EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of June 28, 1995
ATLANTIC AUTO FUNDING CORPORATION, a Delaware corporation (the
"Borrower"), ATLANTIC AUTO FINANCE CORPORATION, a Delaware corporation
("Atlantic Auto" or the "Servicer"), and CITIBANK, N.A., a national banking
association (the "Bank"), agree as follows:
ARTICLE I
DEFINITIONS
Section A. DEFINITIONS. As used in this Agreement, the following
terms have the following meanings:
"ADVANCE RATE" means (i) prior to the Initial CXC Purchase, eighty
percent (80%) and (ii) thereafter, ninety three percent (93%); PROVIDED,
HOWEVER, that such percentage, in the case of clause (ii) only, shall in no
event exceed 100% minus the Aggregate Reserve Percentage (as defined in the
Receivables Purchase Agreement).
"AAFC PURCHASE AGREEMENT" means the Receivables Purchase Agreement
between Atlantic Auto, as originator, and the Borrower, as buyer, pursuant to
which the Borrower shall purchase all of Atlantic Auto's right, title and
interest in and to the Receivables, including the assignment to the Borrower of
the Contract and Title relating to each Receivable.
"AFFILIATE" means, with respect to a Person, another Person that
directly or indirectly controls, is controlled by or is under common control
with such first Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether
through the ownership of voting Securities or by contract or otherwise.
"AGENT" means CNAI.
"AGING RECEIVABLE REPORT" means a monthly report delivered pursuant to
SECTION 4.01(h) in the form attached hereto as EXHIBIT A.
"AUTOMOBILE" means the new or used automobile or light-duty truck that
is purchased by the Obligor to which a particular Receivable relates.
"BASE RATE" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank, N.A. in New
York, New York from time to time, as Citibank, N.A.'s base rate; and
(ii) the sum (adjusted to the nearest one quarter of one percent
(0.25%) or, if there is no nearest one quarter of one percent (0.25%), to
the next higher one quarter of one percent (0.25%)) of (A) one half of one
percent (0.50%) per annum PLUS (B) the rate per annum obtained by dividing
(I) the latest three-week moving average of secondary market morning
offering rates in the United States for three-month certificates of deposit
of major United States money market banks, such three-week moving average
(adjusted to the basis of a year of 360 days) being determined weekly on
each Monday (or, if such day is not a Business Day, on the next succeeding
Business Day) for the three-week period ending on the previous Friday (or,
if such day is not a Business Day, on the next preceding Business Day) by
Citibank, N.A. on the basis of such rates reported by certificate of
deposit dealers to, and published by, the Federal Reserve Bank of New York,
or, if such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank, N.A. from three (3) New
York certificate of deposit dealers of recognized standing selected by
Citibank, N.A., by (II) a percentage equal to 100% minus the average of the
daily percentages specified
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during such three-week period by the Federal Reserve Board (or any
successor) for determining the maximum reserve requirement (including, but
not limited to, any emergency, supplemental or other marginal reserve
requirement) for Citibank, N.A. in respect of liabilities which consist of
or which include (among other liabilities) three-month Dollar nonpersonal
time deposits in the United States PLUS (C) the average during such three-
week period of the annual assessment rates estimated by Citibank, N.A. for
determining the then current annual assessment payable by Citibank, N.A. to
the Federal Deposit Insurance Corporation (or any successor) for insuring
Dollar deposits of Citibank, N.A. in the United States; and
(iii) the sum of (A) one half of one percent (0.50%) per annum PLUS (B)
the Federal Funds Rate in effect from time to time during such period.
"BORROWING" means a borrowing consisting of Loans made on the same
day.
"BORROWING BASE" means, with respect to any date, the product of (i)
the Outstanding Balance of Eligible Receivables as of such date and (ii) the
Advance Rate as of such date.
"BORROWING BASE CERTIFICATE" means a certificate, in substantially the
form of EXHIBIT B, setting forth the Outstanding Balance of Eligible
Receivables.
"BUSINESS DAY" means a day which is not a Saturday or Sunday or a
legal holiday and on which banks are not required or permitted by law or other
governmental action to close in New York, New York.
"CLOSING DATE" means the date on which this Agreement is executed by
the parties hereto and becomes effective.
"CNAI" means Citicorp North America, Inc., a Delaware corporation.
"COLLATERAL" shall have the meaning ascribed to such term in SECTION
5.01.
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"COLLECTIONS" means with respect to each Receivable, without
limitation, all (i) payments received and collected on such Receivable, (ii) net
proceeds received by virtue of the liquidation of such Receivable (including
pursuant to a sale by the Borrower of such Receivable under the Receivables
Purchase Agreement or a Permitted Securitization Transaction), (iii) retained
proceeds received under any property damage, casualty or other insurance policy
with respect to such Receivable, (iv) proceeds received under the VSI Policy,
(v) interest of the Borrower in any property damage, casualty or other insurance
policies as the same relate to the Automobile securing such Receivable and (vi)
other proceeds relating to such Receivable or its Contract File.
"COMMITTED RECEIVABLES PURCHASE AGREEMENT" means the receivables
purchase agreement or agreements between the Borrower and the Liquidity Banks.
"CONTRACT" means, with respect to each Receivable, the note, retail
sales installment contract or other evidence of the Obligor's obligation to
repay Debt to the Borrower (as assignee of Atlantic Auto), executed by such
Obligor in connection with the purchase of an Automobile.
"CONTRACT FILE" means, with respect to each Receivable, the original
Contract, either a copy of the application to the appropriate state authorities
for a Title to the related Automobile or a standard assurance in the form
commonly used in the industry relating to the provision of Title and when issued
by the appropriate state authorities, the related Title (but only to the extent
that Title documents are required under applicable state law to be held by a
secured party in order to perfect such secured party's security interest in the
related Automobile), all original instruments modifying the terms and conditions
of the Receivable and the original endorsements or assignments of such Contract.
"CREDIT AND COLLECTION POLICY" means the Credit and Collection Policy
of Atlantic Auto for the Contracts and the Receivables as set forth on EXHIBIT
C.
"CUSTODIAL AGREEMENT" means that certain custodial agreement dated the
date hereof by and among Atlantic Auto, the Borrower, the Agent and the
Custodian.
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"CUSTODIAN" means Safesite National Business Records Management, Inc.,
a Delaware corporation.
"CUSTODIAN'S CONFIRMATION" means the Custodian's certificate in the
form of EXHIBIT A to the Custodian's Agreement confirming that it has received
(i) an itemized schedule of the Receivables (which shall also briefly describe
each related Contract File) and (ii) the Contract File with respect to each such
Receivable.
"CXC" means CXC Incorporated, a Delaware corporation.
"CXC RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase
agreement or agreements between the Borrower and CXC.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services, (iv)
obligations as lessee under leases which shall have been or should be, in
accordance with GAAP, recorded as capital leases, and (v) obligations under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of others of the kinds
referred to in clauses (i) through (iv) above.
"DEFAULT" means an event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default.
"DEFAULTED RECEIVABLE" means a Receivable (i) with respect to which
any payment thereon has remained unpaid more than ninety (90) days past the due
date therefor or (ii) charged off as uncollectible by the Servicer. A
Receivable shall be deemed to be a Defaulted Receivable upon the earlier to
occur of the events specified in clauses (i) and (ii) of the preceding sentence.
"DOLLARS" and "$" mean the lawful money of the United States.
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"ELIGIBLE RECEIVABLE" means any Receivable with respect to which the
representations and warranties contained in SECTION 5.03(a) are true and correct
at all times and which have not been sold by the Borrower to the Purchaser
pursuant to the Receivables Purchase Agreement.
"EVENT OF DEFAULT" means any of the occurrences set forth in SECTION
6.01 after the expiration of any applicable grace period and the giving of any
applicable notice, in each case as expressly provided in SECTION 6.01.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Bank from three federal funds brokers of recognized standing
selected by the Bank.
"FINANCING AGREEMENTS" means, without limitation, the Custodial
Agreement, the Support Agreement, the AAFC Purchase Agreement and the
Receivables Purchase Agreement.
"FUNDING DATE" means, with respect to any Loan, the date of funding of
such Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accounting Standards Board or in such other
statements by such other entity as may be in general use by significant segments
of the accounting profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"INITIAL CXC PURCHASE" means the first purchase of Receivables by CXC
from the Borrower pursuant to the Receivables Purchase Agreement.
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"INTERCREDITOR AGREEMENT" means the intercreditor agreement among the
Bank, CXC, the Liquidity Banks, the Surety and the Custodian to be entered into
concurrently with the Borrower's execution of the Receivables Purchase
Agreement.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed by
law, and includes the interest of a lessor under a capital lease or under any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement or similar notice (other
than a financing statement filed by a "true" lessor or consignor pursuant to
Section 9-408 of the UCC), naming the owner of such property as debtor, under
the UCC or other comparable law of any jurisdiction.
"LIQUIDITY BANKS" means the banks identified as such in the Committed
Receivables Purchase Agreement.
"LOAN DOCUMENTS" means this Agreement, the Note, and any other
document or instrument executed and delivered by the Borrower to the Bank in
connection with this Agreement.
"LOANS" means all loans made to the Borrower pursuant to SECTION
2.01(a).
"LOCK-BOX ACCOUNT" means an account maintained for the purpose of
receiving Collections.
"LOCK-BOX AGENT" means at any time CNAI or such other Person(s) then
authorized pursuant to this Agreement and, upon its execution and delivery, the
Receivables Purchase Agreement to act as lock-box agent on behalf of the Bank
and the Purchasers, as applicable, and their respective assignees.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the form of
EXHIBIT D, among the Lock-Box Agent, Atlantic Auto, the Borrower and a Lock-Box
Bank which agreement sets forth the rights of the Lock-Box Agent, Atlantic Auto,
the Borrower and
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the Lock-Box Bank with respect to the disposition and application of the
Collections received into the applicable Lock-Box Account.
"LOCK-BOX BANK" means any of the banks holding one or more lock-box
accounts for receiving Collections.
"NET WORTH" means with respect to any Person (i) total consolidated
assets of such Person MINUS (ii) total consolidated liabilities of such Person.
"NOTE" has the meaning ascribed to such term in SECTION 2.01(c).
"NOTICE OF BORROWING" means a Notice of Borrowing attached hereto as
EXHIBIT E and made a part hereof with respect to any proposed borrowing of a
Loan pursuant to SECTION 2.01(b).
"OBLIGATIONS" means all loans, advances, debts, liabilities,
obligations, covenants and duties of any kind or nature, present or future,
whether or not evidenced by any note, guaranty or other instrument, due to the
Bank from Borrower, arising under this Agreement, the Note, the other Loan
Documents, whether or not for the payment of money, whether arising by reason of
an extension of credit, loan, indemnification or in any other manner, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now or hereafter arising and however acquired,
together with all interest, charges, expenses, attorneys' fees and other sums
chargeable to the Borrower under this Agreement.
