which Supplemental Collateral or Additional Collateral is pledged hereunder, as
applicable, be deemed to represent and warrant to Lender, that (for the
avoidance of doubt, the parties hereto acknowledge that Lender would not have
entered into this Agreement, made any Loans hereunder or accepted any
Supplemental Collateral or Additional Collateral unless the following
representations and warranties were true as of the related Borrowing Dates):
(a) Organization and Good Standing. Borrower is duly organized and
validly existing as a limited liability company in good standing under the laws
of the State of Delaware, with the power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is presently conducted, and had at all relevant times, and has, the limited
liability company power, authority and legal right to acquire and own the
Collateral and the Other Residual Financing Facility Collateral and to pledge
the Collateral and the Other Residual Financing Facility Collateral to Lender
and to enter into and perform its other obligations under this Agreement, the
Note and each other Loan Document to which it is a party.
(b) Due Qualification. Borrower is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business (including, without
limitation, the financing of the Pledged ABS and other Collateral as provided
hereunder and the performance of its other obligations under the other Loan
Documents to which it is a party) shall require such qualifications, licenses
and/or approvals.
(c) Power and Authority. Borrower has the power and authority to execute
and deliver this Agreement, the Note and each other Loan Document to which it is
a party and to carry out its terms and their terms, respectively. The execution,
delivery and performance of this Agreement, the Note and each other Loan
Document to which it is a party have been duly authorized by Borrower by all
necessary corporate action.
(d) Binding Obligation. Each of this Agreement, the Note and each other
Loan Document to which Borrower is a party shall constitute a legal, valid and
binding obligation of Borrower enforceable in accordance with its terms, except
only as such enforcement may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
(e) No Violation. The execution, delivery and performance by Borrower of
this Agreement, the Note and each other Loan Document to which Borrower is a
party and the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof do not conflict with, result
in a material breach of any of the terms and
29
provisions of, or constitute (with or without notice or lapse of time) a default
under, the certificate of formation or limited liability operating agreement of
Borrower, or any indenture, agreement, mortgage, deed of trust, or other
instrument to which Borrower is a party or by which it is bound or to which any
of its properties are subject; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any indenture,
agreement, mortgage, deed of trust, or other instrument (other than the Lender
Loan Documents); nor violate any law, order, rule or regulation applicable to
Borrower of any court or of any Federal or State regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over Borrower
or its properties.
(f) Compliance with Law. Borrower is conducting its business and
operations in compliance with all applicable laws, regulations, ordinances and
directives of governmental authorities, except to the extent that any
noncompliance results from the failure of Lender to be licensed or qualified
where necessary and except to the extent that any such noncompliance could not
reasonably be expected to have a Material Adverse Effect. Borrower has filed all
tax returns required to be filed and has paid all taxes due in respect of the
ownership of its assets or the conduct of its operations except to the extent
that the payment of such taxes is being contested in good faith by it in
appropriate proceedings and adequate reserves have been provided for the payment
thereof.
(g) No Consents. Borrower is not required to obtain the consent of any
other party or any consent, license, approval or authorization, or registration
or declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, the Note or any other Loan Document to which Borrower is a party,
except those which may have been obtained and are in full force and effect.
(h) No Proceedings. There are no proceedings or investigations pending
or, to Borrower's best knowledge, threatened against Borrower before any court,
regulatory body, administrative agency, other government instrumentality,
arbitral tribunal or other tribunal having jurisdiction over Borrower or its
properties (i) asserting the invalidity of this Agreement, the Note or any other
Loan Document to which Borrower is a party, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, the Note
or any other Loan Document to which Borrower is a party, or (iii) seeking any
determination or ruling that could have a Material Adverse Effect.
(i) Other Obligations. Borrower is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any of the
Loan Documents to which it is a party or in any agreement or instrument to which
it is a party or by which it is bound the result of which could have a Material
Adverse Effect.
(j) Regulation U. No proceeds of any Loan will be used, directly or
indirectly, by Borrower for the purpose of purchasing or carrying any Margin
Stock (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) or for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry Margin Stock or for any other
purpose which might cause any Loan to be a "purpose credit" within the meaning
of Regulation U.
30
(k) Investment Company Act, Etc. Borrower is not an "investment company"
or a company "controlled" by an investment company within the meaning of the
Investment Company Act of 1940, as amended. Borrower is not subject to
regulation under any Requirement of Law (other than Regulation X of the Board)
which limits its ability to incur Indebtedness.
(l) [Reserved].
(m) Collateral Security.
(i) Borrower owns and will own each item which it pledges as
Collateral, free and clear of any and all Liens (including, without
limitation, any tax liens), other than the first priority Liens created in
favor of Lender pursuant to this Agreement or in the second priority Liens
in favor of the Other Residual Financing Facility Lender under any other
Loan Document. No security agreement, financing statement or other public
notice similar in effect with respect to all or any part of the Collateral
is or will be on file or of record in any public office, except such as
have been or may hereinafter be filed pursuant to this Agreement
evidencing Lender's first priority Liens therein, or as may have been or
may hereafter be filed pursuant to the Other Residual Financing Facility
in favor of the Other Residual Financing Facility Lender evidencing its
second priority Liens therein, or except such as shall be terminated as to
the Collateral no later than immediately prior to the pledge of such
Collateral to the Lender under this Agreement.
(ii) This Agreement is effective to create, as collateral security
for the Obligations hereunder, valid and enforceable Liens on the
Collateral in favor of Lender.
(iii) Upon filing of the financing statement delivered to Lender by
Borrower on or prior to the Effective Date with the Secretary of State of
the State of Delaware (which financing statement is in proper form for
filing in such jurisdiction), the Liens created pursuant to this Agreement
will constitute a perfected security interest in the Collateral in favor
of Lender, which Liens will be prior to all other Liens of all other
Persons and which Liens are enforceable as such as against all other
Persons.
(iv) Borrower owns and will own each item which it pledges as Other
Residual Financing Facility Collateral, free and clear of any and all
Liens (including, without limitation, any tax liens), other than the
second priority Liens created in favor of Lender pursuant to this
Agreement or the first priority Liens in favor of the Other Residual
Financing Facility Lender under the Other Residual Financing Facility. No
security agreement, financing statement or other public notice similar in
effect with respect to all or any part of the Other Residual Financing
Facility Collateral is or will be on file or of record in any public
office, except such as have been or may hereinafter be filed pursuant to
this Agreement evidencing Lender's second priority Liens therein, or as
may have been or hereafter be filed pursuant to the Other Residual
Financing Facility in favor of the Other Residual Financing Lender
evidencing its first priority Liens therein, or except such as shall be
terminated as to the Collateral no later than immediately prior to the
pledge of such Other Residual Financing Facility Collateral to the Lender
under this Agreement.
31
(v) This Agreement is effective to create, as collateral security
for the Obligations hereunder, valid and enforceable Liens on the Other
Residual Financing Facility Collateral in favor of Lender.
(vi) Upon filing of the financing statement delivered to Lender by
Borrower on or prior to the Effective Date with the Secretary of State of
the State of Delaware (which financing statement is in proper form for
filing in such jurisdiction), the Liens created pursuant to this Agreement
will constitute a perfected security interest in the Other Residual
Financing Facility Collateral in favor of Lender, which Liens will be
prior to all other Liens of all other Persons (other than the first
priority Liens of the Other Residual Financing Facility Lender under the
Other Residual Financing Facility) and which Liens in favor of Lender are
enforceable as such as against all other Persons.
(n) Ownership of Properties. Borrower has good and marketable title to
any and all of its properties and assets, subject only to Liens under the Loan
Documents.
(o) Full Disclosure. The information, reports, financial statements,
exhibits, schedules, officer's certificates and other documents furnished by or
on behalf of Borrower to Lender in connection with the negotiation, preparation,
delivery or performance of this Agreement, the Note and the other Loan Documents
or included herein or therein or delivered pursuant hereto or thereto, taken as
a whole, are true and correct in every material respect (or, in the case of
projections, are based on good faith reasonable estimates) on the date as of
which such information is stated or certified and do not contain an untrue
statement of a material fact, or omit to state any material fact necessary to
make the statements herein or therein contained, in the light of the
circumstances under which they were made, not misleading. There is no fact known
to Borrower that, after due inquiry, could reasonably be expected to have a
Material Adverse Effect that has not been disclosed herein, in the other Loan
Documents or in a report, financial statement, exhibit, schedule, disclosure
letter or other writing furnished to Lender for use in connection with the
transactions contemplated hereby or thereby.
(p) ERISA. Neither the Borrower nor any of its Subsidiaries (as
applicable) sponsors, maintains or contributes to any Pension Plans, and the
Borrower agrees to notify the Purchaser and the Lender in advance of forming any
Pension Plans. Neither the Borrower nor any Commonly Controlled Entity has any
obligations or liabilities with respect to any Pension Plans or Multiemployer
Plans, nor have any such Persons had any obligations or liabilities with respect
to any such Pension Plans during the five-year period prior to the date this
representation is made or deemed made. The Borrower will give notice to the
Lender and the Purchaser if at any time it or any Commonly Controlled Entity has
any obligations or liabilities with respect to any Pension Plan or Multiemployer
Plan. All Plans maintained by the Borrower or any Commonly Controlled Entity are
in substantial compliance with all applicable laws (including ERISA). The
Borrower is not an employer under any Multiemployer Plan.
(q) Ownership of Borrower. TFC owns beneficially and of record 100% of
membership interests in Borrower free and clear of all Liens.
(r) No Other Business. Borrower engages in no business activities other
than (i) the financing of Pledged ABS by the pledging of such Pledged ABS to
Lender in connection with
32
Loans hereunder, (ii) the financing of Other Residual Financing Facility Pledged
ABS by the pledging of such Other Residual Financing Facility Pledged ABS to the
Other Residual Financing Facility Lender in connection with Other Residual
Financing Facility Loans thereunder, and (iii) other activities relating to the
foregoing to the extent permitted by the organizational documents of Borrower as
in effect on the date hereof, or as amended with the prior written consent of
Lender. Without limitation of the foregoing, Borrower is not a borrower under
any loan or financing agreement, facility or other arrangement other than the
facility established pursuant to this Agreement and the Other Residual Financing
Facility.
(s) No Indebtedness. Borrower has no Indebtedness, other than
Indebtedness incurred under (or contemplated by) the terms of this Agreement and
the Other Residual Financing Agreement.
(t) No Fraudulent Conveyance. As of the Effective Date and immediately
after giving effect to each Borrowing, the fair value of the assets of Borrower
is greater than the fair value of its liabilities (including, without
limitation, contingent liabilities of Borrower), and Borrower is and will be
solvent, does and will pay its debts as they mature and does not and will not
have an unreasonably small capital to engage in the business in which it is
engaged and proposes to engage. Borrower does not intend to incur, or believe
that it has incurred, debts beyond its ability to pay such debts as they mature.
Borrower is not in default under any material obligation to pay money to any
Person. Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its assets. Borrower is not transferring any Collateral with
any intent to hinder, delay or defraud any of its creditors. Borrower will not
use the proceeds from the transactions contemplated by this Agreement or any
other Loan Document to give any preference to any creditor or class of
creditors.
(u) Committed Securitizations. Each of the representations and
warranties set forth in Schedule III is true and correct as of the Effective
Date and each Borrowing Date.
Section 9. Affirmative Covenants.
