Exhibit 10(m)
PURCHASE AND SALE AGREEMENT
Dated as of December 22, 2000
between
AFC AIM CORPORATION
and
AUTOMOTIVE FINANCE CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE I
AGREEMENT TO PURCHASE AND CONTRIBUTE
1.1. Agreement to Purchase and Sell...........................................2
1.2. Timing of Purchases......................................................3
1.3. Consideration for Purchases..............................................3
1.4. Purchase and Sale Termination Date.......................................3
1.5. Intention of the Parties.................................................3
1.6. Certain Definitions......................................................4
ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price............................................5
ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. Contribution of Receivables..............................................7
3.2. Initial Purchase Price Payment...........................................7
3.3. Subsequent Purchase Price Payments.......................................7
3.4. Settlement as to Specific Receivables....................................8
3.5. Reconveyance of Receivables..............................................9
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase.................................9
4.2. Certification as to Representations and Warranties......................11
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
5.1. Organization and Good Standing..........................................11
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TABLE OF CONTENTS
(continued)
PAGE
5.2. Due Qualification.......................................................11
5.3. Power and Authority; Due Authorization..................................12
5.4. Valid Sale or Contribution; Binding Obligations.........................12
5.5. No Violation............................................................12
5.6. Proceedings.............................................................12
5.7. Bulk Sales Act..........................................................13
5.8. Government Approvals....................................................13
5.9. Financial Condition.....................................................13
5.10. Margin Regulations.....................................................13
5.11. Quality of Title.......................................................13
5.12. Accuracy of Information................................................14
5.13. Offices................................................................14
5.14. Trade Names............................................................14
5.15. Taxes..................................................................15
5.16. Licenses and Labor Controversies.......................................15
5.17. Compliance with Applicable Laws........................................15
5.18. Reliance on Separate Legal Identity....................................15
5.19. Purchase Price.........................................................15
5.20. Eligibility of Receivables.............................................15
ARTICLE VI
COVENANTS OF THE ORIGINATOR
6.1. Affirmative Covenants...................................................16
6.2. Reporting Requirements..................................................18
6.3. Negative Covenants......................................................19
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1. Rights of the Company...................................................20
7.2. Responsibilities of the Originator......................................20
7.3. Further Action Evidencing Purchases.....................................21
7.4. Application of Collections..............................................22
ARTICLE VIII
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TABLE OF CONTENTS
(continued)
PAGE
PURCHASE AND SALE TERMINATION EVENTS
8.1. Purchase and Sale Termination Events....................................22
8.2. Remedies................................................................23
ARTICLE IX
INDEMNIFICATION
9.1. Indemnities by the Originator...........................................24
ARTICLE X
MISCELLANEOUS
10.1. Amendments, etc........................................................27
10.2. Notices, etc...........................................................27
10.3. No Waiver; Cumulative Remedies.........................................27
10.4. Binding Effect; Assignability..........................................27
10.5. Governing Law..........................................................28
10.6. Costs, Expenses and Taxes..............................................28
10.7. Submission to Jurisdiction.............................................29
10.8. Waiver of Jury Trial...................................................29
10.9. Captions and Cross References; Incorporation by Reference..............29
10.10. Execution in Counterparts.............................................29
10.11. Acknowledgment and Agreement..........................................30
SCHEDULES
SCHEDULE 5.13 Office Locations
SCHEDULE 5.14 Trade Names
SCHEDULE 5.15 Tax Matters
EXHIBITS
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TABLE OF CONTENTS
(continued)
PAGE
EXHIBIT A Form of Company Note
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (as amended, supplemented or modified
from time to time, this "AGREEMENT"), dated as of December 22, 2000, is between
AUTOMOTIVE FINANCE CORPORATION, an Indiana corporation, as originator and seller
(the "ORIGINATOR"), and AFC AIM CORPORATION, an Indiana corporation (the
"COMPANY"), as purchaser.
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to the Loan and Servicing
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "LOAN AND SERVICING AGREEMENT"), among the Company, the
Originator, as initial Servicer, and BANK OF MONTREAL, CHICAGO BRANCH, as lender
(together with its successors and assigns, the "LENDER").
BACKGROUND
1. The Company is a special purpose corporation, all of the capital
stock of which is wholly-owned by the Originator.
2. On the Closing Date, the Originator is transferring a portion of
the Receivables and Related Rights in existence on the Closing Date to the
Company as a capital contribution to the Company.
3. In order to finance its business, the Originator wishes to sell
certain Receivables and Related Rights from time to time to the Company, and the
Company is willing, on the terms and subject to the conditions set forth herein,
to purchase such Receivables and Related Rights from the Originator.
4. The Company intends to finance its purchase of the Receivables
and Related Rights through secured loans to be made to the Company by the Lender
pursuant to the Loan and Servicing Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND CONTRIBUTE
1.1. AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the
conditions set forth in this Agreement (including ARTICLE IV), and in
consideration of the Purchase Price, the Originator agrees to sell to the
Company, and does hereby sell to the Company, and the Company agrees to purchase
from the Originator, and does hereby purchase from the Originator, without
recourse and without regard to collectibility, all of the Originator's right,
title and interest in and to:
(a) each Receivable of the Originator that existed and was owing
to the Originator as of the opening of the Originator's business on December 22,
2000 (the "CLOSING DATE") (other than the portion of the Receivables and Related
Rights contributed by the Originator to the Company pursuant to SECTION 3.1 (the
"CONTRIBUTED PORTION"));
(b) each Receivable created or originated by the Originator from
the opening of the Originator's business on the Closing Date to and including
the Purchase and Sale Termination Date;
(c) all of the Originator's right, title and interest under the
Isuzu Loan Documents;
(d) all of the Originator's right, title and interest in all
payments of principal, interest, administrative fees or other amounts due in
respect of any Advance or other disbursement under the Promissory Note and
Security Agreement.
(e) all rights to, but not the obligations under, all Related
Security (other than with respect to the Contributed Portion);
(f) all monies due or to become due with respect to any of the
foregoing;
(g) all books and records related to any of the foregoing; and
(h) all proceeds thereof (as defined in the UCC) including,
without limitation, all funds which either are received by the Originator, the
Company or the Servicer from or on behalf of the Obligor in payment of any
amounts owed (including, without limitation, finance charges, interest and all
other charges) in respect of any Receivable (other than the Contributed
Portion), or that are (or are to be) applied to amounts owed in respect of any
such Receivable (including, without limitation, insurance payments and net
proceeds of the sale or other disposition of vehicles or other collateral or
property of the Obligor or any other Person directly or indirectly liable for
the payment of any such Receivable that are (or are to be) applied thereto).
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All purchases and contributions hereunder shall be made without recourse, but
shall be made pursuant to and in reliance upon the representations, warranties
and covenants of the Originator, in its capacity as Originator and contributor,
set forth in each Transaction Document. The Company's foregoing commitment to
purchase such Receivables and the proceeds and rights described in SUBSECTIONS
(c) through (h) of this SECTION 1.1 (collectively, including such item relating
to Contributed Portion, the "RELATED RIGHTS") is herein called the "PURCHASE
FACILITY."
1.2. TIMING OF PURCHASES.
(a) CLOSING DATE PURCHASES. The Originator's entire right, title
and interest in (i) each Receivable that existed and was owing to the Originator
as of the opening of the Originator's business on the Closing Date, (other than
Contributed Portion) and (ii) all Related Rights with respect thereto shall be
sold to the Company on the Closing Date.
(b) REGULAR PURCHASES. After the Closing Date, each Receivable
created or originated by the Originator and all Related Rights shall be
purchased and owned by the Company (without any further action) upon the
creation or origination of such Receivable.
1.3. CONSIDERATION FOR PURCHASES. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to make all Purchase
Price payments to the Originator.
1.4. PURCHASE AND SALE TERMINATION DATE. The "PURCHASE AND SALE
TERMINATION DATE" shall be the earlier to occur of (a) the date of the
termination of this Agreement pursuant to SECTION 8.2 and (b) the Business Day
immediately following the day on which the Originator shall have given notice to
the Company that the Originator desires to terminate this Agreement.
1.5. INTENTION OF THE PARTIES. It is the express intent of the parties
hereto that the transfers of the Receivables (other than Contributed Portion)
and Related Rights (other than those relating to the Contributed Portion) by the
Originator to the Company, as contemplated by this Agreement be, and be treated
as, sales and not as secured loans secured by the Receivables and Related
Rights. If, however, notwithstanding the intent of the parties, such
transactions are deemed to be loans, the Originator hereby grants to the Company
a first priority security interest in all of the Originator's right, title and
interest in and to each of the items described in clauses (a) through (h) of
SECTION 1.1 above to secure all of the Originator's obligations hereunder.