"OBLIGOR" means the obligor and any co-obligor(s) under a Receivable.
"ORIGINATOR RECEIVABLES" means any Automobile loan receivable
originated by Atlantic Auto other than the Receivables.
"OUTSTANDING BALANCE" means, with respect to any date and any
Receivable, the then outstanding principal amount of such Receivable. For the
avoidance of doubt, it is understood that in no event shall the definition of
"Outstanding Balance" include any amount in respect of (i) finance charges and
income with respect to any such Receivable or (ii) prepaid dealer reserves or
other marketing expenses with respect to any such Receivable.
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"PERMITTED SECURITIZATION TRANSACTION" means a transfer by the
Borrower of Receivables (i) pursuant to the Receivables Purchase Agreement and
(ii) by way of a term securitization transaction, provided that (x) upon the
effectiveness of such transaction and the application of the proceeds therefrom
to prepay Loans secured immediately prior to the effectiveness of such
transaction by the Receivables subject to such transaction, no prepayment of
Loans is required under SECTION 2.03(a) of this Agreement and (y) the parties to
such transaction enter into intercreditor arrangements with the Agent, the Bank
and the Purchasers reasonably satisfactory to each of the Agent, the Bank and
the Purchasers.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"PURCHASER" means CXC or the Liquidity Banks, as applicable and their
respective successors and assigns.
"RECEIVABLES" means the indebtedness evidenced by the Contracts
assigned by Atlantic Auto to the Borrower pursuant to the AAFC Purchase
Agreement, whether constituting accounts, general intangibles, contract rights,
chattel paper or instruments.
"RECEIVABLES PURCHASE AGREEMENT" means, collectively, (i) the CXC
Receivables Purchase Agreement and (ii) the Committed Receivables Purchase
Agreement.
"RECORDS" means, with respect to each Receivable, all factory invoices
and work orders describing the related Automobile, the bill of sale and guaranty
of title, insurance policies, tax receipts, property and casualty insurance
policies or binders naming the Servicer as loss payee or additional named
insured, as is appropriate, insurance premium receipts, ledger sheets, payment
records, insurance claim files and correspondence, all documentation in
connection with any modification, release, accommodation, cosigning or guaranty
of the Receivable and all other documents and instruments, including all books,
records, files, tapes, correspondence and other information or materials
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and
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related property and rights) relating to the Receivable, the Contract, the Title
and the Automobile relating to the Receivable and this Agreement.
"RELATED SECURITY" means, with respect to any Receivable, (i) the
related Contract File, (ii) the related Automobile, (iii) all related Records
and (iv) all proceeds of the foregoing.
"SECURITIES" means any limited, general or other partnership interest,
or any stock, shares, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or any certificates of interest, shares, or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire any of the foregoing, but shall not
include any evidence of the Obligations.
"SUBSIDIARY" means any corporation or other entity of which Securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned or controlled by such Person, one or more of
the other subsidiaries of such Person or any combination thereof.
"SUPPORT AGREEMENT" means the support agreement of UAG in favor of the
Borrower to be entered into concurrently with the Borrower's execution of the
AAFC Purchase Agreement.
"SURETY" means Capital Markets Assurance Corporation, a New York
corporation.
"TAXES" has the meaning ascribed to such term in SECTION 2.07(a).
"TERMINATION DATE" means the earliest of (i) July 5, 1996, (ii) the
date this Agreement is terminated pursuant to SECTION 7.11 and (iii) the date
the Committed Receivables Purchase Agreement is terminated; PROVIDED, HOWEVER,
that if the Initial CXC Purchase does not occur by September 1, 1995, then April
1, 1996 shall be substituted for the date specified in clause (i) of this
definition.
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"TITLE" means, with respect to each Receivable, the original
certificate or other instrument or registration evidencing ownership of the
related Automobile, which certificate, other instrument or registration shall
have the Lien of Atlantic Auto noted thereon or a UCC financing statement signed
by the Obligor and filed in the appropriate jurisdiction evidencing the
perfection of the Lien granted by the Obligor to Atlantic Auto and assigned to
the Borrower as provided herein.
"UAG" means United Auto Group, Inc., a Delaware corporation.
"UCC" means the Uniform Commercial Code as enacted in the State of New
York, as it may be amended from time to time.
"UCC AGENT" means at any time CNAI or such other Person(s) then
authorized pursuant to this Agreement and, upon its execution and delivery, the
Receivables Purchase Agreement to act as assignee of the Borrower on behalf of
the Bank and the Purchasers, as applicable, and their respective assignees under
UCC financing statements filed pursuant to this Agreement.
"VSI POLICY" means the vendors single interest physical damage
insurance policy maintained with respect to the Receivables, a copy of which is
attached as EXHIBIT F.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
SECTION 1.021. LOANS.
(a) AVAILABILITY. The Bank in its sole and absolute discretion and
subject to the terms and conditions hereinafter set forth, may make loans (each
individually, a "Loan" and, collectively, the "Loans") to the Borrower from time
to time during the period from the date hereof to the Business Day immediately
preceding the Termination Date, up to an aggregate outstanding principal amount
equal to the lesser of (i) Five Million Dollars ($5,000,000) or (ii) the
Borrowing Base in effect at such time. Subject to the provisions hereof, the
Borrower may repay any outstanding Loan made to it on any day which is a
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Business Day and any amounts so repaid may be readvanced to the Borrower, up to
the amount available under this SECTION 2.01(a) at such time, in the sole and
absolute discretion of the Bank.
(b) NOTICE OF BORROWING. When the Borrower desires to borrow under
this SECTION 2.01, it shall deliver to the Bank a Notice of Borrowing, signed by
it, no later than 10:00 a.m. (New York time) on the proposed Funding Date. Such
Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be
a Business Day), (ii) the amount of the proposed Borrowing and (iii)
instructions for the disbursement of the proceeds of the proposed Borrowing.
Loans made on any Funding Date shall be in minimum amount of $10,000. Any
Notice of Borrowing (or telephonic notice in lieu thereof) given pursuant to
this SECTION 2.01(b) shall be irrevocable. Each submission by the Borrower to
the Bank of a Notice of Borrowing and each acceptance by the Borrower of the
proceeds of each Loan made hereunder shall constitute a representation and
warranty by the Borrower, as of the Funding Date, that (a) the representations
and warranties made in Article III shall be true and correct on and as of the
date of the Loans, before and after giving effect to such Loans and to the
application of the proceeds therefrom, as though made on and as of such date
(other than representations and warranties which expressly speak as of a
different date) and (b) no event shall have occurred and be continuing, or would
result from the Loans, or from the application of the proceeds therefrom, which
would constitute a Default or an Event of Default in effect on, and as of the
date of, such Loans. Each submission by the Borrower to the Bank of a Notice of
Borrowing shall be accompanied by a Borrowing Base Certificate and a Custodian's
Confirmation.
(c) PROMISE TO REPAY. The Borrower hereby agrees to pay when due the
principal amount of each Loan which is made to it, and further agrees to pay
when due all unpaid interest accrued thereon, in accordance with the terms of
this Agreement and the Note. The Borrower shall execute and deliver to the Bank
a promissory note to evidence the Loans owing to the Bank, substantially in the
form of EXHIBIT G hereto (such promissory note and all amendments thereto,
replacements thereof and substitutions therefor being collectively referred to
as the "Note").
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SECTION 1.022. USE OF PROCEEDS. The Borrower shall apply proceeds of
the Loans to purchase Receivables from Atlantic Auto pursuant to the AAFC
Purchase Agreement, repay outstanding Loans and pay transaction costs associated
therewith.
SECTION 1.023. REPAYMENTS; PREPAYMENTS.
(a) Whenever the aggregate principal amount of Loans outstanding
exceeds the Borrowing Base, a mandatory prepayment of principal shall be made in
the amount of such excess. Such prepayments shall be applied to the Obligations
as set forth in SECTION 2.03(d) and shall be accompanied by a payment of all
interest accrued and unpaid through the date of such mandatory prepayment and
allocable to the amount so prepaid.
(b) The entire remaining outstanding principal balance of the Loans,
together with any accrued and unpaid interest and any other Obligations
hereunder, shall be due and payable on the Termination Date and following an
Event of Default as provided in SECTION 6.01.
(c) The Borrower may, at any time and from time to time, prepay or
repay any Loan, in whole or in part, without premium or penalty, upon at least
one Business Day's notice to the Bank stating the proposed date and principal
amount of the prepayment, and if such notice is given the Borrower shall prepay
such Loan, together with accrued interest to the date of such prepayment on the
principal amount prepaid; PROVIDED, HOWEVER, that each partial prepayment shall
be in an aggregate principal amount not less than $10,000.
(d) All payments of any amounts due under any provision of this
Agreement shall be applied in the following order: FIRST to payment of interest
due and owing allocable to the portion of principal paid; SECOND to the then
outstanding principal balance of the Loans in the order in which they were first
made; and THIRD to the remaining balance of the Obligations.
SECTION 1.024. INTEREST AND FEES.
(a) RATE OF INTEREST. All Loans and the outstanding principal
balance of all other Obligations shall bear interest on the unpaid principal
amount thereof from the date such Loans are
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made and such other Obligations are due and payable until paid in full, except
as otherwise provided in SECTION 2.04(c), at a rate per annum equal to the sum
of the Base Rate, as in effect from time to time as interest accrues PLUS one
half of one percent (0.50%) per annum.
(b) INTEREST PAYMENTS. (i) Interest accrued on each Loan shall be
payable in arrears (A) on the first day of each calendar month, commencing on
the first such day following the making of such Loan and (B) if not theretofore
paid in full, at maturity (whether by acceleration or otherwise) of such Loan.
(ii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the first day of each calendar
month, commencing on the first such day following the incurrence of such
Obligation and (B) if not theretofore paid in full, at the time such other
Obligation becomes due and payable (whether by acceleration or otherwise).
(c) DEFAULT INTEREST. Notwithstanding the rate of interest specified
in SECTION 2.04(a) or elsewhere in this Agreement, effective immediately upon
(i) the occurrence of an Event of Default described in SECTION 6.01(a) or (b) or
(ii) the occurrence of any other Event of Default and notice from the Bank of
the effectiveness of this SECTION 2.04(c), and for as long thereafter as such
Event of Default shall be continuing, the principal balance of all Loans, and
the principal balance of all other Obligations, shall bear interest at a rate
which is two percent (2%) per annum in excess of the Base Rate PLUS one half of
one percent (0.50%) per annum.