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated, Borrower covenants to Lender:
(a) Notice of Defaults, Etc. Borrower shall give notice to Lender
promptly:
(i) upon Borrower becoming aware of, and in any event within one
(1) Business Day after, the occurrence of any Default or any event of
default or default under any other Loan Document or any other material
agreement of Borrower, Warehouse Seller, Warehouse Borrower or TFC;
(ii) upon, and in any event within one (1) Business Day after,
service of process on Borrower, or any agent thereof for service of
process, in respect of any legal or arbitrable proceedings affecting
Borrower (i) that questions or challenges the validity or enforceability
of any of the Loan Documents, (ii) in which the amount in controversy
33
exceeds $1,000,000 or (iii) that could reasonably be expected to have a
Material Adverse Effect;
(iii) within one (1) Business Day after Borrower becomes aware of
any event or change in circumstances that could reasonably be expected to
have a Material Adverse Effect, to constitute a Material Adverse Change or
to cause a Default; and
(iv) within one (1) Business Day after Borrower becomes aware of
entry of a judgment or decree in respect of or Borrower, its assets or the
Collateral in an amount in excess of $1,000,000.
Each notice pursuant to this Section 9(a) shall be accompanied by a statement of
an officer of Borrower setting forth details of the occurrence referred to
therein and stating what action Borrower has taken or proposes to take with
respect thereto.
(b) Taxes. Borrower shall pay and discharge all taxes and governmental
charges upon it or against any of its properties or assets or its income prior
to the date after which penalties attach for failure to pay, except (a) to the
extent that Borrower shall be contesting in good faith in appropriate
proceedings its obligation to pay such taxes or charges, adequate reserves
having been set aside for the payment thereof, or (b) with respect to such taxes
and charges which are not material in either nature or amount such that any
failure to pay or discharge them, and any resulting penalties, either in any one
instance or in the aggregate, would not materially and adversely affect the
financial condition, operations, business or prospects of Borrower.
(c) Separate Existence; No Commingling.
(i) Borrower shall, and shall cause TFC and any other Affiliates
of Borrower to, maintain the truth and accuracy of all facts assumed by
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP in the true-sale/non-consolidation opinions of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP delivered in accordance with Section 7(a)(i)m;
provided that in the event that any request is made for Lender to consent
to or approve any matter that, if effectuated or consummated, would result
in a change to the continuing truth and accuracy of any of the factual
assumptions in such true-sale/non-consolidation opinions, such request
shall be accompanied by an opinion of counsel that the conclusions set
forth in such true-sale/non-consolidation opinions will be unaffected by
such change.
(ii) Borrower shall (A) own no assets, and not engage in any
business, other than the assets and transactions specifically contemplated
by the Loan Documents and the ABS Issuance Agreements, (B) not incur any
indebtedness or obligation, secured or unsecured, direct or indirect,
absolute or contingent, other than as contemplated by the Loan Documents,
(C) not make any loans or advances to any third party, and shall not
acquire obligations or securities of any Affiliate other than as
contemplated by the Loan Documents, (D) pay its debts and liabilities
(including, as applicable, shared personnel and overhead expenses) only
from its own assets, (E) do all things necessary under applicable law and
its organizational documents to observe organizational formalities and to
preserve its existence, and will not amend, modify or otherwise change its
certificate of
34
incorporation or bylaws, or suffer the same to be amended, modified or
otherwise changed, in a manner that will have a Material Adverse Effect,
(F) maintain all of its books, records, financial statements and bank
accounts separate from those of any Affiliate, (G) be, and at all times
will hold itself out to the public as, a legal entity separate and
distinct from any other entity (including without limitation any
Affiliate), correct any known misunderstanding regarding its status as a
separate entity, conduct business in its own name, not identify itself or
any Affiliate as a division or part of the other and maintain and utilize
separate stationery, (H) maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character
and in light of its contemplated business operations, (I) not engage in or
suffer any dissolution, winding-up, liquidation, consolidation or merger
in whole or in part, (J) not commingle its funds or other assets with
those of any Affiliate or any other Person (other than in the Lockbox, the
Clearing Account and the Concentration Account (each, as defined in the
Warehouse Lending Agreement)), (K) maintain its assets in such a manner
that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any Affiliate or any other
Person, (L) not and will not hold itself out to be responsible for the
debts or obligations of any other Person, and (M) be formed and organized
solely for the purpose of (1) the financing of Pledged ABS by the pledging
of such Pledged ABS to Lender in connection with Loans hereunder, (2) the
financing of Other Residual Financing Facility Pledged ABS by the pledging
of such Other Residual Financing Facility Pledged ABS to the Other
Residual Financing Facility Lender in connection with Other Residual
Financing Facility Loans thereunder, and (3) other activities relating to
the foregoing to the extent permitted by the organizational documents of
Borrower as in effect on the date hereof, or as amended with the prior
written consent of Lender, which consent shall not be unreasonably
withheld.
(d) Financing Statements. At the request of Lender, Borrower shall
execute such financing statements as Lender reasonably determines may be
required by law to perfect, maintain and protect the interest of Lender in the
Collateral and the Other Residual Financing Facility Collateral and, in each
case, in the Proceeds thereof.
(e) Books and Records; Other Information.
(i) Borrower shall maintain accurate and complete books and
records with respect to the Collateral and Borrower's business. All
accounting books and records shall be maintained in accordance with GAAP.
(ii) Borrower shall, and shall cause each of its Affiliates to,
permit any representative of Lender to visit and inspect any of the
properties of Borrower and such Affiliates to examine the books and
records of Borrower and such Affiliates, as applicable, and to make copies
and take extracts therefrom, and to discuss the business, operations,
properties, condition (financial or otherwise) or prospects of Borrower
and each such Affiliate, as applicable, or any of the Collateral with the
officers and independent public accountants thereof and as often as Lender
may reasonably request, and so long as no Default or Event of Default
shall have occurred and be continuing, all at such reasonable times during
normal business hours upon reasonable notice; provided that, after a
Default or Event of Default shall have occurred and be continuing, Lender
35
shall make such inspections, examine such documents and conduct such
discussions at such times as it may determine in its sole discretion.
(iii) Borrower shall promptly provide to Lender all information
regarding its operations and practices as Lender shall reasonably request.
(f) Continuity of Business and Compliance With Agreement. Borrower shall
continue in business in a prudent, reasonable and lawful manner with all
licenses, permits, and qualifications necessary to perform its respective
obligations under this Agreement, except where such failure could not be
expected to materially and adversely affect such performance or the
enforceability of Lender's security interest in the Collateral.
(g) Ownership of Borrower. TFC shall own beneficially and of record 100%
of membership interests in Borrower free and clear of all Liens.
(h) Shareholder Reports, Governmental Filings, Etc. Borrower shall
furnish or cause to be furnished to Lender, as soon as available, copies of (w)
any and all Relevant Reports that TFC or Borrower sends to its respective
shareholders or members, (x) all reports, correspondence and other information
provided by Triad Acquisition Corp. or TFC to the Unsecured TFC Noteholders, (y)
copies of all (if any) regular, periodic and special reports, and all
registration statements publicly filed by TFC or any Affiliate of TFC with the
Securities and Exchange Commission or any Governmental Authority that supervises
the issuance of securities by TFC, Borrower or any other Affiliate of TFC, and
(z) any press releases concerning TFC or Borrower.
(i) Fulfillment of Obligations. Borrower shall pay and perform, as and
when due, all of its obligations of whatever nature, except where the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings and reserves in conformity with GAAP with respect thereto have been
provided on the books of Borrower, and except to the extent that the failure to
do so could not, individually or in the aggregate, be expected to have a
Material Adverse Effect.
(j) Covenant Compliance Certificate. Borrower shall deliver or cause to
be delivered a Covenant Compliance Certificate to Lender two (2) Business Days
before the Payment Date in each calendar month or, if such day is not a Business
Day, the immediately preceding Business Day.
(k) Monthly Collateral Report. Borrower shall furnish or cause to be
furnished to Lender, on the last Business Day of each month, a report for each
Pledged ABS, all Supplemental Collateral, all Additional Collateral and each
Demand Note substantially in the form of, and containing the information set
forth on, Exhibit F hereto.
(l) Changes in Location, Name, Etc. Borrower will not (i) change its
"location" as defined in Section 9-307 of the UCC, (ii) change its form of
organization, or (iii) change its name or identity in any manner that would,
could or might make any financing statement or continuation statement filed in
accordance with this Agreement or any other Lender Loan Document seriously
misleading within the applicable provisions of the UCC, unless, in any such
case, Borrower shall have given Lender at least thirty (30) days prior written
notice thereof and
36
shall have delivered to Lender all UCC financing statements, continuation
statements and amendments thereto and taken all other actions as are necessary
(or as are requested by the Secured Party) to continue Lender's perfected first
priority security interest in the Collateral or Lender's perfected junior second
priority security interest in the Other Residual Financing Facility Collateral.
(m) Compliance with Laws, Etc. Borrower shall, and shall cause each of
its subsidiaries to, comply (i) in all material respects with all Requirements
of Law and any change therein or in the application, administration or
interpretation thereof (including, without limitation any request, directive,
guideline or policy, whether or not having the force of law) by any Governmental
Authority charged with the administration or interpretation thereof; and (ii)
with all indentures, mortgages, deeds of trust, agreements, or other instruments
or contractual obligations to which it is a party, including without limitation,
each Loan Document to which it is a party, or by which it or any of its
properties may be bound or affected, or which may affect the Pledged ABS, the
Supplemental Collateral, the Additional Collateral or any Demand Note, if the
failure to comply therewith could, individually or in the aggregate, be expected
to have a Material Adverse Effect.
(n) Collateral Statements. Borrower shall furnish to Lender from time to
time statements and schedules further identifying and describing the Collateral
or the Other Residual Financing Facility Collateral and such other reports in
connection with the Collateral or the Other Residual Financing Facility
Collateral as Lender may reasonably request, all in reasonable detail.
(o) Actions to Preserve Lender's Security Interest. Borrower shall
defend the Collateral against, and shall take such other action as is necessary
to remove, any Lien, security interest or claim on or to the Collateral, other
than the security interests created under the this Agreement and the second
priority security interest of the Other Residual Financing Facility created
pursuant to the Other Residual Financing Facility, and Borrower will defend the
right, title and interest of Lender in and to any of the Collateral and the
Other Residual Financing Facility Collateral against the claims and demands of
all Persons whomsoever (except in the case of the Other Residual Financing
Facility Collateral, the Other Financing Facility Lender). At the request of
Lender, Borrower shall prepare (and execute, if required) such financing
statements as Lender reasonably determines are required by law to perfect,
maintain and protect the first priority security interest of Lender in the
Collateral and the second priority security interest of Lender in the Other
Residual Financing Facility Collateral and, in each case, in the Proceeds
thereof.
(p) Annual Opinion. Borrower shall deliver to Lender on or before March
31 of each year, beginning on March 31, 2006, a legal opinion from external
counsel to TFC (which counsel shall be satisfactory to Lender) in form and
substance satisfactory to Lender and its counsel, relating to the perfection and
first priority of Lender's interest in the Collateral.
(q) Registration of and Payments on Pledged ABS. Borrower shall cause
all Pledged ABS to be registered in the name of Lender. Borrower shall cause
trustee or other paying agent on any Pledged ABS, any Supplemental Collateral
and any Additional Collateral to make all payments in connection with such
Pledged ABS, Supplemental Collateral and Additional
37
Collateral to the Collection Account for the benefit of Lender pursuant to
Section 2(e) of this Agreement and not make any change to any such instructions
without the prior written consent of Lender.
(r) Parity with Other Residual Financing Facility. With respect to each
and every Loan hereunder and each and any Pledged ABS pledged to Lender
hereunder in connection with the Loans, Borrower shall, no later than the
Borrowing Date of such Loan and the delivery to Lender of any such Pledged ABS,
borrow from the Other Residual Financing Facility an amount equal to the amount
of such Loan under this Agreement and shall pledge to the Other Residual
Financing Facility Lender, in connection with such Other Residual Financing
Facility Loan, as Other Residual Financing Facility Pledged ABS, certificates
evidencing an equal amount or percentage interest of each class of securities
constituting any such Pledged ABS pledged in connection with such Loan
hereunder, except that the requirement that the amount of the Loans hereunder
and the amount borrowed under the Other Residual Financing Facility shall not be
applicable if (but only to the extent that):
(i) the Other Residual Financing Facility has terminated and
amounts are not available to be borrowed thereunder;
(ii) the amount of Demand Notes issued by Lender (or an Affiliate
thereof) is different than the amount of demand notes issued by the Other
Warehouse Facility Lender (or an Affiliate thereof); or
(iii) the Other Warehouse Facility Lender ascribes to the Pledged
ABS a different market value than the Market Value determined by Lender.