1.6. CERTAIN DEFINITIONS. As used in this Agreement, the terms
"Material Adverse Effect" and "Solvent" are defined as follows:
"MATERIAL ADVERSE EFFECT" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, operations, property or financial
condition of the Originator;
(ii) the ability of the Originator or the Servicer (if it is
the Originator) to perform its
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obligations under the Loan and Servicing Agreement or any other Transaction
Document to which it is a party or the performance of any such obligations;
(iii) the validity or enforceability of the Loan and
Servicing Agreement or any other Transaction Document;
(iv) with respect to the Purchase and Sale Agreement, the
status, existence, perfection, priority or enforceability of Company's interest
in the Receivables or Related Rights; or
(v) the collectibility of the Receivables.
"SOLVENT" means, with respect to any Person at any time, a
condition under which:
(i) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than such
Person's total liabilities (including contingent and unliquidated liabilities)
at such time;
(ii) such Person is and shall continue to be able to pay all
of its liabilities as such liabilities mature; and
(iii) such Person does not have unreasonably small capital
with which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of all the
facts and circumstances then existing, represents the amount which can
reasonably be expected to become an actual or matured liability;
(B) the "fair value" of an asset shall be the amount which may
be realized within a reasonable time either through collection or sale
of such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such
asset from an interested buyer who is willing to purchase such asset
under ordinary selling conditions; and
(D) the "present fair saleable value" of an asset means the
amount which can be obtained if such asset is sold with reasonable
promptness in an arm's length transaction in an existing and not
theoretical market.
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ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. CALCULATION OF PURCHASE PRICE. On the Closing Date, the Servicer
shall deliver to the Company, the Lender and the Originator (if the Servicer is
other than the Originator) a schedule listing each of the Vehicles relating to
the Receivable funded on the Closing Date, which schedule shall include the
amount of the Advance made with respect to each such Vehicle. Thereafter, the
Servicer shall provide to the Company, the Lender and the Originator (if the
Servicer is other than the Originator) a copy of each Bailed Property Schedule
delivered to the Originator by the Obligor pursuant to Section 2.2 of the
Promissory Note and Security Agreement with respect to any Vehicle financed by
an Advance thereunder.
The "PURCHASE PRICE" (to be paid to the Originator in accordance with the terms
of Article III) for each Receivable and the Related Rights that are purchased
hereunder shall be equal to the Outstanding Balance of such Receivable on the
date of purchase.
"OUTSTANDING BALANCE" means, with respect to any Receivable, the
aggregate amount of all Advances made by the Originator with respect to such
Receivable, less any amounts deposited in the Collection Account and applied to
the reduction of the principal amount of the related Loan pursuant to clause
fifth of Section 1.4(d) of the Loan and Servicing Agreement (or paid directly to
the Lender as a repayment of principal with respect to such Loan).
ARTICLE III
CONTRIBUTION OF RECEIVABLES;
PAYMENT OF PURCHASE PRICE
3.1. CONTRIBUTION OF RECEIVABLES. On the Closing Date, the Originator
shall, and hereby does, contribute to the capital of the Company, in exchange
for the issuance of 1,000 shares of common stock, a portion of the Receivable
and the Related Rights relating to the Advances made by the Originator on the
Closing Date, such that the aggregate Outstanding Balance of the contributed
portion of such Receivable shall be equal to $1,000,000.
3.2. INITIAL PURCHASE PRICE PAYMENT. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to pay to the
Originator the Purchase Price for the purchase of Receivables to be made on the
Closing Date, partially in cash in the amount of the proceeds of the Loan made
by the Lender on the Closing Date under the Loan and Servicing Agreement, and
partially by issuing a promissory note in the form of EXHIBIT B to the
Originator with an initial principal balance equal to the remaining Purchase
Price (as such promissory note may be amended, supplemented, indorsed or
otherwise modified from time to time, together with all promissory notes issued
from time to time in substitution therefor or renewal thereof in accordance with
the Transaction Documents, being herein called the "COMPANY NOTE").
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3.3. SUBSEQUENT PURCHASE PRICE PAYMENTS. On each Business Day falling
after the Closing Date and on or prior to the Purchase and Sale Termination
Date, on the terms and subject to the conditions set forth in this Agreement,
the Company shall pay to the Originator the Purchase Price for the Receivables
sold by the Originator to the Company on such Business Day, in cash, to the
extent funds are available to make such payment and such payment is permitted by
paragraph (o) of Exhibit IV to the Loan and Servicing Agreement, and to the
extent any of such Purchase Price remains unpaid, such remaining portion of such
Purchase Price shall be paid by means of an automatic increase to the
outstanding principal amount of the Company Note.
Servicer shall make all appropriate record keeping entries with respect
to the Company Note or otherwise to reflect the foregoing payments and
adjustments pursuant to SECTION 3.4, and Servicer's books and records shall
constitute rebuttable presumptive evidence of the principal amount of and
accrued interest on the Company Note at any time. Furthermore, Servicer shall
hold the Company Note for the benefit of the Originator, and all payments under
the Company Note shall be made to the Servicer for the account of the applicable
payee thereof. The Originator hereby irrevocably authorizes Servicer to mark the
Company Note "CANCELLED" and to return the Company Note to the Company upon the
final payment thereof after the occurrence of the Purchase and Sale Termination
Date.
3.4. SETTLEMENT AS TO SPECIFIC RECEIVABLES AND DILUTION.
(a) If on the day of purchase or contribution of any Receivable from
the Originator hereunder, any of the representations or warranties set forth in
SECTION 5.4, 5.11 or 5.20 is not true with respect to such Receivable or as a
result of any action or inaction of the Originator, on any day any of the
representations or warranties set forth in SECTION 5.4 or 5.11 is no longer true
with respect to such a Receivable, then the Purchase Price with respect to the
Receivables purchased hereunder shall be reduced by an amount equal to the
Outstanding Balance of such Receivable and shall be accounted to the Originator
as provided in SUBSECTION (c) below; PROVIDED, that if the Company thereafter
receives payment on account of Collections due with respect to such Receivable,
the Company promptly shall deliver such funds to the Originator.
(b) If, on any day, the Outstanding Balance of any Receivable
purchased or contributed hereunder is reduced or adjusted as a result of any
adjustment made by the Originator, Company or Servicer or any setoff or dispute
between the Originator or the Servicer and the Obligor, then the Purchase Price
with respect to the Receivables purchased hereunder shall be reduced by the
amount of such reduction and shall be accounted to the Originator as provided in
SUBSECTION (c) below.
(c) Any reduction in the Purchase Price of the Receivables pursuant
to SUBSECTION (a) or (b) above shall be applied as a credit for the account of
the Company against the Purchase Price of Receivables subsequently purchased by
the Company from the Originator hereunder; PROVIDED, HOWEVER if there have been
no purchases of Receivables (or insufficiently large purchases of Receivables)
to create a Purchase Price sufficient to so apply such credit against, the
amount of such credit
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(i) shall be paid in cash to the Company by the Originator
in the manner and for application as described in the following
proviso, or
(ii) shall be deemed to be a payment under, and shall be
deducted from the principal amount outstanding under, the Company Note,
to the extent that such payment is permitted under paragraph (o) of
Exhibit IV of the Loan and Servicing Agreement;
PROVIDED, FURTHER, that at any time (y) when an Event of Default or Unmatured
Event of Default exists or (z) on or after the Termination Date, the amount of
any such credit shall be paid by the Originator to the Company by deposit in
immediately available funds into the Collection Account for application by
Servicer to the same extent as if Collections of the applicable Receivable in
such amount had actually been received on such date.