(d) UNUSED LINE FEE. The Borrower shall pay to the Bank a fee (the
"Unused Line Fee"), accruing at the rate of one-half of one percent (0.50%) per
annum on the amount from time to time by which $5,000,000 exceeds the
outstanding principal amount of the Loans, for the period commencing on the
Closing Date and ending on the Termination Date, payable monthly, in arrears, on
the first Business Day of each calendar month, commencing on the first such
Business Day after the Closing Date, and on the Termination Date.
SECTION 1.025. INCREASED COSTS. If, after the date hereof, due to
any increase in capital adequacy or reserve requirements or other charges or
costs imposed by any
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governmental authority, the Bank shall determine in good faith that there has
been a direct increase in the cost to the Bank of making, funding, renewing or
maintaining the Loans or a reduction in the yield received by the Bank thereon,
then the Borrower shall from time to time, upon the Bank's written demand to
such effect, pay to the Bank additional amounts sufficient to compensate the
Bank for such increased cost or such reduction in the yield to the Bank. Such
demand shall be accompanied by a detailed statement as to the amount of such
increased cost or reduction in yield, which statement shall be conclusive and
binding for all purposes, absent manifest error. If such increased costs are
incurred as a result of the Bank's selection of a particular lending office, the
Bank shall take reasonable efforts to make, fund and maintain its Loans through
another lending office of the Bank in another jurisdiction, if the making,
funding or maintaining of such Loans through such other office of the Bank does
not, in the judgment of the Bank, otherwise materially adversely affect such
Loans of the Bank.
SECTION 1.026. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment hereunder and under the Note of principal of and interest on the
Loans and other Obligations, without condition or reservation of right, in
immediately available funds, not later than 1:00 P.M. (New York City time) on
the day when due in Dollars to the Bank at its address referred to in SECTION
7.02.
(b) The Borrower hereby authorizes the Bank, if and to the extent
payment is not made when due hereunder or under the Note, to charge from time to
time against any or all of the Borrower's accounts with the Bank any amount so
due.
(c) All computations of interest shall be made by the Bank on the
basis of a year of 360 days and the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable. Each determination by the Bank of an interest rate hereunder shall
be conclusive and binding for all purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Note shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of the time shall in such case
be included in the computation of payment of interest.
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SECTION 1.027. TAXES.
(a) PAYMENT OF TAXES. Any and all payments by the Borrower
hereunder or under the Note or other document evidencing any Obligations
shall be made free and clear of and without reduction for any and all present
or future taxes, levies, imposts, deductions, charges, withholdings, and all
stamp or documentary taxes, excise taxes, ad valorem taxes and other taxes
imposed on the value of the property, charges or levies which arise from the
execution, delivery or registration, or from payment or performance under,
any of the Loan Documents and all other liabilities with respect thereto
excluding taxes imposed on or measured by net income or overall gross
receipts and capital and franchise taxes now or hereafter imposed on the Bank
by (i) the United States, (ii) the governmental authority of the jurisdiction
in which the Bank's applicable domestic lending office is located or any
political subdivision thereof or (iii) the governmental authority in which
the Bank is organized, managed and controlled or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges
and withholdings being hereinafter referred to as "Taxes"). If the Borrower
shall be required by law to withhold or deduct any Taxes from or in respect
of any sum payable hereunder or under the Note or such document to the Bank,
(x) the sum payable to the Bank shall be increased as may be necessary so
that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
SECTION 2.07) the Bank receives an amount equal to the sum it would have
received had no such withholding or deductions been made, (y) the Borrower
shall make such withholding or deductions and (z) the Borrower shall pay the
full amount withheld or deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) INDEMNIFICATION. The Borrower will indemnify the Bank against,
and reimburse the Bank on demand for, the full amount of all Taxes
(including, without limitation, any Taxes imposed by any governmental
authority on amounts payable under this SECTION 2.07 and any additional
income or franchise taxes resulting therefrom) incurred or paid by the Bank
or any bank holding company parent of the Bank and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties)
arising therefrom or with respect thereto, whether or
-16-
not such Taxes were lawfully payable. A certificate as to any additional amount
payable to any Person under this SECTION 2.07 shall be submitted to the Borrower
and shall, unless the Borrower within ten (10) Business Days after its receipt
of such certificate shall dispute the additional amount payable, be final,
conclusive and binding upon all parties hereto. In connection with any such
dispute, the Bank agrees, within a reasonable time after receiving a written
request from the Borrower, to provide the Borrower with documentation supporting
its calculation of such additional amounts payable; PROVIDED, HOWEVER, that the
Bank shall not be required to disclose to the Borrower any tax returns of the
Bank or any bank holding company parent of the Bank or any other confidential
information relating to the Bank or such bank holding company parent. In
addition, the Bank agrees, within a reasonable time after receiving a written
request from the Borrower, to provide the Borrower with such certificates as are
reasonably required, and take such other actions as are reasonably necessary to
claim such exemptions as the Bank may be entitled to claim in respect of all or
a portion of any Taxes which are otherwise required to be paid or deducted or
withheld pursuant to this SECTION 2.07 in respect of any payments under this
Agreement or under the Note.
(c) RECEIPTS. Within thirty (30) days after the date of any payment
of Taxes by the Borrower, it will furnish to the Bank, at its address referred
to in SECTION 7.02, the original or a certified copy of a receipt or other
documentation reasonably satisfactory to the Bank, evidencing payment thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 1.031. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) The Borrower is duly incorporated, validly existing and in good
standing under the laws of Delaware, has the corporate power and authority
to own its assets and to transact the business in which it is now engaged
or proposed to be engaged and is duly qualified as a foreign corporation
and in good standing under the laws of each
-17-
other jurisdiction where the nature and extent of the business transacted
by it or the ownership of its assets makes such authorization necessary.
(b) The execution, delivery and performance by the Borrower of the
Loan Documents and each Financing Agreement to which it is a party have
been duly authorized by all necessary corporate actions and do not and will
not (i) contravene its charter or by-laws; (ii) violate any provision of,
or require any filing, registration, consent or approval under, any law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award having applicability to the Borrower; (iii) result in a breach of
or constitute a default or require any consent under any indenture or loan
or credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected; or (iv) cause the Borrower to be in default (with or without
notice or lapse of time or both) under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any
such indenture, agreement, lease or instrument.
(c) Each of the Loan Documents and each of the Financing Agreements
to which it is a party has been duly executed and delivered by the Borrower
and constitutes its legal, valid and binding obligation enforceable against
it in accordance with its terms, except as such enforcement may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity).
(d) 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 due execution, delivery and performance by the Borrower of this
Agreement, the Note, the other Loan Documents or any Financing Agreement to
which it is a party.
(e) Except as disclosed on SCHEDULE 3.01(e) hereto, there is no
pending or threatened action, proceeding or
-18-
investigation affecting the Borrower before any court, commission, agency
or instrumentality of the federal or any state or municipal government or
any agency or subdivision thereof or before any arbitration which may
materially adversely affect the financial condition or operations of the
Borrower or which purports to affect the legality, validity or
enforceability of this Agreement, the Note or the other Loan Documents or
any of the Financing Agreements.
(f) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U issued by the Board of Governors of the Federal Reserve
System), and no proceeds of the Loans will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock.
(g) The Borrower has filed all tax returns (federal, state and local)
required to be filed and paid all taxes shown thereon to be due, including
interest and penalties, or has filed for and/or received valid extensions
of time for such filings or payments. No assessments have been made
against the Borrower by any taxing authority nor has any penalty or
deficiency been asserted by any such authority which has not been paid
unless the validity thereof is being contested in good faith by appropriate
proceedings.
(h) No representation or warranty of the Borrower contained in this
Agreement, any other Loan Document, any Financing Agreement or in any
certificate, document or other written materials including, without
limitation, financial information delivered by the Borrower to the Bank in
connection therewith contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
contained therein not misleading.
(i) The Borrower is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(j) The AAFC Purchase Agreement creates a valid sale, transfer and
assignment to the Borrower of, and the Borrower is the legal and beneficial
owner of, all right, title and
-19-
interest of Atlantic Auto in and to the Receivables now existing and
hereafter-created and the proceeds thereof. Subject to the terms of the
Intercreditor Agreement, the Bank has a perfected, first-priority security
interest in each Receivable and no further action is required to perfect
such security interest, other than the possession by the Custodian of the
Contracts and Titles relating to each Receivable, which possession is
evidenced by the Custodian's Confirmations.
SECTION 1.032. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The
Servicer represents and warrants as follows:
(a) The Servicer is duly incorporated, validly existing and in good
standing under the laws of Delaware, has the corporate power and authority
to own its assets and to transact the business in which it is now engaged
or proposed to be engaged and is duly qualified as a foreign corporation
and in good standing under the laws of each other jurisdiction where the
nature and extent of the business transacted by it or the ownership of its
assets makes such authorization necessary.
(b) The execution, delivery and performance by the Servicer of this
Agreement and each Financing Agreement to which it is a party have been
duly authorized by all necessary corporate actions and do not and will not
(i) contravene its charter or by-laws; (ii) violate any provision of, or
require any filing, registration, consent or approval under, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award having applicability to the Servicer; (iii) result in a breach of or
constitute a default or require any consent under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which the
Servicer is a party or by which it or its properties may be bound or
affected; or (iv) cause the Servicer to be in default (with or without
notice or lapse of time or both) under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any
such indenture, agreement, lease or instrument.
(c) Each of this Agreement and each of the Financing Agreements to
which it is a party has been duly executed and
delivered by the Servicer and constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity).
(d) 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 due execution, delivery and performance by the Servicer of this
Agreement, or any Financing Agreement to which it is a party.
(e) The consolidated balance sheets of the Servicer as at December
31, 1994, and the related consolidated statements of income and retained
earnings of the Servicer for the fiscal period then ended, copies of which
have been furnished to the Bank, fairly present the financial condition of
the Servicer as at such date and the results of the operations of the
Servicer for the period ended on such date, all in accordance with GAAP,
and since December 31, 1994, there has been no material adverse change in
such condition or operations which would materially adversely affect the
ability of the Servicer to perform its obligations under this Agreement or
any Financing Agreement to which it is a party.
(f) Except as disclosed on SCHEDULE 3.02(f), there is no pending or
threatened action, proceeding or investigation affecting the Servicer
before any court, commission, agency or instrumentality of the federal or
any state or municipal government or any agency or subdivision thereof or
before any arbitration which may materially adversely affect the financial
condition or operations of the Servicer or which purports to affect the
legality, validity or enforceability of this Agreement or any of the
Financing Agreements.