(s) Monthly Servicer's Certificates on Pledged ABS. Borrower shall
deliver, or cause TFC to deliver, to Lender, no later than 4:00 p.m., New York
City time, on the third (3rd) Business Day preceding each Payment Date
hereunder, in computer-readable format reasonably acceptable to each such
Person, the monthly servicer's certificates (the "Pledged ABS Servicer's
Certificates") for each Pledged ABS prepared by TFC in respect of the monthly
distribution date for each such Pledged ABS that corresponds to the Payment Date
for such month.
(t) Monthly Remittance Certificates. Borrower shall deliver, or cause
TFC to deliver, to Lender and the Collection Account Bank, no later than 4:00
p.m., New York City time, on the second (2nd) Business Day preceding each
Payment Date hereunder, in computer-readable format reasonably acceptable to
each such Person, a Remittance Certificate (a "Remittance Certificate") executed
by a Responsible Officer or agent of Borrower or TFC containing, among other
things (without duplication), (i) all information, including information set
forth in the applicable Pledged ABS Servicer's Certificates, necessary to enable
the Collection Account Bank to make the withdrawals and allocations required to
be made on the next Payment Date pursuant to Section 13(b) or Section 13(c), as
applicable, (ii) a listing of all Collateral which has been pledged to Lender
since the preceding Remittance Certificate, (iii) a listing of all Collateral
which has been redeemed or paid-in-full, or which has been liquidated or has
received its final payment or distribution since the preceding Remittance
Certificate and (iv) the Borrowing Base as of the date of such Remittance
Certificate. In addition to the information set forth in the preceding sentence,
each Remittance Certificate shall also contain the
38
following information: (a) whether an Event of Default has occurred; and (b)
such other information reasonably requested by Lender. Borrower shall deliver,
or cause TFC to deliver, to Lender and the Collection Account Bank a hard copy
of any such Remittance Certificate upon request of such Person.
Section 10. Negative Covenants.
Until the Obligations are paid and satisfied in full and this Agreement
has been terminated Borrower covenants to Lender:
(a) Adverse Transactions. Borrower shall not enter into any transaction
which adversely affects the Collateral or Lender's rights under this Agreement
or any other Loan Document to which it is a party.
(b) Guarantees. Borrower shall not Guarantee or otherwise in any way
become liable with respect to the obligations or liabilities of any other
Person, except (a) for the obligations of Borrower to Lender, the Other Residual
Financing Facility Lender and the Other Warehouse Facility Lender and (b) by
customary endorsement of instruments or items of payment for deposit to the
general account of Borrower or for delivery to Lender.
(c) Dividends. Borrower shall not declare or pay any dividends except to
the extent of funds legally available therefor from payments received by
Borrower pursuant to clause eleventh of Section 12(e), clause seventh of Section
13(b) and clause seventh of Section 13(c). Notwithstanding the foregoing,
Borrower shall not declare or pay any dividends on any date as of which any of a
Default, a Warehouse Lending Agreement Deficiency or an Other Lender Deficiency
shall have occurred and be continuing.
(d) Investments. Borrower shall not make any investment in any Person
through the direct or indirect holding of securities or otherwise, other than in
the ordinary course of business or in connection with the future securitization
of automobile retail installment sale contracts.
(e) Limitations on Loans; Other Advances by Borrower. Borrower shall not
make any unsecured loans or other advances of money to officers, directors,
employees, stockholders, or Affiliates in excess of $50,000 in the aggregate.
Other than the indebtedness under this Agreement and the Note, Borrower shall
not incur any long term or working capital debt if such action would constitute
a breach of a covenant contained herein.
(f) Further Covenants. Prior to the termination of this Agreement and
each other Loan Document and the indefeasible payment of all Obligations
hereunder and thereunder, without prior written consent of Lender, which consent
shall not be unreasonably delayed or withheld, Borrower will not: (i) assign,
sell, transfer, pledge or grant any security interest in or Lien on any of the
Collateral to anyone except Lender and except for the second priority security
interest in favor of the Other Residual Financing Facility Lender under the
Other Residual Financing Facility (provided that the Other Residual Financing
Facility Lender acknowledges Lender's first priority and senior security
interest in the Collateral and such second priority security interest of the
Other Financing Lender remains subject to the Intercreditor Agreement), permit
any financing statement (except any financing statements in favor of Lender and
financing statements filed thereafter that are in favor of the Other Residual
Financing Facility
39
Lender evidencing its second priority security interest in the Collateral) or
assignment (except for any assignments in favor of Lender) to be on file in any
public office with respect thereto, (ii) permit or suffer to exist any security
interest, lien, charge, encumbrance or right of others to attach to any of the
Collateral, except as contemplated by this Agreement, (iii) assign, sell,
transfer, pledge or grant any security interest in or Lien on any of the Other
Residual Financing Facility Collateral to anyone except for the first priority
security interest therein in favor of the Other Residual Financing Facility
Lender and except for the second priority security interest therein in favor of
Lender hereunder, permit any financing statement (except any financing
statements in favor of the Other Residual Financing Facility Lender and
financing statements filed thereafter that are in favor of Lender evidencing its
second priority security interest in the Other Residual Financing Facility
Collateral) to be on file in any public office with respect thereto, (ii) permit
or suffer to exist any security interest, lien, charge, encumbrance or right of
others to attach to any of the Other Residual Financing Facility Collateral,
except as contemplated by this Agreement, or (iii) consent to any amendment or
supplement to any ABS Issuance Agreement that would have a Material Adverse
Effect on the Lender, the Collateral or the Market Value of any Pledged ABS.
(g) Changes in Capital Structure or Business Objectives. Borrower shall
not do any of the following if it will adversely affect the payment or
performance of, or its ability to pay and/or perform, its obligations to Lender
with respect to this Agreement or any other Loan Document to which it is a
party, or the Note: (i) redeem, retire, purchase or otherwise acquire, directly
or indirectly, any of its stock, except in connection with employment or similar
agreements with officers and directors of it consistent with past practice, or
(ii) make any change in its capital structure, or (iii) make any material change
in any of its business objectives, purposes or operations which could reasonably
be expected to adversely affect the payment or performance of, or its ability to
pay and/or perform, its obligations to Lender with respect to this Agreement or
any other Loan Document to which it is a party, or the Note.
(h) Limitation on Modifications. Borrower shall not amend, supplement or
otherwise modify any document related to the Other Residual Financing Facility
without prior written notice to Lender. In the event of any such amendment,
supplement or other modification to the Other Residual Financing Facility,
Lender may, in its sole discretion, either require or reject a parallel
amendment, supplement or other modification to the applicable Lender Loan
Document.
(i) Asset Sales. Prior to the termination of this Agreement and each
other Loan Document and the payment of all amounts payable pursuant hereto and
thereto, Borrower will not sell all or any material portion of its assets
without the prior written consent of Lender; provided that in the event that
Borrower shall intend to sell any Pledged ABS to any third party, Borrower shall
inform Lender of such prospective sale and Lender shall be permitted to bid on
such Pledged ABS in the same bidding process as that in which any third party is
permitted to bid on such Pledged ABS.
(j) No Disparity with Other Residual Financing Facility. In no event
shall Borrower receive a Loan under this Agreement and pledge any Pledged ABS to
Lender in connection therewith, unless Borrower simultaneously borrows from the
Other Residual Financing Facility and pledges Other Residual Financing Facility
Pledged ABS to the Other Residual Financing Facility Lender in accordance with
Section 9(r) (subject to the exceptions specified in such
40
Section 9(r)). Without limitation of the foregoing, in no event shall any item
of Pledged ABS pledged to Lender hereunder constitute a percentage interest in
any class of residual securities or principal amount of any class of
Subordinated Notes that is greater than a 50% percentage interest in such class
of residual securities or one-half of the principal amount of any class of
Subordinated Notes, without the prior written consent of Lender in each case.
(k) No Indebtedness. Borrower will not at any time incur any
Indebtedness, other than Indebtedness incurred under (or contemplated by) the
terms of this Agreement and the Other Residual Financing Agreement.
(l) No Other Business. Borrower will not at any time engage in any
business activities other than (i) the financing of Pledged ABS by the pledging
of such Pledged ABS to Lender in connection with Loans hereunder, (ii) the
financing of Other Residual Financing Facility Pledged ABS by the pledging of
such Other Residual Financing Facility Pledged ABS to the Other Residual
Financing Facility Lender in connection with Other Residual Financing Facility
Loans thereunder, and (iii) other activities relating to the foregoing to the
extent permitted by the organizational documents of Borrower as in effect on the
date hereof, or as amended with the prior written consent of Lender. Without
limitation of the foregoing, Borrower will not at any time be a borrower under
any loan or financing agreement, facility or other arrangement other than the
facility established pursuant to this Agreement and the Other Residual Financing
Facility.
(m) ERISA. Neither Borrower nor any Commonly Controlled Entity shall
adopt, establish, maintain or otherwise become obligated to contribute to any
Plan that is subject to Title IV of ERISA or any Multiemployer Plan.
Section 11. Events of Default.