3.5. RECONVEYANCE OF RECEIVABLES. In the event that the Originator
has paid to the Company the full Outstanding Balance of any Receivable pursuant
to SECTION 3.4, the Company shall reconvey such Receivable to the Originator,
without representation or warranty, but free and clear of all liens created by
the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
4.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
hereunder is subject to the condition precedent that the Company shall have
received, on or before the Closing Date, the following, each (unless otherwise
indicated) dated the Closing Date, and each in form, substance and date
satisfactory to the Company:
(a) A copy of the resolutions of the Board of Directors of the
Originator approving the Transaction Documents to be delivered by it and the
transactions contemplated hereby and thereby, certified by the Secretary or
Assistant Secretary of the Originator;
(b) A Certificate of Existence for the Originator issued as of a
recent date by the Indiana Secretary of State;
(c) A certificate of the Secretary or Assistant Secretary of the
Originator certifying the names and true signatures of the officers authorized
on the Originator's behalf to sign the Transaction Documents to be delivered by
it (on which certificate the Company and Servicer (if other than the Originator)
may conclusively rely until such time as the Company and the Servicer shall
receive from the Originator a revised certificate meeting the requirements of
this SUBSECTION (c));
(d) The articles of incorporation of the Originator together with a
copy of the by-laws of the Originator, each duly certified by the Secretary or
an Assistant Secretary of the Originator;
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(e) Copies of the proper financing statements (Form UCC-1) that have
been duly executed and name the Originator as the assignor and the Company as
the assignee (and the Lender as assignee of the Company) of the Receivables
generated by the Originator and Related Rights or other, similar instruments or
documents, as may be necessary or, in Servicer's or the Lender's opinion,
desirable under the UCC of all appropriate jurisdictions or any comparable law
of all appropriate jurisdictions to perfect the Company's ownership interest in
all Receivables and Related Rights in which an ownership interest may be
transferred to it hereunder;
(f) A written search report from a Person satisfactory to Servicer
and the Lender listing all effective financing statements that name the
Originator as debtor or assignor and that are filed in the jurisdictions in
which filings were made pursuant to the foregoing SUBSECTION (e), together with
copies of such financing statements (none of which, except for those described
in the foregoing SUBSECTION (e), shall cover any Receivable or any Related
Right), and tax and judgment lien search reports from a Person satisfactory to
Servicer and the Lender showing no evidence of such liens filed against the
Originator;
(g) Favorable opinions of Joel Garcia, Esq., general counsel to the
Originator, Ice Miller, special counsel to the Originator, concerning
enforceability of this Agreement and certain other matters, and Ice Miller,
concerning certain bankruptcy matters, and such other opinions as the Company
may reasonably request;
(h) Evidence (i) of the execution and delivery by each of the parties
thereto of each of the other Transaction Documents to be executed and delivered
in connection herewith and (ii) that each of the conditions precedent to the
execution, delivery and effectiveness of such other Transaction Documents has
been satisfied to the Company's satisfaction; and
(i) A certificate from an officer of the Originator to the effect
that Servicer and the Originator have placed on the most recent, and have taken
all steps reasonably necessary to ensure that there shall be placed on
subsequent, summary master control data processing reports the following legend
(or the substantive equivalent thereof): "THE RECEIVABLES DESCRIBED HEREIN HAVE
BEEN SOLD TO AFC AIM CORPORATION PURSUANT TO A PURCHASE AND SALE AGREEMENT,
DATED AS OF DECEMBER 22, 2000, BETWEEN AUTOMOTIVE FINANCE CORPORATION AND AFC
AIM CORPORATION; AND A SECURITY INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS
BEEN GRANTED TO BANK OF MONTREAL, PURSUANT TO A LOAN AND SERVICING AGREEMENT,
DATED AS OF DECEMBER 22, 2000, AMONG AFC AIM CORPORATION, AS BORROWER,
AUTOMOTIVE FINANCE CORPORATION, AS SERVICER, AND BANK OF MONTREAL, AS LENDER.
4.2. CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. The
Originator, by accepting the Purchase Price (including by the increase in the
outstanding balance of the Company Note) related to each purchase of Receivables
and Related Rights shall be deemed to have certified that the representations
and warranties contained in ARTICLE V are true and correct on and as of such
day, with the same effect as though made on and as of such day.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
In order to induce the Company to enter into this Agreement and to make
purchases and accept contributions hereunder, the Originator, in its capacity as
Originator under this Agreement, hereby makes the representations and warranties
set forth in this ARTICLE V.
5.1. ORGANIZATION AND GOOD STANDING. The Originator has been duly
incorporated and in existence as a corporation under the laws of the state of
its incorporation, with power and authority to own its properties and to conduct
its business as such properties are presently owned and such business is
presently conducted.
5.2. DUE QUALIFICATION. The Originator is duly licensed or qualified
to do business as a foreign corporation in good standing in the jurisdiction
where its chief executive office and principal place of business are located and
in all other jurisdictions in which the ownership or lease of its property or
the conduct of its business requires such licensing or qualification except
where the failure to be so licensed or qualified has not had and could not
reasonably be expected to have a Material Adverse Effect.
5.3. POWER AND AUTHORITY; DUE AUTHORIZATION. The Originator has (a)
all necessary corporate power, authority and legal right (i) to execute and
deliver, and perform its obligations under, each Transaction Document to which
it is a party, as Originator, and (ii) to generate, own, sell, contribute and
assign Receivables and Related Rights on the terms and subject to the conditions
herein and therein provided; and (b) duly authorized such execution and delivery
and such sale, contribution and assignment and the performance of such
obligations by all necessary corporate action.
5.4. VALID SALE OR CONTRIBUTION; BINDING OBLIGATIONS. Each sale or
contribution, as the case may be, of Receivables and Related Rights made by the
Originator pursuant to this Agreement shall constitute a valid sale or
contribution, as the case may be, transfer, and assignment thereof to the
Company, enforceable against creditors of, and purchasers from, the Originator;
and this Agreement constitutes, and each other Transaction Document to be signed
by the Originator, as Originator, when duly executed and delivered, will
constitute, a legal, valid, and binding obligation of the Originator,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law.
5.5. NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the other Transaction Documents to which the Originator is
a party as Originator, and the fulfillment of the terms hereof or thereof will
not (a) conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under (i) the Originator's articles of incorporation or by-laws, or (ii) any
indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument to which it is a party or by which it is
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bound, (b) result in the creation or imposition of any Adverse Claim upon any of
its properties pursuant to the terms of any such indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument, other than the
Transaction Documents, or (c) violate any law or any order, writ, judgment,
award, injunction, decree, rule, or regulation applicable to it or its
properties, where, in the cases of ITEMS (a)(ii), (b) or (c), such conflict,
breach, default, Adverse Claim or violation has had or could reasonably be
expected to have a Material Adverse Effect.
5.6. PROCEEDINGS. (i) There is no litigation or, to the Originator's
knowledge, any proceeding or investigation pending before any Government
Authority or arbitrator (a) asserting the invalidity of any Transaction Document
to which the Originator is a party as Originator, (b) seeking to prevent the
sale or contribution of Receivables and Related Rights to the Company or the
consummation of any of the other transactions contemplated by any Transaction
Document to which the Originator is a party as Originator, or (c) seeking any
determination or ruling that could reasonably be expected to have a Material
Adverse Effect. (ii) The Originator is not subject to any order, judgment,
decree, injunction, stipulation or consent order that could reasonably be
expected to have a Material Adverse Effect.
5.7. BULK SALES ACT. No transaction contemplated hereby requires
compliance with any bulk sales act or similar law.
5.8. GOVERNMENT APPROVALS. Except for the filing of the UCC financing
statements referred to in ARTICLE IV, all of which, at the time required in
ARTICLE IV, shall have been duly made and shall be in full force and effect, no
authorization or approval or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required for the Originator's
due execution, delivery and performance of any Transaction Document to which it
is a party, as Originator.
5.9. FINANCIAL CONDITION.
(a) On the date hereof, and on the date of each sale of Receivables
by the Originator to the Company (both before and after giving effect to such
sale), the Originator shall be Solvent.
(b) The consolidated balance sheets of the Originator and its
consolidated subsidiaries as of December 31, 1999, and the related statements of
income and shareholders' equity of the Originator and its consolidated
subsidiaries for the fiscal year then ended certified by the Originator's
independent accountants, copies of which have been furnished to the Company,
present fairly the consolidated financial position of the Originator and its
consolidated subsidiaries for the period ended on such date, all in accordance
with generally accepted accounting principles consistently applied; and since
such date no event has occurred that has had, or is reasonably likely to have, a
Material Adverse Effect.
5.10. MARGIN REGULATIONS. No use of any funds acquired by the
Originator under this Agreement will conflict with or contravene any of
Regulations T, U and X promulgated by the Board of Governors of the Federal
Reserve System from time to time.
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5.11. QUALITY OF TITLE.
(a) Each Receivable (together with the Related Rights) which is to
be sold or contributed to the Company hereunder is or shall be owned by the
Originator, free and clear of any Adverse Claim. Whenever the Company makes a
purchase, or accepts a contribution, hereunder, it shall have acquired a valid
and perfected ownership interest (free and clear of any Adverse Claim) in all
Receivables generated by the Originator and all Collections related thereto, and
in the Originator's entire right, title and interest in and to the other Related
Rights with respect thereto.
(b) No effective financing statement or other instrument similar in
effect covering any Receivable or any Related Right is on file in any recording
office except such as may be filed in favor of the Company or the Originator, as
the case may be, in accordance with this Agreement or in favor of the Lender in
accordance with the Loan and Servicing Agreement.
5.12. ACCURACY OF INFORMATION. No factual written information furnished
or to be furnished in writing by the Originator, as Originator, to the Company
or the Lender for purposes of or in connection with any Transaction Document or
any transaction contemplated hereby or thereby (including the information
contained in any Purchase Report) is, and no other such factual written
information hereafter furnished (and prepared) by the Originator, as Originator,
to the Company or the Lender pursuant to or in connection with any Transaction
Document, taken as a whole, will be inaccurate in any material respect as of the
date it was furnished or (except as otherwise disclosed to the Company at or
prior to such time) as of the date as of which such information is dated or
certified, or shall contain any material misstatement of fact or omitted or will
omit to state any material fact necessary to make such information, in the light
of the circumstances under which any statement therein was made, not materially
misleading on the date as of which such information is dated or certified.