(g) The Servicer has filed all tax returns (federal, state and local)
required to be filed and paid all taxes shown thereon to be due, including
interest and penalties, or has filed for and/or received valid extensions
of time
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for such filings or payments. No assessments have been made against the
Servicer by any taxing authority nor has any penalty or deficiency been
asserted by any such authority which has not been paid unless the validity
thereof is being contested in good faith by appropriate proceedings.
(h) No representation or warranty of the Servicer contained in this
Agreement, any Financing Agreement to which it is a party or in any
certificate, document or other written materials including, without
limitation, financial information delivered by the Servicer to the Bank in
connection therewith contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
contained therein not misleading.
ARTICLE IV
COVENANTS OF THE BORROWER AND THE SERVICER
SECTION 1.041. AFFIRMATIVE COVENANTS. Until the later of (i) the
date on which all of the Obligations have been paid in full and (ii) the
Termination Date, each of the Borrower and the Servicer shall, unless the Bank
shall otherwise consent in writing:
(a) CORPORATE MAINTENANCE. At all times maintain its corporate
existence and preserve and keep in full force and effect its rights,
privileges and franchises necessary to its business.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material respects with
(i) all applicable laws, rules, regulations and orders and (ii) all
indentures, or loan or credit agreements or any other agreement, lease or
instrument to which it is a party or by which it or its properties may be
bound or affected.
(c) TAXES. Duly file all tax returns with respect to it and its
property which are required to be filed, duly pay all taxes (including all
quarterly tax assessments) due and payable by it and all assessments and
other governmental charges imposed on it or on any of its property or
assets or
-22-
in respect of any of its business, income or property before any penalty
accrues thereon; PROVIDED that no such taxes, assessments and governmental
charges above need be paid if being contested in good faith by appropriate
proceedings diligently instituted and conducted and if such reserve or
other appropriate provision, if any, as shall be required in conformity
with GAAP shall have been made therefor.
(d) BOOKS AND RECORDS. Keep proper books of record and account in
which entries in conformity with GAAP shall be made of all dealings and
transactions in relation to their businesses and activities.
(e) FURTHER ASSURANCES.
(i) Execute and deliver from time to time to the Bank all such
further documents and instruments and do all such other acts and
things as may be reasonably required by the Bank to enable the Bank to
exercise and enforce its rights hereunder and under the other
documents referred to herein and to perfect, continue the perfection
of, preserve and protect its lien on the Collateral.
(ii) From time to time, at its own expense, (x) take whatever
action is reasonably requested by the Bank or its legal counsel to
preserve, protect or perfect the security interest in the Collateral
granted pursuant to ARTICLE V, including, without limitation,
executing UCC financing statements, endorsing notes, executing
additional security documents or delivering possession of Collateral
to the Custodian, (y) appear in and defend any action or proceeding
which may affect the Borrower's title to the Collateral or the
security interest granted hereunder and (z) perform such acts as the
Bank shall reasonably deem necessary or appropriate to effectuate the
purposes of this Agreement.
(f) LITIGATION. Give the Bank prompt notice of any suit at law or in
equity against it, except where damages of less than $100,000 are sought
(exclusive of claims covered by insurance policies unless the applicable
insurance carrier has disclaimed coverage or has reserved the right to
disclaim coverage on such claims).
-23-
(g) MATERIAL ADVERSE EFFECT. Notify the Bank of the occurrence of
any event which may be reasonably expected to have a material adverse
effect on or may be reasonably expected to cause a material adverse change
in the condition or prospects, financial condition or business, of it, as
soon as it becomes aware of such event.
(h) REPORTING REQUIREMENTS. Furnish to the Bank:
(i) As soon as available and in any event within 30 days after
the end of each calendar month in each fiscal year, (x) in the case of
the Borrower, a balance sheet of the Borrower as of the end of such
month and a statement of income of the Borrower for such month and for
the period commencing at the end of the previous fiscal year and
ending with the end of such month, certified by the chief financial
officer of the Borrower and (y) in the case of the Servicer,
consolidated balance sheets of the Servicer and its Subsidiaries as of
the end of such month and consolidated statements of income of the
Servicer and its Subsidiaries for such month and for the period
commencing at the end of the previous fiscal year and ending with the
end of such month, certified by the chief financial officer of the
Servicer;
(ii) As soon as available and in any event within 120 days after
the end of its fiscal year (x) in the case of the Borrower, a copy of
its financial statements for such year and a balance sheet for the
twelve month period then ended, a statement of income, cash flow and
changes in shareholder equity of the Borrower for such fiscal year,
together with comparative information for the previous fiscal year,
and copies of all reports and management letters, if any, from the
independent certified public accountants to the Borrower, which
reports and letters shall be reasonably satisfactory to the Bank, all
certified by the chief financial officer of the Borrower and (y) in
the case of the Servicer, a copy of its consolidated financial
statements for such year and consolidated balance sheets for the
twelve month period then ended, consolidated statements of income,
cash flow and
-24-
changes in shareholder equity of the Servicer and its Subsidiaries for
such fiscal year, together with comparative information for the
previous fiscal year, and copies of all reports and management
letters, if any, from the independent certified public accountants to
the Servicer, which reports and letters shall be reasonably
satisfactory to the Bank, all certified by the chief financial officer
of the Servicer;
(iii) Promptly upon obtaining knowledge of the occurrence of each
Default and Event of Default continuing on the date of such statement,
a statement of the chief financial officer of the Borrower or the
Servicer, as applicable, setting forth details of such Default or
Event of Default and the action which the Borrower or the Servicer, as
applicable, has taken and proposes to take with respect thereto;
(iv) In the case of the Borrower only, (x) at least once every
ten (10) Business Days, a Borrowing Base Certificate, together with
such supporting documents as the Bank requests (provided that this
reporting requirement may be satisfied for such a period by the
Borrower's delivery of a Borrowing Base Certificate in accordance with
SECTION 2.01(b) in connection with a Borrowing during such period) and
(y) on or before the tenth day of each calendar month (or such more
frequent period as the Bank shall determine in its sole discretion), a
schedule of activity for the Receivables for the preceding calendar
month, which sets forth (1) the aggregate principal amount of
Receivables, (2) an Aging Receivable Report setting forth the
aggregate principal amount of Receivables which are delinquent and the
number of days payments on such Receivables are delinquent, and (3)
any other pertinent information reasonably requested by the Bank, all
certified as being true, accurate and complete by the chief financial
officer of the Borrower.
(v) Promptly upon receipt thereof, copies of any notices,
reports (financial or other) or other information required to be
delivered to the Borrower by Atlantic Auto pursuant to the AAFC
Purchase Agreement,
-25-
by UAG pursuant to the Support Agreement or by the Custodian pursuant
to the Custodial Agreement;
(vi) Such other information respecting the condition or
operations, financial or otherwise, of the Borrower or the Servicer,
as applicable, as the Bank may from time to time reasonably request;
and
(vii) together with each delivery of any financial statement
pursuant to subsection (i) and (ii) hereof, a certificate from the
chief financial officer of the Borrower or the Servicer, as
applicable, containing a statement that no Default or Event of Default
has occurred and is continuing on the date of such certificate, or if
any such Default or Event of Default has occurred, setting forth
details of such Default or Event of Default and the action which the
Borrower or the Servicer, as applicable, has taken and proposes to
take with respect thereto.
(i) COMPLIANCE WITH FINANCING AGREEMENTS. Comply promptly with any
and all covenants and provisions of the Financing Agreements to which it is
a party.
(j) MAINTENANCE OF INSURANCE.
(i) In the case of the Servicer only, maintain and keep in force
insurance in amounts and with companies as is customary for companies
engaged in the same business as that of the Servicer.
(ii) In the case of the Borrower only, pay or cause to be paid
all annual insurance premiums with respect to the VSI Policy and all
charges and fees relating thereto.
(k) MAINTENANCE OF INDEPENDENT DIRECTOR. The Borrower will maintain
at least one independent director who is not an officer, director or
employee of (i) Atlantic Auto or (ii) any Affiliate thereof, or a parent,
child, spouse or sibling of any such Person; PROVIDED, HOWEVER, that if
such independent director dies or resigns the Borrower shall have thirty
(30) Business Days to replace that person with another independent
director; PROVIDED, FURTHER, HOWEVER,
-26-
that until any such independent director shall have been replaced the
Borrower shall take no action requiring the vote or consent of its
independent director.
SECTION 1.042. NEGATIVE COVENANTS OF THE BORROWER. Until the later of
(i) the date on which all of the Obligations have been paid in full and (ii) the
Termination Date, the Borrower will not, without the written consent of the
Bank:
(a) Merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, acquire all or substantially all of the assets of,
any Person or division of any Person or materially change the nature or
conduct of its business as conducted on the date hereof other than pursuant
to or as permitted by this Agreement and any Financing Agreement.
(b) Incur, create, assume, suffer to exist or otherwise become liable
with respect to any Debt other than the Loans, its obligations under any
Financing Agreement, its obligations under any Permitted Securitization
Transaction and Debt for operational expenses of the Borrower in an amount
not to exceed $25,000.
(c) Amend, modify or otherwise change any of the terms or provisions
in its articles/certificate of incorporation, its by-laws, any document
setting forth the designation, amount, relative rights, limitations and
preferences of any class or series of its capital stock, and in each case,
any equivalent documents, as in effect on the date hereof.
(d) (i) Cancel or terminate the AAFC Purchase Agreement or the
Custodial Agreement or consent to or accept any cancellation or termination
of either agreement, (ii) amend or otherwise modify any term or condition
of the AAFC Purchase Agreement or the Custodial Agreement or give any
consent, waiver or approval under either agreement, (iii) waive any default
under or breach of the AAFC Purchase Agreement or the Custodial Agreement
or (iv) take any other action under the AAFC Purchase Agreement or the
Custodial Agreement not required by the terms thereof.
-27-
(e) Use the proceeds of any Loan for any purpose other than the
purchase of Receivables, repayment of the outstanding Loans and the payment
of any transaction costs associated therewith.
(f) Except in accordance with the Credit and Collection Policy and in
the ordinary course of business, compromise, extend, release or adjust
payments on any Contracts or Receivables, accept a conveyance of an
Automobile in full or partial satisfaction of any Contract or Receivable,
or release the Lien noted on any Title to any Automobile securing any
Receivable unless, after excluding each Receivable with respect to which
any such action has been taken from the calculation of the Borrowing Base,
the Borrowing Base exceeds the aggregate principal amount of Loans
outstanding.
(g) Change the location of its chief executive office and principal
place of business from 800 Perinton Hills Office Park, Fairport, New York
14450 or change its name, identity or corporate structure to such an extent
that any financing statement filed in connection with this Agreement would
become misleading, unless the Borrower shall have given the Bank at least
30 days' prior written notice thereof and prior to effecting any such
change, taken such steps as the Bank may deem necessary or desirable to
continue the perfection and priority of the Liens in favor of the Bank
granted in connection herewith.