Each of the following, so long as it shall not have been remedied, shall
constitute an "Event of Default" hereunder:
(i) (i) Any payment by or on behalf of Borrower shall fail to be
made to Lender when due of principal or interest on the Loans or (ii) any
payment by or on behalf of Borrower of any other Obligation shall fail to
be made on its due date;
(ii) Borrower, TFC, Warehouse Seller or Warehouse Borrower shall
fail to perform or observe in any material respect any term, covenant or
agreement under this Agreement (other than any term, covenant or agreement
referred to in another subsection of this Section 11), the Note or any
other Lender Loan Document to which it is a party, which failure is (i)
curable by payment of money and continues unremedied for a period of three
(3) Business Days, (ii) curable by means other than payment of money and
continues unremedied for a period of fifteen (15) Business Days; or (iii)
is not curable;
(iii) Any representation or warranty made or deemed to be made by
Borrower, TFC, Warehouse Seller or Warehouse Borrower, or any of their
respective officers, under or in connection with this Agreement or any
other Lender Loan Document, any remittance report or other information or
report delivered pursuant hereto or any other Lender Loan Document shall
prove to have been false or incorrect in any material respect
41
when made which failure is (i) curable by payment of money and continues
unremedied for a period of three (3) Business Days, (ii) curable by means
other than payment of money and continues unremedied for a period of
fifteen (15) Business Days; or (iii) is not curable;
(iv) Borrower, TFC, Warehouse Seller, Warehouse Borrower or any
Affiliate of TFC shall fail to pay any money due under any other
agreement, note, indenture or instrument evidencing, securing,
Guaranteeing or otherwise relating to Indebtedness of Borrower, TFC,
Warehouse Seller, Warehouse Borrower or such Affiliate of TFC (including,
without limitation, Indebtedness relating to any Warehouse Document,
Indebtedness relating to any Securitization and Indebtedness to the Other
Residual Financing Facility Lender), which failure to pay constitutes an
event of default under any such agreement, note, indenture or instrument
or constitutes a default thereunder and such default shall continue
unremedied for three (3) Business Days; or Borrower, TFC, Warehouse
Seller, Warehouse Borrower or any Affiliate of TFC shall otherwise fail to
perform or observe any term, covenant, agreement or representation and
warranty under any such other agreement, note, indenture or instrument,
which failure constitutes an event of default under any such agreement,
note, indenture or instrument or constitutes a default thereunder and such
default shall result in the acceleration of such Indebtedness; or any
other event under any such agreement or instrument shall occur or
condition shall exist if the effect of such event or condition is to
accelerate the maturity of such Indebtedness; provided that, if such
Indebtedness is solely Indebtedness of TFC (and not in whole or in part
Indebtedness of Borrower, Warehouse Seller, Warehouse Borrower or any
other Affiliate of TFC), such Indebtedness must be in an aggregate amount
of at least $500,000 in order for an event described in this clause (iv)
to constitute an Event of Default;
(v) The Collateral or any other material assets of Borrower, TFC,
Warehouse Seller or Warehouse Borrower are attached, seized, levied upon
or subjected to a writ or distress warrant, or come within the possession
of any receiver, trustee, custodian or assignee for the benefit of
Borrower, TFC, Warehouse Seller or Warehouse Borrower and the same is not
dissolved or dismissed within thirty (30) days thereafter; an application
is made by any Person other than Borrower, TFC, Warehouse Seller or
Warehouse Borrower for the appointment of a receiver, trustee, or
custodian for the Collateral or a material portion of the assets of
Borrower, TFC, Warehouse Seller or Warehouse Borrower and the same is not
dismissed within thirty (30) days after the application thereof, or
Borrower, TFC, Warehouse Seller or Warehouse Borrower shall have
concealed, removed or permitted to be concealed or removed any portion of
its property with intent to hinder, delay or defraud its creditors or made
or suffered a transfer of any of its property which is fraudulent under
any bankruptcy, fraudulent conveyance or other similar law;
(vi) An application is made by Borrower, TFC, Warehouse Seller or
Warehouse Borrower for the appointment of a receiver, trustee or custodian
for the Collateral or any other material assets of Borrower, TFC,
Warehouse Seller or Warehouse Borrower; a petition under any section or
chapter of the Bankruptcy Code or federal or state law or regulation shall
be filed by Borrower, TFC, Warehouse Seller or
42
Warehouse Borrower; Borrower, TFC, Warehouse Seller or Warehouse Borrower
shall make an assignment for the benefit of its creditors; any case or
proceeding shall be filed by Borrower, TFC, Warehouse Seller or Warehouse
Borrower for its dissolution, liquidation, or termination; or Borrower,
TFC, Warehouse Seller or Warehouse Borrower ceases to conduct its
business;
(vii) Borrower, TFC, Warehouse Seller or Warehouse Borrower is
enjoined, restrained or prevented by court order from conducting all or
any material part of its business affairs, or a petition under any section
or chapter of the Bankruptcy Code or any similar federal or state law or
regulation is filed against Borrower, TFC, Warehouse Seller or Warehouse
Borrower, or any case or proceeding is filed against Borrower, TFC,
Warehouse Seller or Warehouse Borrower, for its dissolution or
liquidation, and such injunction, restraint, petition, case or proceeding
is not dismissed within sixty (60) days after the entry of filing thereof;
(viii) Borrower, TFC, Warehouse Seller or Warehouse Borrower admits
in writing to its inability to pay its debts as they mature;
(ix) Lender shall for any reason cease to have a first priority
perfected security interest in the Collateral free and clear of all Liens
(other than a Lien under any Loan Document);
(x) Lender shall for any reason cease to have a second priority
perfected security interest in the Other Residual Financing Facility
Collateral free and clear of all Liens other than the first priority
security interest in favor of the Other Residual Financing Facility Lender
under the Other Residual Financing Facility;
(xi) Any breach by Borrower of a covenant set forth in Section 9(r)
or Section 10(j) shall have occurred and remain uncured for at least
thirty (30) consecutive days;
(xii) Lender, in its reasonable, good faith judgment, has cause to
believe that (A) there has been a Material Adverse Effect or (B) Borrower,
TFC, Warehouse Seller or Warehouse Borrower shall have suffered any
Material Adverse Change;
(xiii) (a) TFC shall have at any time been terminated or resign, as
a servicer under any Securitization or the Servicing Agreement; or (b)
there shall be a default or termination event (regardless of whether such
default or termination event has been waived) on the part of TFC as
servicer under any Securitization or the Servicing Agreement;
(xiv) [Reserved];
(xv) As of any date of determination the Total Outstandings exceeds
the Borrowing Base, and cash or Supplemental Collateral is not delivered
to Lender as required by Section 5, and such failure continues for three
Business Days after notice thereof to Borrower by Lender;
43
(xvi) Borrower becomes an "investment company" or company
"controlled" by an investment company within the meaning of the Investment
Company Act of 1940, as amended.
(xvii) Any Change of Control shall occur with respect to Borrower,
TFC, Warehouse Seller or Warehouse Borrower, unless Lender shall have
expressly consented to such Change of Control in writing or unless the
Obligations shall have been indefeasibly repaid in full and the facility
terminated;
(xviii) A final, nonappealable judgment by any competent court in
the United States of America for the payment of money in an amount in
excess of $1,000,000 shall be rendered against Borrower, TFC, Warehouse
Seller or the Warehouse Borrower, and the same remains undischarged and
unstayed for a period of thirty (30) days after the entry thereof;
(xix) Borrower, TFC, Warehouse Seller or the Warehouse Borrower
shall pay an amount in excess of $1,000,000 in connection with the
settlement of any action filed in any competent court in the United States
of America, in which action such Person is a named defendant, if such
action contains undismissed allegations of (A) fraud, wrongful conduct in
connection with such Person's lending, servicing or origination practices,
as applicable, or (B) other wrongdoing that could have a Material Adverse
Effect;
(xx) Any Loan Document shall be terminated or cease to be in full
force and effect, or the enforceability thereof shall be (A) reasonably
contested by Lender, (B) contested by any other party thereto, or (C)
contested by an indenture trustee on behalf of Unsecured TFC Noteholders;
(xxi) TFC shall fail to pay to Lender, within 30 days following the
presentment of invoices, any and all fees, costs or expenses which Lender
pays to a bank or other similar institution arising out of or in
connection with the return of payments from Borrower deposited for
collection by Lender; or
(xxii) TFC shall grant or otherwise create any Lien on the
membership interests (or any other equity interest) in Borrower.
Section 12. Remedies.
(a) Remedies for Default.
(i) Upon the occurrence of any Event of Default, Lender may, by
notice to Borrower (which notice shall be deemed given automatically upon
occurrence of an Event of Default referred to in paragraph (v), (vi),
(vii) or (viii) of Section 11), terminate its commitment to make any Loans
hereunder, and declare immediately due and payable all principal, interest
and other Obligations payable hereunder and under the Note by Borrower
then due and payable that would otherwise be due after the date specified
in the notice (or the date such notice is deemed given), whereupon all
those amounts shall become immediately due and payable, all without
further diligence, presentment, demand of payment, protest or notice of
any kind, all of which are expressly waived by Borrower.
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(ii) Without limitation to any of the provisions or remedies set
forth in Section 12(a)(i), if any Event of Default shall have occurred and
be continuing, Borrower may, with the prior written consent of Lender in
Lender's sole discretion, (A) make a principal payment on the Loans in
such amount as Lender shall specify or (B) pledge Additional Collateral
having such value, as determined by Lender in its sole discretion, as
Lender shall specify. If Lender so consents to Borrower's taking such
action as is described in this Section 12(a)(ii) upon an Event of Default,
Borrower shall remain liable for any remaining deficiency between the
amount of the Obligations and the amount of the principal payment or
pledge of Additional Collateral made pursuant hereto, and under no
circumstances shall Lender's consent to such action be construed as a
waiver of such deficiency or a modification of the Obligations.
(iii) In the event that Borrower shall hereinafter pledge any
Additional Collateral to Lender as specified in Section 12(a)(ii),
Borrower shall, concurrently with such pledge, deliver to Lender an
opinion of counsel in form and substance reasonably satisfactory to Lender
regarding first priority, perfection and the absence of Liens in respect
of such Additional Collateral.
(b) Action Regarding Collateral. If an Event of Default shall occur and
be continuing, Lender, without demand of performance or other demand or notice
of any kind to Borrower or any other person, all of which are hereby expressly
waived, may forthwith apply the cash, if any, then held by it as part of the
Collateral relating to any Loan to the payment of any of the Obligations. If
there shall be no such cash or the cash so applied shall not be sufficient to
pay in full all Obligations, Lender may thereafter collect, receive,
appropriate, retain and realize upon the Collateral, or any part thereof, and
may forthwith sell, assign, give an option or options to purchase, contract to
sell, or otherwise dispose of and deliver the Collateral, or any part thereof,
in one or more parcels at such public or private sale or sales, at such place or
places, to such potential buyers at such price or prices and upon such other
terms and conditions as Lender may deem best, for cash or on credit or for
future delivery without assumption of any credit risk, with the right of Lender
upon any such sale or sales to purchase all or any part of the Collateral so
sold. In connection with any sale of the Collateral, Borrower will cooperate
with Lender to provide potential buyers of the Collateral with the necessary
information that they need to make a decision to purchase the Collateral,
including without limitation (A) providing potential buyers with information
about the Pledged ABS or any other similar asset backed securities issued in
connection with a securitization involving Borrower, TFC or an Affiliate thereof
(the "Other ABS") and any Demand Notes, (B) providing potential buyers with
records relating to the Pledged ABS, the Other ABS and the assets securing such
Pledged ABS and Other ABS and relating to any Demand Note, and (C) providing
potential buyers with access to personnel responsible for originating and
servicing the assets securing the Pledged ABS and the Other ABS. Upon any sale,
transfer or other disposition of the Collateral pursuant hereto Lender shall
have the right to deliver, assign and transfer to the transferee thereof the
Collateral so sold. Each transferee upon any such transfer or other disposition
shall hold the property thereby acquired by it absolutely free from any claim or
right of any kind, including without limitation any equity or rights of
redemption, of Borrower, who hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any rule of law or
statute whether now existing or hereafter adopted (in the latter case, to the
extent permitted thereby). Borrower agrees that Lender need give only such
notice of the time and place of any public or private sale (including
45
without limitation any adjourned private sale) or other intended disposition as
may be required by market conditions and standards of commercial reasonableness
and that Lender need not in any event give more than five (5) Business Days'
notice that such sale or disposition is to take place. Borrower agrees that the
notice provided for in the preceding sentence is reasonable notification of such
matters.
Lender shall not be obligated to make any sale pursuant to any such
notice. Lender may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or any
part of the Collateral on credit or for future delivery, the Collateral so sold
may be retained by Lender until the selling price is paid by the purchaser
thereof, but Lender shall not incur any liability in case of the failure of such
purchaser to take up and pay for the Collateral so sold and, in case of any such
failure, such Collateral may again be sold upon like notice. Lender, however,
instead of exercising the power of sale herein conferred upon it, may proceed by
a suit or suits at law or in equity to foreclose the Lien and security interest
created hereby and sell the Collateral, or any portion thereof, under a judgment
or decree of a court or courts of competent jurisdiction.
If an Event of Default shall occur and be continuing Lender shall have the
rights of a secured party under the UCC and other applicable law in respect of
the Other Residual Financing Facility Collateral, subject to, solely in relation
to the rights of the Other Residual Financing Lender with respect thereto, the
terms of the Intercreditor Agreement.
(c) Deficiency. Borrower shall remain liable for any deficiency if the
Proceeds of any sale or other disposition of the Collateral are insufficient to
pay in full all Obligations, including, without limitation, the reasonable fees
and disbursements of any attorneys employed by Lender to collect such
deficiency.
(d) Private Sale. Lender shall incur no liability as a result of the
sale of the Collateral or any part thereof, at any private sale. Borrower hereby
waives any claims against Lender or any holder or holders of the Note arising by
reason of the fact that the price at which the Collateral may have been sold at
such a private sale was less than the price which might have been obtained at a
public sale or was less than the aggregate amount of the Obligations, so long as
such private sale was conducted in a commercially reasonable manner.