5.13. OFFICES. The Originator's principal place of business and chief
executive office is located at the address set forth under the Originator's
signature hereto, and the offices where the Originator keeps all its books,
records and documents evidencing the Receivables and all other agreements
related to such Receivables are located at the addresses specified on SCHEDULE
5.13 (or at such other locations, notified to Servicer (if other than the
Originator) and the Lender in accordance with SECTION 6.1(f), in jurisdictions
where all action required by SECTION 7.3 has been taken and completed).
5.14. TRADE NAMES. Except as disclosed on SCHEDULE 5.14, the Originator
does not use any trade name other than its actual corporate name. From and after
the date that fell six years before the date hereof, the Originator has not been
known by any legal name or trade name other than its corporate name as of the
date hereof, nor has the Originator been the subject of any merger or other
corporate reorganization except, in each case, as disclosed on SCHEDULE 5.14.
5.15. TAXES. Except as set forth on SCHEDULE 5.15 the Originator has
filed all tax returns and reports required by law to have been filed by it and
has paid all taxes and governmental charges thereby shown to be owing, except
any such taxes which are not yet delinquent or are being
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diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with generally accepted accounting principles
shall have been set aside on its books.
5.16. LICENSES AND LABOR CONTROVERSIES.
(a) The Originator has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
its properties or to the conduct of its business, which violation or failure to
obtain would be reasonably likely to have a Material Adverse Effect; and
(b) There are no labor controversies pending against the Originator
that have had (or are reasonably likely to have) a Material Adverse Effect.
5.17. COMPLIANCE WITH APPLICABLE LAWS. The Originator is in compliance,
in all material respects, with the requirements of (i) all applicable laws,
rules, regulations, and orders of all governmental authorities applicable to the
Receivables and the Isuzu Loan Documents.
5.18. RELIANCE ON SEPARATE LEGAL IDENTITY. The Originator is
aware that the Lender is entering into the Transaction Documents to which it is
a party in reliance upon the Company's identity as a legal entity separate from
the Originator.
5.19. PURCHASE PRICE. The purchase price payable by the Company to the
Originator hereunder is intended by the Originator and Company to be consistent
with the terms that would be obtained in an arm's length sale. The Servicer's
Fee payable to the Originator is intended to be consistent with terms that would
be obtained in an arm's length servicing arrangement.
5.20. ELIGIBILITY OF RECEIVABLES. Unless otherwise identified to the
Company on the date of the purchase hereunder, each Receivable purchased
hereunder is on the date of purchase an Eligible Receivable.
ARTICLE VI
COVENANTS OF THE ORIGINATOR
6.1. AFFIRMATIVE COVENANTS. From the date hereof until the first day
following the Final Payout Date, the Originator will, unless the Company and the
Lender shall otherwise consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with
all applicable laws, rules, regulations and orders, including those with respect
to the Receivables generated by it and the Isuzu Loan Documents and other
agreements related thereto.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence,
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rights, franchises and privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such existence, rights,
franchises, privileges and qualification could reasonably be expected to have a
Material Adverse Effect.
(c) RECEIVABLES REVIEW. (i) At any time and from time to time during
regular business hours, upon reasonable prior notice, permit the Company and/or
the Lender, or their respective agents or representatives, (A) to examine, to
audit and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or
under the control of the Originator relating to the Receivables and Related
Rights and (B) to visit the Originator's offices and properties for the purpose
of examining such materials described in the foregoing CLAUSE (A) and discussing
matters relating to the Receivables and Related Rights or the Originator's
performance hereunder with any of the officers or employees of the Originator
having knowledge of such matters; and (ii) without limiting the provisions of
CLAUSE (i) next above, from time to time on request of the Lender, permit
certified public accountants or other auditors acceptable to the Lender to
conduct a review of its books and records with respect to the Receivables and
Related Rights.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain an ability to
recreate records evidencing the Receivables in the event of the destruction of
the originals thereof.
(e) PERFORMANCE AND COMPLIANCE WITH ISUZU LOAN DOCUMENTS. At its
expense timely and fully perform and comply with all provisions, covenants and
other promises required to be observed by it under the Isuzu Loan Documents and
all other agreements related to the Receivables and Related Rights.
(f) LOCATION OF RECORDS, ETC.. (i) Keep its principal place of
business and chief executive office, and the offices where it keeps its records
concerning or related to Receivables and Related Rights, at the address(es)
referred to in SCHEDULE 5.13 or, upon 30 days' prior written notice to the
Company and the Lender, at such other locations in jurisdictions where all
action required by SECTION 7.3 shall have been taken and completed, and (ii)
provide the Company and the Lender with at least 30 days' written notice prior
to making any change in its name or making any other change in its identity or
corporate structure (including a merger) which could render any UCC financing
statement filed in connection with this Agreement "seriously misleading" as such
term is used in the UCC (which written notice sets forth the applicable change
and the effective date thereof).
(g) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. Take such actions as
shall be required in order that:
(i) the Company's operating expenses (other than certain
organization expenses and expenses incurred in connection with the preparation,
negotiation and delivery of the Transaction Documents) will not be paid by the
Originator;
(ii) the Company's books and records will be maintained
separately from those of
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the Originator;
(iii) all financial statements of the Originator that are
consolidated to include the Company will contain detailed notes clearly stating
that (A) all of the Company's assets are owned by the Company, and (B) the
Company is a separate entity with creditors who have received interests in the
Company's assets;
(iv) the Originator will strictly observe corporate formalities
in its dealing with the Company;
(v) the Originator shall not commingle its funds with any funds
of the Company;
(vi) the Originator will maintain arm's length relationships
with the Company, and the Originator will be compensated at market rates for any
services it renders or otherwise furnishes to the Company; and
(vii) the Originator will not be, and will not hold itself out
to be, responsible for the debts of the Company or the decisions or actions in
respect of the daily business and affairs of the Company (other than with
respect to such decisions or actions of the Originator in its capacity as
Servicer).
6.2. REPORTING REQUIREMENTS. From the date hereof until the first day
following the Purchase and Sale Termination Date, the Originator shall, unless
the Lender and the Company shall otherwise consent in writing, furnish to the
Company and the Lender:
(a) PROCEEDINGS. As soon as possible and in any event within three
Business Days after the Originator has knowledge thereof, written notice to the
Company and the Lender of (i) all pending proceedings and investigations of the
type described in SECTION 5.6 not previously disclosed to the Company and/or the
Lender and (ii) all material adverse developments that have occurred with
respect to any previously disclosed proceedings and investigations;
(b) as soon as possible and in any event within three Business Days
after the occurrence of each Purchase and Sale Termination Event or event which,
with the giving of notice or lapse of time, or both, would constitute a Purchase
and Sale Termination Event, a statement of the chief financial officer of the
Originator setting forth details of such Purchase and Sale Termination Event or
event and the action that the Originator has taken and proposes to take with
respect thereto;
(c) promptly after the filing or receiving thereof, copies of all
reports and notices that the Originator or any Affiliate files under ERISA with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or that the Originator or any Affiliate receives from
any of the foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Originator or any Affiliate is or was,
within the preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event or condition which
could, in the aggregate, result in the imposition of liability on the
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Originator and/or any such Affiliate in excess of $250,000; and
(d) promptly after the occurrence of any event or condition that
could reasonably be expected to have a Material Adverse Effect, notice of such
event or condition.
(e) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables, the Related Rights or
the Originator's performance hereunder that the Company or the Lender may from
time to time reasonably request in order to protect the interests of the
Company, the Lender or any other Affected Party under or as contemplated by the
Transaction Documents.
6.3. NEGATIVE COVENANTS. From the date hereof until the date
following the Final Payout Date, the Originator agrees that, unless the Lender
and the Company shall otherwise consent in writing, it shall not:
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in any
other Transaction Document, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse Claim upon or
with respect to, any Receivable, Collections or Related Security, or any
interest therein, or assign to any person other than the Lender any right to
receive income in respect thereof.
(b) CHANGE IN BUSINESS. Make any material change in the character
of its business that would adversely affect the collectibility of the
Receivables or the enforceability of the Isuzu Documents or the ability of the
Originator to perform its obligations under the Isuzu Documents or under any
other Transaction Document; without prior written consent of the Company and the
Lender.
(c) RECEIVABLES NOT TO BE EVIDENCED BY INSTRUMENTS. Take any action
to cause or permit any Receivable generated by it to become evidenced by any
"instrument" (as defined in the applicable UCC) unless such "instrument" shall
be delivered to the Company which in turn shall deliver the same to the Lender.
(d) MERGERS, ACQUISITIONS, SALES, ETC. Merge or consolidate with
another Person (except pursuant to a merger or consolidation involving the
Originator where the Originator is the surviving corporation), or convey,
transfer, lease or otherwise dispose of (whether in one or in a series of
transactions), all or substantially all of its assets (whether now owned or
hereafter acquired), other than pursuant to this Agreement.
(e) COLLECTION ACCOUNT BANK. Replace or terminate the Collection
Account Bank unless the requirements of paragraph (h) of Exhibit IV to the Loan
and Servicing Agreement have been met.