(h) (i) Fail to do all things necessary to maintain its existence as
a corporation separate and apart from Atlantic Auto and any Affiliate of
Atlantic Auto, and any Affiliate of the Borrower, including, without
limitation, conducting business correspondence in its own name, holding
regular meetings of, or obtaining regular written consents from, its Board
of Directors and maintaining appropriate books and records; (ii) suffer any
limitation on the authority of its own directors and officers to conduct
its business and affairs in accordance with their independent business
judgment, or authorize or suffer any Person other than its own directors
and officers to act on its behalf with respect to matters (other than
matters customarily delegated to others under powers of attorney) for which
a corporation's own directors and officers would customarily
-28-
be responsible; (iii) fail to (A) subject to the terms of the Custodial
Agreement, maintain or cause to be maintained by an agent of the Borrower
under the Borrower's control physical possession of all its books and
records, (B) maintain capitalization adequate for the conduct of its
business, (C) account for and manage its liabilities separately from those
of any other Person, including, without limitation, payment of all payroll
and other administrative expenses and taxes from its own assets, (D)
segregate and identify separately all of its assets from those of any other
Person, and (E) maintain offices through which its business is conducted
separate from those of Atlantic Auto and any Affiliates of Atlantic Auto
and any Affiliates of the Borrower (PROVIDED that, to the extent that the
Borrower and any of its Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs and expenses
among them, and each such entity shall bear its fair share of such
expenses); or (iv) commingle its funds with those of Atlantic Auto or any
Affiliate of Atlantic Auto or any Affiliates of the Borrower except to the
extent permitted by ARTICLE V, or use its funds for other than the
Borrower's uses.
SECTION 1.043. NEGATIVE COVENANTS OF THE SERVICER. Until the later of
(i) the date on which all of the Obligations have been paid in full and (ii) the
Termination Date, the Servicer will not, without the written consent of the
Bank:
(a) Merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, acquire all or substantially all of the assets of,
any Person or division of any Person or materially change the nature or
conduct of its business as conducted on the date hereof.
(b) Amend, modify or otherwise change any of the terms or provisions
in its articles/certificate of incorporation, its by-laws, any document
setting forth the designation, amount, relative rights, limitations and
preferences of any class or series of its capital stock, and in each case,
any equivalent documents, as in effect on the date hereof.
-29-
(c) Compromise, extend, release or adjust payments on any Contracts
or Receivables, accept a conveyance of an Automobile in full or partial
satisfaction of any Contract or Receivable, or release the Lien noted on
any Title to any Automobile securing any Receivable, except to the extent
permitted in SECTION 4.02(f) with respect to the Borrower.
ARTICLE V
COLLATERAL; ADMINISTRATION AND COLLECTION
Section 1.051. SECURITY INTEREST.
To secure the prompt and complete payment, observance
and performance of all of the Obligations, subject to the terms of the
Intercreditor Agreement, the Borrower hereby grants to the Bank a security
interest in all of the Borrower's right, title and interest in and to the
following property, whether now owned or existing or hereafter arising or
acquired and wheresoever located (the "Collateral"):
(a) All of the Borrower's right, title and interest in and to the
Receivables and the Related Security with respect to such Receivables.
(b) All Records relating to the Receivables, the Contracts, the
Titles, and the Automobiles, whether now or hereafter delivered to, or in
the possession, custody or control of, the Custodian, Atlantic Auto and/or
the Bank.
(c) All guarantees, indemnities, warranties, insurance policies and
proceeds thereof and other agreements or arrangements of whatever character from
time to time supporting or securing payment of the Receivables whether pursuant
to the related Contract or otherwise.
(d) All right, title and interest of the Borrower in and to the Lock-
Box Accounts, and any and all items deposited therein and all investments
held therein; PROVIDED, HOWEVER, that the Bank shall have no interest in
any collections of Originator Receivables deposited in the Lock-Box
Accounts.
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(e) Any and all interest of the Borrower in and under the AAFC
Purchase Agreement and the Support Agreement.
(f) All Collections and other cash and non-cash proceeds of the
foregoing items (a) - (d) and the documents pertaining thereto, together
with whatever is receivable or received when any of items (a) - (d) or the
proceeds thereof are sold, collected or exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary and also including,
without limitation, all rights to payment with respect to any cause of
action affecting or relating to the foregoing and all additions thereto,
substitutions therefor and replacements thereof.
Section 1.052. POWER OF ATTORNEY. Subject to the terms and
provisions of this Agreement and the Intercreditor Agreement, at any time,
without notice and at the expense of the Borrower, the Bank may, and the
Borrower hereby appoints the Bank its true attorney-in-fact (such agency being
coupled with an interest) for such purposes, upon the occurrence of an Event of
Default, perform any obligation of the Borrower hereunder in the Borrower's name
or otherwise.
Section 1.053. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE
COLLATERAL. (a) The Borrower represents and warrants with respect to each
Receivable identified on each Borrowing Base Certificate as an "Eligible
Receivable", as of the date of such Borrowing Base Certificate, as follows:
(i) The Obligor of such Receivable is a U.S. resident.
(ii) Such Receivable is not a Defaulted Receivable.
(iii) Such Receivable is evidenced by a Contract which matures in 75
months or less.
(iv) Such Receivable arose pursuant to a Contract which constitutes
"chattel paper" within the meaning of Section 9-105 of the UCC.
(v) Such Receivable is denominated in Dollars and payable in the
United States.
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(vi) Such Receivable arose under a Contract which represents the
legal, valid and binding obligation of the related Obligor under such
Contract and is not subject to any dispute, offset, counterclaim or
defense, except as provided for under state or federal consumer protection
law.
(vii) Such Receivable and related Contract do not contravene
applicable laws, rules or regulations concerning, without limitation, such
matters as usury, consumer protection, truth in lending, fair credit
billing and equal credit opportunity.
(viii) Such Receivable arose under a Contract for the retail sale of
an Automobile where such Automobile has already been delivered and the
Obligor under such Contract is not in default under the terms of the
Contract.
(ix) Such Receivable satisfies all applicable requirements of
Atlantic Auto's Credit and Collection Policy.
(x) The related Obligor received a Fair Isaac Score (as defined in
the Credit and Collection Policy) of at least 160.
(xi) Such Receivable or Contract has not been assigned or pledged by
Atlantic Auto or the Borrower except pursuant to the terms of the AAFC
Purchase Agreement and this Agreement, the Borrower has good and marketable
title thereto, and the Borrower is the sole legal and beneficial owner
thereof and has full right to transfer, sell and encumber the same free and
clear of any Lien except as created in favor of the Bank pursuant to the
terms of this Agreement and as contemplated by the Intercreditor Agreement.
(xii) To the best of the Borrower's knowledge, after diligent
inquiry, there is no default, breach, violation or event of acceleration
existing under the related Contract, and there is no event which, with the
passage of time, or with notice and the expiration of any grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and the Borrower has not waived any default, breach,
violation or event of acceleration.
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(xiii) The related Contract contains customary and enforceable
provisions so as to render the rights and remedies of the holder thereof
against the property subject to such Contract adequate for the realization
of the benefits of the security provided thereby, including all the rights
of a secured party under the Uniform Commercial Code as in effect in the
state in which the related Obligor resides or such Contract was executed.
(xiv) The related Contract is not secured by any collateral, except
the Lien with respect to the corresponding Automobile as noted on the
related Title.
(xv) At the time a Lien with respect to the Automobile was granted by
the related Obligor, the Automobile was and is free of material damage and
is in good repair.
(xvi) Atlantic Auto is the lienholder of record on the related Title.
(xvii) The related Obligor maintains casualty and liability insurance
for the Automobile in accordance with the Credit and Collection Policy.
(b) In addition, the Borrower represents and warrants with respect to
the Collateral as follows:
(i) The Custodian's Confirmation required to be delivered under
SECTION 2.01(b) has been delivered to the Bank prior to each advance made
hereunder and Atlantic Auto has retained (i) all documents relating to the
Receivables not delivered to the Custodian and (ii) a copy of each Contract
File.
(ii) The Borrower's chief executive office and principal place of
business are located at 800 Perinton Hills Office Park, Fairport, New York
14450 and Atlantic Auto's chief executive office and principal place of
business are located at 800 Perinton Hills Office Park, Fairport, New York
14450.
(iii) The origination and collection practices used by Atlantic Auto
with respect to each Receivable have been, and
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are, in all respects legal and prudent and comply with all requirements of
the Credit and Collection Policy.
(iv) The transfer, assignment and conveyance of the Contracts by
Atlantic Auto to the Borrower pursuant to the AAFC Purchase Agreement are
not subject to any bulk transfer or similar statutory provisions in effect
in any applicable jurisdiction.
Section 1.054. COVENANTS WITH RESPECT TO THE COLLATERAL.
(a) Each of the Borrower and the Servicer shall comply with any and
all requirements of any federal, state or local law applicable to the Contracts,
including, without limitation, all consumer protection laws.
(b) The Borrower shall keep the Collateral, or cause the Collateral
to be kept, in accordance with safe and sound business practices.
(c) The Borrower shall not sell, assign, pledge, grant or suffer to
exit any Lien on, transfer, dispose of or otherwise encumber any of the
Collateral except for (i) the Liens securing the Obligations and (ii) sales of
Receivables pursuant to the Receivables Purchase Agreement or a Permitted
Securitization Transaction.
Section 1.055. RELEASE OF RECEIVABLES AND LIENS WITH RESPECT TO
AUTOMOBILES. (a) Whether or not an Event of Default exists, in the event that
any Receivable is to be paid or prepaid in full, the Custodian shall release the
corresponding Contract and Title to the Servicer for further delivery to the
Obligor under such Receivable; PROVIDED, HOWEVER, that the Servicer hereby
agrees (i) to hold any such Contract and Title in trust for the benefit of the
Bank and to segregate such Contract and Title from any other property belonging
to the Servicer until such Receivable has been paid or prepaid in full and such
payment has been deposited in a Lock-Box Account; and (ii) to return such
Contract and Title to the Custodian within twenty (20) days of the Custodian's
release thereof if such Receivable has not been paid or prepaid by such time.
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(b) Whether or not an Event of Default exists, in the event that the
Borrower requests of the Bank and the Custodian that any Contracts which are to
be canceled in connection with a foreclosure, deed in lieu of foreclosure or
other similar proceeding, be delivered to the Servicer prior to such event, the
Custodian shall release such Contracts and all related documents to the
Servicer; PROVIDED, HOWEVER, that the Servicer hereby agrees to segregate and
hold such Contracts and related documents together with all proceeds thereof in
trust for the benefit of the Bank, and such Contracts, related documents and
proceeds thereof shall remain Collateral hereunder.