(e) Application of Proceeds. Notwithstanding Section 13(b) and Section
13(c), the Proceeds of any sale or other realization of all or any part of the
Collateral, and any other cash at the time held in the Collection Account for
the benefit of Lender under this Agreement (including, but not limited to, any
amounts held by Lender pursuant to Section 12(h)) and any payments and
distributions, whether in cash or in kind, made with respect to the Collateral
pursuant to Section 3(a), shall be applied by Lender (or by the Collection
Account Bank upon the instruction of Lender) in the following order of priority:
First, to the payment of the costs and expenses of such sale and all
expenses, liabilities and advances made or incurred by Lender in
connection therewith and in connection with any Default or Event of
Default hereunder.
46
Second, to Lender, any fees or reimbursements due and payable to
Lender under this Agreement, including without limitation any unpaid
Commitment Fees.
Third, to the payment of all accrued and unpaid interest under the
Note due or past due.
Fourth, to the payment of unpaid principal upon the Note due or past
due.
Fifth, to the payment of all other unpaid amounts owing under this
Agreement.
Sixth, to the payment of all other Obligations (other than the
Warehouse Facility Obligations) owing to Lender.
Seventh, to the payment to Lender for amounts due and unpaid
pursuant to the Warehouse Lending Agreement and all other Warehouse
Facility Obligations.
Eighth, to the Other Residual Financing Facility Lender, for amounts
due and unpaid pursuant to the Other Residual Financing Facility, if
an event of default shall have occurred and be continuing under the
Other Residual Financing Facility.
Ninth, to the Other Residual Financing Facility Lender, for amounts
due and unpaid pursuant to the Other Warehouse Facility, if an event
of default shall have occurred and be continuing under the Other
Warehouse Facility.
Tenth, to the Collection Account Bank, (A) any fees and expenses due
and payable to the Collection Account Bank (to the extent that such
fees and/or expenses shall not have been paid directly by TFC as
required under Section 16(c)) and (B) any Collection Account Bank
Indemnified Expenses due and payable pursuant to Section 16(d) (to
the extent that such Collection Account Bank Indemnified Expenses
shall not have been paid directly by TFC as required under Section
16(d)).
Eleventh, to the payment to Borrower, or to such other person as a
court of competent jurisdiction may direct, of any surplus then
remaining from such Proceeds and other cash.
(f) Default Rate of Interest. If Borrower shall default in the payment
of the principal of or interest on the Loans or any other Obligation, Borrower
shall on demand pay interest on such overdue principal or other amount and, to
the extent permitted by applicable law, on such overdue interest and any other
overdue amount, for each day at a rate per annum equal to three hundred (300)
basis points in excess of the interest rate for such Loans or other Obligations
that would otherwise be applicable hereunder. In each case, such interest shall
be calculated on the basis of the actual number of days elapsed in a year of 360
days and shall accrue from the date such payment was due until such amount is
paid in full.
(g) Power of Attorney. Notwithstanding the delivery of the Power of
Attorney, Lender agrees that it shall only use such Power of Attorney for the
purpose of carrying out the
47
provisions of this Agreement and taking any action and executing any instruments
which Lender may deem necessary or advisable to accomplish the purposes hereof,
including without limitation the right and power to receive, endorse, without
recourse, and collect all checks made payable to the order of Borrower
representing any distribution in respect of the Collateral or any part thereof
and to give full discharge for the same.
(h) Payments on Collateral to Borrower. Neither Borrower nor any other
Person shall be entitled to receive any payment pursuant to clause eleventh of
Section 12(e) until all Obligations hereunder shall have been paid in full.
Section 13. Maturity Date; Application of Remittances on Collateral;
Payment Dates; Repayment of Principal.
(a) Payment on Maturity Date. Borrower and Lender hereby agree that the
Obligations of Borrower under the Loans are payable on the Maturity Date for
such Loans unless earlier payment thereof is required pursuant to the terms of
this Agreement. Borrower and Lender hereby agree that the Obligations of
Borrower under the Note and all other Obligations of Borrower hereunder are
payable on the Maturity Date for the Loans (to the extent not otherwise paid)
unless earlier payment thereof is required pursuant to the terms of this
Agreement.
(b) Application of Remittances Prior to Commitment Termination Date.
Subject to Section 12(e) after an Event of Default and to the last paragraph of
this Section 13(b), on each Payment Date on or prior to the Commitment
Termination Date, the Collection Account Bank shall withdraw from the Collection
Account all remittances on the Collateral that are received in the Collection
Account on such Payment Date, together with all other amounts then on deposit in
the Collection Account, and shall apply such withdrawn amounts (based solely on
the information contained in the Remittance Report delivered with respect to
such Payment Date pursuant to Section 9(t) hereof) in the following order of
priority:
First, to Lender, any fees or reimbursements due and payable to
Lender under this Agreement, including without limitation any unpaid
Commitment Fees.
Second, to Lender, all accrued and unpaid interest then due and
payable on the Loans.
Third, to Lender, to the payment of the unpaid principal portion of
the Loans, but only to the extent that the Total Outstandings exceed
the Borrowing Base.
Fourth, if a Warehouse Lending Agreement Deficiency shall have
occurred and be continuing, to Lender for amounts due and unpaid
pursuant to the Warehouse Lending Agreement.
Fifth, if an Other Residual Financing Facility Deficiency shall have
occurred and be continuing, to the Other Residual Financing Facility
Lender for amounts due and unpaid pursuant to the Other Residual
Financing Agreement.
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Sixth, if an Other Warehouse Lending Agreement Deficiency shall have
occurred and be continuing, to the Other Residual Financing Facility
Lender for amounts due and unpaid pursuant to the Other Warehouse
Lending Agreement.
Seventh, to the Collection Account Bank, (A) the fees and expenses
due and payable to the Collection Account Bank on such Payment Date
(to the extent that such fees and/or expenses shall not have been
paid directly by TFC as required under Section 16(c)) and (B) any
Collection Account Bank Indemnified Expenses due and payable
pursuant to Section 16(d) as of such Payment Date (to the extent
that such Collection Account Bank Indemnified Expenses shall not
have been paid directly by Originator as required under Section
16(d)).
Eighth, to Borrower, or to such other person as a court of competent
jurisdiction may direct.
Lender may independently verify the information contained in the
Remittance Certificate delivered with respect to any Payment Date. If Lender
reasonably determines that there are errors or inaccuracies with respect to the
information in any such Remittance Certificate on the basis of which the
Collection Account Bank would otherwise apply amounts withdrawn from the
Collection Account on such Payment Date pursuant to this Section 13(b) or
Section 13(c) hereof, Lender shall inform Borrower and the Collection Account
Bank of such determination in writing no later than 1:00 p.m., New York City
time, on the Business Day immediately preceding such Payment Date. In such case,
Lender shall instruct the Collection Account Bank in writing no later than 1:00
p.m., New York City time, on such Payment Date to withdraw all amounts on
deposit in the Collection Account on such Payment Date, including all
remittances on the Collateral that are received in the Collection Account on
such Payment Date and to apply such withdrawn amounts in the order of priority
set forth in this Section 13(b) or Section 13(c), as the case may be, based
solely on information provided by Lender to the Collection Account Bank. If
Borrower fails to deliver, or cause TFC to deliver, a completed Remittance
Certificate to Lender and the Collection Account Bank on the third Business Day
prior to any Payment Date, then, no later than 1:00 p.m., New York City time, on
such Payment Date, Lender shall instruct the Collection Account Bank in writing
to withdraw all amounts on deposit in the Collection Account, including all
remittances on the Collateral that are received in the Collection Account on
such Payment Date, and to apply such withdrawn amounts in the order of priority
set forth in this Section 13(b) or Section 13(c), as the case may be, based
solely on information provided by Lender to the Collection Account Bank.
(c) Application of Remittances Following Commitment Termination Date.
Subject to Section 12(e) after an Event of Default and to the last paragraph of
Section 13(b), on each Payment Date after the Commitment Termination Date, the
Collection Account Bank shall withdraw from the Collection Account all
remittances on the Collateral that are received in the Collection Account on
such Payment Date, together with all other amounts then on deposit in the
Collection Account, and shall apply such withdrawn amounts (based solely on the
information contained in the Remittance Report delivered with respect to such
Payment Date pursuant to Section 9(t) hereof) in the following order of
priority:
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First, to Lender, any fees or reimbursements due and payable to
Lender under this Agreement, including without limitation any unpaid
Commitment Fees.
Second, to Lender, all accrued and unpaid interest then due and
payable on the Loans.
Third, to Lender, to the payment of the unpaid principal portion of
the Loans.
Fourth, if a Warehouse Lending Agreement Deficiency shall have
occurred and be continuing, to Lender for amounts due and unpaid
pursuant to the Warehouse Lending Agreement.
Fifth, if an Other Residual Financing Facility Deficiency shall have
occurred and be continuing, to the Other Residual Financing Facility
Lender for amounts due and unpaid pursuant to the Other Residual
Financing Agreement.
Sixth, if an Other Warehouse Lending Agreement Deficiency shall have
occurred and be continuing, to the Other Residual Financing Facility
Lender for amounts due and unpaid pursuant to the Other Warehouse
Facility.
Seventh, to the Collection Account Bank, (A) the fees and expenses
due and payable to the Collection Account Bank on such Payment Date
(to the extent that such fees and/or expenses shall not have been
paid directly by TFC as required under Section 16(c)) and (B) any
Collection Account Bank Indemnified Expenses due and payable
pursuant to Section 16(d) as of such Payment Date (to the extent
that such Collection Account Bank Indemnified Expenses shall not
have been paid directly by Originator as required under Section
16(d)).
Eighth, to Borrower, or to such other person as a court of competent
jurisdiction may direct.
(d) Obligations Unconditional. Borrower hereby acknowledges and agrees
its obligations to pay (x) accrued interest in respect of each Loan on the
related Payment Date, (y) the unpaid principal amount of each Loan on the
Maturity Date (or in the case of both clauses (x) and (y) such earlier times as
may be required pursuant to the terms of this Agreement) and (z) the payment of
all fees (including without limitation any Commitment Fees), reimbursements and
other amounts under from time to time payable under this Agreement or the other
Lender Loan Documents are in each case unconditional, and if any such amounts
are not paid when due and payable pursuant to the provisions of Section 13(b)
above such amounts shall be promptly paid by Borrower to Lender as otherwise
provided in this Agreement.
(e) Payment of Principal. In addition to the obligation of Borrower to
repay the Loans on the Maturity Date for such Loans or otherwise pursuant to the
terms of this Agreement, the principal portion of the Loans may be repaid in
whole or in part at the discretion of Borrower on any Payment Date for such
Loans by Borrower pursuant to the terms of this Agreement and the related
Confirmation Statement; provided that (i) Borrower shall have provided Lender
with not less than two (2) Business Days' prior written notice of Borrower's
intention to effect such repayment and the amount thereof, (ii) all payments of
interest then due and owing on the Loans
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are paid in full and (iii) no Event of Default has occurred and is continuing
with respect to any of Borrower's Obligations hereunder or under the Note.
(f) Event of Default. Nothing in this Section 13 shall be deemed to
limit the right of Lender to require, so long as an Event of Default shall have
occurred and be continuing, the accelerated and immediate payment by Borrower of
all Obligations arising hereunder and under the Note.
(g) Payments on Pledged ABS. Borrower acknowledges and agrees that all
payments on the Pledged ABS will be made to the Collection Account, for the
benefit of Lender. Lender shall, within one Business Day, remit to Borrower the
excess, if any, of any such amounts received by Lender over the amount of any
Obligations then accrued and payable to Lender pursuant to Section 13(b) or
Section 13(c), as applicable, provided, however, that if a Default or Event of
Default shall have occurred and be continuing, Lender shall be entitled to
retain all such payments for application to amounts due or to become due
hereunder until all Obligations have been paid in full.