(f) ACCOUNTING FOR PURCHASES. Account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby in any
manner other than as sales of the
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Receivables and Related Security by the Originator to the Company.
(g) TRANSACTION DOCUMENTS. (i) Amend, supplement, amend and restate
or otherwise modify any Transaction Document except (A) in accordance with the
terms of such document, instrument or agreement and (B) with the advance written
consent of the Lender, or (ii) enter into, execute, deliver or otherwise become
bound by any agreement, instrument, document or other arrangement that restricts
the right of the Originator to amend, supplement, amend and restate or otherwise
modify, or to extend or renew, or to waive any right under, this Agreement or
any other Transaction Documents.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1. RIGHTS OF THE COMPANY. The Originator hereby authorizes the
Company and the Servicer (if other than the Originator) or their respective
designees to take any and all steps in the Originator's name necessary or
desirable, in their respective determination, to collect all amounts due under
any and all Receivables and Related Rights, including, without limitation,
endorsing the Originator's name on checks and other instruments representing
Collections and enforcing such Receivables and the provisions of the Isuzu Loan
Documents that concern payment and/or enforcement of rights to payment.
7.2. RESPONSIBILITIES OF THE ORIGINATOR. Anything herein to the
contrary notwithstanding:
(a) The Originator agrees to transfer any Collections that it
receives directly to the Collection Account within one Business Day of receipt
thereof, and agrees that all such Collections shall be segregated and held in
trust for the Company and the Lender; PROVIDED that if the Company or the
Servicer is required by Section 5.4 of the Loan and Servicing Agreement to remit
Collections directly to the Lender (or its designee) the Originator shall remit
such Collections directly to the Lender (or its designee) in the same manner as
the Company and Servicer may be required to do so by Section 5.4 of the Loan and
Servicing Agreement. The Originator further agrees not to deposit any funds
other than Collections in the Collection Account.
(b) The Originator shall perform its obligations hereunder, and the
exercise by the Company or its designee of its rights hereunder shall not
relieve the Originator from such obligations.
(c) None of the Company, Servicer (if other than the Originator), or
the Lender shall have any obligation or liability to the Obligor or any other
third Person with respect to any Receivables or the Isuzu Loan Documents, nor
shall the Company, Servicer (if other than the Originator), or the Lender be
obligated to perform any of the obligations of the Originator thereunder.
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(d) The Originator agrees to deliver to the Servicer (if other than
the Originator) an irrevocable power of attorney, with full power of
substitution, coupled with an interest, to take in the name of the Originator
all steps necessary or advisable to indorse, negotiate or otherwise realize on
any writing or other right of any kind held or transmitted by the Originator or
transmitted or received by the Company (whether or not from the Originator) in
connection with any Receivable or Related Right.
7.3. FURTHER ACTION EVIDENCING PURCHASES. The Originator agrees that
from time to time, at its expense, it will promptly execute and deliver all
further instruments and documents, and take all further action that the Company
or Servicer may reasonably request in order to perfect, protect or more fully
evidence the Receivables (and the Related Rights) purchased by, or contributed
to, the Company hereunder, or to enable the Company to exercise or enforce any
of its rights hereunder or under any other Transaction Document. Without
limiting the generality of the foregoing, the Originator will:
(a) upon the request of the Company execute and file such financing
or continuation statements, or amendments thereto or assignments thereof, and
such other instruments or notices, as may be necessary or appropriate; and
(b) mark the summary master control data processing records with the
legend set forth in SECTION 4.1(i).
The Originator hereby authorizes the Company or its designee to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Receivables (and the Related Rights) now
existing or hereafter generated by the Originator. If the Originator fails to
perform any of its agreements or obligations under this Agreement, the Company
or its designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of the Company or
its designee incurred in connection therewith shall be payable by the Originator
as provided in SECTION 10.6.
7.4. APPLICATION OF COLLECTIONS. Any payment by the Obligor in
respect of any indebtedness owed by it to the Originator shall, except as
otherwise specified by the Obligor or otherwise required by contract or law and
unless otherwise instructed by the Company or the Lender, be applied FIRST, as a
Collection of any Receivables of the Obligor, in the order of the age of such
Receivables, starting with the oldest of such Receivables, and SECOND, to any
other indebtedness of the Obligor.
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
8.1. PURCHASE AND SALE TERMINATION EVENTS. Each of the following
events or occurrences described in this SECTION 8.1 shall constitute a "PURCHASE
AND SALE TERMINATION EVENT":
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(a) The Termination Date (as defined in the Loan and Servicing
Agreement) shall have occurred; or
(b) The Originator shall fail to make any payment or deposit to be
made by it hereunder when due and such failure shall remain unremedied for five
(5) Business Days after notice; or
(c) Any representation or warranty made or deemed to be made by the
Originator (or any of its officers) under or in connection with this Agreement,
any other Transaction Document or any other information or report delivered
pursuant hereto or thereto shall prove to have been false or incorrect in any
material respect when made or deemed made provided, however, if the violation of
this paragraph (c) by the Originator may be cured without any potential or
actual detriment to the Company, or the Lender, the Originator shall have 30
days from the earlier of (i) the Originator's knowledge of such failure and (ii)
notice to the Originator of such failure to so cure any such violation before a
Purchase and Sale Termination Event shall occur so long as the Originator is
diligently attempting to effect such cure; or
(d) The Originator shall fail to perform or observe in any material
respect any agreement contained in any of SECTIONS 6.1(g) or 6.3; or
(e) The Originator shall fail to perform or observe any other
material term, covenant or agreement contained in this Agreement on its part to
be performed or observed and such failure shall remain unremedied for 30 days
after written notice thereof shall have been given by Servicer, the Lender or
the Company to the Originator; or
(f)(i) The Originator or any of its subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the benefit
of creditors; or any proceeding shall be instituted by or against the Originator
or any of its subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the
entry of an order for relief or the appointment of a receiver, trustee, or other
similar official for it or for all or any substantial part of its property and,
in the case of any such proceeding instituted against it (but not instituted by
it), such proceeding shall remain undismissed or unstayed for a period of 30
days; or (ii) the Originator or any of its subsidiaries shall take any corporate
action to authorize any of the actions set forth in CLAUSE (i) above in this
SECTION 8.1(f);
(g) A contribution failure shall occur with respect to any benefit
plan sufficient to give rise to a lien under Section 302(f) of ERISA, or the
Internal Revenue Service shall, or shall indicate its intention in writing to
the Originator to, file notice of a lien asserting a claim or claims pursuant to
the Code with regard to any of the assets of the Originator, or the Pension
Benefit Guaranty Corporation shall, or shall indicate its intention in writing
to the Originator or an ERISA Affiliate to, either file notice of a lien
asserting a claim pursuant to ERISA with regard to any assets of the Originator
or an ERISA Affiliate or terminate any benefit plan that has unfunded benefit
liabilities; or
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(h) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any of
assets of the Originator and such lien shall not have been released within ten
Business Days, or the Pension Benefit Guaranty Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to Section 4068 of
ERISA with regard to any of the assets of the Originator.
8.2. REMEDIES.
(i) OPTIONAL TERMINATION. Upon the occurrence of a Purchase
and Sale Termination Event, the Company (and not Servicer) shall have
the option by notice to the Originator (with a copy to the Lender) to
declare the Purchase and Sale Termination Date to have occurred.
(ii) REMEDIES CUMULATIVE. Upon any termination of the Facility
pursuant to this SECTION 8.2, the Company shall have, in addition to
all other rights and remedies under this Agreement or otherwise, all
other rights and remedies provided under the UCC of each applicable
jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing, the occurrence of the
Purchase and Sale Termination Date shall not deny the Company any
remedy in addition to termination of the Purchase Facility to which the
Company may be otherwise appropriately entitled, whether at law or
equity.