(c) In connection with any sale by the Borrower of any Receivable
pursuant to the Receivables Purchase Agreement or a Permitted Securitization
Transaction, the Bank shall release its Lien in such Receivable and the
related Contract and Title upon the terms and subject to the conditions set
forth in the Intercreditor Agreement; PROVIDED, HOWEVER, that nothing in this
SECTION 5.05(c) shall be deemed to constitute a release by the Bank of (i)
its Lien on the proceeds received by the Borrower for the sale, purported
sale or other transfer of any such Receivable pursuant to the Receivables
Purchase Agreement or (ii) any Lien or other interest or right the Bank has
in any "Unsold Receivables" (as defined in the Intercreditor Agreement) and
the proceeds thereof, including without limitation, collections of Unsold
Receivables which are at any time deposited in any Lock-Box Account.
Section 1.056. LOCK-BOX AGENT; UCC AGENT. (a) CNAI is hereby
designated as the Lock-Box Agent. Each of Atlantic Auto and the Borrower agrees
to enter into a Lock-Box Agreement with each Lock-Box Bank and the Lock-Box
Agent on or prior to the Closing Date or as promptly thereafter as practicable
and, in any event, no later than August 5, 1995.
(b) CNAI is hereby designated as the UCC Agent.
Section 1.057. DESIGNATION OF SERVICER. The servicing, administering
and collection of the Receivables shall be conducted by the Person (the
"Servicer") so designated from time to time in accordance with this SECTION
5.07. Until the Borrower or the Bank, as applicable, gives notice to Atlantic
Auto of the designation of a new Servicer, Atlantic Auto is hereby designated
as, and hereby agrees to perform the duties and obligations of,
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the Servicer pursuant to the terms hereof. The Borrower, in accordance with
Section 6.01 of the AAFC Purchase Agreement and with the prior written consent
of the Bank, at any time prior to the occurrence of an Event and the Bank at any
time following the occurrence of an Event of Default, may designate as Servicer
any Person to succeed Atlantic Auto or any successor Servicer, on the condition
that any such Person so designated shall agree to perform the duties and
obligations of the Servicer pursuant to the terms hereof. The Servicer may,
with the prior consent of the Borrower and the Bank, subcontract with any other
Person for servicing, administering or collecting the Receivables, provided that
the Servicer shall remain liable for the performance of the duties and
obligations of the Servicer pursuant to the terms hereof. The charges, fees or
reimbursements for services provided by the Servicer hereunder shall be
determined by mutual agreement of the Servicer and the Borrower and shall be
paid by the Borrower. The Bank's exercise of any of its rights with respect to
the Servicer created under this SECTION 5.07 shall in each case be subject to
the terms of the Intercreditor Agreement.
Section 1.058. DUTIES OF THE SERVICER. (a) The Servicer shall take or
cause to be taken all such actions as may be necessary or advisable to collect
each Receivable from time to time, all in accordance with applicable laws, rules
and regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Each of the Borrower and the Bank hereby appoints
as its agent the Servicer, from time to time designated pursuant to SECTION
5.07, to enforce its respective rights and interests in and under the
Receivables, the Related Security and Collections with respect thereto.
Atlantic Auto (so long as it is Servicer) will at all times apply the same
standards and follow the same procedures with respect to the decision to
commence, and in prosecuting and litigating with respect to Receivables as it
applies and follows with respect to Originator Receivables. In no event shall
the Servicer be entitled to make the Bank or the Borrower a party to any
litigation without the Bank's express prior written consent.
(b) On each day prior to the Termination Date, the Servicer shall set
aside and hold in trust for the Bank (to the extent of its interest therein
determined in accordance with the Intercreditor Agreement) all Collections of
Receivables received on such day. Subject to the terms of the Intercreditor
Agreement, within two (2) Business days of deposit into the Lock-
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Box Account of such Collections the Servicer shall identify such Collections and
apply such Collections in the following order of priority:
(i) if such Collections are collections of Originator Receivables,
the Servicer shall remit such collections to Atlantic Auto in accordance
with Section 5.08(d);
(ii) if such Collections are Collections of Receivables and payment of
any amount is due the Bank under any provision of this Agreement, the
Servicer shall apply such Collections to the payment of such amount in
accordance with SECTION 2.03(d); and
(iii) all Collections remaining after giving effect to clauses (i)
and (ii) above shall be remitted to (x) if no Event of Default has occurred
and is continuing, the Borrower or (y) if an Event of Default has occurred
and is continuing, the Bank to prepay outstanding Loans in accordance with
SECTION 2.03(d).
(c) Provided that the Termination Date shall not have occurred,
Atlantic Auto, while it is Servicer, may, in accordance with the Credit and
Collection Policy and in the ordinary course of business, amend, modify or waive
any term or condition of any Contract unless such amendment, modification or
waiver relates to a negative change in the related Obligor's creditworthiness or
inability to make any payment under the related Contract. Atlantic Auto shall
deliver to the Servicer, and the Servicer shall hold in trust for the Borrower
and the Bank in accordance with their respective interests (determined in
accordance with the Intercreditor Agreement), all Records. Notwithstanding
anything to the contrary contained herein but subject to the terms of the
Intercreditor Agreement, following the occurrence of an Event of Default, the
Bank shall have the absolute and unlimited right to direct the Servicer (whether
the Servicer is Atlantic Auto or otherwise) to commence or settle any legal
action to enforce collection of any Receivable or to foreclose upon or repossess
any Related Security.
(d) The Servicer shall as soon as practicable following receipt turn
over to Atlantic Auto the collections of any Originator Receivable less, in the
event Atlantic Auto is not the Servicer, all reasonable and appropriate out-of-
pocket
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costs and expenses of such Servicer of servicing, collecting and administering
the Originator Receivables to the extent not covered by the servicer fee
received by it. The Servicer, if other than Atlantic Auto, shall as soon as
practicable upon demand deliver to Atlantic Auto all records in its possession
relating to Originator Receivables and copies of Records in its possession
relating to Receivables. The Servicer's authorization under this Agreement
shall terminate after the Termination Date on such date as the Receivables shall
have been collected or charged off as uncollectible.
(e) Notwithstanding anything to the contrary contained in this
ArticleV, the Servicer, if the Bank or its designee, shall have no obligation to
collect, enforce or take any other action described in this Article V with
respect to any Originator Receivable other than to deliver to Atlantic Auto the
collections and documents with respect to any such Originator Receivable as
described in the first two sentences of SECTION 5.08(d) and to exercise the same
degree of care with respect to such collections and documents in its possession
as it would with respect to its own property.
Section 1.059. RIGHTS OF THE BANK. (a) Subject to the terms of the
Intercreditor Agreement, the Bank is hereby authorized at any time to instruct
the Lock-Box Agent to notify any or all of the Lock-Box Banks to remit all
Collections of Receivables deposited in such Lock-Box Accounts directly to the
Lock-Box Agent. The Lock-Box Agent agrees that it will identify and apply
Collections in accordance with SECTION 5.08(b) if the Bank exercises the
foregoing right. Each of the Servicer and the Borrower agrees to supply the
Lock-Box Agent with all Records necessary for the Lock-Box Agent to perform its
obligation set forth in the preceding sentence.
(b) Subject to the terms of the Intercreditor Agreement, at any time
following the designation of a Servicer other than Atlantic Auto pursuant to
SECTION 5.07:
(i) The Bank may notify at any time the Obligors of Receivables,
or any of them, of its interest in such Receivables and direct such
Obligors, or any of them, that payment of all amounts payable under
any Receivable be made directly to the Bank or its designee.
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(ii) Atlantic Auto shall, at the Bank's request and at Atlantic
Auto's expense, give notice of the Bank's interest in Receivables to
each Obligor and direct that payments be made directly to the Bank or
its designee.
(iii) Atlantic Auto shall, at the Bank's request, (A) assemble all
Records which the Bank reasonably believes are necessary or appropriate for
the administration and enforcement of the Receivables, and shall make the
same available to the Bank at a place selected by the Bank or its designee,
and (B) segregate all cash, checks and other instruments received by it from
time to time constituting Collections of Receivables in a manner acceptable
to the Bank and shall, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed instruments of
transfer, to the Bank or its designee.
(iv) Atlantic Auto hereby authorizes the Bank to take any and all
steps in Atlantic Auto's name and on behalf of Atlantic Auto necessary
or desirable, in the determination of the Bank, to collect all amounts
due under any and all Receivables, including, without limitation,
endorsing Atlantic Auto's name on checks and other instruments
representing Collections and enforcing such Receivables and the
related Contracts.
Section 5.10. RESPONSIBILITIES OF THE BORROWER. Anything herein to
the contrary notwithstanding, the Borrower shall (i) perform all of its
obligations under the Contracts related to the Receivables and the exercise by
the Bank of its rights hereunder shall not relieve the Borrower from such
obligations and (ii) pay when due any taxes, including without limitation,
sales, excise and personal property taxes payable in connection with the
Receivables, unless the Borrower is contesting the payment of such taxes in good
faith and by appropriate proceedings.