Section 14. Payment of Liabilities.
(a) Borrower and Lender agree that any tax or other liability (excluding
any tax liability arising from the receipt by Lender of interest income on any
Loan under this Agreement) incurred by the beneficial owner or the registered
holder of any Collateral or Other Residual Financing Facility Collateral pledged
under the this Agreement shall be borne by Borrower.
(b) So long as any Obligations are outstanding hereunder, Borrower
agrees to indemnify Lender and each of its directors, officers, employees and
agents and hold each of them harmless from and against, any and all liabilities,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements, including without limitation the fees and disbursement of
counsel to Lender and such other parties, incurred by any of them in connection
with, arising out of or in any way relating to (i) any investigation, claim,
litigation or other proceeding, pending or threatened with respect to the
Collateral, the Other Residual Financing Facility Collateral or any Loan
Document (whether or not any of them is designated a party thereto), (ii) this
Agreement or any other Loan Document and any of the transactions contemplated
herein or therein, (iii) any use of the proceeds of any Loan by Borrower or (iv)
any liability for the payment of expenses of the trust funds established under
the applicable ABS Issuance Agreements. Notwithstanding anything to the contrary
contained herein, such right of indemnity shall not be available to the extent
that such liabilities, costs and expenses arose out of or resulted from the
gross negligence, willful misconduct, or bad faith of the Lender or any of its
agents, officers, directors, employees or representatives.
Section 15. Surety Waivers by Borrower Relating to Warehouse Facility
Obligations.
(a) Borrower acknowledges that its pledge of Collateral and Other
Residual Financing Facility Collateral under this Agreement secures the
Warehouse Facility Obligations of the Warehouse Borrower. Borrower agrees that
its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which
51
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Warehouse Facility Obligations. In furtherance of the
foregoing and without limiting the generality thereof, Borrower agrees as
follows: (i) Lender may from time to time, without notice or demand and without
affecting the validity or enforceability of this Agreement or giving rise to any
limitation, impairment or discharge of Borrower's liability hereunder, (A)
renew, extend, accelerate or otherwise change the time, place, manner or terms
of payment of the Warehouse Facility Obligations, (B) settle, compromise,
release or discharge, or accept or refuse any offer of performance with respect
to, or substitutions for, the Warehouse Facility Obligations or any agreement
relating thereto and/or subordinate the payment of the same to the payment of
any other obligations, (C) request and accept guaranties of the Warehouse
Facility Obligations and take and hold other security for the payment of the
Warehouse Facility Obligations, (D) release, exchange, compromise, subordinate
or modify, with or without consideration, any other security for payment of the
Warehouse Facility Obligations, any guaranties of the Warehouse Facility
Obligations, or any other obligation of any person with respect to the Warehouse
Facility Obligations, (E) enforce and apply any other security now or hereafter
held by or for the benefit of Lender in respect of the Warehouse Facility
Obligations and direct the order or manner of sale thereof, or exercise any
other right or remedy that Lender may have against any such security, as Lender
in its discretion may determine consistent with any Loan Documents, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (F) exercise any other rights available to Lender under the Loan Documents
and the agreements related to the Loan Documents, at law or in equity; and (ii)
this Agreement and the obligations of Borrower hereunder shall be valid and
enforceable and shall not be subject to any limitation, impairment or discharge
for any reason (other than payment in full of the Warehouse Facility
Obligations), including without limitation the occurrence of any of the
following, whether or not such Subsidiary shall have had notice or knowledge of
any of them: (A) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or demand or any right,
power or remedy with respect to the Warehouse Facility Obligations or any
agreement relating thereto, or with respect to any guaranty of or other security
for the payment of the Warehouse Facility Obligations, (B) any waiver, amendment
or modification of, or any consent to departure from, any of the terms or
provisions (including without limitation provisions relating to events of
default) of the Warehouse Documents or any agreement or instrument executed
pursuant thereto, or of any guaranty or other security for the Warehouse
Facility Obligations, (C) the Warehouse Facility Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (D) the application of payments received from any
source to the payment of indebtedness other than the Warehouse Facility
Obligations, even though Lender might have elected to apply such payment to any
part or all of the Warehouse Facility Obligations, (E) any failure to perfect or
continue perfection of a security interest in any the Warehouse Facility
Collateral or other collateral which secures any of the Warehouse Facility
Obligations, (F) any defenses, set-offs or counterclaims which company may
allege or assert against the Warehouse Borrower in respect of the Warehouse
Facility Obligations, including but not limited to failure of consideration,
breach of warranty, payment, statute of frauds, statute of limitations, accord
and satisfaction and usury, and (G) any other act or thing or omission, or delay
to do any other act or thing, which may or might in any manner or to any extent
vary the risk of Borrower as an obligor in respect of the Warehouse Facility
Obligations.
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(b) Borrower hereby waives, for the benefit of Lender: (i) any right to
require Lender as a condition of payment or performance by Borrower, to (A)
proceed against the Warehouse Borrower, any guarantor of the Warehouse Facility
Obligations or any other person, (B) proceed against or exhaust any other
security held from the Warehouse Borrower, any guarantor of the Warehouse
Facility Obligations or any other person, (C) proceed against or have resort to
any balance of any deposit account or credit on the books of Lender, any lender
in favor of the Warehouse Borrower or any other person, or (D) pursue any other
remedy in the power of Lender whatsoever; (ii) any defense arising by reason of
the incapacity, lack of authority or any disability or other defense of the
Warehouse Borrower including, without limitation, any defense based on or
arising out of the lack of validity or the unenforceability of the Warehouse
Facility Obligations or any agreement or instrument relating thereto or by
reason of the cessation of the liability of company from any cause other than
payment in full of the Warehouse Facility Obligations; (iii) any defense based
upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that
of the principal; (iv) any defense based upon Lender's errors or omissions in
the administration of the Warehouse Facility Obligations, except behavior which
amounts to bad faith; (v) (A) any principles or provisions of law, statutory or
otherwise, which are or might be in conflict with the terms of this Agreement
and any legal or equitable discharge of such Subsidiary's obligations hereunder,
(B) the benefit of any statute of limitations affecting such Subsidiary's
liability hereunder or the enforcement hereof, (C) any rights to set-offs,
recoupments and counterclaims, and (D) promptness, diligence and any requirement
that Lender protect, secure, perfect or insure any other security interest or
Lien or any property subject thereto; (vi) notices, demands, presentments,
protests, notices of protest, notices of dishonor and notices of any action or
inaction, notices of default under any Warehouse Documents or any agreement or
instrument related to the Warehouse Documents, notices of any renewal, extension
or modification of the Warehouse Facility Obligations or any agreement related
thereto, notices of any extension of credit to the Warehouse Borrower and
notices of any of the matters referred to in the preceding paragraph and any
right to consent to any thereof; and (vii) to the fullest extent permitted by
law, any defenses or benefits that may be derived from or afforded by law which
limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Agreement.
(c) Until the Warehouse Facility Obligations shall have been paid in
full and the commitments under the Loan Documents shall have terminated,
Borrower shall withhold exercise of (i) any claim, right or remedy, direct or
indirect, that Borrower now has or may hereafter have against the Warehouse
Borrower or any of its assets in connection with this Agreement or the
performance by the Warehouse Borrower of its Warehouse Facility Obligations
under the Warehouse Documents or its obligations under any agreement or
instrument related to the Warehouse Documents, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
or otherwise and including without limitation (A) any right of subrogation,
reimbursement or indemnification that Subsidiary now has or may hereafter have
against the Warehouse Borrower, (B) any right to enforce, or to participate in,
any claim, right or remedy that Lender now have or may hereafter have against
the Warehouse Borrower, and (C) any benefit of, and any right to participate in,
any Warehouse Facility Collateral or other collateral or security now or
hereafter held by Lender and (ii) any right of contribution such Subsidiary may
have against any guarantor of the Warehouse Facility Obligations. Borrower
further agrees that, to the extent the waiver of its rights of
53
subrogation, reimbursement, indemnification and contribution as set forth herein
is found by a court of competent jurisdiction to be void or voidable for any
reason, any rights of subrogation, reimbursement or indemnification Borrower may
have against the Warehouse Borrower or against any Warehouse Facility Collateral
or other collateral or security, and any rights of contribution Borrower may
have against the Warehouse Borrower, shall be junior and subordinate to any
rights Lender may have against the Warehouse Borrower, to all right, title and
interest Lender may have in any such other collateral.
(d) Lender shall have no obligation to disclose or discuss with Borrower
their assessment of the financial condition of the Warehouse Borrower. Borrower
has adequate means to obtain information from the Warehouse Borrower on a
continuing basis concerning the financial condition of the Warehouse Borrower
and its ability to perform its obligations under the Warehouse Documents, and
Borrower assumes the responsibility for being and keeping informed of the
financial condition of the Warehouse Borrower and of all circumstances bearing
upon the risk of nonpayment of the Warehouse Facility Obligations. Borrower
hereby waives and relinquishes any duty on the part of Lender to disclose any
matter, fact or thing relating to the business, operations or condition of the
Warehouse Borrower now known or hereafter known by Lender.
Section 16. The Collection Account Bank.
(a) Rights and Duties of Collection Account Bank.
(i) The Collection Account Bank accepts the trusts under this
Agreement in accordance with the provisions of this Agreement and agrees
to perform its duties required under this Agreement in accordance with the
terms of hereof to the end that the interests of Lender may be adequately
and effectively protected.
(ii) Notwithstanding the foregoing:
First, the Collection Account Bank undertakes to perform such duties
and only such duties as are specifically set forth in this Agreement
and no implied covenants or obligations shall be read into this
Agreement against the Collection Account Bank; and
Second, in the absence of bad faith on its part, the Collection
Account Bank may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon the face value of the certificates, reports, resolutions,
documents, orders, opinions or other instruments furnished to the
Collection Account Bank and conforming to the requirements of this
Agreement; provided, however, that the Collection Account Bank shall
not be responsible for the accuracy or content of any such
resolution, certificate, statement, opinion, report, document, order
or other instrument; provided further, however, that the Collection
Account Bank shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Agreement. If any such instrument is found not to conform in any
material respect to the requirements of this Agreement, the
Collection Account Bank shall notify Lender in the event that
54
the Collection Account Bank, after so requesting, does not receive a
satisfactorily corrected instrument.
(iii) The Collection Account Bank may not be relieved from liability
for its own negligent action, its own negligent failure to act or its own
willful misconduct, except that:
First, this paragraph does not limit the effect of Section
16(a)(ii); and
Second, the Collection Account Bank shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to the terms of this
Agreement.
(iv) No provision of this Agreement shall require the Collection
Account Bank to advance, expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder, if
it shall have reasonable grounds to believe that repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it.
(b) Individual Rights of Collection Account Bank. The Collection Account
Bank in its individual or any other capacity may deal with Borrower and/or its
Affiliates with the same rights it would have if it were not Collection Account
Bank.
(c) Collection Account Bank's Fees and Expenses. The Collection Account
Bank shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between TFC and the
Collection Account Bank (as outlined in the fee letter from the Collection
Account Bank to TFC, dated April 29, 2005), and the Collection Account Bank
shall be entitled to be reimbursed by TFC for its other reasonable expenses
hereunder, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Collection Account Bank
may employ in connection with the exercise and performance of its rights and its
duties hereunder. If any fees and/or expenses due to the Collection Account Bank
as of any Payment Date shall not have been paid by TFC, the Collection Account
Bank shall be entitled to receive such outstanding fees and expenses from
Borrower on such Payment Date, in the priority set forth in clause seventh of
Section 13(b) or Section 13(c) or clause tenth of Section 12(e), as applicable.