ARTICLE IX
INDEMNIFICATION
9.1. INDEMNITIES BY THE ORIGINATOR. Without limiting any other
rights which the Company may have hereunder or under applicable law, the
Originator hereby agrees to indemnify the Company, the Lender and each of their
respective assigns, officers, directors, employees and agents (each of the
foregoing Persons being individually called a "PURCHASE AND SALE INDEMNIFIED
PARTY"), forthwith on demand, from and against any and all damages, losses,
claims, judgments, liabilities and related costs and expenses, including
reasonable attorneys' fees and disbursements (all of the foregoing being
collectively called "PURCHASE AND SALE INDEMNIFIED AMOUNTS"), regardless of
whether any such Purchase and Sale Indemnified Amount is the result of a
Purchase and Sale Indemnified Party's negligence, strict liability or other acts
or omissions of a Purchase and Sale Indemnified Party, awarded against or
incurred by any of them arising out of or as a result of the following:
(a) the transfer by the Originator of an interest in any Receivable
or Related Right to any Person other than the Company;
(b) the breach of any representation or warranty made by the
Originator under or in connection with this Agreement or any other Transaction
Document, or any information or report delivered by the Originator pursuant
hereto or thereto (including any information contained in a
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Purchase Report) which shall have been false or incorrect in any material
respect when made, deemed made or delivered;
(c) the failure by the Originator to comply with any applicable law,
rule or regulation with respect to any Receivable or the Isuzu Loan Documents,
or the nonconformity of any Receivable or the Isuzu Loan Documents with any such
applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company a
perfected ownership interest in the Receivables generated by the Originator and
Related Rights free and clear of any Adverse Claim, other than an Adverse Claim
arising solely as a result of an act of the Company, whether existing at the
time of the purchase or contribution of such Receivables or at any time
thereafter;
(e) the failure of the Originator to file with respect to itself, or
any delay by the Originator in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Receivables or purported Receivables
generated by the Originator or Related Rights, whether at the time of any
purchase or contribution or at any subsequent time;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Receivable or purported
Receivable generated by the Originator (including, without limitation, a defense
based on such Receivables or the Isuzu Loan Documents not being a legal, valid
and binding obligation of the Obligor enforceable against it in accordance with
its terms), or any other claim resulting from or relating to the transaction
giving rise to any Receivable or relating to collection activities with respect
to any Receivable (if such collection activities were performed by the
Originator or any of its Affiliates acting as Servicer or by any agent or
independent contractor retained by the Originator or any of its Affiliates);
(g) any products liability or other claim, investigation, litigation
or proceeding arising out of or in connection with goods, insurance or services
that secure or relate to any Receivable;
(h) any litigation, proceeding or investigation against the
Originator or in respect of any Receivable or Related Right;
(i) any tax or governmental fee or charge (other than any tax
excluded pursuant to the proviso below), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the same, which may
arise by reason of the purchase, contribution or ownership of the Receivables or
any Related Right connected with any such Receivables;
(j) any failure of the Originator, individually or as Servicer, to
perform its duties or obligations in accordance with the provisions of this
Agreement or any other Transaction Document; and
(k) the commingling of any Collections at any time with other funds;
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EXCLUDING, HOWEVER, (i) Purchase and Sale Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of a Purchase
and Sale Indemnified Party, (ii) any indemnification which has the effect of
recourse for non-payment of the Receivables due to credit reasons to the
Originator (except as otherwise specifically provided under this SECTION 9.1)
and (iii) any tax based upon or measured by net income or gross receipts.
If for any reason the indemnification provided above in this SECTION
9.1 is unavailable to a Purchase and Sale Indemnified Party or is insufficient
to hold such Purchase and Sale Indemnified Party harmless, then the Originator
shall contribute to the amount paid or payable by such Purchase and Sale
Indemnified Party as a result of such loss, claim, damage or liability to the
maximum extent permitted under applicable law. Promptly after receipt by a
Purchase and Sale Indemnified Party under this ARTICLE IX of notice of any claim
or the commencement of any action arising out of or as a result of any of
paragraphs (a) through (j) above, the Purchase and Sale Indemnified Party shall,
if a claim in respect thereof is to be made against the Originator under this
ARTICLE IX, notify the Originator in writing of the claim or the commencement of
that action; PROVIDED, HOWEVER, that the failure to notify the Originator shall
not relieve it from any liability which it may have under this ARTICLE IX except
to the extent it has been materially prejudiced by such failure and, PROVIDED,
FURTHER, that the failure to notify the Originator shall not relieve it from any
liability which it may have to a Purchase and Sale Indemnified Party otherwise
than under this ARTICLE IX. If any such claim or action shall be brought against
a Purchase and Sale Indemnified Party, the Originator shall be entitled to
participate therein and, to the extent that it wishes, to assume the defense
thereof with counsel satisfactory to the Purchase and Sale Indemnified Party.
After notice from the Originator to the Purchase and Sale Indemnified Party of
its election to assume the defense of such claim or action, the Originator shall
not be liable to the Purchase and Sale Indemnified Party under this ARTICLE IX
for any legal or other expenses subsequently incurred by Purchase and Sale
Indemnified Party in connection with the defense thereof other than reasonable
costs of investigation. The Originator shall not (i) without the prior written
consent of the relevant Purchase and Sale Indemnified Party or Parties (which
consent shall not be unreasonably withheld), settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the Purchase and Sale Indemnified Party
or Parties are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
Purchase and Sale Indemnified Party from all liability arising out of such
claim, action, suit or proceeding or (ii) be liable for any settlement of any
such action affected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment of the plaintiff in any such action, the Originator agrees to
indemnify and hold harmless any indemnified party from and against any Purchase
and Sale Indemnified Amounts relating thereto.
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ARTICLE X
MISCELLANEOUS
10.1. AMENDMENTS, ETC.
(a) The provisions of this Agreement may from time to time be
amended, modified or waived, if such amendment, modification or waiver is in
writing and consented to by the Originator, the Company, the Servicer (if other
than the Originator) and the Lender.
(b) No failure or delay on the part of the Company, Servicer, the
Originator or any third party beneficiary in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Company, Servicer, or the Originator in any case shall entitle it to any
notice or demand in similar or other circumstances. No waiver or approval by the
Company or Servicer under this Agreement shall, except as may otherwise be
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval under this Agreement shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder.
10.2. NOTICES, ETC. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage-prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (i) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (ii) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
10.3. NO WAIVER; CUMULATIVE REMEDIES. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
10.4. BINDING EFFECT; ASSIGNABILITY. This Agreement shall be binding
upon and inure to the benefit of the Company, the Originator and its respective
successors and permitted assigns. The Originator may not assign its rights
hereunder or any interest herein without the prior consent of the Company and
the Lender. This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the date after the Purchase and Sale Termination
Date on which the Originator has received payment in full for all Receivables
and Related Rights purchased pursuant to SECTION 1.1 hereof. The rights and
remedies with respect to any breach of any representation and warranty made by
the Originator pursuant to ARTICLE V and the indemnification and payment
provisions of ARTICLE IX and SECTION 10.6 shall be continuing and shall survive
any termination of this Agreement.
-22-
10.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF INDIANA (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT
THE VALIDITY OR PERFECTION OF THE INTERESTS OF THE COMPANY IN THE RECEIVABLES OR
RELATED RIGHTS, OR REMEDIES HEREUNDER IN RESPECT THEREOF, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF INDIANA.
10.6. COSTS, EXPENSES AND TAXES. In addition to the obligations
of the Originator under ARTICLE IX, the Originator agrees to pay on demand:
(a) all reasonable costs and expenses in connection with the
preparation, execution, delivery and administration (including periodic auditing
of the Receivables) of this Agreement, the Loan and Servicing Agreement and the
other documents and agreements to be delivered hereunder or in connection
herewith, including all reasonable costs and expenses relating to the amending,
amending and restating, modifying or supplementing of this Agreement, the Loan
and Servicing Agreement and the other documents and agreements to be delivered
hereunder or in connection herewith and the waiving of any provisions thereof,
and including in all cases, without limitation, Attorney Costs for the Company,
the Lender and their respective Affiliates and agents with respect thereto and
with respect to advising the Company, the Lender and their respective Affiliates
and agents as to their rights and remedies under this Agreement and the other
Transaction Documents, and all reasonable costs and expenses, if any (including
Attorney Costs), of the Company, the Lender and their respective Affiliates and
agents, in connection with the enforcement of this Agreement and the other
Transaction Documents; and
(b) any and all stamp and other taxes and fees payable in connection
with the execution, delivery, filing and recording of this Agreement or the
other documents or agreements to be delivered hereunder, and agrees to save each
Purchase and Sale Indemnified Party harmless from and against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
10.7. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY INDIANA STATE
COURT AND THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF INDIANA,
OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION
DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES DISTRICT COURT; (c)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT
ITS ADDRESS SPECIFIED IN SECTION 10.2; AND (e) TO THE EXTENT ALLOWED BY LAW,
AGREES THAT A NONAPPEALABLE FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING
-23-
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION 10.7
SHALL AFFECT THE COMPANY'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST THE ORIGINATOR OR
ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.
10.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO EXPRESSLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY
AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
10.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE. The
various captions (including, without limitation, the table of contents) in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to any underscored Section or Exhibit are to such Section or Exhibit of this
Agreement, as the case may be. The Exhibits hereto are hereby incorporated by
reference into and made a part of this Agreement.
10.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
10.11. ACKNOWLEDGMENT AND AGREEMENT. By execution below, the
Originator expressly acknowledges and agrees that all of the Company's rights,
title, and interests in, to, and under this Agreement shall be pledged by the
Company to the Lender pursuant to the Loan and Servicing Agreement, and the
Originator consents to such pledge. Each of the parties hereto acknowledges and
agrees that the Lender is a third party beneficiary of the rights of the Company
arising hereunder and under the other Transaction Documents to which the
Originator is a party and that the Lender may enforce the rights of the Company
under this Agreement.