Section 5.11. APPLICATION OF PAYMENTS. To the extent the Servicer
receives a payment from an Obligor of a Receivable with respect to which the
Obligor has not identified the Receivable to which such payment should be
applied (a payment in
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the exact amount of an outstanding invoice being sufficient identification), the
Servicer shall use its best efforts to contact such Obligor to confirm the
Receivable to which such Obligor intended that such payment be applied.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 1.061. EVENTS OF DEFAULT. If any of the following Events of
Default shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of the Note when the
same becomes due and payable; or
(b) The Borrower shall fail to pay any interest on the Note or any
other amount payable with respect to which the Borrower has knowledge
hereunder or under any of the other Loan Documents when the same becomes
due and payable and such non-payment continues for a period of more than
five (5) days; or
(c) Any representation or warranty made by the Borrower herein
(other than those made in SECTION 5.03(a)), in the other Loan Documents, in
any Financing Agreement to which it is party or in any certificate,
agreement or written statement contemplated by or made and delivered to the
Bank in connection with this Agreement shall prove to have been incorrect
in any material respect when made; or
(d) The Borrower shall default in the performance or compliance with
any term contained in this Agreement (other than as covered by paragraphs
(a), (b) or (c) of this SECTION 6.01) or any default or event of default
shall occur under any of the other Loan Documents or any Financing
Agreement to which it is a party and such default or event of default
continues for a period of more than thirty (30) days after notice thereof;
or
(e) The Borrower shall fail to pay any principal of or premium or
interest on any Debt (but excluding indebtedness evidenced by the Note) in
a principal amount of at least
40
$100,000 when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Debt; or any other event
shall occur or condition shall exist under any agreement or instrument
relating to any such Debt and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of
such event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
prepay, redeem, purchase or defease such Debt shall be required to be made,
in each case prior to the stated maturity thereof; or
(f) The Borrower 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 Borrower seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of the Borrower 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, custodian or
other similar official for the Borrower or for any substantial part of its
property and, in the case of any such proceeding instituted against the
Borrower (but not instituted by the Borrower), either such proceeding shall
remain undismissed or unstayed for a period of 45 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, the Borrower or for any
substantial part of its property) shall occur; or the Borrower shall take
any corporate action to authorize any of the actions set forth above in
this subsection (f); or
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(g) Any judgment or order for the payment of money in excess of
$100,000 (excluding amounts covered by insurance) shall be rendered against
the Borrower and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall
be any period of ten consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise, shall
not be in effect; or
(h) At any time, for any reason, (i) any Loan Document ceases to be
in full force and effect or the Borrower seeks to repudiate its obligations
thereunder and the Liens intended to be created thereby are, or the
Borrower seeks to render such Liens, invalid and unperfected, or (ii) Liens
in favor of the Bank contemplated by the Loan Documents shall, at any time,
for any reason, be invalidated or otherwise cease to be in full force and
effect, or such Liens shall be subordinated or shall not have the priority
contemplated by this Agreement or the other Loan Documents; or
(i) The Borrower shall fail to be a wholly-owned Subsidiary of
Atlantic Auto; or
(j) The Net Worth of the Borrower shall be less than $100,000; or
(k) Any representation or warranty made by the Servicer herein, in
any Financing Agreement to which it is a party or in any certificate,
agreement or written statement contemplated by or made and delivered to the
Bank in connection with this Agreement shall prove to have been incorrect
in any material respect when made; or
(l) The Servicer shall default in the performance or compliance with
any term contained in this Agreement (other than as covered by paragraph
(k) of this SECTION 6.01) or any default or event of default shall occur
under any Financing Agreement to which it is a party and such default or
event of default continues for a period of more than thirty (30) days after
notice thereof; or
(m) The Servicer shall fail to pay any principal of or premium or
interest on any Debt in a principal amount of at least $100,000 when the
same becomes due and payable
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(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Debt; or any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or
to permit the acceleration of, the maturity of such Debt; or any such Debt
shall be declared to be due and payable, or required to be prepaid (other
than by a regularly scheduled required prepayment), redeemed, purchased or
defeased, or an offer to prepay, redeem, purchase or defease such Debt
shall be required to be made, in each case prior to the stated maturity
thereof; or
(n) The Servicer 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 Servicer seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of the Servicer 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, custodian or
other similar official for the Servicer or for any substantial part of its
property and, in the case of any such proceeding instituted against the
Servicer (but not instituted by the Servicer), either such proceeding shall
remain undismissed or unstayed for a period of 45 days, or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, the Servicer or for any
substantial part of its property) shall occur; or the Servicer shall take
any corporate action to authorize any of the actions set forth above in
this subsection (n); or
(o) (i) The occurrence of a default, breach or failure of condition by
the Borrower or Atlantic Auto under any
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Financing Agreement to which the Borrower or Atlantic Auto is a party which
(unless such default otherwise constitutes an Event of Default pursuant to
another provision of this SECTION 6.01) is not remedied within the
applicable cure period contained therein, if any; or (ii). the Borrower or
Atlantic Auto for any reason fails to remain a party to the AAFC Purchase
Agreement or any other Financing Agreement to which the Borrower or
Atlantic Auto is a party on the date hereof; or
(p) (i) Any of the Financing Agreements, or any Lien or priority
claim granted thereunder shall terminate, cease to be effective or cease to
be the legal, valid, binding and enforceable obligation of the Borrower,
Atlantic Auto or any servicer or subservicer, as applicable, thereunder; or
(ii) the Borrower shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability (it being
understood that the Borrower may, in good faith, question the accuracy of
any mathematical calculation of an amount owed thereunder); or
(q) The VSI Policy shall cease to be in full force and effect; or
(r) Atlantic Auto ceases to be qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of any of the
Receivables or the AAFC Purchase Agreement or the ability of Atlantic Auto
to perform its duties hereunder or under the AAFC Purchase Agreement; or
(s) The occurrence of an Event of Termination (as defined in the
Committed Receivables Purchase Agreement) under the Committed Receivables
Purchase Agreement which is not remedied within the applicable cure period
specified therein, if any; or
(t) (i) The Support Agreement shall terminate, cease to be effective
or cease to be the legal, valid, binding and enforceable obligation of UAG;
(ii) UAG shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or (iii) UAG
shall default in the performance or compliance with any term
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contained in the Support Agreement which is not remedied within the
applicable cure period contained therein, if any;
then, and in any such event, the Bank may, by notice to the Borrower, declare
the Note, all interest thereon and all of the Obligations to be forthwith due
and payable, whereupon the Note, all such interest and all of the Obligations
shall become and be forthwith due and payable, without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the Borrower; PROVIDED, HOWEVER, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower or the Servicer under
the Federal Bankruptcy Code, the Loans, the Note, all such interest and all the
Obligations shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower. Notwithstanding any other rights the Bank may
have under applicable law and hereunder, the Borrower agrees that upon the
occurrence and during the continuance of an Event of Default, the Bank shall
have the right to take any or all of the following actions at the same or
different times: with or without legal process and with or without previous
notice or demand for performance, to take possession of the Collateral and
without liability for trespass to enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the Collateral and
to apply (including by way of set-off) any of the Collateral or any other
property of the Borrower held by the Bank or thereafter coming into the Bank's
possession (including account balances of the Borrower) to a reduction of the
Obligations of the Borrower and, generally, to exercise any and all rights
afforded to a secured party under the UCC or other applicable law.
ARTICLE VII
MISCELLANEOUS
SECTION 1.071. AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower or the
Servicer therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Bank, and then such waiver or consent shall be
effective only in
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the specific instance and for the specific purpose for which given.
SECTION 1.072. NOTICES, ETC. (a) All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at 800 Perinton Hills
Office Park, Fairport, New York 14450, Attention: Robert Anderson, Secretary
and Treasurer, Telecopier No. 716/421-1954; if to the Servicer, at its address
at 800 Perinton Hills Office Park, Fairport, New York 14450, Attention: Suzanne
O'Connor, Treasurer, Telecopier No. 716/421-1954; and if to the Bank, at its
address at 399 Park Avenue, New York, New York 10043, Attention: Reinhard
Kleinschmitt, Telecopier No. (212) 758-6272; or, as to each party, at such other
address as shall be designated by such party in a written notice to the other
party. All such notices and communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
redelivered to the cable company, respectively, except that notices to the Bank
pursuant to the provisions of Article II shall not be effective until received
by the Bank. The Bank shall be entitled to rely conclusively on any written
notice sent to it by telecopy.
(b) The Borrower agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from the Borrower; PROVIDED that the
Borrower shall not have any obligation under this SECTION 7.02(b) to an
Indemnitee with respect to any indemnified matter caused by or resulting from
the gross negligence or willful misconduct of that Indemnitee as finally
determined by a court of competent jurisdiction.
SECTION 1.073. NO WAIVER; REMEDIES. No failure on the part of the
Bank to exercise, and no delay in exercising, any
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right hereunder or under the Note shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 1.074. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistently applied.
SECTION 1.075. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay
on demand all reasonable costs and expenses in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the Note and the other Loan Documents, including, without limitation,
the reasonable fees and out-of-pocket expenses of counsel for the Bank with
respect thereto and with respect to advising the Bank as to its rights and
responsibilities under this Agreement. The Borrower further agrees to pay after
an Event of Default on demand all costs and expenses, if any (including
reasonable counsel fees and expenses), (i) in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Note and the other Loan Documents, including, without limitation,
reasonable counsel fees and expenses in connection with the enforcement of
rights under this SECTION 7.05; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding; and (iii)
in commencing, defending or intervening in any litigation or in filing a
petition, complaint, motion or other pleadings in any legal proceeding relating
to the Obligations, the Collateral, the Borrower and related to or arising out
of the transactions contemplated hereby or by any of the other Loan Documents.
In addition, the Borrower shall pay any and all stamp and other taxes (other
than those taxes excluded pursuant to SECTION 2.07) payable or determined to be
payable in connection with the execution and delivery of this Agreement, the
Note and the other Loan Documents to be delivered hereunder, and agrees to save
the Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes.
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SECTION 1.076. RIGHT OF SET-OFF. Subject to the terms and conditions
of the Intercreditor Agreement, upon the occurrence and during the continuance
of an Event of Default, the Bank is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by the Bank to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing, whether or not the Bank shall have made
any demand under this Agreement, the Note or any other Loan Document and
although such Obligations may be unmatured. The Bank agrees promptly to notify
the Borrower after any such set-off and application, PROVIDED that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this SECTION 7.06 are in addition to
other rights and remedies (including, without limitation, other rights of set-
off) which the Bank may have.
SECTION 1.077. BINDING EFFECT; ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may assign all or a portion of its rights and
obligations under this Agreement to an institution with a comparable credit
rating upon notice to the Borrower and the Bank may at any time create a
security interest in all or any portion of its rights under this Agreement
(including, without limitation, Obligations owing to it and the Note held by it)
in favor of any Federal Reserve bank in accordance with Regulation A of the
Federal Reserve Board.
SECTION 1.078. 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 taken together shall constitute one and the same
agreement.
SECTION 1.079. ENTIRE AGREEMENT; SEVERABILITY OF PROVISIONS. This
Agreement, taken together with all of the other Loan Documents, embodies the
entire agreement and understanding of the parties hereto and all prior
agreements and understandings, written and oral, relating to the subject matter
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hereof. In case any provision in or obligation under this Agreement or the
other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 7.10 INDEMNIFICATION. The Borrower agrees to indemnify the
Bank and its Affiliates and each of their respective stockholders, directors,
officers, agents, attorneys and employees, and the successors and assigns of the
foregoing (collectively, "Indemnitees"), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against any Indemnitee in any way relating
to or arising out of the Loan Documents, any Financing Agreement or any related
transactions (whether actual or proposed), or any action taken or omitted by the
Bank under the Loan Documents or any Financing Agreement, PROVIDED that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the breach by the Bank of any agreement contained
herein or the gross negligence or wilful misconduct of such Indemnitee as
finally determined by a court of competent jurisdiction. The foregoing
agreements shall survive the making and repayment of the Loans.
SECTION 7.11. TERMINATION OF AGREEMENT. This Agreement may be
terminated by either the Bank or the Borrower upon 3 days' prior written notice
to the other party hereto, and, in the case of termination by the Borrower,
payment in full of the Obligations on the Termination Date. No such termination
shall affect the obligations of the Borrower with respect to the Loans hereunder
outstanding at the time of such termination.