Any amounts paid pursuant to the immediately preceding sentence shall be payable
solely in the priority set forth in clause seventh of Section 13(b) or Section
13(c) or clause tenth of Section 12(e), as applicable, and shall be deemed not
to be a part of the Collateral immediately after such payment.
(d) Indemnity to Collection Account Bank. TFC shall be liable as primary
obligor for, and shall indemnify the Collection Account Bank and its successors,
assigns, agents and servants (collectively, the "Collection Account Bank
Indemnified Parties") from and against, any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever (collectively, "Collection Account Bank
Indemnified Expenses") which may at any time be imposed on, incurred by, or
asserted against the Collection Account Bank or any Collection Account Bank
Indemnified Party in any way relating to or
55
arising out of this Agreement, except only that TFC shall not be liable for or
required to indemnify a Collection Account Bank Indemnified Party from and
against Collection Account Bank Indemnified Expenses arising or resulting from
the Collection Account Bank's own willful misconduct, negligence or bad faith.
The indemnities contained in this Section 16(d) shall survive the resignation or
termination of the Collection Account Bank or the termination of this Agreement.
In any event of any claim, action or proceeding for which indemnity will be
sought pursuant to this Section 16(d), the Collection Account Bank Indemnified
Party's choice of legal counsel shall be subject to the approval of TFC, which
approval shall not be unreasonably withheld. If any Collection Account Bank
Indemnified Expenses due to any Collection Account Bank Indemnified Party as of
any Payment Date shall not have been paid by TFC, the Collection Account Bank,
on behalf of such Collection Account Bank Indemnified Party, shall be entitled
to receive such outstanding fees and expenses from Borrower on such Payment
Date, in the priority set forth in clause seventh of Section 13(b) or Section
13(c) or clause tenth of Section 12(e), as applicable. Any amounts paid pursuant
to the immediately preceding sentence shall be payable solely in the priority
set forth in clause seventh of Section 13(b) or Section 13(c) or clause tenth of
Section 12(e), as applicable, and shall be deemed not to be a part of the
Collateral immediately after such payment.
Borrower, Lender, the Collection Account Bank and TFC acknowledge that
TFC's agreement to perform its obligations pursuant to Section 16(c) and this
Section 16(d) is partial consideration to Lender for Lender's consent to the
appointment of TFC as the initial Servicer under the Servicing Agreement.
(e) Replacement of Collection Account Bank.
(i) No resignation or removal of the Collection Account Bank and
no appointment of a successor Collection Account Bank shall become
effective until the acceptance of appointment by the successor Collection
Account Bank pursuant to this Section 16(e)(i). The Collection Account
Bank may resign at any time by so notifying Lender and Borrower. Lender
may remove the Collection Account Bank by so notifying the Collection
Account Bank and may appoint a successor Collection Account Bank. If the
Collection Account Bank resigns or is removed or if a vacancy exists in
the office of Collection Account Bank for any reason (the Collection
Account Bank in such event being referred to herein as the retiring
Collection Account Bank), Lender shall promptly appoint a successor
Collection Account Bank.
(ii) Notwithstanding the replacement of the Collection Account Bank
pursuant to this Section, TFC's and Borrower's obligations under Section
16(c) and Section 16(d) shall continue for the benefit of the retiring
Collection Account Bank. Without limitation of the foregoing, the retiring
Collection Account Bank shall be paid all amounts owed to it upon its
resignation or removal, by TFC or Borrower in accordance with Section
16(c) and Section 16(d). The retiring Collection Account Bank shall not be
liable for the acts or omissions of any Successor Collection Account Bank.
(f) Successor Collection Account Bank. If the Collection Account Bank
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Collection Account Bank.
56
(g) Waiver of Setoffs. The Collection Account Bank hereby expressly
waives any and all rights of setoff that the Collection Account Bank may
otherwise at any time have under applicable law with respect to the Collection
Account and agrees that amounts in the Collection Account shall at all times be
held and applied solely in accordance with the provisions hereof and of the
other Lender Loan Documents.
(h) No Petition.
(i) The Collection Account Bank shall not, prior to the date that
is one year and one day after the termination of this Agreement and the
payment in full of all Loans, all other amounts payable hereunder and all
amounts payable under the other Loan Documents, petition or otherwise
invoke or cause Borrower to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against
Borrower under any federal or State bankruptcy, insolvency or similar law
or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of Borrower or any substantial part
of its property, or ordering the winding up or liquidation of the affairs
of Borrower.
(ii) Lender shall not petition or otherwise invoke or cause
Securitization LLC to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against
Securitization LLC under any federal or State bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of Securitization LLC or
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of Securitization LLC.
(i) Representations and Warranties of the Collection Account Bank. The
Collection Account Bank represents and warrants to Lender, Borrower and TFC as
follows:
(i) Due organization. The Collection Account Bank is a national
banking association and is duly authorized and licensed under applicable
law to conduct its business as presently conducted.
(ii) Power and Authority. The Collection Account Bank has all
requisite right, power and authority to execute and deliver this Agreement
and to perform all of its duties as Collection Account Bank hereunder.
(iii) Due Authorization. The execution and delivery by the
Collection Account Bank of this Agreement, and the performance by the
Collection Account Bank of its duties hereunder, have been duly authorized
by all necessary banking association proceedings and no further approvals
or filings, including any governmental approvals, are required for the
valid execution and delivery by the Collection Account Bank, or the
performance by the Collection Account Bank, of this Agreement.
(iv) Valid and Binding Agreement. The Collection Account Bank has
duly executed and delivered this Agreement, and this Agreement constitutes
the legal, valid and binding obligation of the Collection Account Bank,
enforceable against the Collection Account Bank in accordance with its
terms, except as (x) such enforceability
57
may be limited by insolvency, reorganization and similar laws relating to
or affecting the enforcement of creditors' rights generally and (y) the
availability of equitable remedies may be limited by equitable principles
of general applicability.
Section 17. Miscellaneous.
(a) Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder Lender is hereby authorized at any
time and from time to time, without notice to Borrower, or to any other person
or entity, any such notice being hereby expressly waived, to set-off against any
obligation owing by Lender or any Affiliate of Lender to Borrower, or against
any funds or other property of Borrower or any of its Subsidiaries held by or
otherwise in the possession of Lender or any Affiliate of Lender, the
obligations and liabilities of Borrower or any of its Subsidiaries to Lender
under this Agreement irrespective of whether Lender shall have made any demand
hereunder.
(b) Amendments, Waivers, etc. Neither this Agreement nor any terms
hereof may be amended, modified or otherwise supplemented except in writing
signed by the parties hereto. In the case of any waiver of a Default or Event of
Default, any Default or Event of Default waived shall be deemed to be cured and
not continuing; but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.
(c) No Waiver; Remedies Cumulative. No failure or delay on the part of
the Lender in exercising any right, remedy, power or privilege under any Lender
Loan Document shall operate as a waiver thereof, nor shall any single or partial
exercise of, or any abandonment or discontinuance of steps to enforce any right,
remedy, power or privilege under any Lender Loan Document preclude any other or
further exercise thereof or the exercise of any other rights, remedies or
privileges thereunder. The rights, remedies, powers and privileges provided in
the Lender Loan Documents are cumulative and may be exercised singularly or
concurrently and are not exclusive of any other rights, remedies, powers or
privileges provided by law. In addition to the rights and remedies granted to it
in this Agreement or under the Note, Lender shall have all the rights and
remedies of a secured party under the UCC.
(d) Payment of Expenses, Indemnity, etc. Borrower agrees to:
58
(i) pay or reimburse Lender for the following on the Closing Date
(to the extent incurred on or prior to the Closing Date) or within 30 days
following presentment of invoices (if incurred after the Closing Date):
all of Lender's out-of-pocket fees, costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, modification or supplement to, or any waiver under, any Lender
Loan Document and any other document prepared in connection therewith, and
the consummation and administration of the transactions contemplated
thereby, including, without limitation, the reasonable fees and
disbursements of counsel to Lender with respect to any of the foregoing,
including, without limitation, such fees and disbursements incurred in
advising the Lender from time to time as to its rights and remedies under
any Loan Document;
(ii) pay on demand all reasonable costs and expenses of Lender,
including without limitation the reasonable fees and disbursements of
counsel to Lender, in connection with the occurrence or continuance of a
Default or Event of Default and the enforcement, collection, protection or
preservation (whether through negotiations, legal proceedings or
otherwise) of this Agreement or any other Loan Document, the Collateral,
the Other Residual Financing Facility Collateral, any Obligation or any
right, remedy, power or privilege of Lender hereunder or under any other
Loan Document;
(iii) pay and hold Lender harmless from and against any and all
present and future stamp, excise, recording or other similar taxes or fees
payable in connection with the execution, delivery, recording and filing
of any Loan Document and hold Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission by
Borrower to pay such taxes or fees; and
(iv) indemnify Lender and its Affiliates and each of their
respective directors, officers, employees and agents and hold each of them
harmless from and against, any and all liabilities, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements, including without limitation the reasonable fees and
disbursement of counsel to Lender and such other parties, incurred by any
of them in connection with, arising out of or in any way relating to any
investigation, claim, litigation or other proceeding, pending or
threatened (whether or not any of them is designated a party thereto), in
connection with, arising out of or in any way related to this Agreement or
any other Loan Document or any of the transactions contemplated herein or
therein or any use of the proceeds of any Loan by Borrower.
Notwithstanding anything to the contrary contained herein, such right of
indemnity shall not be available to any such indemnified party to the
extent that such liabilities, costs and expenses resulted from the gross
negligence, willful misconduct or bad faith on the part of such
indemnified party or any of its agents, officers, directors, employees or
representatives.
If and to the extent that the indemnity obligations of Borrower under this
Section 17(d) may be unenforceable for any reason, Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of such
indemnity obligations which is permissible under applicable law.
59
(e) Severability. Any provision of this Agreement or any other Loan
Document which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without invalidating the
remaining provisions hereof or thereof to the extent permitted by law or
affecting the validity, enforceability or legality of such provisions in any
other jurisdiction.
(f) Entire Agreement. This Agreement and the other Lender Loan Documents
constitute the entire agreement among the parties relative to the subject matter
hereof. Any previous agreement among the parties with respect to the subject
matter hereof is superseded by this Agreement and the other Lender Loan
Documents. Except to the extent otherwise provided in Section 17(v), nothing in
this Agreement or in the Lender Loan Documents, express or implied, is intended
to confer upon any party other than the parties hereto and thereto any rights,
remedies, obligations or liabilities under or by reason of this Agreement or the
other Lender Loan Documents. Notwithstanding the foregoing, nothing in this
clause (f) of this Section shall supersede, nullify, derogate from or otherwise
affect any rights of either party under any document or instrument related to
any other residual financing agreement between Borrower and the Other Residual
Financing Facility Lender.
(g) Binding Effect. This Agreement shall be binding upon and shall be
enforceable by Borrower and Lender and their respective successors and permitted
assigns.
(h) GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY.
(i) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN FOR THE PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE,
ANY OTHER LENDER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. NOTHING HEREIN SHALL AFFECT THE RIGHT OF EITHER PARTY HERETO TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE OTHER PARTY IN
ANY OTHER JURISDICTION. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(ii) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
60
(iii) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS
PERSONALLY DELIVERED OR TRANSMITTED BY REGISTERED MAIL TO THE ADDRESS SET
FORTH FOR NOTICES IN SECTION 10.09; PROVIDED THAT UPON ANY SUCH SERVICE BY
REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH, SEND
NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION.
NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF EITHER PARTY HERETO TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(i) Headings Descriptive. The headings of the several articles and
sections of this Agreement, and the Table of Contents, are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provisions of this Agreement.
(j) Assignments; Participations. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Borrower may not assign any of its rights or obligations
hereunder, under the Note or under any other Loan Document without the prior
written consent of Lender. Lender may assign, participate or otherwise transfer
to any Affiliate of Lender or any other Person all or any of its rights or
obligations under this Agreement and the other Lender Loan Documents. Borrower
agrees to cooperate with Lender in connection with any such assignment or
transfer, to execute and deliver such replacement notes, and to enter into such
restatements of, and amendments, supplements and other modifications to, this
Agreement and the other Loan Documents in order to give effect to such
assignment or transfer.
(k) Notices, Payments, Deliveries. Unless otherwise provided herein, all
notices and other communications provided for hereunder shall be in writing and
delivered by overnight courier or registered mail, except in the case of
Borrowing Request under Section 2(f) which may be delivered by facsimile
transmission, and such notices and other communications shall be effective when
received at the address for notices for the party to whom such notice or
communications is to be given as follows:
To Lender: Citigroup Global Markets Realty Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Citigroup Global Markets Realty Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
61
To Borrower: Triad Financial Residual Special Purpose LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Collection Account Bank: JPMorgan Chase Bank, National Association
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Worldwide Securities Services/Global
Debt -- Triad Financial
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
provided, however, that a facsimile or other form of electronic transmission
shall be deemed to be received by the parties hereto when transmitted so long as
the transmitting machine has provided an electronic confirmation of such
transmission and such facsimile or other form of electronic transmission is
confirmed with a printed paper copy thereof by mail or overnight courier
service. All payments on and deliveries of Collateral hereunder shall be made to
the address or account for payments and deliveries of such Collateral for the
party to whom such payment or delivery is to be made as set forth above. Either
party may revise any information relating to it by notice in writing to the
other party, which notice shall be effective on the third Business Day following
receipt thereof.
(l) Counterparts. This Agreement may be signed in any number of
counterparts which, taken together, shall constitute a full and original
agreement for all purposes.
(m) Termination. On the date when all Obligations shall have been
indefeasibly paid in full, this Agreement shall terminate and Lender shall
release its Liens and security interest hereunder and assign, transfer and
deliver, against receipt, any remaining Collateral and Other Residual Financing
Facility Collateral and money received in respect thereof to or on the order of
Borrower. Upon the request of Borrower, Lender will then execute termination
statements and such other documents as Borrower may reasonably request as are
necessary to make clear upon the public record the termination of the Liens and
security interests created hereby with respect to such assignment. The
obligations of Borrower under Section 17(d) above and Section 17(p) below shall,
with respect to each transaction entered into hereunder, survive any termination
hereof.
(n) Aggregate Amount of Loans; Disbursement of Funds.
(i) The aggregate outstanding principal amount of the Loans made
by Lender hereunder shall be limited to the Aggregate Maximum Advance
Amount.
(ii) Borrower may request disbursement of amounts borrowed
hereunder upon not less than two (2) Business Days' written notice to
Lender.
62
(o) Lender's Right to Pledge. Nothing in this Agreement shall preclude
Lender from engaging in transactions with third parties involving the selling
pursuant to a repurchase arrangement, pledging or hypothecating of the
Collateral, but no such transaction shall relieve Lender of its obligations
hereunder. Notwithstanding any such sale, pledge or hypothecation of the
Collateral, Borrower shall be entitled to deal solely with Lender with respect
to such Collateral and shall not be required to deal with any such third party
unless a Default or Event of Default shall have occurred and be continuing.
Lender hereby grants to Borrower the right to perform in Lender's stead under
any repurchase, reverse repurchase, loan or similar transaction in which Lender
has sold, pledged or otherwise transferred any Pledged ABS in the event that
Lender has defaulted on its obligations to repurchase or accept redelivery of
such Pledged ABS in conformity with the terms of any such transaction and so
long as an Event of Default hereunder by Borrower shall not have occurred and be
continuing. Lender further acknowledges that each Pledged ABS identified in a
Confirmation Statement and included as Collateral for the Loans hereunder is
unique and identifiable on the date of such pledge and that an award of money
damages would be insufficient to compensate Borrower for the losses and damages
incurred by Borrower in the event of Lender's failure to release and redeliver
any Pledged ABS upon the repayment of the Loans by Borrower as provided
hereunder.
(p) [Reserved].
(q) Further Assurances. At its sole cost and without expense to Lender,
on demand, Borrower shall do, execute, acknowledge and deliver all and every
such further acts, deeds, conveyances, assignments, notices of assignment,
transfers and assurances as Lender shall from time to time reasonably require
for better assuring, conveying, assigning, transferring and confirming unto
Lender the property and rights pledged or assigned or intended now or hereafter
so to be, or which Borrower may be or may hereafter become bound to convey,
pledge or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Agreement or any of the other Loan
Documents, or for filing, registering or recording of the Loan Documents.
(r) Remedies Cumulative. All rights, remedies and powers of Lender
hereunder and in connection herewith are irrevocable and cumulative, and not
alternative or exclusive, and shall be in addition to all other rights, remedies
and powers of Lender whether under law, equity or agreement. In addition to the
rights and remedies granted to it in this Agreement or under the Note, Lender
shall have all the rights and remedies of a secured party under the UCC.
(s) Litigation. Notwithstanding any termination hereof, Borrower hereby
agrees that any legal action or proceeding against it in connection herewith may
be brought in the courts of the State of New York or of the United States of
America located in the City and State of New York, Borough of Manhattan, as
Lender may elect, and Borrower hereby irrevocably submits to the jurisdiction of
each of said courts, and waives any objection on the grounds of venue, forum non
conveniens or similar grounds.
(t) Confidentiality of Information. Each of Lender and Borrower agrees
to keep information obtained by it pursuant hereto and the other Loan Documents
confidential in accordance with its customary practices. It further agrees that
it shall only use such information in connection with the transactions
contemplated by this Agreement and/or the other Loan
63
Documents, including for the purposes of its legal, credit or compliance review
in connection with any such transactions, or as required by law or regulation
and not disclose any such information other than (a) to its affiliates,
officers, directors, employees, representatives, counsel and agents that are, or
are expected to be, involved in the evaluation of such information in connection
with (i) the transactions contemplated by this Agreement and/or the other Loan
Documents, (ii) its legal or compliance or credit review in connection with any
such transactions or (iii) enforcing its rights and performing under the terms
of this Agreement and/or the other Loan Documents and are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes (i) available to such party from a source
other than the party hereto to which such information relates or any of its
affiliates, and such disclosing party does not know that such information is
disclosed in violation of a confidentiality agreement or is otherwise
unauthorized or (ii) available to the public other than as a result of a breach
by such party of this Section 17(t), (c) to the extent disclosure is required by
law, regulation or judicial order or requested or required by bank or other
regulators or auditors, as long as, to the extent permitted by Requirements of
Law, notice is given to the party hereto to which such information relates by
the disclosing party prior to (or, in the event that prior notice is not
reasonably practicable or in case of a judicial order, promptly after) such
disclosure, or (d) to current or prospective assignees, participants and
contractual counterparties in connection with the transactions contemplated by
this Agreement and/or the other Loan Documents or in any hedging contract
permitted under the Loan Documents and to their respective representatives and
legal or financial advisors, in each case and to the extent such assignees,
participants, grantees or counterparties agree to be bound by, and to cause
their advisors to comply with, the provisions of this Section 17(t).
Notwithstanding any other provision in this Agreement, Borrower hereby agrees
that Lender (and each of its officers, directors, employees, accountants,
attorneys and other advisors) may disclose to any and all persons, without
limitation of any kind, the U.S. tax treatment and U.S. tax structure of the
transactions contemplated hereby and all materials of any kind (including
opinions and other tax analyses) that are provided to Lender relating to such
U.S. tax treatment and U.S. tax structure, other than any information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws. The provisions of this Section 17(t) shall survive termination
of this Agreement for a period of two years.
(u) Specific Performance. Borrower acknowledges and agrees that no
adequate remedy at law exists for a breach by it of this Agreement and the terms
of this Agreement related to it may be enforced by Lender in an action for
specific performance.
(v) Benefits of Agreement. Nothing in this Agreement or the Note,
express or implied, shall give to any person, other than the parties to this
Agreement and their permitted successor and assigns, any benefit or any legal or
equitable right, remedy or claim under this Agreement; provided, however, that
the Other Residual Financing Facility Lender shall be an express third-party
beneficiary of clauses eighth and ninth of Section 12(e), clauses fifth and
sixth of Section 13(b) and clauses fifth and sixth of Section 13(c) of this
Agreement.
(w) Lender Consent to Transactions. Notwithstanding any provision of
this Agreement or any of the other Loan Documents, any requirement in this
Agreement for TFC or Borrower to obtain the prior consent of Lender to any
action or transaction shall not be effective or binding, to the extent the
Obligations shall have been indefeasibly repaid in full (other than
64
any indemnification or expense claims which have not been made) and each of the
Loan Documents shall have been terminated prior to such action or transaction.
65
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
TRIAD FINANCIAL RESIDUAL SPECIAL
PURPOSE LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Attorney-In-Fact
CITIGROUP GLOBAL MARKETS REALTY
CORP.
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Authorized Signatory
Acknowledged and Accepted
(solely with respect to Section
16(c) and Section 16(d)):
TRIAD FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Corporate Secretary
SCHEDULE III
REPRESENTATIONS AND WARRANTIES AS TO SECURITIZATIONS
(a) Each of TFC and its Affiliates is in compliance in all material
respects with all agreements to which it is bound under all applicable ABS
Issuance Agreements. Borrower has made available to Lender true and complete
copies of all ABS Issuance Agreements and related transaction and other closing
documents. Each party to the applicable ABS Issuance Agreements has performed in
all material respects all of its respective obligations thereunder, and there is
no pending or threatened cancellation of any ABS Issuance Agreement, and neither
TFC nor any of its Affiliates has received any notice to the effect that any
party to any ABS Issuance Agreement intends to cease doing business with TFC or
any of its Affiliates.
(b) Neither the TFC nor any of its Affiliates, including any issuer or
depositor in any Securitization (a "Securitization Issuer"), and no servicer
with respect to a Securitization, has taken any action which would cause any
trust, corporation, partnership or other entity ("Securitization Entity") to be
registered as an investment company pursuant to the Investment Company Act of
1940, as amended (the "Investment Company Act"), or which would cause any
Securitization Entity to be "controlled by" an investment company within the
meaning of the Investment Company Act.
(c) Each Securitization Issuer and each servicer with respect to a
Securitization has made all filings required to be made by or under the
Securities Exchange Act of 1934, as amended. There is no pending or threatened
claim that any private placement memorandum or other offering document, or any
amendments or supplements thereto contained, as of the date on which it was
issued by a Securitization Entity in any Securitization, any untrue statement of
a material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No securities were
issued or sold by TFC or any of its Affiliates in violation of Section 5 of the
Securities Act of 1933, as amended, in any Securitization.
(d) No Securitization Issuer, no depositor or servicer with respect to a
Securitization and no entity serving as trustee for any Securitization has taken
any action which would adversely affect the characterization or tax treatment
for federal, state or local income or franchise tax purposes of any
Securitization Entity or any securities issued in a Securitization, and all
required federal, state and local tax and information returns relating to any
Securitization have been properly filed.
(e) Since December 31, 2004, no rating agency has downgraded, or given
the TFC any indication that it is considering a downgrading of any securities
issued in any Securitization.
(f) Except as would not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, neither TFC nor any of its
Affiliates has done or failed to do, or has caused to be done or omitted to be
done, any act, the effect of which would operate to invalidate or materially
impair (x) any approvals of any rating agency, insurer, investor or other party
to any ABS Issuance Agreement, or (y) any fidelity bond, direct surety bond, or
errors and
S-III-1
omissions insurance policy required by any agency, insurer or investor, or
other party to any ABS Issuance Agreement.
S-III-2