-24-
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AUTOMOTIVE FINANCE CORPORATION
By: /s/ Curtis L. Phillips
-----------------------------
Name: Curtis L. Phillips
Title: EVP, CFO, Treas
310 East 96th Street, Suite 300
Indianapolis, Indiana 46240
Attention: Curt Phillips
Telephone: (317) 815-9751
Facsimile: (317) 815-9650
AFC AIM CORPORATION
By: /s/ Curtis L. Phillips
-----------------------------
Name: Curtis L. Phillips
Title: EVP CFO Treas
310 East 96th Street, Suite 320
Indianapolis, Indiana 46240
Attention: Curt Phillips
Telephone: (317) 815-9751
Facsimile: (317) 815-9650
SCHEDULE 5.13
OFFICE LOCATIONS
310 East 96th Street, Suite 300
Indianapolis, Indiana 46240
SCHEDULE 5.14
TRADE NAMES
AFC
AFC, Inc.
Autodaq Finance Corporation
Automotive Finance
Automotive Floorplan Corporation
SCHEDULE 5.15
TAX MATTERS
None.
EXHIBIT A
FORM OF COMPANY NOTE
NON-NEGOTIABLE
TERM NOTE
December 22, 2000
FOR VALUE RECEIVED, the undersigned, AFC AIM CORPORATION, an Indiana
corporation (the "COMPANY"), promises to pay to AUTOMOTIVE FINANCE CORPORATION,
an Indiana corporation ("ORIGINATOR"), on the terms and subject to the
conditions set forth herein and in the Purchase and Sale Agreement referred to
below, the aggregate unpaid Purchase Price of all Receivables purchased by the
Company from Originator pursuant to such Purchase and Sale Agreement, as such
unpaid Purchase Price is shown in the records of Servicer.
1. PURCHASE AND SALE AGREEMENT. This Term Note is the Company Note
described in, and is subject to the terms and conditions set forth in, that
certain Purchase and Sale Agreement of even date herewith (as the same may be
amended, supplemented, amended and restated or otherwise modified in accordance
with its terms, the "PURCHASE AND SALE AGREEMENT"), among the Company and
Originator. Reference is hereby made to the Purchase and Sale Agreement for a
statement of certain other rights and obligations of the Company and Originator.
2. DEFINITIONS. Capitalized terms used (but not defined) herein have the
meanings assigned thereto in the Purchase and Sale Agreement and in EXHIBIT I to
the Receivables Purchase Agreement (as defined in the Purchase and Sale
Agreement). In addition, as used herein, the following terms have the following
meanings:
"BANKRUPTCY PROCEEDINGS" has the meaning set forth in CLAUSE
(b) of PARAGRAPH 9 hereof.
"FINAL MATURITY DATE" means the Payment Date immediately
following the date that falls one hundred twenty one (121) days after
the Purchase and Sale Termination Date.
"INTEREST PERIOD" means the period from and including a
Payment Date (or, in the case of the first Interest Period, the date
hereof) to but excluding the next Payment Date.
"SENIOR INTERESTS" means, collectively, (i) all accrued
interest on the Loans, (ii) the fees referred to in SECTION 1.5 of the
Loan and Servicing Agreement, (iii) all amounts payable pursuant to
SECTION 1.7, 1.8, 1.9 or 1.11 of the Loan and Servicing Agreement, (iv)
the principal amount of the Loans and (v) all other obligations of the
Company, the Originator and the Servicer (as long as the Originator is
the Servicer) that are due and payable, to (a) the Lender and its
successors, permitted transferees
1
and assigns arising in connection with the Transaction Documents and
(b) any Indemnified Party arising in connection with the Loan and
Servicing Agreement, in each case, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, together with any and all
interest accruing on any such amount after the commencement of any
Bankruptcy Proceedings, notwithstanding any provision or rule of law
that might restrict the rights of any Senior Interest Holder, as
against the Company or anyone else, to collect such interest.
"SENIOR INTEREST HOLDERS" means, collectively, the Lender and
the Indemnified Parties.
"SUBORDINATION PROVISIONS" means, collectively, CLAUSES (a)
through (l) of PARAGRAPH 9 hereof.
"TELERATE SCREEN RATE" means, for any Interest Period, the
rate for thirty day commercial paper denominated in Dollars which
appears on Page 1250 of the Dow Jones Telerate Service (or such other
page as may replace that page on that service for the purpose of
displaying Dollar commercial paper rates) at approximately 9:00 a.m.,
New York City time, on the first day of such Interest Period.
3. INTEREST. Subject to the Subordination Provisions set forth below,
the Company promises to pay interest on this Term Note as follows:
(a) Prior to the Final Maturity Date, the aggregate unpaid
Purchase Price from time to time outstanding during any Interest Period
shall bear interest at a rate PER ANNUM equal to the Telerate Screen
Rate for such Interest Period, as determined by Servicer; and
(b) From (and including) the Final Maturity Date to (but
excluding) the date on which the entire aggregate unpaid Purchase Price
is fully paid, the aggregate unpaid Purchase Price from time to time
outstanding shall bear interest at a rate PER ANNUM equal to the rate
of interest publicly announced from time to time by Bank of Montreal,
as its "base rate", "reference rate" or other comparable rate, as
determined by Servicer.
4. INTEREST PAYMENT DATES. Subject to the Subordination Provisions set
forth below, the Company shall pay accrued interest on this Term Note on each
Payment Date, and shall pay accrued interest on the amount of each principal
payment made in cash on a date other than a Payment Date at the time of such
principal payment.
5. BASIS OF COMPUTATION. Interest accrued hereunder that is computed
by reference to the Telerate Screen Rate shall be computed for the actual number
of days elapsed on the basis of a 360-day year, and interest accrued hereunder
that is computed by reference to the rate described in PARAGRAPH 3(b) of this
Term Note shall be computed for the actual number of days elapsed on the basis
of a 365- or 366-day year.
2
6. PRINCIPAL PAYMENT DATES. Subject to the Subordination Provisions
set forth below, payments of the principal amount of this Term Note shall be
made as follows:
(a) The principal amount of this Term Note shall be reduced
by an amount equal to each payment deemed made pursuant to SECTION 3.4
of the Purchase and Sale Agreement; and
(b) The entire remaining unpaid Purchase Price of all
Receivables purchased by the Company from Originator pursuant to the
Purchase and Sale Agreement shall be paid on the Final Maturity Date.
Subject to the Subordination Provisions set forth below, the principal amount of
and accrued interest on this Term Note may be prepaid on any Business Day
without premium or penalty.
7. PAYMENT MECHANICS. All payments of principal and interest hereunder
are to be made in lawful money of the United States of America in the manner
specified in ARTICLE III of the Purchase and Sale Agreement.
8. ENFORCEMENT EXPENSES. In addition to and not in limitation of the
foregoing, but subject to the Subordination Provisions set forth below and to
any limitation imposed by applicable law, the Company agrees to pay all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
Originator in seeking to collect any amounts payable hereunder which are not
paid when due.
9. SUBORDINATION PROVISIONS. The Company covenants and agrees, and
Originator and any other holder of this Term Note (collectively, Originator and
any such other holder are called the " HOLDER"), by its acceptance of this Term
Note, likewise covenants and agrees on behalf of itself and any holder of this
Term Note, that the payment of the principal amount of and interest on this Term
Note is hereby expressly subordinated in right of payment to the payment and
performance of the Senior Interests to the extent and in the manner set forth in
the following clauses of this PARAGRAPH 9:
(a) No payment or other distribution of the Company's assets
of any kind or character, whether in cash, securities, or other rights
or property, shall be made on account of this Term Note except to the
extent such payment or other distribution is (i) permitted under CLAUSE
(n) of EXHIBIT IV to the Loan and Servicing Agreement or (ii) made
pursuant to CLAUSE (a) or (b) of PARAGRAPH 6 of this Term Note;
(b) In the event of any dissolution, winding up, liquidation,
readjustment, reorganization or other similar event relating to the
Company, whether voluntary or involuntary, partial or complete, and
whether in bankruptcy, insolvency or receivership proceedings, or upon
an assignment for the benefit of creditors, or any other marshalling of
the assets and liabilities of the Company or any sale of all or
substantially all of the assets of the Company other than as permitted
by the Purchase and Sale Agreement (such proceedings being herein
collectively called "BANKRUPTCY PROCEEDINGS"), the Senior Interests
3
shall first be paid and performed in full and in cash before Originator
shall be entitled to receive and to retain any payment or distribution
in respect of this Term Note. In order to implement the foregoing: (i)
all payments and distributions of any kind or character in respect of
this Term Note to which Holder would be entitled except for this CLAUSE
(b) shall be made directly to the Lender (for the benefit of the Senior
Interest Holders); (ii) Holder shall promptly file a claim or claims,
in the form required in any Bankruptcy Proceedings, for the full
outstanding amount of this Term Note, and shall use commercially
reasonable efforts to cause said claim or claims to be approved and all
payments and other distributions in respect thereof to be made directly
to the Lender (for the benefit of the Senior Interest Holders) until
the Senior Interests shall have been paid and performed in full and in
cash; and (iii) Holder hereby irrevocably agrees that Lender, in the
name of Holder or otherwise, demand, sue for, collect, receive and
receipt for any and all such payments or distributions, and file, prove
and vote or consent in any such Bankruptcy Proceedings with respect to
any and all claims of Holder relating to this Term Note, in each case
until the Senior Interests shall have been paid and performed in full
and in cash;
(c) In the event that Holder receives any payment or other
distribution of any kind or character from the Company or from any
other source whatsoever, in respect of this Term Note, other than as
expressly permitted by the terms of this Term Note, such payment or
other distribution shall be received in trust for the Senior Interest
Holders and shall be turned over by Holder to the Lender (for the
benefit of the Senior Interest Holders) forthwith. Holder will mark its
books and records so as clearly to indicate that this Term Note is
subordinated in accordance with the terms hereof. All payments and
distributions received by the Lender in respect of this Term Note, to
the extent received in or converted into cash, may be applied by the
Lender (for the benefit of the Senior Interest Holders) first to the
payment of any and all expenses (including reasonable attorneys' fees
and legal expenses) paid or incurred by the Senior Interest Holders in
enforcing these Subordination Provisions, or in endeavoring to collect
or realize upon this Term Note, and any balance thereof shall, solely
as between Originator and the Senior Interest Holders, be applied by
the Lender (in the order of application set forth in SECTION 1.4(d) of
the Loan and Servicing Agreement) toward the payment of the Senior
Interests; but as between the Company and its creditors, no such
payments or distributions of any kind or character shall be deemed to
be payments or distributions in respect of the Senior Interests;
(d) Notwithstanding any payments or distributions received by
the Senior Interest Holders in respect of this Term Note, while any
Bankruptcy Proceedings are pending Holder shall not be subrogated to
the then existing rights of the Senior Interest Holders in respect of
the Senior Interests until the Senior Interests have been paid and
performed in full and in cash. If no Bankruptcy Proceedings are
pending, Holder shall only be entitled to exercise any subrogation
rights that it may acquire (by reason of a payment or distribution to
the Senior Interest Holders in respect of this Term Note) to the extent
that any payment arising out of the exercise of such rights would be
permitted under CLAUSE (n) of EXHIBIT IV to the Loan and Servicing
Agreement;
4
(e) These Subordination Provisions are intended solely for the
purpose of defining the relative rights of Holder, on the one hand, and
the Senior Interest Holders on the other hand. Nothing contained in
these Subordination Provisions or elsewhere in this Term Note is
intended to or shall impair, as between the Company, its creditors
(other than the Senior Interest Holders) and Holder, the Company's
obligation, which is unconditional and absolute, to pay Holder the
principal of and interest on this Term Note as and when the same shall
become due and payable in accordance with the terms hereof or to affect
the relative rights of Holder and creditors of the Company (other than
the Senior Interest Holders);
(f) Holder shall not, until the Senior Interests have been
paid and performed in full and in cash, (i) cancel, waive, forgive,
transfer or assign, or commence legal proceedings to enforce or
collect, or subordinate to any obligation of the Company, howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due or to become due,
other than the Senior Interests, this Term Note or any rights in
respect hereof or (ii) convert this Term Note into an equity interest
in the Company, unless Holder shall have received the prior written
consent of the Lender in each case;
(g) Holder shall not, without the advance written consent of
the Lender, commence, or join with any other Person in commencing, any
Bankruptcy Proceedings with respect to the Company until at least one
year and one day shall have passed since the Senior Interests shall
have been paid and performed in full and in cash;
(h) If, at any time, any payment (in whole or in part) of any
Senior Interest is rescinded or must be restored or returned by a
Senior Interest Holder (whether in connection with Bankruptcy
Proceedings or otherwise), these Subordination Provisions shall
continue to be effective or shall be reinstated, as the case may be, as
though such payment had not been made;
(i) Each of the Senior Interest Holders may, from time to
time, at its sole discretion, without notice to Holder, and without
waiving any of its rights under these Subordination Provisions, take
any or all of the following actions: (i) retain or obtain an interest
in any property to secure any of the Senior Interests; (ii) retain or
obtain the primary or secondary obligations of any other obligor or
obligors with respect to any of the Senior Interests; (iii) extend or
renew for one or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Interests, or release or
compromise any obligation of any nature with respect to any of the
Senior Interests; (iv) amend, supplement, amend and restate, or
otherwise modify any Transaction Document; and (v) release its security
interest in, or surrender, release or permit any substitution or
exchange for all or any part of any rights or property securing any of
the Senior Interests, or extend or renew for one or more periods
(whether or not longer than the original period), or release,
compromise, alter or exchange any obligations of any nature of any
obligor with respect to any such rights or property;
5
(j) Holder hereby waives: (i) notice of acceptance of these
Subordination Provisions by any of the Senior Interest Holders; (ii)
notice of the existence, creation, non-payment or non-performance of
all or any of the Senior Interests; and (iii) all diligence in
enforcement, collection or protection of, or realization upon, the
Senior Interests, or any thereof, or any security therefor;
(k) Each of the Senior Interest Holders may, from time to
time, on the terms and subject to the conditions set forth in the
Transaction Documents to which such Persons are party, but without
notice to Holder, assign or transfer any or all of the Senior
Interests, or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or transfer
thereof, such Senior Interests shall be and remain Senior Interests for
the purposes of these Subordination Provisions, and every immediate and
successive assignee or transferee of any of the Senior Interests or of
any interest of such assignee or transferee in the Senior Interests
shall be entitled to the benefits of these Subordination Provisions to
the same extent as if such assignee or transferee were the assignor or
transferor; and
(l) These Subordination Provisions constitute a continuing
offer from the holder of this Term Note to all Persons who become the
holders of, or who continue to hold, Senior Interests; and these
Subordination Provisions are made for the benefit of the Senior
Interest Holders, and the Lender may proceed to enforce such provisions
on behalf of each of such Persons.
10. GENERAL. No failure or delay on the part of Originator in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to, any provision
of this Term Note shall in any event be effective unless (i) the same shall be
in writing and signed and delivered by the Company and Holder and (ii) all
consents required for such actions under the Transaction Documents shall have
been received by the appropriate Persons.
11. MAXIMUM INTEREST. Notwithstanding anything in this Term Note to the
contrary, the Company shall never be required to pay unearned interest on any
amount outstanding hereunder and shall never be required to pay interest on the
principal amount outstanding hereunder at a rate in excess of the maximum
nonusurious interest rate that may be contracted for, charged or received under
applicable federal or state law (such maximum rate being herein called the
"HIGHEST LAWFUL RATE"). If the effective rate of interest which would otherwise
by payable under this Term Note would exceed the Highest Lawful Rate, or if the
holder of this Term Note shall receive any unearned interest or shall receive
monies that are deemed to constitute interest which would increase the effective
rate of interest payable by the Company under this Term Note to a rate in excess
of the Highest Lawful Rate, then (i) the amount of interest which would
otherwise by payable by the Company under this Term Note shall be reduced to the
amount allowed by applicable law, and (ii) any unearned interest paid by the
Company or any interest paid by the Company in excess of the Highest Lawful Rate
shall be refunded to the Company. Without limitation of the foregoing, all
6
calculations of the rate of interest contracted for, charged or received by
Originator under this Term Note that are made for the purpose of determining
whether such rate exceeds the Highest Lawful Rate applicable to Originator (such
Highest Lawful Rate being herein called the "ORIGINATOR'S MAXIMUM PERMISSIBLE
RATE") shall be made, to the extent permitted by usury laws applicable to
Originator (now or hereafter enacted), by amortizing, prorating and spreading in
equal parts during the actual period during which any amount has been
outstanding hereunder all interest at any time contracted for, charged or
received by Originator in connection herewith. If at any time and from time to
time (i) the amount of interest payable to Originator on any date shall be
computed at Originator's Maximum Permissible Rate pursuant to the provisions of
the foregoing sentence and (ii) in respect of any subsequent interest
computation period the amount of interest otherwise payable to Originator would
be less than the amount of interest payable to Originator computed at
Originator's Maximum Permissible Rate, then the amount of interest payable to
Originator in respect of such subsequent interest computation period shall
continue to be computed at Originator's Maximum Permissible Rate until the total
amount of interest payable to Originator shall equal the total amount of
interest which would have been payable to Originator if the total amount of
interest had been computed without giving effect to the provisions of the
foregoing sentence.
12. NO NEGOTIATION. This Term Note is not negotiable.
13. GOVERNING LAW. THIS TERM NOTE SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO
CONFLICT OF LAWS PRINCIPLES.
14. CAPTIONS. Paragraph captions used in this Term Note are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Term Note.
[Signature page follows)
7
AFC AIM CORPORATION
By: /S/ CURTIS L. PHILLIPS
---------------------------------
Name: CURTIS L. PHILLIPS
-------------------------------
Title: EVP CFO, TREAS
------------------------------
S-1 Company Note