SECTION 7.12. GOVERNING LAW. This Agreement and the Note shall be
governed by, and construed in accordance with, the laws of the State of New York
(including, without limitation, Section 5-1401 of the General Obligations Law of
New York but otherwise without regard to conflicts of laws principles).
SECTION 7.13. CERTAIN CONSENTS AND WAIVERS OF THE BORROWER.
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(a) PERSONAL JURISDICTION. EACH OF THE BORROWER, THE SERVICER AND
THE BANK IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF
MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREEMENT, ANY LOAN DOCUMENT OR ANY FINANCING
AGREEMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE BORROWER, THE
SERVICER AND THE BANK AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE
BORROWER AND THE SERVICER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE
TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(b) SERVICE OF PROCESS. EACH OF THE BORROWER AND THE SERVICER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER'S OR THE
SERVICER'S, AS APPLICABLE, NOTICE ADDRESS SPECIFIED HEREIN, SUCH SERVICE TO
BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. EACH OF THE BORROWER AND THE
SERVICER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR
ANY FINANCING AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT OF THE BANK TO BRING PROCEEDINGS AGAINST THE BORROWER OR
THE SERVICER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE BANK
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR ANY FINANCING AGREEMENT.
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SECTION 7.14. EFFECTIVENESS OF THIS AGREEMENT. This Agreement shall
become effective when the Borrower, the Servicer and the Bank have executed this
Agreement and the Bank shall have received each of the documents set forth on
the List of Closing Documents attached hereto as EXHIBIT H.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
ATLANTIC AUTO FUNDING CORPORATION
By:/s/Suzanne A. O'Connor
--------------------------
Name: Suzanne A. O'Connor
Title: Vice President
ATLANTIC AUTO FINANCE CORPORATION,
as Servicer
By:/s/Richard J. Harrison
--------------------------
Name: Richard J. Harrison
Title: President
CITIBANK, N.A.
By:/s/Christopher J. Kiernan
--------------------------
Name: Christopher J. Kiernan
Title: Vice President
Acknowledged and Accepted:
CITICORP NORTH AMERICA, INC.
By:/s/Reinhard Kleinschmitt
---------------------------
Name: Reinhard Kleinschmitt
Title: Vice President
EXHIBIT D
FORM OF LOCKBOX AGREEMENT
This Agreement, effective as of July __, 1995 is by and among Atlantic
Auto Finance Corporation ("Atlantic"), Atlantic Funding Corporation ("AFC"),
Citicorp North America, Inc., acting in its capacity as agent (the "Agent") and
______________________ (the "Lockbox Bank").
1. Pursuant to a Receivables Purchase Agreement dated as of June 28,
1995 between Atlantic and AFC (the "AFC Purchase Agreement"), Atlantic has sold,
and will hereafter sell, certain of Atlantic's auto loan receivables
("Receivables") to AFC. Pursuant to certain loan, security and purchase
agreements (collectively, the "Citicorp Agreements") entered into, or to be
entered into, among AFC, Atlantic, Citibank, N.A. ("Citibank"), CXC
Incorporated, certain other financial institutions and the Agent (collectively,
the "Secured Parties"), AFC has granted a security interest or transferred an
ownership interest in the Receivables, including all proceeds thereof, to the
Secured Parties. Atlantic has agreed to act as the servicer of the Receivables
under the Citicorp Agreements (in such capacity, the "Servicer").
2. In order to provide for the orderly collection and processing of
the proceeds of the Receivables, Atlantic has established a Post Office Box with
the United States Post Office (the "Lockbox"). In addition, Atlantic has
established account no. ____________ at the Lockbox Bank (the "Account") into
which collections remitted to the Lockbox are to be deposited. In connection
with the AFC Purchase Agreement, Atlantic has transferred exclusive ownership
and control of the Lockbox and the Account to AFC and in connection with the
Citicorp Agreements, AFC has transferred exclusive ownership and control of the
Account and the Lockbox to the Agent for the benefit of the Secured Parties.
3. The monies, checks, instruments and other items of payment mailed
to the Lockbox and the funds deposited into the Account will not be subject to
deduction, set-off, banker's lien, or any other similar right in favor of the
Lockbox Bank or in favor of any person other than the Agent, except that
returned or dishonored items may be charged back to the Account and netted
against collections in accordance with the Lockbox Bank's usual practices. It
is understood and agreed that all fees and charges associated with the
establishment, maintenance and operation of the Lockbox, the Account and this
Agreement shall be the responsibility of Atlantic.
4. Notwithstanding the transfer of ownership and control of the
Lockbox and the Account described above, unless and until the Lockbox Bank is
otherwise notified by the Agent as hereinafter set forth, the Lockbox Bank shall
(i) collect and deposit into the Lockbox Account all monies, checks, instruments
and other items of payment received in the Lockbox; (ii) transfer all funds
deposited and collected in the Account pursuant to the instructions of Atlantic;
and (iii) permit Atlantic and/or the Agent to obtain upon request any
information relating to the Account and the Lockbox, including, without
limitation, any information regarding the balance or activity of the Account.
The Agent may, at any time by written notice to the Lockbox Bank, terminate the
authority of Atlantic to direct transfers of funds in the Account pursuant to
CLAUSE (II) above. Atlantic, AFC and the Agent hereby authorize and direct the
Lockbox Bank, upon its receipt of such notice from the Agent, to remit by wire
transfer to, or at the direction of, the Agent all funds in the Account from
time to time in accordance with instructions from the Agent, and from and after
the date of any such notice, the Agent shall be entitled to exercise any and all
rights in respect of or in connection with the Account and the Lockbox. Under
no circumstances shall the Lockbox Bank be obligated to make any independent
inquiry whatsoever as to the Agent's right or authority to give the Lockbox Bank
any instruction, order or direction with respect to the Lockbox or the items
received therein, or as to the use the Agent makes of any monies deposited to
the Account as herein provided.
5. This Agreement may not be terminated at any time by Atlantic, AFC
or by Atlantic in its separate capacity as servicer for AFC or for the Agent,
but may be terminated by either the Lockbox Bank upon 30 days' prior written
notice to the Agent or by the Agent upon 30 days' prior written notice to the
Lockbox Bank.
6. The Lockbox Bank will not assign or transfer its rights or
obligations hereunder (other than to the Agent) without the prior written
consent of the other parties hereto. Subject to the preceding sentence, this
Agreement shall inure to the
benefit of and be binding upon all parties hereto and their respective
successors and assigns.
7. Any change, amendment, modification or waiver of this Agreement
or any provision hereof will not be effective unless such change, amendment,
modification or waiver is in writing and signed by all parties hereto.
8. All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto shall be
effective if communicated in writing and personally delivered or sent by
registered, certified, express or regular mail, postage prepaid, return receipt
requested, or by telex, telecopy (receipt promptly confirmed by telephone) or
prepaid telegram (with messenger delivery specified in the case of a telegram)
or by telephone (promptly confirmed in writing) and shall be deemed to be given
for purposes of this Agreement on the day that such communication is delivered
to the intended recipient thereof in accordance with the provisions of this
paragraph. Unless otherwise specified in a notice sent or delivered in
accordance with the foregoing provisions of this paragraph, notices, demands,
instructions and other communications shall be given to or made upon the
respective parties hereto at their respective addresses (or to their respective
telex, telecopy or telephone numbers) indicated below, or at such other address
as any party hereto may notify to the other parties in accordance with the
provisions of this paragraph.
9. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered will be an original hereof, and it
will not be necessary in making proof of this Agreement to produce or account
for more than one counterpart hereof.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, including, without limitation, Section
5-1401 of the General Obligations Law but otherwise without regard to conflict
of laws principles.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers, all as of the day and year first
written above.
ATLANTIC AUTO FINANCE CORPORATION
By: _____________________________
Title: __________________________
Address:
ATLANTIC FUNDING CORPORATION
By: _____________________________
Title: __________________________
Address:
CITICORP NORTH AMERICA, INC.,
as Agent
By: _____________________________
Title: Vice President
Address: 450 Mamaroneck Avenue
Harrison, New York 10528
LOCKBOX BANK
By: _______________________
Title: ____________________
Address:
EXHIBIT G
[FORM OF NOTE]
ATLANTIC AUTO FUNDING CORPORATION
$5,000,000 June 28, 1995
New York, New York
For value received, the undersigned, ATLANTIC AUTO FUNDING
CORPORATION, a Delaware corporation (the "Borrower"), promises to pay to the
order of Citibank, N.A. (the "Bank"), on the "Termination Date" (as defined in
the "Loan Agreement" referred to below), the lesser of (i) the principal amount
of FIVE MILLION DOLLARS ($5,000,000) or (ii) the unpaid principal amount of all
amounts loaned by the Bank to the Borrower as Loans under the Loan Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount of all Loans from the date advanced until paid at the rates (which shall
not exceed the maximum rate permitted by applicable law) and at the times
determined in accordance with the provisions of that certain Loan and Security
Agreement dated as of June 28, 1995 among the Borrower, Atlantic Auto Finance
Corporation, as Servicer, and the Bank (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement").
This Note is issued pursuant to, and is entitled to the benefits of,
the Loan Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Loans evidenced hereby are
made and are to be repaid. Terms defined in the Loan Agreement and not
otherwise defined herein are used herein with the meanings so defined.
All payments of principal and interest in respect of this Note shall
be made to the Bank not later than 1:00 p.m. (New York time) on the date and at
the place due, to the Bank's Account in lawful money of the United States of
America in immediately available funds.
This Note may be prepaid at the option of the Borrower as provided in
SECTION 2.03(c) of the Loan Agreement and must be prepaid as provided in SECTION
2.03(a) of the Loan Agreement.
THE LOAN AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Upon the occurrence of any one or more of certain Events of Default,
the unpaid balance of the principal amount of this Note may become, and upon the
occurrence and continuation of any one or more of certain other Events of
Default, such unpaid balance may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Loan Agreement.
No reference herein to the Loan Agreement and no provisions of this
Note, the Loan Agreement or the other Loan Documents shall alter or impair the
obligation of the Borrower, which is absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees and disbursements incurred in the collection and
enforcement of this Note or any appeal of a judgment rendered thereon all in
accordance with the provisions of the Loan Agreement. The Borrower hereby
waives diligence, presentment, protest, demand and notice of every kind except
as required pursuant to the Loan Agreement and to the full extent permitted by
law the right to plead any statute of limitations as a defense to any demands
hereunder.
This Note is secured and reference is made to the Loan Documents for
the terms and conditions governing the collateral security for the Obligations
of the Borrower hereunder.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
ATLANTIC AUTO FUNDING CORPORATION
By_____________________________
Name:
Title: