SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 8, 1998
MONACO FINANCE, INC.
(Exact Name of Registrant as Specified in Charter)
Colorado 0-18819 84-1088131
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
Identification No.)
of Incorporation)
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (303) 592-9411
N/A
(Former Name or Former Address, if Changed Since Last Report)
Total number of pages is 170
The exhibit index appears at sequential page no. 3.
<PAGE>
ITEM 5. OTHER EVENTS.
Monaco Finance, Inc. (the "Company") is engaged in the business of
acquiring sub-prime installment automobile contracts from new and used car
dealerships and also acquires bulk portfolios utilizing its proprietary credit
evaluation system. The Company's strategy in acquiring bulk portfolios is to
price the purchase of such portfolios based upon risk-adjusted yields using
its credit evaluation system.
In connection with its bulk purchase strategy, the Company entered into
an Amended and Restated Asset Purchase Agreement dated as of January 8, 1998
(the "Asset Purchase Agreement"), with Pacific USA Holdings Corp. and certain
of its wholly-owned or partially-owned subsidiaries - Pacific Southwest Bank
("PSB"), NAFCO Holding Company LLC ("NAFCO"), Advantage Funding Group, Inc.
("Advantage") and PCF Service, LLC - providing for, among other things, the
purchase by the Company of sub-prime automobile loans from NAFCO and Advantage
having an unpaid principal balance of approximately $81,115,233 for a purchase
price of $77,870,623 of which $73,003,709 was paid in cash. Financing was
provided by Daiwa Finance Corporation. The balance of the purchase price,
$4,866,914 is payable either in the form of promissory notes or, if regulatory
and shareholder approvals are obtained, by the issuance of 2,433,457 shares of
the Company's 8% Cumulative Convertible Preferred Stock, Series 1998-1 (the
"Preferred Stock") valued at $2.00 per share. Each share of Preferred Stock
will be convertible at any time into one-half share of Class A Common Stock,
or an aggregate of up to 1,216,728 shares of Class A Common Stock. Thus, the
effective cost to Pacific USA of the Class A Common Stock issuable upon
conversion of the Preferred Stock will be $4.00 per share.
As required by the Asset Purchase Agreement, PSB entered into a Loan Loss
Reimbursement Agreement whereby it agreed to reimburse the Company for up to
15% of any losses incurred by the Company in connection with the loans
acquired from NAFCO and Advantage. In consideration therefor, the Company
agreed to pay PSB an amount equal to 2% of the principal amount of the
acquired loans in the form of a promissory note or, if regulatory and
shareholder approval (the "Approvals") are obtained, in shares of the
Company's Class A Common Stock valued at $2.00 per share. This would amount to
an aggregate of 811,152 shares of Class A Common Stock.
Also, the Company may be obligated to make additional payments to NAFCO
based on the performance of certain other assets acquired from NAFCO and the
results of operations, if any, with loan originators previously associated
with NAFCO. If there are any pre-tax earnings associated with these assets
and/or operations for calendar years 1998 and 1999, the Company is obligated
to pay NAFCO amounts equal to 2- times such pre-tax earnings in the form of
promissory notes or, if the Approvals are obtained, in shares of the Company's
Class A Common Stock valued at the average daily closing price of such stock
on the Nasdaq Stock Market for the last ten days of such calendar year. The
number of shares of Class A Common Stock which the Company may be required to
issue to NAFCO pursuant to these agreements cannot be determined at present.
The shares of Preferred Stock and the shares of Class A Common Stock issuable
in connection with the Asset Purchase Agreement are collectively referred to
herein as the "Transaction Shares."
The Company filed the required documents under the Hart-Scott-Rodino Act
("HSR Act") on January ___, 1998, and, as of the date hereof, has not received
any response. The date on which either the promissory notes or the Transaction
Shares will be issued is the first business day following: (i) the day both
Approvals have been obtained; (ii) if HSR Act approval is not obtained, the
later of the date of HSR Act denial or shareholder approval; or (iii) if
shareholder approval is not obtained, the date of the shareholder meeting.
Pacific USA beneficially owns and has the right to vote shares of the
Company's Class A and Class B Common Stock having 48.3% of the combined voting
power of the Common Stock. Management is informed that Pacific USA intends to
cast all of its votes in favor of approval of the issuance of the Transaction
Shares. If such issuance is approved and consummated, Pacific USA or its
affiliates will own of record 2,311,152 shares of Class A Common Stock (28.8%
of that class) and will be able to exercise approximately 51.8% of the
combined voting power of the Class A and Class B Common Stock.
<PAGE>
.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
10.63 Amended and Restated Asset Purchase Agreement dated January 8, 1998,
by and among the Company, Pacific USA Holdings Corp., and certain of its
wholly-owned or partially-owned subsidiaries.
10.64 Loan Purchase Agreement dated January 8, 1998 among Advantage
Funding Group, Inc., a Delaware corporation, the Company, Pacific USA Holdings
Corp., a Texas corporation, and Pacific Southwest Bank, a federal savings
bank.
10.65 Loan Loss Reimbursement Agreement dated January 8, 1998. between, on
the one hand, Pacific Southwest Bank, a federally chartered savings bank,
NAFCO Holding Company, LLC, a Delaware limited liability company, and
Advantage Funding Group, Inc., a Delaware corporation, and, on the other hand,
the Company.
10.66 Loan Purchase Agreement dated January 8, 1998 among NAFCO Holding
Company, L.L.C., a Delaware limited liability company, the Company, Pacific
USA Holdings Corp., a Texas corporation, and Pacific Southwest Bank, a federal
savings bank.
10.67 Interim Servicing Agreement dated as of January 8, 1998, between, on
the one hand, the Company and, on the other hand, Advantage Funding Group,
Inc., a Delaware corporation, Pacific USA Holdings Corp., a Texas corporation,
and Pacific Southwest Bank, a federally chartered savings bank.
10.68 Interim Servicing Agreement dated as of January 8, 1998, between, on
the one hand, the Company and, on the other hand, NAFCO Holding Company, LLC,
a Delaware limited liability company, Pacific USA Holdings Corp., a Texas
corporation, and Pacific Southwest Bank, a federally chartered savings bank.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONACO FINANCE, INC.
Date: January 23, 1998 By: /s/ Irwin L. Sandler
Irwin L. Sandler
Executive Vice President
<PAGE>
EXHIBIT 10.63
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (this "Agreement"),
dated as of January 8, 1998, is entered into among Monaco Finance, Inc., a
Colorado corporation ("Monaco"), Pacific USA Holdings Corp., a Texas
corporation ("Pacific USA"), Pacific Southwest Bank, a federally chartered
savings bank ("PSB"), NAFCO Holding Company, LLC, a Delaware limited liability
company ("NAFCO"), Advantage Funding Group, Inc., a Delaware corporation
("Advantage"), and PCF Service, LLC, a Delaware limited liability company
("PCF").
WHEREAS Monaco, Pacific USA, NAFCO, and Advantage have previously entered
into that certain Asset Purchase Agreement, dated as of September 30, 1997 (as
amended or modified to the date hereof, the "Original Agreement");
WHEREAS the parties to the Original Agreement desire to amend and restate
the Original Agreement in its entirety on the terms and conditions contained
herein; and
WHEREAS, in connection with such amendment and restatement, the parties
to the Original Agreement desire to have PSB and PCF become parties to this
Agreement, and each of PSB and PCF desires to become a party to this
Agreement, on the terms and conditions contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms, when used herein, will have the following
meanings:
"Acquired Loans" means the NAFCO Loans and the Advantage Loans.
"ADA Capital Corporation" means ADA Capital Corporation, a New York
corporation.
"ADA Equity Interest" means one hundred percent (100%) of the equity
interests owned by PCF in ADA Capital Corporation.
"Advantage Loan Purchase Agreement" means a loan purchase agreement,
substantially in the form of EXHIBIT A-1 attached hereto, relating to the
Advantage Loans among Monaco, Pacific USA, PSB, and Advantage.
"Advantage Preferred Shares" means the shares of Preferred Stock that may
be issued to Advantage (or its designee) pursuant to Section 2.2(b)(ii)(B).
"Adverse Claim" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect of a lien or security interest
upon or with respect to any of the properties of a transferring party other
than in favor of Monaco.
"Asset Purchase Documents" means all agreements, documents, and
instruments entered into by any of the parties hereto in connection with the
transactions contemplated hereby.
"Auto Loan" means a consumer Automobile loan, including installment sales
contracts, arising from the sale of Automobiles.
"Auto Loan Balance" means, at any time any determination thereof is to be
made: (a) the aggregate outstanding principal balance of the Acquired Loans
as of the close of business on the Cut-Off Date, determined after deduction of
all payments of principal received with respect to the Acquired Loans on or
before the close of business on the Cut-Off Date; minus (b) the principal
balance (as of the Cut-Off Date) of any Acquired Loans that have been
repurchased pursuant to the terms of either of the Loan Purchase Agreements.
"Automobiles" means new and used automobiles and light trucks (i.e.,
light duty trucks with a maximum load capacity of 2,000 pounds), the purchase
of which the related Obligors financed by Auto Loans.
"Business Day" means any day, other than a Saturday or a Sunday, or
another day on which commercial banks in the States of New York, Colorado, or
Texas are required, or authorized by law, to close.
"Certificate of Designation" means a certificate of designation of Monaco
respecting the rights, preferences, privileges, and restrictions pertaining to
the Preferred Stock, such certificate of designation to be in the form of
EXHIBIT C-1 attached hereto.
"Class A Common Stock" means the Class A Common Stock of Monaco, par
value $.01 per share.
"Commission" means the Securities and Exchange Commission.
"Cut-Off Date" means December 19, 1997.
"Designated NAFCO Operations" means the operations represented by (a) any
loan sale agreements that are executed by Monaco during the period beginning
on the Closing Date and ending six (6) months following the Closing Date with
the prospects who are listed on SCHEDULE A, (b) any loan sale agreements
that are executed by Monaco or, if and only if the ADA Equity Interest is
assigned to Monaco pursuant to the terms hereof, ADA Capital Corporation
during the period beginning on the execution of this Agreement and ending six
(6) months following the Closing Date with NADA associations, including those
who are listed in SCHEDULE B, and (c) the Unrestricted Warrants.
"Determination Date" means: (a) if Monaco receives the Monaco
Shareholders' Approval and the parties hereto receive the HSR Approval, the
date which is the later to occur of: (i) the HSR Date; and (ii) the Monaco
Shareholders' Approval Date; (b) if Monaco receives the Monaco Shareholders'
Approval but the parties hereto receive the HSR Denial, the date which is the
later to occur of: (i) the HSR Date; and (ii) the Monaco Shareholders'
Approval Date; or (c) if Monaco does not receive the Monaco Shareholders'
Approval, the Monaco Shareholders' Approval Date.
"Exchange Act" means the Securities and Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as amended.
"Federal Funds Rate" means, for any day, the rate, per annum (rounded
upwards, if necessary, to the nearest 0.01%), equal to the weighted average of
the rates of overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day as published by
the Federal Reserve Bank of New York on the Business Day immediately following
such day; provided that, if the day for which such rate is to be determined
is not a Business Day, then the "Federal Funds Rate" for such day shall be
such rate on such transactions on the immediately following Business Day as
published on the Business Day immediately following such Business Day.
"HSR Approval" means either: (a) the express written approval by the
United States Department of Justice and Federal Trade Commission of the
transactions referred to in the HSR Required Filings; or (b) the expiration of
all waiting periods respecting the HSR Required Filings without objection by
the United States Department of Justice and/or the Federal Trade Commission.
"HSR Date" means the first Business Day following the date on which the
parties hereto have received either the HSR Approval or the HSR Denial.
"HSR Denial" means the final express denial by the United States
Department of Justice and/or the Federal Trade Commission of the transactions
referred to in the HSR Required Filings.
"HSR Required Filings" means all filings required to be made by the
parties hereto (or any of them) under the Hart-Scott-Rodino Act with respect
to the Stock Issuances.
"Interest Rate" means, for any date, the rate, per annum, equal to the
Federal Funds Rate plus 2.21%.
Loan Loss Reimbursement Agreement" means a Loan Loss Reimbursement
Agreement executed by PSB, NAFCO, and Advantage in favor of Monaco (or its
designee) in the form attached hereto as EXHIBIT L-1, together with all
exhibits and schedules thereto.
"Loan Purchase Agreements" means, collectively, the NAFCO Loan Purchase
Agreement and the Advantage Loan Purchase Agreement.
"Monaco/Advantage Note" means a promissory note, substantially in the
form of EXHIBIT M-1 attached hereto, evidencing the obligation of Monaco to
pay to Advantage (to the extent required by, and in accordance with, Section
2.2(b)(ii)) the balance of the purchase price for the Advantage Loans.
"Monaco/Advantage Registration Rights Agreement" means a registration
rights agreement, substantially in the form of EXHIBIT M-2 attached hereto,
between Monaco and Advantage (or its designee).
"Monaco/ANO Note I" means a promissory note, substantially in the form of
EXHIBIT M-1 attached hereto, evidencing the obligation of Monaco to pay to
NAFCO or its designee (to the extent required by, and in accordance with,
Section 2.2(c)(ii)) an amount equal to two and one-half (2 ) times the
Pre-Tax Earnings for such calendar year.
"Monaco/ANO Note II" means a promissory note, substantially in the form
of EXHIBIT M-1 attached hereto, evidencing the obligation of Monaco to pay
to NAFCO or its designee (to the extent required by, and in accordance with,
Section 2.2(c)(ii)) an amount equal to two and one-half (2 ) times the
Pre-Tax Earnings for such calendar year.
"Monaco/NAFCO Note" means a promissory note, substantially in the form of
EXHIBIT M-1 attached hereto, evidencing the obligation of Monaco to pay to
NAFCO or its designee (to the extent required by, and in accordance with,
Section 2.2(a)(ii)) the balance of the purchase price for the NAFCO Loans.
"Monaco/NAFCO Registration Rights Agreement" means a registration rights
agreement, substantially in the form of EXHIBIT M-3 attached hereto, between
Monaco and NAFCO (or its designee).
"Monaco Pledge Agreement" means a pledge agreement, substantially in the
form of EXHIBIT M-4 attached hereto, between Monaco, as pledgor, and PSB,
NAFCO, and Advantage (or their respective designees), as secured parties.
"Monaco/PSB Note" means a promissory note, substantially in the form of
EXHIBIT M-1 attached hereto, evidencing the obligation of Monaco to pay to
PSB or its designee (to the extent required by, and in accordance with,
Section 2.3), an amount equal to two percent (2%) of the Auto Loan Balance
as of the Cut-Off Date.
"Monaco/PSB Registration Rights Agreement" means a registration rights
agreement, substantially in the form of EXHIBIT M-5 attached hereto, between
Monaco and PSB (or its designee).
"Monaco Shareholders' Approval" means the approval by the shareholders of
Monaco of the Stock Issuances.
"Monaco Shareholders' Approval Date" means the day which is the first
Business Day immediately following the date on which the meeting of the
shareholders of Monaco takes place at which Monaco either receives or fails to
receive the Monaco Shareholders' Approval.
"NAFCO Common Shares" means the shares of Class A Common Stock that may
be issued to NAFCO (or its designee) pursuant to Sections 2.2(c)(ii) and
2.2(c)(iii).
"NAFCO Loan Purchase Agreement" means a loan purchase agreement,
substantially in the form of EXHIBIT N-1 attached hereto, relating to the
NAFCO Loans among Monaco, Pacific USA, PSB, and NAFCO.
"NAFCO Loan Originators" means any originator who is party to a loan sale
agreement described in clause (a) or (b) of the definition of "Designated
NAFCO Operations" herein.
"NAFCO Preferred Shares" means the shares of Preferred Stock that may be
issued to NAFCO (or its designee) pursuant to Section 2.2(a)(ii)(A).
"NAFCO Shares" means, collectively, the NAFCO Common Shares and the NAFCO
Preferred Shares.
"NASDAQ" means the Nasdaq National Market System.
"Obligor" means, with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, governmental authority or any other entity of
whatever nature.
"Post-Closing Loans" means Auto Loans purchased by Monaco or its
affiliates from NAFCO Loan Originators subsequent to the Closing Date.
"Preferred Stock" means non-voting, no par value 8% Cumulative
Convertible Preferred Stock, Series 1997-1 of Monaco, having the rights,
preferences, privileges, and restrictions set forth in the Certificate of
Designation.
"Pre-Tax Earnings" means for any calendar year during the Pricing Period,
the aggregate of the net income of the Designated NAFCO Operations determined
in accordance with generally accepted accounting principles and based on
audited financial statements of Monaco, except that solely for purposes of
calculation of such amount, (a) there shall be excluded any gain or loss
constituting federal or state income taxes; (b) no deduction will be made for
amortization of goodwill; (c) no deduction will be made for interest on funds
advanced by Monaco for the Designated NAFCO Operations; (d) no deduction shall
be made for corporate assessments, overhead or charges by Monaco or any of its
affiliates, except for loan origination costs and servicing costs as more
fully set out below; (e) revenue shall include interest and fee income on
Post-Closing Loans, less any losses of principal as a result of defaulted
contracts, net of recoveries thereof, in excess of the loan loss reserve for
such loans, gain on sale attributable to securitizations of Post-Closing
Loans, subject to adjustment, if any, for future loss on the Post-Closing
Loans; (f) only if Monaco has effected an off-balance sheet securitization of
at least $30 million in principal amount of automobile loans primarily
consisting of automobile loans acquired in the ordinary course of its business
(i.e., automobile loans that were not acquired by Monaco in bulk loan purchase
transactions involving the purchase of multiple automobile loans in a single
transaction) there shall be included as net income an amount equal to the
product of the principal balance of any Post-Closing Loans which have not been
securitized as of December 31, 1999 multiplied by the pre-tax gain on sale on
Monaco's most recent securitization transaction (expressed as a percentage of
the principal balance of the automobile loans included in such
securitization), and excess servicing income, if any, relating to the
Post-Closing Loans, (g) direct expenses related to each revenue stream
referred to in (e) and (f) of this sentence will be deducted from gross
revenue to determine the earnings contribution of each revenue stream, such
direct expenses to consist of interest incurred by Monaco to acquire and
warehouse such loans, a one time application fee of $20 for each Post-Closing
Loan of the Designated NAFCO Operations; a one time loan boarding fee of $200
for credit, underwriting, and funding; and a monthly fee of 250 basis points
per annum on the average loans outstanding for servicing collection operations
for each Post-Closing Loan serviced by Monaco. Computations of gains-on-sales
with respect to securitizations shall be computed by Monaco and certified by
its outside auditors.
"Pricing Period" means the period of January 1, 1998 through December 31,
1999.
"PSB Shares" means the shares of Class A Common Stock that may be issued
to PSB or its designee pursuant to Section 2.3.
"Related Party" means any of Pacific USA, PSB, NAFCO, Advantage, and/or
PCF.
"Reimbursement Value" means an amount equivalent to two percent (2%)of
the Auto Loan Balance as of the Cut-Off Date. For example, if the Auto Loan
Balance on the Cut-Off Date is $100 million, the Reimbursement Value is 2% x
$100 million, or $2 million.
"Restricted Warrants" means those Warrants with respect to which there
exist restrictions on transfer to a third Person (including Monaco) that have
not been waived or rendered ineffective or inapplicable (by operation of law
or otherwise) in connection with the transfer of such Warrants to Monaco as
contemplated hereby, all of which, as of the Closing Date, are scheduled on
SCHEDULE R-1 attached hereto, which SCHEDULE R-1 also sets forth all
restrictions on the transfer of same.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as amended.
"Stock Issuances" means the issuance by Monaco of all of the Transaction
Shares at the respective times contemplated by the terms of this Agreement.
"Transaction" means, collectively, all of the transactions contemplated
hereby.
"Transaction Shares" means, collectively, the Advantage Preferred Shares,
the NAFCO Shares, and the PSB Shares.
"Unrestricted Warrants" means all Warrants, other than Restricted
Warrants, that have been sold, assigned, transferred and conveyed to Monaco as
contemplated hereby, all of which, as of the Closing Date, are scheduled on
SCHEDULE U-1 attached hereto.
"Warrants" means, collectively, the stock and/or warrants held by NAFCO
or PCF in NAFCO Loan Originators, including the ADA Equity Interest.
ARTICLE 2 ARTICLE
PURCHASE AND SALE OF THE ASSETS PURCHASE AND SALE OF THE ASSETS
2.1 Sale and Purchase of Assets.
(a) NAFCO Loans. Subject to the terms and conditions of this
Agreement and the NAFCO Loan Purchase Agreement, NAFCO hereby agrees to sell,
convey, assign, transfer and deliver to Monaco on the Closing Date, and Monaco
hereby agrees to acquire, buy and accept, all of NAFCO's rights, title and
interest in and to all of the Auto Loans set forth on SCHEDULE 2.1(A)
attached hereto, which Auto Loans: (i) as of the Cut-Off Date, are not more
than fifty-nine (59) days past due with respect to any regularly scheduled
monthly payment from any Obligor thereon; and (ii) shall be listed on the
"Auto Loan Schedule" attached to the NAFCO Loan Purchase Agreement (such Auto
Loans are collectively referred to herein as the "NAFCO Loans").
(b) Advantage Loans. Subject to the terms and conditions of this
Agreement and the Advantage Loan Purchase Agreement, Advantage hereby agrees
to sell, convey, assign, transfer, and deliver to Monaco, and Monaco hereby
agrees to acquire, buy and accept, all of Advantage's rights, title, and
interest in and to the Auto Loans set forth on SCHEDULE 2.1(B) attached
hereto, which Auto Loans: (i) as of the Cut-Off Date, are not more than
fifty-nine (59) days past due with respect to any regularly scheduled monthly
payment from any Obligor thereon; and (ii) shall be listed on the "Auto Loan
Schedule" attached to the Advantage Loan Purchase Agreement (such Auto Loans
are collectively referred to herein as the "Advantage Loans").
(c) Warrants. Subject to the terms and conditions of this
Agreement, PCF hereby agrees to sell, convey, assign, transfer and deliver to
Monaco on the Closing Date, and Monaco hereby agrees to acquire, buy and
accept, all of PCF's rights, title and interest in and to all of the Warrants;
provided that, if, as of the Closing Date, there exist any Restricted
Warrants, each of NAFCO and PCF shall, from and after the Closing Date, use
its best efforts to cause the transfer of such Restricted Warrants to Monaco
in compliance with the applicable restrictions; provided further that PCF
shall not be deemed to have sold or transferred any Restricted Warrant(s)
until such time, if any, as such Restricted Warrant(s) become(s) Unrestricted
Warrant(s).
2.2 Purchase Price. Subject to the terms and conditions of this
Agreement and the Loan Purchase Agreements:
(a) NAFCO Loans. The purchase price payable by Monaco to NAFCO for
the NAFCO Loans shall be 96% of the outstanding principal balance of the NAFCO
Loans as of the Cut-Off Date, plus accrued and unpaid interest on each NAFCO
Loan through the Cut-Off Date, plus interest as provided in Section
2.2(a)(i), payable as follows:
(i) an amount equal to (A) 90% of the outstanding principal balance
of the NAFCO Loans as of the Cut-Off Date, plus (B) accrued and unpaid
interest on each NAFCO Loan through the Cut-Off Date, plus (C) interest on the
foregoing amounts from the Cut-Off Date to the Closing Date at the Interest
Rate, shall be payable in cash on the Closing Date; and
(ii) the balance of the purchase price for the NAFCO Loans shall be
payable by the issuance by Monaco to NAFCO (or its designee) on the
Determination Date of: (A) if Monaco does not receive the Monaco
Shareholders' Approval or the parties hereto receive the HSR Denial, the
Monaco/NAFCO Note; or (B) if Monaco receives the Monaco Shareholders' Approval
and the parties hereto receive the HSR Approval, that number of shares of
fully paid and non-assessable Preferred Stock equal to 6% of the outstanding
principal balance of the NAFCO Loans as of the Cut-Off Date, divided by $2.00.
(b) Advantage Loans. The purchase price payable by Monaco to
Advantage for the Advantage Loans shall be 96% of the outstanding principal
balance of the Advantage Loans as of the Cut-Off Date, plus accrued and unpaid
interest on each Advantage Loan through the Cut-Off Date, plus interest as
provided in Section 2.2(b)(i), payable as follows:
(i) an amount equal to (A) 90% of the outstanding principal balance
of the Advantage Loans as of the Cut-Off Date, plus (B) accrued and unpaid
interest on each Advantage Loan through the Cut-Off Date, plus (C) interest on
the foregoing amounts from the Cut-Off Date to the Closing Date at the
Interest Rate, shall be payable in cash on the Closing Date; and
(ii) the balance of the purchase price for the Advantage Loans shall
be payable by the issuance by Monaco to Advantage (or its designee) on the
Determination Date of: (A) if Monaco does not receive the Monaco
Shareholders' Approval or the parties hereto receive the HSR Denial, the
Monaco/Advantage Note; or (B) if Monaco receives the Monaco Shareholders'
Approval and the parties hereto receive the HSR Approval, that number of
shares of fully paid and non-assessable Preferred Stock equal to 6% of the
outstanding principal balance of the Advantage Loans as of the Cut-Off Date,
divided by $2.00.
(c) Additional Payments in Respect of Designated NAFCO Operations.
(i) For the period commencing on the Closing Date and ending December
31, 1999, Monaco will maintain a separate book of accounts for the Designated
NAFCO Operations to determine the Pre-Tax Earnings of the Designated NAFCO
Operations during each calendar year of the Pricing Period.
(ii) If (y) any Warrants have been transferred to Monaco pursuant to
Section 2.1(c) and/or any loan sale agreements referred to in clauses (a) and
(b) of the definition of "Designated NAFCO Operations" contained herein have
been entered into between the Closing Date and the date which is six months
thereafter and (z) there are any Pre-Tax Earnings from the Designated NAFCO
Operations for the 1998 calendar year, Monaco will issue to NAFCO or its
designee, on or before April 15, 1999: (A) if Monaco shall have received the
Monaco Shareholders' Approval and the parties hereto shall have received the
HSR Approval, that number of shares of Class A Common Stock equal to (1) two
and one/half (2 ) times the Pre-Tax Earnings for such calendar year, divided
by (2) the average of the daily closing sales price (or the last reported
closing sales price if on any trading day there shall have been no
transactions in such stock) per share of the Class A Common Stock listed on
the NASDAQ on the ten trading days immediately preceding January 1, 1999; or
(B) if Monaco shall not have received the Monaco Shareholders' Approval or the
parties hereto shall have received the HSR Denial, the Monaco/ANO Note I.
(iii) If (y) any Warrants have been transferred to Monaco pursuant to
Section 2.1(c) and/or any loan sale agreements referred to in clauses (a) and
(b) of the definition of "Designated NAFCO Operations" contained herein have
been entered into between the Closing Date and the date which is six months
thereafter and (z) there are any Pre-Tax Earnings from the Designated NAFCO
Operations for the 1999 calendar year, Monaco will issue to NAFCO or its
designee, on or before April 15, 2000: (A) if Monaco shall have received the
Monaco Shareholders' Approval and the parties hereto shall have received the
HSR Approval, that number of shares of Class A Common Stock equal to (x) two
and one/half (2 ) times the Pre-Tax Earnings for such calendar year, divided
by (y) the average of the daily closing sales price (or the last reported
closing sales price if on any trading day there shall have been no
transactions in such stock) per share of the Class A Common Stock listed on
the NASDAQ on the ten trading days immediately preceding January 1, 2000; or
(B) if Monaco shall not have received the Monaco Shareholders' Approval or the
parties hereto shall have received the HSR Denial, the Monaco/ANO Note II.
2.3 Loan Loss Reimbursement. PSB, a wholly owned subsidiary of
Pacific USA, NAFCO, and Advantage shall execute the Loan Loss Reimbursement
Agreement in favor of Monaco on the Closing Date. As consideration for such
Loan Loss Reimbursement Agreement, on the Determination Date: (a) if Monaco
shall have received the Monaco Shareholders' Approval and the parties hereto
shall have received the HSR Approval, then Monaco shall issue to and in the
name of PSB or its designee one share of Class A Common Stock for each $2.00
of Reimbursement Value; or (b) if Monaco shall not have received the Monaco
Shareholders' Approval or the parties hereto shall have received the HSR
Denial, then Monaco shall issue to PSB or its designee the Monaco/PSB Note.
ARTICLE 3
CLOSING
3.1 Time, Date and Place of Closing. The closing of the
Transaction (other than that portion of the Transaction consisting of the
Stock Issuances) and the deliveries required by Sections 3.5 through 3.9
(collectively, the "Closing"), shall be made at the offices of Andrews & Kurth
L.L.P., 1717 Main Street, Suite 3700, Dallas, Texas 75201, at 10:00 a.m.
(Texas time), on January 8, 1998, or at such other place and time as the
parties hereto shall mutually agree (the "Closing Date").
3.2 Closing; Failed Closing.
(a) The Closing shall be subject to the satisfaction of all of the
conditions set forth in this Article III (to the extent not waived in
accordance with Section 7.5). The Closing shall not be deemed to have
occurred unless and until all of the conditions contained in this Article III
have been satisfied (or waived in accordance with Section 7.5).
(b) If the Closing does not occur for any reason on or before January
10, 1998, then the parties shall have no further obligations or liabilities to
each other under this Agreement or any of the other agreements, documents, or
instruments executed in connection herewith.
3.3 Conditions Relating to Pacific USA, PSB, NAFCO, Advantage, and
PCF. Consummation by each of Pacific USA, PSB, NAFCO, Advantage, and PCF of
the Transaction is subject to the fulfillment on or before the Closing Date of
each of the following conditions, any one or more of which may be waived in
whole or in part in accordance with Section 7.5 (and, at or prior to the
Closing, any of such parties may obtain a certificate of the President of
Monaco or such other evidence as it deems advisable as to the fulfillment of
the conditions in subparagraphs (a) through (c) below to the extent such
conditions relate to Monaco):
(a) The representations and warranties of Monaco con-tained in this
Agreement or in any certificate, schedule, exhibit or other agreement
delivered pursuant to the provisions of this Agreement shall be true in all
material respects as of the date when made
(b) Monaco shall have performed and complied in all material respects
with all covenants, agree-ments and conditions required by this Agreement to
be performed or complied with by it on or before the Closing Date.
(c) On the Closing Date there shall be no judgment, decree,
injunction, ruling or order of any court or governmental authority outstanding
against Monaco, Pacific USA, PSB, NAFCO, Advantage, or PCF which prohibits,
restricts or delays consumma-tion of the Transaction.
(d) Pacific USA and NAFCO shall have terminated any employment
contracts relating to NAFCO employees that have not been assumed by Monaco, on
terms satisfactory to Pacific USA and NAFCO.
(e) Monaco shall have obtained a commitment for financing of the
purchase of the Acquired Loans, in form and content acceptable to Pacific USA,
NAFCO and Advantage.
(f) NAFCO shall have received the consent of its members to the
Transaction.
3.4 Conditions Relating to Monaco. Consummation by Monaco of the
Transaction is subject to the fulfillment on or prior to the Closing Date of
each of the following conditions, any one or more of which may be waived in
whole or in part by Monaco in accordance with Section 7.5 (and, at or prior
to the Closing, Monaco may obtain a certificate of the President of Pacific
USA, PSB, NAFCO, Advantage, or PCF, as the case may be, or such other evidence
as it deems advisable as to the fulfillment of the following conditions):
(a) The representations and warranties of Pacific USA, PSB, NAFCO,
Advantage, and PCF contained in this Agreement or in any certificate,
schedule, exhibit or other agreement delivered pursuant to one or more of the
provisions of this Agreement, shall be true in all material respects as of the
date when made.
(b) Pacific USA, PSB, NAFCO, Advantage, and PCF shall have per-formed
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed or complied with by them
on or prior to the Closing Date.
(c) On the Closing Date there shall be no judgment, decree,
injunction, ruling or order of any court or governmental authority outstanding
against Monaco, Pacific USA, PSB, NAFCO, Advantage, and/or PCF which
prohibits, restricts or delays consumma-tion of the Transaction.
(d) Monaco shall have obtained a commitment for financing of the
purchase of the Acquired Loans, in form and content acceptable to Monaco.
(e) Monaco shall have completed its due diligence and shall be
satisfied with the results of its due diligence.
(f) As of the Cut-Off Date, no more than twelve percent (12%) of the
aggregate number of Acquired Loans will be between thirty-one (31) and
fifty-nine (59) days past due with respect to any regularly scheduled monthly
payment from the related Obligors.
3.5 Deliveries by Monaco. Monaco hereby covenants and agrees to
deliver or cause to be delivered the following on or before the Closing Date,
and it shall be a condition to the obligations of Pacific USA, PSB, NAFCO,
Advantage and PCF under this Agree-ment that all of the following are
delivered on or before the Closing Date:
(a) The NAFCO Loan Purchase Agreement.
(b) The Advantage Loan Purchase Agreement.
(c) A Servicing Agreement (substantially in the form of EXHIBIT
3.5(C) attached hereto, the "Advantage Servicing Agreement") between Monaco
and Advantage, as servicer, pursuant to which Advantage will service the
Advantage Loans on an interim basis from the Closing Date through June 30,
1998, at which time Monaco shall assume overall servicing responsibilities.
(d) A Servicing Agreement (substantially in the form of EXHIBIT
3.5(D) attached hereto, the "NAFCO Servicing Agreement") between Monaco and
NAFCO, as servicer, pursuant to which NAFCO will service the NAFCO Loans on an
interim basis, from the Closing Date through June 30, 1998, at which time
Monaco shall assume overall servicing responsibilities.
(e) The Monaco Pledge Agreement.
(f) The Loan Loss Reimbursement Agreement.
(g) A certificate of the Secretary or an Assistant Secretary of
Monaco certifying as to (i) the actions referred to in Section 4.1(b), (ii)
a true and correct copy of the Certificate of Incorporation of Monaco, (iii) a
good standing certificate with respect to Monaco, dated as of a recent date,
and (iv) the authorization and incumbency of the officers of Monaco that
executed this Agreement and the other agreements, instruments and certificates
to be delivered by Monaco pursuant to this Agreement.
(h) The opinion of counsel for Monaco, in the form agreed to between
Monaco's counsel, Pacific USA, PSB, NAFCO, Advantage, and PCF.
3.6 Deliveries by NAFCO. NAFCO hereby covenants and agrees to
deliver or cause to be delivered the following on or before the Closing Date,
subject to the other terms and conditions of this Agreement, and it shall be a
condition to Monaco's obligations under this Agreement that all of the
following are delivered on or before the Closing Date:
(a) The NAFCO Loan Purchase Agreement.
(b) The NAFCO Servicing Agreement.
(c) The Loan Loss Reimbursement Agreement and the "Letters of Credit"
(as that term is defined in the Loan Loss Reimbursement Agreement).
(d) The Monaco Pledge Agreement.
(e) A certificate of the Secretary or an Assistant Secretary of NAFCO
certifying as to (i) the actions referred to in Section 4.3(b), (ii) a true
and correct copy of the Certificate of Formation of NAFCO, and (iii) the
authorization and incumbency of the officers of NAFCO that executed this
Agreement and the other agreements, instruments and certificates to be
delivered by NAFCO pursuant to this Agreement.
(f) A good standing certificate with respect to NAFCO, dated as of a
recent date.
(g) The opinion of counsel for NAFCO, in the form agreed to between
Monaco and NAFCO.
3.7 Deliveries by Advantage. Advantage hereby covenants and agrees
to deliver or cause to be delivered the following on or before the Closing
Date, subject to the other terms and conditions of this Agreement, and it
shall be a condition to Monaco's obligations under this Agreement that all of
the following are delivered on or before the Closing Date:
(a) The Advantage Loan Purchase Agreement.
(b) The Advantage Servicing Agreement.
(c) The Loan Loss Reimbursement Agreement and the "Letters of Credit"
(as that term is defined in the Loan Loss Reimbursement Agreement).
(d) The Monaco Pledge Agreement.
(e) The certificate of the Secretary or an Assistant Secretary of
Advantage certifying as to (i) the actions referred to in Section 4.4(b),
(ii) a true and correct copy of the Certificate of Incorporation of Advantage,
and (iii) the authorization and incumbency of the officers of Advantage that
executed this Agreement and the other agreements, instruments and certificates
to be delivered by Advantage pursuant to this Agreement.
(f) A good standing certificate with respect to Advantage, dated as
of a recent date.
(g) The opinion of counsel for Advantage, in the form agreed to
between Advantage's counsel and Monaco.
3.8 Deliveries by Pacific USA. Pacific USA hereby covenants and
agrees to deliver or cause to be delivered the following on or before the
Closing Date, subject to the other terms and conditions of this Agreement, and
it shall be a condition to Monaco's obligations under this Agreement that all
of the following are delivered on or before the Closing Date:
(a) The Loan Purchase Agreements.
(b) A certificate of the Secretary or an Assistant Secretary of
Pacific USA certifying as to (i) the actions referred to in Section 4.2(b),
(ii) a true and correct copy of the Certificate of Incorporation of Pacific
USA, and (iii) the authorization and incumbency of the officers of Pacific USA
that executed this Agreement and the other agreements, instruments and
certificates to be delivered by Pacific USA pursuant to this Agreement.
(c) A good standing certificate with respect to Pacific USA, dated as
of a recent date.
(d) The opinion of counsel for Pacific USA, in the form agreed to
between Pacific USA's counsel and Monaco.
3.9 Deliveries by PSB. PSB hereby covenants and agrees to deliver
or cause to be delivered the following on or before the Closing Date, subject
to the other terms and conditions of this Agreement, and it shall be a
condition to Monaco's obligations under this Agreement that all of the
following are delivered on or before the Closing Date:
(a) The Loan Purchase Agreements.
(b) The Loan Loss Reimbursement Agreement and the "Letters of Credit"
(as that term is defined in the Loan Loss Reimbursement Agreement).
(c) The Monaco Pledge Agreement.
(d) A certificate of the Secretary or an Assistant Secretary of PSB
certifying as to (i) the actions referred to in Section 4.5(b), (ii) a true
and correct copy of the Federal Stock Charter of PSB, and (iii) the
authorization and incumbency of the officers of PSB that executed this
Agreement and the other agreements, instruments and certificates to be
delivered by PSB pursuant to this Agreement.
(e) A good standing certificate with respect to PSB, dated as of a
recent date.
(f) The opinion of counsel for PSB, in the form agreed to between
PSB's counsel and Monaco.
3.10 Deliveries by PCF. PCF hereby covenants and agrees to deliver
or cause to be delivered the following on or before the Closing Date, subject
to the other terms and conditions of this Agreement, and it shall be a
condition to Monaco's obligations under this Agreement that all of the
following are delivered on or before the Closing Date:
(a) A certificate of the Secretary or an Assistant Secretary of PCF
certifying as to (i) the actions referred to in Section 4.6(b), (ii) a true
and correct copy of the Certificate of Formation of PCF, and (iii) the
authorization and incumbency of the officers of PCF that executed this
Agreement and the other agreements, instruments and certificates to be
delivered by PCF pursuant to this Agreement.
(b) A good standing certificate with respect to PCF, dated as of a
recent date.
(c) The opinion of counsel for PCF, in the form agreed to between
PCF's counsel and Monaco.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Monaco. Monaco hereby
represents and warrants to Pacific USA, PSB, NAFCO, Advantage, and PCF (all
such representations and warranties being made as of the Closing Date, except
as otherwise specifically provided) as follows:
(a) Organization and Good Standing. Monaco is a corporation duly
organized, validly existing and in good standing under the law of the State of
Colorado and is qualified to transact business in each State where the nature
of its business requires it to qualify, except to the extent that the failure
to so qualify would not in the aggregate materially adversely affect the
ability of Monaco to perform its obligations hereunder.
(b) Authorization. Monaco has the power, authority and legal right
to execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly authorized
by Monaco by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
a legal, valid and binding obligation of Monaco, enforceable against Monaco in
accordance with its terms except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of Monaco, or any indenture, agreement,
mortgage, deed of trust or other instrument to which Monaco is a party or by
which it is bound, or in the creation or imposition of any lien upon any of
its properties pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, or violate any law, or any order, rule
or regulation applicable to Monaco of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Monaco or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Transaction Shares. All of the Transaction Shares have been
duly authorized, and upon delivery thereof to NAFCO (or its designee),
Advantage (or its designee) and PSB (or its designee) following the receipt by
Monaco of the Monaco Shareholders' Approval in accordance with the provisions
hereof, shall be validly issued, fully paid and non-assessable, free and clear
of all pledges, liens, encumbrances and restrictions, except restrictions on
transfer arising under applicable securities laws, rules and regulations.
(g) Capital Stock. On the date hereof, the authorized capital
stock of Monaco consists of 17,750,000 shares of Class A Common Stock, of
which 7,140,379 shares are issued and outstanding, 2,250,000 shares of Class B
Common Stock, of which 1,311,715 shares are issued and outstanding, and
5,000,000 shares of preferred stock, no par value, of which no shares are
issued and outstanding. Monaco shall not issue any shares of preferred stock
prior to the Closing Date.
(h) Securities Laws. Under the circumstances contemplated by this
Agreement and assuming the accuracy of the representations of NAFCO,
Advantage, and PSB in Sections 4.3(f),and 4.4(f) and 4.5(f), respectively,
the offer, issuance, sale and delivery of the Transaction Shares will not,
under current laws and regulations, require compliance with the prospectus
delivery or registration requirements of the Securities Act.
(i) SEC Filings. As of the date hereof, Monaco has made all
filings that it is required to make with the Commission under the Exchange Act
(the "Company SEC Reports") and will make all such filings as are required in
connection with the Transaction. As of their respective dates, the Company
SEC Reports did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(j) Private Resale. Monaco will acquire the Warrants described in
Section 2.1(a)(iii) for investment, and not for the interest of any other
person, not for resale to any other person and not with a view to or in
connection with any sale or distribution. Monaco acknowledges that the
Warrants are "restricted securities" as defined in Rule 144(a)(3) under the
Securities Act and subject to substantial restrictions on transfer, and that
the certificates representing the Warrants will bear restrictive legends. In
addition, Monaco is an "accredited investor" as that term is defined in Rule
501(a) of Regulation D under the Securities Act. Monaco has had access to the
books and records of the issuers of the Warrants and has received from such
issuers and other sources all information required by it in order to make an
informed investment decision with respect to the Warrants.
(k) No Default or Breach. Monaco is not in default or in breach of
any agreement or instrument to which Monaco is a party or by which it is
bound, except for defaults or breaches which in the aggregate would not
materially hinder or impair the consummation of the Transaction.
(l) No Misstatement, Etc. Monaco has not made any misstatements of
fact or omitted to state any fact necessary or desirable to make complete,
accurate, and not misleading every representation or warranty set forth in
this Agreement.
(m) No Brokers. No broker, finder, agent or similar intermediary
(other than SPGC, LLC and The Stone Pine Companies) has acted for or on behalf
of Monaco in connection with the Transaction, and no such Person (other than
SPGC, LLC and The Stone Pine Companies) is or will be entitled to any
broker's, finders or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with Monaco or any action
taken by Monaco, and the responsibility to pay any or all of such amounts to
SPGC, LLC and/or The Stone Pine Companies is and shall be the sole
responsibility of Monaco.
4.2 Representations and Warranties of Pacific USA. Pacific USA
hereby represents and warrants to Monaco (all such representations and
warranties being made as of the Closing Date, except as otherwise specifically
provided) as follows:
(a) Organization and Good Standing. Pacific USA is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Texas and is qualified to transact business in each State where the
nature of its business requires it to qualify, except to the extent that the
failure to so qualify would not in the aggregate materially adversely affect
the ability of Pacific USA to perform its obligations hereunder.
(b) Authorization. Pacific USA has the power, authority and legal
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by Pacific USA by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by Monaco, constitutes a legal, valid
and binding obligation of Pacific USA, enforceable against Pacific USA in
accordance with its terms except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of Pacific USA, or any indenture,
agreement, mortgage, deed of trust or other instrument to which Pacific USA is
a party or by which it is bound, or in the creation or imposition of any lien
upon any of its properties pursuant to the terms of such indenture,
agreement, mortgage, deed of trust or other such instrument, or violate any
law, or any order, rule or regulation applicable to Pacific USA of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Pacific USA or any of
its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) No Default or Breach. Pacific USA is not in default or in
breach of any agreement or instrument to which Pacific USA is a party or by
which it is bound, except for defaults or breaches which in the aggregate
would not materially hinder or impair the consummation of the Transaction.
(g) No Misstatements, Etc.. Pacific USA has not made any
misstatements of fact or omitted to state any fact necessary or desirable to
make complete, accurate, and not misleading every representation or warranty
set forth in this Agreement.
(h) No Brokers. No broker, finder, agent or similar intermediary
has acted for or on behalf of Pacific USA in connection with the Transaction,
and no such Person is or will be entitled to any broker's, finders or similar
fee or other commission in connection therewith based on any agreement,
arrangement or understanding with Pacific USA or any action taken by Pacific
USA.
(i) General. The NAFCO Loans, the Advantage Loans, and the
Warrants do not constitute substantially all of the assets of Pacific USA.
4.3 Representations and Warranties of NAFCO. NAFCO hereby
represents and warrants to Monaco (all such representations and warranties
being made as of the Closing Date, except as otherwise specifically provided)
as follows:
(a) Organization and Good Standing. NAFCO is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to transact business in each State
where the nature of its business requires it to qualify, except to the extent
that the failure to so qualify would not in the aggregate materially adversely
affect the ability of NAFCO to perform its obligations hereunder.
(b) Authorization. NAFCO has the power, authority and legal right
to execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by NAFCO by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by Monaco, constitutes a legal, valid
and binding obligation of NAFCO, enforceable against NAFCO in accordance with
its terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or operating agreement of NAFCO, or any indenture,
agreement, mortgage, deed of trust or other instrument to which NAFCO is a
party or by which it is bound, or in the creation or imposition of any lien
upon any of its properties pursuant to the terms of such indenture,
agreement, mortgage, deed of trust or other such instrument, or violate any
law, or any order, rule or regulation applicable to NAFCO of any court or of
any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over NAFCO or any of its
properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Private Placement. Except as contemplated by this Agreement,
NAFCO and/or its designee will acquire the NAFCO Shares for investment, and
not for the interest of any other person, not for resale to any other Person
and not with a view to or in connection with any sale or distribution. NAFCO
acknowledges, and acknowledges on behalf of any designee of NAFCO, that the
NAFCO Shares will be "restricted securities" as defined in Rule 144(a)(3)
under the Securities Act and subject to substantial restrictions on transfer,
and that the certificates representing the NAFCO Shares will bear restrictive
legends. In addition, NAFCO represents and warrants that it is (and that any
designee of NAFCO will be) an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Securities Act. NAFCO further
represents and warrants that it and/or its designee has had access to the
books and records of Monaco and has received from Monaco and other sources all
information required by it in order to make an informed investment decision
with respect to the NAFCO Shares including, without limitation, (i) all
reports filed by Monaco with the Commission pursuant to Section 13 under the
Securities Exchange Act of 1934, (ii) all annual reports to its shareholders,
(iii) the opportunity to ask questions and receive answers concerning the
terms and conditions of the sale of such securities, which questions have been
answered to its satisfaction, and (iv) all additional information requested by
NAFCO and/or its designee which Monaco possesses or could acquire without
unreasonable effort or expense to verify the accuracy of the information
furnished to NAFCO and/or its designee, which information has been provided to
NAFCO and/or its designee, as applicable.
(g) Ownership of NAFCO Loans. Immediately prior to the
consummation of the transactions contemplated hereby to be consummated on the
Closing Date, NAFCO will be the sole owner of and will have full right to
transfer the NAFCO Loans to Monaco, and the NAFCO Loans will be free and clear
of any Adverse Claim.
(h) No Default or Breach. NAFCO is not in default or in breach of
any agreement or instrument to which NAFCO is a party or by which it is bound,
except for defaults or breaches which in the aggregate would not materially
hinder or impair the consummation of the Transaction.
(i) No Misstatements, Etc. NAFCO has not made any misstatements of
fact or omitted to state any fact necessary or desirable to make complete,
accurate, and not misleading every representation or warranty set forth in
this Agreement.
(j) No Brokers. No broker, finder, agent or similar intermediary
has acted for or on behalf of NAFCO (or any designee of NAFCO) in connection
with the Transaction, and no such Person is or will be entitled to any
broker's, finders or similar fee or other commission in connection therewith
based on any agreement, arrangement or understanding with, or any action taken
by, NAFCO (or any designee of NAFCO).
(k) General. It is NAFCO's present intention that at all times
prior to and immediately after the consummation of the Transaction, NAFCO will
continue to operate in the consumer finance business.
(l) NAFCO Loans. None of the NAFCO Loans was originally originated
by PSB.
4.4 Representations and Warranties of Advantage. Advantage hereby
represents and warrants to Monaco (all such representations and warranties
being made as of the Closing Date, except as otherwise specifically provided)
as follows:
(a) Organization and Good Standing. Advantage is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to transact business in each State where
the nature of its business requires it to qualify, except to the extent that
the failure to so qualify would not in the aggregate materially adversely
affect the ability of Advantage to perform its obligations hereunder.
(b) Authorization. Advantage has the power, authority and legal
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by Advantage by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by Monaco, constitutes a legal, valid
and binding obligation of Advantage, enforceable against Advantage in
accordance with its terms except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of Advantage, or any indenture, agreement,
mortgage, deed of trust or other instrument to which Advantage is a party or
by which it is bound, or in the creation or imposition of any lien upon any of
its properties pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, or violate any law, or any order, rule
or regulation applicable to Advantage of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Advantage or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Private Placement. Except as contemplated by this Agreement,
Advantage and/or its designee will acquire the Advantage Preferred Shares for
investment, and not for the interest of any other Person, not for resale to
any other person and not with a view to or in connection with any sale or
distribution. Advantage acknowledges, and acknowledges on behalf of any
designee of Advantage, that the Advantage Preferred Shares will be "restricted
securities" as defined in Rule 144(a)(3) under the Securities Act and subject
to substantial restrictions on transfer, and that the certificates
representing the Advantage Preferred Shares will bear restrictive legends In
addition, Advantage represents and warrants that it is (and that any designee
of Advantage will be) an "accredited investor" as that term is defined in Rule
501(a) of Regulation D under the Securities Act. Advantage further represents
and warrants that it and/or its designee has had access to the books and
records of Monaco and has received from Monaco and other sources all
information required by it in order to make an informed investment decision
with respect to the Advantage Preferred Shares including, without limitation,
(i) all reports filed by Monaco with the Commission pursuant to Section 13
under the Securities Exchange Act of 1934, (ii) all annual reports to its
shareholders, (iii) the opportunity to ask questions and receive answers
concerning the terms and conditions of the sale of such securities, which
questions have been answered to its satisfaction, and (iv) all additional
information requested by Advantage and/or its designee which Monaco possesses
or could acquire without unreasonable effort or expense to verify the accuracy
of the information furnished to Advantage and/or its designee, which
information has been provided to Advantage and/or its designee, as applicable.
(g) Ownership of Advantage Loans. Immediately prior to the
consummation of the transactions contemplated hereby to be consummated on the
Closing Date, Advantage will be the sole owner of and will have full right to
transfer the Advantage Loans to Monaco, and the Advantage Loans will be free
and clear of any Adverse Claim.
(h) No Default or Breach. Advantage is not in default or in breach
of any agreement or instrument to which Advantage is a party or by which it is
bound, except for defaults or breaches which in the aggregate would not
materially hinder or impair the consummation of the Transaction.
(i) No Misstatements, Etc. Advantage has not made any
misstatements of fact or omitted to state any fact necessary or desirable to
make complete, accurate, and not misleading every representation or warranty
set forth in this Agreement.
(j) No Brokers. No broker, finder, agent or similar intermediary
has acted for or on behalf of Advantage (or any designee of Advantage) in
connection with the Transaction, and no such Person is or will be entitled to
any broker's, finders or similar fee or other commission in connection
therewith based on any agreement, arrangement or understanding with, or any
action taken by, Advantage (or any designee of Advantage).
(k) General. It is Advantage's present intention that at all times
prior to and immediately after the consummation of the Transaction, Advantage
will continue to operate its business as conducted by it as of the date
hereof.
(l) Advantage Loans. None of the Advantage Loans was originally
originated by PSB.
4.5 Representations and Warranties of PSB. PSB hereby represents
and warrants to Monaco (all such representations and warranties being made as
of the Closing Date, except as otherwise specifically provided) as follows:
(a) Organization and Good Standing. PSB is a bank duly organized,
validly existing and in good standing under the laws of the United States of
America and is qualified to transact business in each State where the nature
of its business requires it to qualify, except to the extent that the failure
to so qualify would not in the aggregate materially adversely affect the
ability of PSB to perform its obligations hereunder.
(b) Authorization. PSB has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by PSB by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by Monaco, constitutes a legal, valid
and binding obligation of PSB, enforceable against PSB in accordance with its
terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of PSB, or any indenture, agreement,
mortgage, deed of trust or other instrument to which PSB is a party or by
which it is bound, or in the creation or imposition of any lien upon any of
its properties pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, or violate any law, or any order, rule
or regulation applicable to PSB of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over PSB or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Private Placement. PSB and/or its designee will acquire the
PSB Shares for investment, and not for the interest of any other Person, not
for resale to any other person and not with a view to or in connection with
any sale or distribution. PSB acknowledges, and acknowledges on behalf of any
designee of PSB, that the PSB Shares will be "restricted securities" as
defined in Rule 144(a)(3) under the Securities Act and subject to substantial
restrictions on transfer, and that the certificates representing the PSB
Shares will bear restrictive legends. In addition, PSB represents and
warrants that it is (and that any designee of PSB will be) an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D under the
Securities Act. PSB further represents and warrants that each of PSB and/or
its designee has had access to the books and records of Monaco and has
received from Monaco and other sources all information required by it in order
to make an informed investment decision with respect to the PSB Shares
including, without limitation, (i) all reports filed by Monaco with the
Commission pursuant to Section 13 under the Securities Exchange Act of 1934,
(ii) all annual reports to its shareholders, (iii) the opportunity to ask
questions and receive answers concerning the terms and conditions of the sale
of such securities, which questions have been answered to its satisfaction,
and (iv) all additional information requested by PSB and/or its designee which
Monaco possesses or could acquire without unreasonable effort or expense to
verify the accuracy of the information furnished to PSB and/or its designee,
which information has been provided to PSB and/or its designee, as applicable.
(g) No Default or Breach. PSB is not in default or in breach of
any agreement or instrument to which PSB is a party or by which it is bound,
except for defaults or breaches which in the aggregate would not materially
hinder or impair the consummation of the Transaction.
(h) No Misstatements, Etc. PSB has not made any misstatements of
fact or omitted to state any fact necessary or desirable to make complete,
accurate, and not misleading every representation or warranty set forth in
this Agreement.
(i) No Brokers. No broker, finder, agent or similar intermediary
has acted for or on behalf of PSB (or any designee of PSB) in connection with
the Transaction, and no such Person is or will be entitled to any broker's,
finders or similar fee or other commission in connection therewith based on
any agreement, arrangement or understanding with, or any action taken by, PSB
(or any designee of PSB).
(j) General. It is PSB's present intention that at all times prior
to and immediately after the consummation of the Transaction, PSB will
continue to operate its business as conducted by it as of the date hereof;
provided that it is PSB's intention to sell substantially all of its banking
operations in 1998.
4.6 Representations and Warranties of PCF. PCF hereby represents
and warrants to Monaco (all such representations and warranties being made as
of the Closing Date, except as otherwise specifically provided) as follows:
(a) Organization and Good Standing. PCF is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to transact business in each State
where the nature of its business requires it to qualify, except to the extent
that the failure to so qualify would not in the aggregate materially adversely
affect the ability of PCF to perform its obligations hereunder.
(b) Authorization. PCF has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by PCF by all corporate action.
(c) Binding Obligation. This Agreement, assuming due
authorization, execution and delivery by Monaco, constitutes a legal, valid
and binding obligation of PCF, enforceable against PCF in accordance with its
terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or operating agreement of PCF, or any indenture,
agreement, mortgage, deed of trust or other instrument to which PCF is a party
or by which it is bound, or in the creation or imposition of any lien upon any
of its properties pursuant to the terms of such indenture, agreement,
mortgage, deed of trust or other such instrument, or violate any law, or any
order, rule or regulation applicable to PCF of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over PCF or any of its properties.
(e) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Ownership of ADA Equity Interest and other Warrants.
Immediately prior to the consummation of the transactions contemplated hereby
which are to take place on the Closing Date: (i) PCF will be the sole owner
of and will have full right to transfer the ADA Equity Interest to Monaco
subject to the right of first refusal in favor of other shareholders of ADA
Capital Corporation and applicable securities laws, and the ADA Equity
Interest will be free and clear of any Adverse Claim; and (ii) PCF will be the
sole owner of and will have full right to transfer all of the Warrants (other
than the Restricted Warrants) to Monaco, and all of the Warrants (other than
the Restricted Warrants) will be free and clear of any Adverse Claim.
(g) No Default or Breach. PCF is not in default or in breach of
any agreement or instrument to which PCF is a party or by which it is bound,
except for defaults or breaches which in the aggregate would not materially
hinder or impair the consummation of the Transaction.
(h) No Misstatements, Etc. PCF has not made any misstatements of
fact or omitted to state any fact necessary or desirable to make complete,
accurate, and not misleading every representation or warranty set forth in
this Agreement.
(i) No Brokers. No broker, finder, agent or similar intermediary
has acted for or on behalf of PCF (or any designee of PCF) in connection with
the Transaction, and no such Person is or will be entitled to any broker's,
finders or similar fee or other commission in connection therewith based on
any agreement, arrangement or understanding with, or any action taken by, PCF
(or any designee of PCF).
4.7 Joint Representations and Warranties of NAFCO and Advantage.
NAFCO and Advantage jointly and severally represent and warrant to Monaco that
as of the Cut-Off Date, no more than twelve percent (12%) of the aggregate
number of Acquired Loans will be between thirty-one (31) and fifty-nine (59)
days past due with respect to any regularly scheduled monthly payment or
principal and/or interest from the related Obligors.
ARTICLE V
COVENANTS OF MONACO
5.1 Certain Covenants of Monaco. Monaco covenants and agrees for
the benefit of NAFCO (and any designee of NAFCO to which any Transaction
Shares have been issued) as follows:
(a) Within ninety (90) days after the end of each calendar year
during the Pricing Period, Monaco shall give NAFCO a statement prepared by
Monaco (and audited by Ehrhardt, Keefe, Steiner & Hottman or such other firm
as is then acting as Monaco's auditors) confirming the accuracy of Monaco's
calculations) showing the computation of the Pre-Tax Earnings of the
Designated NAFCO Operations for such calendar year, and shall make the
delivery of the shares of Class A Common Stock or the Monaco/ANO Note I and
the Monaco/ANO Note II, as applicable, to NAFCO (or its designees) to be made
pursuant to Section 2.2(c) on the basis of such computations. All such
statements will also be accompanied by complete financial statements of Monaco
for such calendar year, which shall be audited. For sixty (60) days after the
receipt of any such statement, NAFCO and its agents shall be entitled to
inspect the books of Monaco relating to the operations which provide the basis
for the computation of the Pre-Tax Earnings set forth in such statement, such
inspection to be completed within thirty (30) days after access to such books
are granted. If NAFCO shall notify Monaco in writing prior to the end of such
30-day period that it disagrees with the computation of Pre-Tax Earnings
contained in such statement, the determination of such Pre-Tax Earnings shall
be submitted to Ehrhardt, Keefe, Steiner & Hottman (or such other firm as is
then acting as Monaco's auditors), a second firm of independent certified
public accountants to be named by NAFCO and a third firm of independent
certified public accountants to be selected by both such firms (or if such
third firm is not so selected, a third firm of independent certified public
accountants designated by the American Arbitration Association), and the
decision of a majority thereof shall be binding upon all the parties to this
Agreement. The fees and expenses incurred in connection with all such
determinations of Ehrhardt, Keefe, Steiner & Hottman (or such other firm as
is then acting as Monaco's auditors) shall be borne by Monaco, of the second
firm of independent certified public accountants named by NAFCO shall be borne
by NAFCO, and of such third firm shall be borne one-half each by Monaco and
NAFCO. If NAFCO does not notify Monaco in writing prior to the end of such
30-day period that it disagrees with the computation of the Pre-Tax Earnings
contained in the statement, such computation shall be binding upon all the
parties hereto.
(b) From and after the Closing Date, Monaco shall maintain and
operate the Designated NAFCO Operations as a separate and identifiable
division and will maintain all books and records required for the
determination of Pre-Tax Earnings during the Pricing Period.
(c) From and after the Closing Date, Monaco will attempt in good
faith to advance the business of the Designated NAFCO Operations, will offer
the NAFCO Loan Originators the same types of loan programs as are offered by
Monaco to other originators (which Monaco terms "loan production offices"),
will not divert the business or assets of the Designated NAFCO Operations to
any other organization or entity, will not shift earnings of the Designated
NAFCO Operations to periods outside the Pricing Period, will not shift
expenses of the Acquired Operations properly allocable to periods outside the
Pricing Period to the Pricing Period, and will at all times exercise good
faith in making any decisions affecting the Designated NAFCO Operations.
(d) Monaco shall keep in full effect its existence, rights and
franchises as a corporation, and shall obtain and preserve its qualification
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 this Agreement and to perform its duties under this
Agreement. Any Person into which Monaco may be merged or consolidated, or to
whom Monaco has sold substantially all of its assets, or any corporation
resulting from any merger, conversion or consolidation to which Monaco shall
be a party, shall be the successor of Monaco hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto; provided, however, that such successor shall execute an agreement of
assumption, in form reasonably satisfactory to NAFCO, to perform every
covenant of Monaco under this Agreement.
(e) Monaco will promptly furnish to NAFCO from time to time upon
written request such information regarding the business and affairs and
financial condition of the Designated NAFCO Operations as NAFCO may reasonably
request, and will furnish to NAFCO monthly reports, promptly after becoming
available and in any event within 30 days after the end of each month
following the Closing Date and through the end of the Pricing Period, the
balance sheet of the Designated NAFCO Operations as of the end of such period,
the statements in income, and statements of cash flow of the Designated NAFCO
Operations for such month and for the period from the beginning of the Pricing
Period (for the month beginning February 1998), certified by the principal
financial officer of Monaco to have been prepared in accordance with generally
accepted accounting principles consistently followed throughout the period
indicated, except to the extent stated therein, subject to normal changes
resulting from year-end adjustment.
(f) Monaco will permit any officer, employee or agent of NAFCO to
examine the books and records relating to the Designated NAFCO Operations,
take copies and extracts therefrom, and discuss the affairs, finances and
accounts of the Designated NAFCO Operations with Monaco's officers,
accountants and auditors, upon reasonable request and during normal business
hours so as not to interfere with Monaco's normal operations.
(g) Except in connection with the transfer of assets in a
securitization transaction or similar financing arrangement, Monaco will not
sell, transfer, dissolve or otherwise dispose of the business operations
relating to the Designated NAFCO Operations after the Closing Date and prior
to the end of the Pricing Period without the prior written consent of NAFCO.
ARTICLE VI
ADDITIONAL COVENANTS
6.1 Covenants of PSB, NAFCO and Advantage. PSB, NAFCO and
Advantage each covenant and agree to promptly provide such information and
assistance to Monaco as it shall reasonably require in connection with its
solicitation of proxies from the holders of its Class A and Class B Common
Stock in connection with the special meeting of its shareholders to be called
for the purpose of approving the Stock Issuances.
6.2 Covenants of all Parties. Each of the parties hereto shall
make all HSR Required Filings with the appropriate governmental authorities as
soon as possible and will use its best efforts to file same within ten (10)
calendar days following the Closing Date.
6.3 Covenants of NAFCO, Advantage, PSB, PCF, and Monaco.
(a) Monaco shall file with the Commission for its approval a proxy
statement relating to the Stock Issuances as soon as possible following the
Closing Date and will use its best efforts to file same within ten (10)
calendar days following the Closing Date. Thereafter, within four (4)
Business Days following the approval of such proxy statement by the
Commission, Monaco shall, by means of such proxy statement, seek to obtain the
Monaco Shareholders' Approval Morris Ginsburg and Irwin Sandler have
previously agreed to vote all shares of Class A and Class B Common Stock over
which they have voting power in favor of the Stock Issuances. If the Monaco
Shareholders' Approval is received and the parties hereto have received the
HSR Approval, then Monaco shall cause the Stock Issuances to take place and
shall deliver on the Determination Date:
(i) to NAFCO or its designee, the share certificates, in the form
agreed to between Monaco and NAFCO, representing the NAFCO Preferred Shares;
(ii) to NAFCO or its designee, with respect to the NAFCO Preferred
Shares, the Monaco/NAFCO Registration Rights Agreement;
(iii) to Advantage or its designee, the share certificates, in the
form agreed to between Monaco and Advantage, representing the Advantage
Preferred Shares;
(iv) to Advantage or its designee, with respect to the Advantage
Preferred Shares, the Monaco/Advantage Registration Rights Agreement;
(v) to PSB or its designee, the share certificates representing the
PSB Shares, or a fully executed instruction letter to Monaco's transfer agent
to issue such share certificates;
(vi) to PSB or its designee, with respect to the PSB Shares, the
Monaco/PSB Registration Rights Agreement; and
(vii) to NAFCO or its designee, Advantage or its designee, and PSB or
its designee, an opinion of counsel respecting such Stock Issuances, in form
and substance reasonably acceptable to Monaco and each of such other Persons.
In connection with the foregoing, each of NAFCO, Advantage, and PSB (or their
respective designees, as applicable) shall (or shall cause their respective
designees, as applicable, to) duly execute and deliver (on the Determination
Date) the registration rights agreement to which it is a party. If NAFCO,
Advantage, and/or PSB should designate a Person to which any of the
Transaction Shares are to be issued as provided herein, then it shall be a
condition precedent to the obligation of Monaco to deliver share certificates
representing such Transaction Shares to such designee (either on the
Determination Date or at any time thereafter) that such designee shall execute
and deliver to Monaco an agreement whereby it makes the same representations
and warranties to Monaco as are made by NAFCO, Advantage, and PSB in Sections
4.3(f), 4.4(f), and 4.5(f). If the parties hereto shall have received the
HSR Approval, and Monaco shall have received the Monaco Shareholders' Approval
and caused the Stock Issuances, then the Monaco Pledge Agreement shall
automatically terminate and be of no further force and effect.
(b) From and after the Closing Date, each of NAFCO and PCF shall use
its best efforts to cause the transfer of any Restricted Warrants to Monaco in
compliance with the restrictions applicable thereto.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices, requests, consents and other
communications required or permitted hereunder or under any other Asset
Purchase Document shall be in writing and shall be personally delivered,
transmitted via facsimile or overnight courier service or mailed first-class
postage prepaid, registered or certified mail,
(a) if to Pacific USA, PSB, NAFCO, Advantage, and/or PCF:
c/o Pacific USA Holdings Corp.
5999 Summerside Drive, Suite 112
Dallas, Texas 75252
Attn: Bill C. Bradley, Chief Executive Officer
Facsimile No.: (972) 248-5023
With a Copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter, Chief General Counsel
Facsimile No.: (713) 871-0155
(b) if to Monaco:
Monaco Finance, Inc.
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin L. Sandler, Executive Vice President
Facsimile No.: (303) 405-6496
and such notices and other communications shall for all purposes of this
Agreement and any other Asset Purchase Document be treated as being effective
or having been given on the date when personally delivered or when transmitted
by facsimile (if confirmation of facsimile receipt has been given), on the
date after being deposited with an overnight courier service, or, if sent by
mail, four days after deposit in the United States mail, postage prepaid. Any
party may change its address for notice by notifying the other party pursuant
to the above notice provisions.
7.2 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered will be deemed to be an original but
all of which together will constitute one and the same instrument. Delivery
of an executed counterpart of the signature page to this Agreement by
telefacsimile shall be effective as delivery of a manually executed
counterpart of this Agreement, and any party delivering such an executed
counterpart of this Agreement by telefacsimile to any other party shall
thereafter also promptly deliver a manually executed counterpart of this
Agreement to such other party; provided that the failure to deliver such
manually executed counterpart shall not affect the validity, enforceability,
or binding effect of this Agreement.
7.3 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(A) THIS AGREEMENT AND THE ASSET PURCHASE DOCUMENTS SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT OR THE ASSET
PURCHASE DOCUMENTS OR RELATING TO ANY OTHER DEALINGS AND NEGOTIATIONS BETWEEN
THE PARTIES, EACH PARTY AGREES (I) TO THE EXERCISE OF JURISDICTION OVER IT BY
A FEDERAL COURT SITTING IN DALLAS, TEXAS OR DENVER, COLORADO; AND (II) IF
EITHER PARTY BRINGS A LEGAL ACTION, IT SHALL BE INSTITUTED IN ONE OF THE
COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(C) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT OR THE ASSET PURCHASE DOCUMENTS. INSTEAD, ANY LEGAL ACTION
RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
7.4 Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
7.5 Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Pacific USA and Monaco, or in the case
of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
7.6 Securitization Matters. Notwithstanding anything to the
contrary contained herein, each of the parties hereto agrees that, in
connection with any securitization transaction contemplated under Section 9
of the Loan Loss Reimbursement Agreement, such party shall take such actions
(including, without limitation, the amendment or modification of any of the
Asset Purchase Documents and the delivery of opinions of counsel) as shall be
reasonably required by MBIA Insurance Corporation (or similar entity) and/or
any rating agency involved in any such securitization transaction; provided
that Monaco shall pay all of the reasonable out-of-pocket expenses, including,
without limitation, attorneys' fees, incurred by each such party in taking
such action(s); provided further that no party hereto shall be required to
take any such action if, in the good faith determination of such party, such
action would materially and adversely affect such party.
7.7 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
7.8 Certain Rules of Construction. Unless otherwise specified
herein, section, exhibit, and schedule references are to this Agreement. All
of the exhibits and schedules hereto are incorporated herein by this
reference. Headings used herein are for convenience of reference only.
7.9 Confidentiality. Each Related Party hereby agrees that all
information obtained by such Person regarding the Acquired Loans from and
after the Closing Date shall be maintained in confidence and shall not be
disclosed to any other Person unless: (a) such disclosure does not violate
any applicable law or regulation or any proprietary rights of Monaco, any
subsidiary of Monaco, or any servicer of all or any of the Acquired Loans; (b)
such disclosure is ordered by a court of applicable jurisdiction; or (c) such
disclosure is made by such Related Party to its officers, directors, auditors,
attorneys, employees, professional consultants, or agents who would have
access to such information in the normal course of the performance of such
Related Party's duties; provided that such Related Party may make
disclosures with respect to any of the above matters to reinsurers or any
Person having regulatory authority over such Related Party.
7.10 Amendment and Restatement; Effectiveness. This Agreement
amends and restates the Original Agreement in its entirety. This Agreement
shall become effective as of the date first written above upon the execution
and delivery of a counterpart hereof by each of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed and delivered by the
parties hereto as of the date first written above.
MONACO FINANCE, INC.,
a Colorado corporation
By: /s/ Irwin L. Sandler
Name: Irwin L. Sandler
Title: Executive Vice President
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ Bill C. Bradley
Name: Bill C. Bradley
Title: Chief Executive Officer
PACIFIC SOUTHWEST BANK,
a federally chartered savings bank
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Executive Vice President
NAFCO HOLDING COMPANY, LLC,
a Delaware limited liability Company
By: /s/ Robert Womack
Name: Robert Womack
Title: Chief Financial Officer
ADVANTAGE FUNDING GROUP, INC.,
a Delaware corporation
By: /s/ Robert Womack
Name: Robert Womack
Title: Vice President
PCF SERVICE, LLC,
a Delaware limited liability Company
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Executive Vice President
<PAGE>
EXHIBIT A-1
Form of Advantage Loan Purchase Agreement
SEE EXHIBIT 10.64 FILED HEREWITH
<PAGE>
EXHIBIT C-1
Form of Certificate of Designation
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF
8% CUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1998-1
OF
MONACO FINANCE, INC.
MONACO FINANCE, INC., a Colorado corporation (the "Corporation"), does
hereby certify that pursuant to the authority conferred upon the Board of
Directors by the Articles of Incorporation, as amended, of the Corporation and
pursuant to Section 7-106-102 of the Colorado Business Corporation Act, said
Board of Directors, pursuant to a unanimous Statement of Consent effective as
of January ____, 1998, duly adopted the following resolution:
RESOLVED, that, pursuant to the authority expressly granted to and vested
in the Board of Directors of MONACO FINANCE, INC., a Colorado corporation (the
"Corporation"), by the Articles of Incorporation, as amended, of the
Corporation, the Board of Directors hereby creates out of the authorized
preferred stock, no par value per share, of the Corporation a series of
preferred stock to consist of not more than 2,433,457 shares, and this Board
of Directors hereby fixes the designation and the powers, preferences and
rights, and the qualifications, limitations or restrictions of the shares of
such series as follows:
1. DESIGNATION. This resolution shall provide for a single
series of preferred stock, the designation of which shall be "8% Cumulative
Convertible Preferred Stock-Series 1998-1" (hereinafter the "Preferred Shares"
or the "Preferred Stock") and the number of authorized shares constituting the
Preferred Stock is 2,433,457. The number of authorized Preferred Shares may be
reduced or increased by a further resolution duly adopted by the Board of
Directors of the Corporation and by the filing of an amendment to the
Corporation's Articles of Incorporation pursuant to the provisions of the
Colorado Business Corporation Act stating that such reduction or increase has
been so authorized.
2. VOTING; DIRECTOR. Except as provided herein or otherwise
expressly required by the laws of the State of Colorado, the holders of the
Preferred Shares shall have no voting rights and shall not be entitled to
notice of meetings of shareholders, and the exclusive voting power shall be
vested in the holders of the shares of the Corporation's Class A and Class B
Common Stock, $.01 par value per share (the "Common Stock"), and/or in any
other series of the Corporation's preferred stock now or at any time hereafter
issued and outstanding having voting rights. So long as not less than
1,500,000 Preferred Shares are issued and outstanding, the holders of the
outstanding Preferred Stock, voting separately as a class, shall be entitled
to elect one member of the Board of Directors of the Corporation to serve
until his or her successor shall have been duly elected and qualified. Any
corporate action that requires a vote of the holders of the Preferred Stock as
a class shall be deemed to have been approved by that class upon the
affirmative vote by the holders of a majority of the issued and outstanding
Preferred Shares unless a higher voting requirement is imposed by the Colorado
Business Corporation Act. If any corporate action shall require a vote of the
holders of the Preferred Shares other than as a class, the Preferred Shares
shall vote as a group with the Common Stock.
2.1 VOTING PROCEDURES. Whenever holders of the Preferred Stock are
entitled to elect one director or otherwise vote as provided herein, such
holders shall, to the extent practicable, act by unanimous consent to action
without a meeting signed by all holders of the Preferred Stock to be effective
when actually received by the Corporation or on such later date as may be
specified in such consent. When holders of the Preferred Stock are not able to
reach a consensus, the Corporation shall, upon the request made by any
holder(s) of ten percent or more of the number of outstanding Preferred
Shares, call a special meeting of holders of the Preferred Stock for the
election of the director or to take any other action upon not less than ten
nor more than 60 days notice to such holders. The holders of a majority of the
outstanding shares of Preferred Stock, present in person or by proxy, shall
constitute a quorum for all meetings of Preferred Stockholders. In the event
the election of such director or any other matter to be voted on shall be
subject to any laws, rules or regulations with respect to the solicitation of
proxies or otherwise, the holders of the Preferred Stock agree to timely
provide the Corporation with such information as it shall reasonably require
to comply therewith.
2.2 VACANCIES. Any vacancy in the office of the director elected by
the holders of the Preferred Stock shall be filled by them in the manner
provided in Section 2.1 herein; provided, however, that if the vacancy shall
not have been so filled within 30 days after the occurrence of such vacancy,
the vacancy shall be eliminated by reduction of the number of members of the
board of directors by one without action by the board of directors or
shareholders; provided, further, that if such vacancy shall not have been
filled and in the event of an emergency requiring action by the board of
directors during such 30-day period, the remaining members of the board of
directors may temporarily fill the vacancy or temporarily eliminate such
vacancy by reducing the number of members of the board of directors by one,
subject to the rights of the holders of the Preferred Stock as provided
herein. The director elected by the holders of the Preferred Stock may be
removed during the aforesaid term of office, whether with or without cause,
only by the affirmative vote of the holders of a majority of the Preferred
Stock.
2.3 OTHER VOTING RIGHTS. The affirmative vote by the holders of a
majority of the outstanding shares of Preferred Stock, voting separately as a
group, shall be required with respect to any amendment to the Articles of
Incorporation which would:
(a) Increase or decrease the aggregate number of authorized
shares of Preferred Stock;
(b) Effect an exchange or reclassification of all or part of the
shares of Preferred Stock into shares of another class;
(c) Effect an exchange or reclassification, or create the right
of exchange, of all or part of the shares of another class into shares of
Preferred Stock;
(d) Change the designation, preferences, limitations, or
relative rights of all or part of the shares of Preferred Stock;
(e) Change the shares of all or part of the Preferred Stock into
a different number of shares of the same class;
(f) Create a new class of shares having rights or preferences
with respect to distributions or dissolution that are prior, superior, or
substantially equal to the shares of Preferred Stock;
(g) Increase the rights, preferences, or number of authorized
shares of any class that, after giving effect to the amendment, have rights or
preferences with respect to distributions or to dissolution that are prior,
superior, or substantially equal to the shares of Preferred Stock;
(h) Cancel or otherwise affect rights to distributions or
dividends that have accumulated but have not yet been declared on all or part
of the shares of Preferred Stock;
(i) Make the Preferred Stock redeemable either mandatorily
or at the option of the Corporation.
3. DIVIDENDS.
3.1 RATE. Holders of Preferred Shares shall be entitled to
receive, when, as and if declared by the Board of Directors out of any funds
of the Corporation legally available for that purpose, cumulative dividends
from the date of issuance at the rate of 8% ($.16 per share of Preferred
Stock) per year, payable quarterly (pro-rated for partial quarters) in
arrears, in shares of its Preferred Stock valued at $2.00 per share (or in
cash if no Preferred Shares are available for that purpose), on the first day
of April, July, October and January of each year commencing January 1, 1998
(each such date being hereinafter individually referred to as the "Dividend
Payment Date" and collectively as the "Dividend Payment Dates"). Each such
dividend shall be paid to the holders of record of the Preferred Shares as
they appear on the books of the Corporation on the record date which shall be
not less than 30 days prior to the related Dividend Payment Date. Dividends
on the Preferred Shares shall be cumulative whether or not the Corporation was
or is legally able to pay such dividends in whole or in part. Holders of
Preferred Shares shall not be entitled to any dividends whether payable in
cash, property or stock in excess of full dividends as herein provided on the
Preferred Shares.
3.2 DIVIDENDS ON COMMON STOCK. No dividends (other than those
payable solely in Common Stock) shall be paid with respect to the Common Stock
during any fiscal year of the Corporation unless all accumulated and unpaid
dividends and the quarterly dividend on the shares of Preferred Stock for the
then current dividend period shall have been declared and paid.
4. CONVERSION.
4.1 VOLUNTARY CONVERSION. The Preferred Stock may be converted
in whole or in part at any time and from time to time into shares of Class A
Common Stock ("Voluntary Conversion") at the rate of one share of Class A
Common Stock for each two shares of Preferred Stock so converted (the
"Conversion Ratio").
4.2 AUTOMATIC CONVERSION. In the event the Current Market Value
(as defined in Section 4.6(a) herein) of the Class A Common Stock shall equal
or exceed $6.00 per share on each trading day during any period of 60
consecutive calendar days commencing on the date of original issuance of the
Preferred Stock, all of the Preferred Shares shall be automatically converted
("Automatic Conversion") into shares of Class A Common Stock at the Conversion
Ratio. All holders of Preferred Stock shall deliver or cause to be transferred
to the Corporation all of their Preferred Stock promptly upon Automatic
Conversion.
4.3 CONVERSION PROCEDURES AND CONDITIONS. Any holder of
Preferred Stock desiring to convert the same into shares of Class A Common
Stock shall surrender the certificate or certificates evidencing the shares of
Preferred Stock to be converted, duly endorsed, or otherwise deliver the
Preferred Stock desired to be converted, at the office of the Corporation or
of its transfer agent, if any, and shall give written notice signed by such
holder to the Corporation at such office stating that such holder elects to
convert the same and the number of Preferred Shares to be converted (which
requirements, together with the requirement stated in Section 4.4 herein,
shall be referred to as the "Conversion Conditions"). Upon Automatic
Conversion, the holders of the Preferred Stock and, upon satisfaction of the
Conversion Conditions with respect to Voluntary Conversion, the holders of the
Preferred Stock surrendered for conversion, shall be deemed to be the holders
of record of the shares of Class A Common Stock issu-able upon such
conversion, not-with-standing that the stock trans-fer books of the
Corporation shall then be closed or that the Class A Common Stock issuable
upon such conversion shall not actually have been issued. The Corporation
shall, as soon as practicable thereafter, issue in the name of such converting
holder and/or in the name of such holder's designee (and mail if issued in
certificated form to the last known address of the converting holder or such
holder's designee) the shares of Class A Common Stock to which such holder or
such designee shall be entitled. Upon Automatic Conversion, all outstanding
shares of Preferred Stock shall be deemed to have been canceled without any
requirement of action by the Corporation or by the holders of the Preferred
Stock and whether or not the Preferred Stock so converted has been surrendered
to the Corporation or its transfer agent; provided, however, that the
Corporation shall not be obligated to deliver the shares of Class A Common
Stock issuable upon such Automatic Conversion except to the extent the
Preferred Stock is either delivered to the Corporation or its transfer agent
as provided herein.
4.4 ADDITIONAL CONDITION. Notwithstanding anything herein
contained to the contrary, the Corporation shall not be obligated to issue the
shares of Class A Common Stock issuable upon conversion of Preferred Shares
until there shall have been delivered to the Corporation or to its transfer
agent, as applicable, an opinion of counsel reasonably satisfactory to the
Corporation to the effect that the issuance of such Class A Common Stock is
exempt from registration under the Securities Act of 1933, as amended, and
from qualification under applicable state laws or that a registration
statement with respect thereto has been filed with the Securities and Exchange
Commission and with the appropriate state regulatory authorities and has
become effective.
4.5 RESERVATION OF SHARES. The Corporation hereby agrees that
at all times there shall be reserved for issuance upon conversion of the
Preferred Stock the maximum number of shares of its Class A Common Stock
issuable upon full conversion thereof.
4.6 NO FRACTIONAL SHARES; CURRENT MARKET VALUE. No fractional
shares or scrip rep-re-senting fractional shares shall be issued upon
conversion of the Preferred Stock. With respect to any fraction of a share
called for upon any conversion thereof, the Corporation shall pay to the
holder an amount in cash equal to such fraction multi-plied by the "Cur-rent
Market Value" of the Class A Common Stock, de-termined as follows:
(a) EXCHANGE OR NASDAQ LISTING. If the Class A Common Stock
is listed on a national secu-rities exchange or admitted to unlisted trading
privileges on such exchange or listed on the Nasdaq Stock Market, the Current
Market Value shall be the last re-ported sale price of the Class A Common
Stock on the composite tape of such exchange or on Nasdaq on the last trading
day prior to the date of conversion or if no such sale is made on such day,
the average closing bid and asked prices for such day on the composite tape of
such exchange or on Nasdaq; or
(b) OTHER MARKETS. If the Class A Common Stock is not so
listed or admitted to unlisted trading privileges, the Current Market Value
shall be the mean of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. or the OTC Bulletin Board on the last trading
day prior to the date of the conversion; or
(c) BOARD VALUATION. If the Class A Common Stock is not so
listed or admitted to unlisted trading privileges and bid and asked prices are
not so reported, the Current Market Value shall be an amount, not less than
book value, determined in such rea-sonable manner as may be prescribed by the
Board of Direc-tors of the Corporation, such determination to be final and
binding on the Holder.
4.7 RIGHTS OF THE HOLDER. The holder shall not, by virtue
hereof, be entitled to any rights of a holder of the Corporation's Class A
Common Stock, either at law or equity, and the rights of the holder are
limited to those expressed herein and are not enforce-able against the
Corporation except to the extent set forth herein.
4.8 STOCK SPLITS AND STOCK DIVIDENDS. In case the Corporation
shall at any time issue Class A Common Stock -by way of dividend or other
distribution on any stock of the Corporation or subdivide or combine the
out-standing shares of Class A Common Stock, the Conversion Ratio shall be
proportionately decreased in the case of such issuance (on the day following
the date fixed for determining sharehold-ers entitled to receive such dividend
or other distribution) or decreased in the case of such subdivision or
increased in the case of such combination (on the date that such subdivi-sion
or combination shall become effective).
4.9 OFFICER'S CERTIFICATE. Whenever the Conversion Ratio shall
be adjusted as required herein, the Corporation shall forthwith file in the
custody of its Secretary or an Assistant Secretary at its principal office,
and with its stock transfer agent, if any, an officer's certificate showing
the adjusted Conversion Ratio determined as herein provided and setting forth
in reasonable detail the facts requiring such adjustment and the calculation
thereof. Each such officer's certificate shall be made avail-able at all
reasonable times for inspection by the holder and the Corporation shall,
forthwith after each such adjustment, mail a copy of such certificate to the
holder.
4.10 NOTICES TO HOLDERS. So long as any Preferred Shares shall
be outstanding and unconverted (i) if the Corporation shall pay any divi-dend
or make any distribution upon the Class A Common Stock, or (ii) if the
Corporation shall offer to the holders of Class A Common Stock for
subscription or purchase by them any shares of stock of any class or any other
rights, or (iii) if any capital reorganiza-tion of the Corporation,
reclassifi-cation of the capital stock of the Corporation, consolidation or
merger of the Corporation with or into another cor-poration, sale, lease or
transfer of all or substan-tially all of the property and assets of the
Corporation to another corporation, or voluntary or involuntary dis-solution,
liquidation or winding up of the Corporation shall be effected, then, in any
such case, the Corporation shall cause to be delivered to the Holder, at least
30 days prior to the date specified in (x) or (y) below, as the case may be, a
notice con-taining a brief description of the proposed action and stating the
date on which (x) a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassifica-tion, reorganization,
consolida-tion, merger, convey-ance, lease, dissolution, liquidation or
wind-ing up is to take place and the date, if any, is to be fixed, as of which
the holders of Class A Common Stock of record shall be enti-tled to exchange
their shares of Class A Common Stock for securities or other property
deliverable upon such reclassification, reorgani-zation, con-soli-dation,
merger, conveyance, dissolution, liquida-tion or wind-ing up.
4.11 RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Class A Common Stock of the Corporation (other than a change in par value,
or from par value to no par value, or as a result of an issu-ance of Class A
Common Stock by way of dividend or other distribution or of a subdi-vision or
combination), or in case of any consolidation or merger of the Corporation
with or into another corporation (other than a merger with a subsidiary in
which merger the Corporation is the con-tinuing corporation and which does not
result in any re-classifi-cation, capital reorganization or other change of
out-standing shares of Class A Common Stock of the class issuable upon
exer-cise of this Warrant) or in case of any sale or convey-ance to another
corporation of the property of the Corporation as an en-tirety or
substantially as an entirety, the Corporation shall cause effec-tive provision
to be made so that the holder shall have the right there-after, by converting
the Preferred Shares, -to pur-chase the kind and amount of shares of stock and
other securi-ties and property re-ceivable upon such reclassification, capital
reor-ganization or other change, consolidation, merger, sale or con-veyance as
if the holder had converted such Preferred Shares prior to such transaction.
Any such pro-vision shall include provision for adjustments which shall be as
nearly equiv-alent as may be prac-ticable to the ad-justments pro-vided for
herein. A copy of such pro-vision shall be furnished to the holder(s) of
Preferred Shares within ten days after execution of the appropriate agree-ment
pertaining to same and, in any event, prior to any consolida-tion, merger,
sale or conveyance subject to the provisions of this Section. The foregoing
provisions of this Section shall similarly apply to succes-sive
reclassifi-cations, capital reorgan-izations and changes of shares of Class A
Common Stock and to successive consolidations, merg-ers, sales or
convey-ances.
4.12 DISSOLUTION. If, at any time prior to the conversion of
all Preferred Shares, any dissolu-tion, liquidation or winding up of the
Corporation shall be pro-posed, the Corporation shall cause at least 30 days'
notice to be mailed by cer-tified mail to the registered holders of the
Preferred Shares -at their addresses as they appear on the books of the
Corporation. Such notice shall specify the date(s) as of which holders of
record of Common Stock and Preferred Stock shall participate in any
distribution or shall be entitled to exchange their Common Stock or Preferred
Stock for secu-rities or other property, deliverable upon such dissolution,
liquidation or wind-ing up, as the case may be; to the end that, during such
period of 30 days, the holders of the Preferred Stock may convert the
Preferred Stock and acquire Class A Common Stock (or other stock substituted
therefor as hereinbefore provided) and be entitled in respect of shares so
acquired to all of the rights of the other holders of Class A Common Stock of
the Corporation. In case of a disso-lu-tion, liquidation or winding up of the
Corporation, all conversion rights with respect to the Preferred Stock shall
terminate at the close of busi-ness on the date as of which holders of record
of the Preferred Stock shall be entitled to par-ticipate in a distribution of
the assets of the Corporation in connection with such dissolution, liquidation
or winding up (pro-vided that in no event shall said date be less than 30 days
after completion of service by certi-fied mail of notice as aforesaid).
4.13 SPIN-OFFS. In the event the Corporation spins-off a
sub-sidiary or stock held in another corporation as an investment by
distributing to the shareholders of the Corporation, as a dividend or
otherwise, the stock of the subsidiary or other corporation, the Corporation
shall reserve shares of the subsid-iary or other corporation to be delivered
to the holders of the Preferred Shares upon conversion to the same extent as
if they were owners of record of the Class A Common Stock on the record date
for pay-ment of the shares of the subsid-iary or other corporation.
4.14 CLASS A COMMON STOCK DEFINED. Whenever reference is made
in this Section 4 to the issue or sale of shares of Class A Common Stock, the
term "Class A Common Stock" shall mean the Class A Common Stock of the
Corporation authorized as of the date hereof and any other class of stock
ranking on a parity with such Class A Common Stock, excluding the Class B
Common Stock However, subject to the provisions of Sec-tion 4.11hereof,
shares issuable upon exercise hereof shall include only shares of the class
designated as Class A Common Stock of the Corporation as of the date hereof.
5. EXCHANGE, ASSIGNMENT OR LOSS OF PREFERRED SHARES. Subject
to the provisions of Section 6 hereof, the Preferred Stock is assignable and
exchangeable, with-out expense, at the option of the holder, upon presentation
and sur-render of such Preferred Stock to the Corporation, together with
written instructions signed by the holder of such Preferred Stock with respect
to reissuance thereof and good funds sufficient to pay any transfer or similar
tax; whereupon the Corporation shall, with-out charge, exe-cute and deliver
Preferred Stock in the designated denominations and in the designated name(s)
and the Preferred Stock so surrendered promptly shall be canceled. Upon
receipt by the Corporation of evidence satisfactory to it of the loss, theft,
destruction or mutilation of Preferred Stock certificates, and (in the case of
loss, theft or destruction) of reasonably satis-fac-tory indem-nification
including a surety bond, and upon surrender and cancel-lation of Preferred
Stock certificates, if mutilated, the Corporation will execute and deliver new
Preferred Stock certificates of like tenor and date. Any such new Preferred
Stock certificates executed and delivered shall constitute addi-tional
contractual obliga-tion on the part of the Corporation, whether or not the
Preferred Stock certificates so lost, stolen, destroyed, or mutilated shall be
at any time en-forceable by any-one.
6. LEGENDS AND SECURITIES LAW COMPLIANCE.
6.1 SECURITIES LAW COMPLIANCE. Neither the Preferred Stock nor
the Class A Common Stock nor any other secur-ity issued or issuable upon
conversion of the Preferred Stock may be issued, offered or sold except in
conformity with the Secur-ities Act of 1933, as amended, and applicable state
laws, and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provi-sions of this Sec-tion
with respect to any resale or other disposition of such securities.
6.2 SECURITIES LEGEND. The Corporation may cause the following
legend to be set forth on each certificate representing Preferred Stock or any
other security issued or issuable upon conversion of the Preferred Stock,
unless counsel for the Corporation is of the opinion as to any such
certificate that such legend is un-necessary:
The securities represented by this cer-tifi-cate may not be offered for sale,
sold or otherwise trans-ferred except pursuant to an effective registra-tion
statement made under the Securi-ties Act of 1933 (the "Act"), or pursuant to
an exemption from registration under the Act the availability of which is to
be established to the satisfaction of the Corporation.
6.3 OTHER LEGENDS. All certificates representing the Preferred
Shares and any and all securities issued in replacement thereof or upon
conversion thereof shall bear such additional legends as shall be required by
law or contract.
7. RIGHTS ON LIQUIDATION. In the event of the liquidation,
dissolution or winding up of the Corporation, whether voluntary or
involuntary, resulting in any distribution of its assets to its shareholders,
the holders of the Preferred Shares then issued and outstanding shall be
entitled to receive an amount equal to $2.00 per Preferred Share plus any
accumulated but unpaid dividends, and no more, before any payment or
distribution of the assets of the Corporation is made to or set apart for the
holders of Common Stock. If the assets of the Corporation distributable to
the holders of Preferred Shares are insufficient for the payment to them of
the full preferential amount described above, such assets shall be distributed
ratably among the holders of the Preferred Shares. The holders of the Common
Stock shall be entitled to the exclusion of the holders of the Preferred
Shares to share in all remaining assets of the Corporation in accordance with
their respective interests. For purposes of this paragraph, a consolidation
or merger of the Corporation with any other corporation or corporations shall
not be deemed to be a liquidation, dissolution or winding up of the
Corporation.
8. NOTICE. Any notices or certificates by the Corporation to the
Holder and by the Holder to the Corporation shall be deemed to have been given
if in writing and upon the earlier of personal delivery (including by
messenger, facsimile or other receipted delivery during normal business hours
or, if delivered other than during normal business hours, at the beginning of
the first business day following such delivery) or three business days
following deposit in the United States mails, by registered or cer-tified
mail, return receipt requested, addressed to the holder at such holder's
address of record on the books of the Corporation or to the Corporation at
Monaco Finance, Inc., 370 Seventeenth Street, Suite 5060, Denver, Colorado
80202. Any person may change the address for the giving of notice by notice
duly given effective five (5) business days thereafter.
IN WITNESS WHEREOF, MONACO FINANCE, INC. has caused its corporate seal to
be affixed hereto and this certificate to be signed by its President and
Secretary this day of __________________, 1998.
MONACO FINANCE, INC.
By:
Morris Ginsburg, President
[S E A L]
ATTEST:
Irwin L. Sandler, Secretary
<PAGE>
EXHIBIT L-1
Form of Loan Loss Reimbursement Agreement
SEE EXHIBIT 10.65 FILED HEREWITH.
<PAGE>
EXHIBIT M-1
Form of
Monaco/Advantage Note, Monaco/ANO Note I, Monaco ANO Note II,
Monaco/NAFCO Note, and Monaco/PSB Note
FORM OF SECURED PROMISSORY NOTE
$__________ Denver, Colorado
dated as of ____________, ____
1. PROMISE TO PAY. FOR VALUE RECEIVED, MONACO FINANCE, INC., a
Colorado corporation ("Payor"), whose principal place of business is located
at 370 17th Street, Suite 5060, Denver, Colorado 80202 (Attention: Irwin L.
Sandler), promises to pay to __________________________, a __________
corporation ("Payee"), or order, at Payee's address located at
____________________________ (or at such other address as the holder hereof
may specify to Payor from time to time in writing in accordance with the
provisions of the Agreement (as hereinafter defined)) the principal sum of
$___________, together with interest thereon (as provided hereinbelow),
subject to the terms and conditions contained in that certain Amended and
Restated Asset Purchase Agreement, dated as of January 8, 1998 (as amended or
modified from time to time, the "Agreement"), between, on the one hand, Payor,
and, on the other hand, Pacific USA Holdings Corp., a Texas corporation,
Pacific Southwest Bank, a federally chartered savings bank, NAFCO Holding
Company, LLC, a Delaware limited liability company ("NAFCO"), and Advantage
Funding Group, Inc., a Delaware corporation ("Advantage"). The obligations of
Payor hereunder are secured pursuant to the terms of that certain Pledge
Agreement, dated as of January 8, 1998 (as amended or modified from time to
time, the "Pledge Agreement"), between, on the one hand, Payor, as debtor,
and, on the other hand, NAFCO and Advantage, as secured parties.
2. INTEREST; COMPUTATION OF INTEREST. The unpaid principal balance
of this Secured Promissory Note shall bear interest from the date hereof until
paid at a rate per annum equal to the Prime Rate plus one (1.0) percentage
point; provided that, upon the occurrence and during the continuation of an
Event of Default (as that term is defined in the Pledge Agreement, an "Event
of Default"), and without affecting any of Payee's other rights hereunder, the
unpaid principal balance of this Secured Promissory Note shall bear interest
at a rate per annum equal to the Prime Rate plus three (3.0) percentage
points. All interest charged under hereunder shall be computed on the basis
of a year of three hundred sixty-five (365) or three hundred sixty-six (366)
days, as applicable, per year and actual days elapsed. For purposes hereof,
the term "Prime Rate" means, for any day, the "Prime Rate" as quoted most
recently in the "Southwestern Edition" of The Wall Street Journal.
3. REPAYMENT OF THIS SECURED PROMISSORY NOTE; EVENTS OF DEFAULT.
(a) Upon the date that is the earliest of (i) the date that is
three (3) years following the date hereof (the "Maturity Date"), (ii) the date
on which an Event of Default of the type described in clauses (v) or (vi) of
the definition of "Event of Default" contained in the Pledge Agreement shall
have occurred, and (iii) the date, following the occurrence and during the
continuation of any Event of Default other than those referenced in clause
(ii) of this Section 3(a), on which Payee has given notice to Payor (in
accordance with the provisions of the Agreement) that it has accelerated the
obligations of Payor hereunder, Payor shall repay, in full, the outstanding
principal balance hereof plus accrued and unpaid interest thereon to such
date, such amount being automatically due and payable in full on such date.
(b) Payor may, at any time or from time to time, prepay all or
any part of the balance due under this Secured Promissory Note, without
premium or penalty; provided that, together with any prepayment, Payor shall
pay all accrued and unpaid interest on the principal amount being prepaid
through to the date of payment.
(c) All amounts due hereunder shall be payable in lawful money
of the United States of America in immediately available funds to Payee at its
address set forth in Section 1 hereof.
4. GOVERNING LAW; VENUE; WAIVER OF TRIAL BY JURY. This Secured
Promissory Note is subject to the provisions contained in the Agreement
relating to governing law, venue, and waiver of trial by jury.
5. SUCCESSORS AND ASSIGNS. This Secured Promissory Note shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; provided that neither party may assign or
transfer any interest, right, or duty hereunder except as permitted under the
Agreement.
IN WITNESS WHEREOF, Payor has duly executed, and delivered to Payee, this
Secured Promissory Note as of the date first written above.
PAYOR: MONACO FINANCE, INC.,
a Colorado corporation
By: ______________________________
Its: _____________________________
<PAGE>
EXHIBIT M-2
Form of Monaco/Advantage Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
______________, 1998, is made by and between Monaco Finance, Inc., a Colorado
corporation (the "Company") and ______________________, a
______________________ ("Pacific").
For good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties do hereby covenant and agree as follows:
Section 1. Definitions
The following terms when used in this Agreement shall have the following
meanings:
"Class A Common Stock" means Class A Common Stock, $.01 par value, of
the Company.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities and Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as amended.
"Preferred Shares" means the _____________ shares of ____________
Preferred Stock, $_______________ par value, of the Company issued to Pacific
on the date hereof.
"Registrable Securities" means (i) the Preferred Shares, (ii) any capital
stock of the Company issued as a dividend or other distribution with respect
thereto, or in exchange for or in replacement of, the Preferred Shares, and
(iii) shares of Class A Common Stock issued upon conversion of the Preferred
Shares.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as amended.
Section 2. Request for Registration
(a) Pacific (so long as it or any of its affiliates own at least 25%
of the Registrable Securities) may request in a written notice that the
Company file a registration statement under the Securities Act covering the
registration of all or part of the Registrable Securities. Following receipt
of any notice under this Section 2(a) the Company shall use its best efforts
to cause to be registered under the Securities Act all Registrable Securities
that Pacific has requested be registered in accordance with the manner of
disposition specified in such notice by Pacific.
(b) If Pacific intends to have the Registrable Securities distributed
by means of an underwritten offering, then Pacific shall enter into an
underwriting agreement in customary form with the underwriter or underwriters.
An underwriter or underwriters shall be selected by Pacific and shall be
approved by the Company, which approval shall not be unreasonably withheld;
provided (i) that all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of Pacific, (ii) that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement shall be conditions precedent to the
obligations of Pacific, and (iii) that Pacific shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties to or agreements regarding
Pacific, the Registrable Securities and Pacific's intended method of
distribution and any other representations required by law or reasonably
required by the underwriter.
(c) The Company shall not be obligated to effect more than two
registrations pursuant to this Section 2; provided that a registration
requested pursuant to this Section 2 shall not be deemed to have been effected
for purposes of this Section 2 unless (i) it has been declared effective by
the Commission, (ii) it has remained effective for the period set forth in
Section 6(a), (iii) the offering of Registrable Securities pursuant to such
registration is not subject to any stop order, injunction or other order of
requirement of the Commission (other than any such stop order, injunction, or
other requirement of the Commission prompted by any act or omission of
Pacific).
(d) If the Board of Directors of the Company, in its good faith
judgment, determines that any registration of Registrable Securities should
not be made or continued due to a valid need not to disclose confidential
information or because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger or other material
transaction involving the Company (collectively, a "Valid Business Reason"),
the Company may postpone filing a registration statement relating to a request
for registration under this Section 2 until such Valid Business Reason no
longer exists, but in no event for more than three months from the date of the
notice referred to below, and, in case any such registration statement has
been filed the Company may cause such registration statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing
such registration statement; and the Company shall give written notice (a
"Delay Notice") of its determination to postpone or withdraw a registration
statement and of the fact that the Valid Business Reason for such postponement
or withdrawal no longer exists, in each case, promptly after the occurrence
thereof. Upon the request of Pacific, the Company will disclose to Pacific
the nature of such Valid Business Reason in reasonable detail; provided that
Pacific executes a confidentiality agreement reasonably satisfactory to the
Company; provided further that any such confidentiality agreement shall
terminate upon the earlier of the public disclosure of such Valid Business
Reason or three months from the date of such Delay Notice. Notwithstanding
the foregoing provisions of this subparagraph (d), no registration statement
filed and subsequently withdrawn by reason of any existing or anticipated
Valid Business Reason as hereinabove provided shall count as one of the two
registration statements referred to in the limitation in Section 2(c) and the
Company shall be entitled to serve only one Delay Notice (i) within any period
of 180 consecutive days, or (ii) with respect to any three consecutive
registrations requested pursuant to this Section 2 or Section 5.
(e) In the event that Pacific shall determine for any reason not to
proceed with a registration at any time before the registration statement has
been declared effective by the SEC, and (i) Pacific requests the Company to
withdraw such registration statement, if theretofore filed with the SEC, with
respect to the Registrable Securities covered thereby, or if the offering is
not consummated for any reason and (ii) Pacific agrees to bear its expenses
incurred in connection therewith and to reimburse the Company for the expenses
incurred by it attributable to the registration of such Registrable
Securities, then Pacific shall not be deemed to have exercised its right to
require the Company to register Registrable Securities pursuant to this
Section 2.
(f) Without the written consent of Pacific, neither the Company nor
any other holder of securities of the Company may include securities in a
registration pursuant to this Section 2 if in the good faith judgment of the
managing underwriter of such public offering the inclusion of such securities
would interfere with the successful marketing of the Registrable Securities or
require the exclusion of any portion of the Registrable Securities to be
registered.
Section 3. Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act on any form (other than Form S-4 or Form
S-8) that would permit the inclusion of the Registrable Securities in
connection with the proposed offer and sale for money of any of its securities
by it or any of its security holders, the Company will give written notice of
its determination to Pacific. Upon the written request of Pacific given
within 30 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all such shares of Registrable
Securities for which Pacific has so requested registration, to be included in
such registration statement, all to the extent requisite to permit the sale or
other disposition by Pacific of the Registrable Securities to be so
registered; provided, however, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any such registration initiated by
it. If any registration pursuant to this Section 3 shall be underwritten in
whole or in part, the Company may require that the Registrable Securities
requested for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. If, in the written opinion of the
managing underwriter, the total amount of securities to be so registered,
including the Registrable Securities, will exceed the maximum amount of the
Company's securities that can be marketed (a) at a price reasonably related to
the then current market value of such securities, or (b) without otherwise
materially and adversely affecting the entire offering, then the Company shall
include in such registration (i) first, all the securities the Company
proposes to sell for its own account or is required to register on behalf of
any third party exercising rights similar to those granted in Section 2(a) and
without having the adverse effect referred to above, and (ii) second, to the
extent that the number of securities which the Company proposes to sell for
its own account pursuant to this Section 3 or is required to registered on
behalf of any third party exercising rights similar to those granted in
Section 2(a) is less than the number of equity securities which the Company
has been advised can be sold in such offering without having the adverse
effect referred to above, all Registrable Securities requested to be included
in such registration by Pacific pursuant to this Section 3; provided that if
the number of Registrable Securities requested to be included in such
registration by Pacific pursuant to this Section 3, together with the number
of securities to be included in such registration pursuant to clause (i) of
this Section 3, exceeds the number which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, the
number of such Registrable Securities requested to be included in such
registration by Pacific shall be limited to such extent.
Section 4. Registration on Form S-3. If at any time (a) Pacific
requests in writing that the Company file a registration statement on Form S-3
or any successor thereto for a public offering of all or any portion of the
Registrable Securities held by Pacific, the reasonably anticipated aggregate
price to the public of which would exceed $1,000,000, and (b) the Company is a
registrant entitled to use Form S-3 or any successor thereto, then the Company
shall use its best efforts to register as soon as practicable under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such request, the
Registrable Securities specified in such request. Whenever the Company is
required by this Section 4 to use its best efforts to effect the registration
of Registrable Securities, each of the limitations, procedures and
requirements of Section 2(b) and (d) shall apply to such registration;
provided, however, that there shall be no limitation on the number of
registrations on Form S-3 that may be requested and obtained under this
Section 4. The Company will use its best efforts to qualify and maintain its
qualification as a registrant entitled to use Form S-3 or any successor
thereto.
Section 5. Obligations of the Company. Whenever required under Section
2 or Section 4 to use its best efforts to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective for the period of
the distribution contemplated thereby determined as provided hereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement, and furnish to Pacific copies of any
such amendments and supplements prior to their being used or filed with the
Commission;
(c) furnish to Pacific such numbers of copies of the registration
statements and the prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto in conformity with the
requirements of the Securities Act) and such other documents and information
as Pacific may reasonably request and make available for inspection by the
parties referred to in Section 5(d) below such financial and other information
and books and records of the Company, and cause the officers, directors,
employees, counsel and independent certified public accountants of the Company
to respond to such inquiries, as shall be reasonably necessary, in the
judgment of the respective counsel referred to in such Section, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities
Act;
(d) provide (i) Pacific, (ii) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an underwriter
within the meaning of Section 2(11) of the Securities Act), if any, thereof,
(iii) the sales or placement agent, if any, therefor, (iv) counsel for such
underwriters or agent, and (v) not more than one counsel for Pacific the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(e) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto
Rico as shall be reasonably appropriate for the distribution of the
Registrable Securities covered by the registration statement; provided,
however, that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business in or to file a general consent
to service of process in any jurisdiction wherein it would not but for the
requirements of this paragraph (e) be obligated to do so; and provided
further, that the Company shall not be required to qualify such Registrable
Securities in any jurisdiction in which the securities regulatory authority
requires that Pacific submit its Registrable Securities to the terms,
provisions and restrictions of any escrow, lockup or similar agreement(s) for
consent to sell Registrable Securities in such jurisdiction unless Pacific
agrees to do so;
(f) promptly notify Pacific, the sales or placement agent, if any,
and the managing underwriter or underwriters, if any, and confirm such advice
in writing (i) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
comments by the Commission or by any Blue Sky securities commissioner or
regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such registration statement or prospectus or
for additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for the purpose, (iv) if at any
time the representations and warranties of the Company contained in any
underwriting agreement or other customary agreement cease to be true and
correct in all material respects, or (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for the sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(h) promptly notify Pacific at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make, in light of the circumstances under which they were made, the
statements therein not misleading, and at the request of Pacific promptly
prepare and furnish to Pacific a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make, in light of
the circumstances under which they were made, the statements therein not
misleading;
(i) furnish, at the request of Pacific, if the method of distribution
is by means of an underwriting on the date that the Registrable Securities are
delivered to the underwriters for sale pursuant to such registration or if
such Registrable Securities are not being sold through underwriters, on the
date that the registration statement with respect to such Registrable
Securities becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to Pacific as to such
matters as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction; and (2) letters dated
such date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if any, and
if such Registrable Securities are not being sold through underwriters, then
to Pacific, and if such accountants refuse to deliver such letters to Pacific,
then to the Company (i) stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements and other financial data of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (ii)
covering such other financial matters (including information as to the period
ending not more than five (5) business days prior to the date of such letters)
with respect to the registration in respect of which such letter is being
given as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction;
(j) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities
to be so included in the registration statement;
(k) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may
be required to effect registration or the offering or sale in connection
therewith or to enable Pacific to offer, or to consummate the disposition of,
their Registrable Securities;
(l) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed.
For purposes of Sections 5(a) and 5(b), and with respect to (i) registration
required pursuant to Section 2, (A) the period of distribution of Registrable
Securities in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it and (B) the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the
earlier of the sale of all Registrable Securities covered thereby and six (6)
months after the effective date thereof, and (ii) registrations required
pursuant to Section 4, the period of distribution of Registrable Securities in
any registration (firm commitment underwritten or otherwise) shall be deemed
to extend until the earlier of the sale of all Registrable Securities covered
thereby and three (3) months after the effective date thereof.
Pacific agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (h) of this Section 5,
Pacific will forthwith discontinue disposition of the Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until Pacific's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (h) of this Section 5, and, if so directed
by the Company, Pacific will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in Pacific's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice; provided, however, that any period of time during
which Pacific must discontinue disposition of the Registrable Securities shall
not be included in the determination of a period of distribution for purposes
of Sections 5(a) and 5(b).
Section 6. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement,
that Pacific shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition
of such securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
Section 7. Expenses of Registration. All expenses incurred in
connection with the first registration effected pursuant to Section 2, and
each registration pursuant to Section 3 and Section 4 of this Agreement,
excluding underwriter's discounts and commissions, but including without
limitation all registration, filing and qualification fees, word processing,
duplicating, printers' and accounting fees (including the expense of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. (the "NASD") or listing fees, messenger and deliver expenses,
all fees and expenses of complying with state securities or blue sky laws, and
fees and disbursements of counsel for the Company and Pacific, shall be paid
by the Company; provided, however, that if a registration request pursuant to
Section 2 of this Agreement is subsequently withdrawn at the request of
Pacific, Pacific shall bear such expenses; and provided further, that if a
registration request pursuant to Section 4 of this Agreement is subsequently
withdrawn at the request of Pacific, the Company shall not be required to pay
any expenses of such registration proceeding, and Pacific shall bear such
expenses. Pacific shall bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection
with any registration, filings, and qualifications made pursuant to this
Agreement. In addition, Pacific shall pay all expenses incurred in connection
with the second registration effected pursuant to Section 2.
Section 8. Underwriting Requirements In connection with any
underwritten offering, the Company shall not be required under Section 3 to
include Registrable Securities in such underwritten offering, unless Pacific
accepts the terms of the underwriting of such offering that have been
reasonably agreed upon between the Company and the underwriters selected by
the Company.
Section 9. Rule 144 and Rule 144A Information. With a view to making
available the benefits of certain rules and regulations of the Commission
which may at any time permit the sale of the Registrable Securities to the
public without registration, at all times, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(iii) furnish to Pacific forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of such Rule
144 and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company as Pacific may reasonably request in availing itself
of any rule or regulation of the Commission allowing Pacific to sell any
Registrable Security without registration.
Notwithstanding anything contained in this Section 9, the Company may cease to
file reports with the Commission under Section 12 of the Exchange Act if it
then is permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
Section 10. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless Pacific, its
directors and officers, each person who participates in the offering of such
Registrable Securities, including underwriters (as defined in the Securities
Act), and each person, if any, who controls Pacific or participating person
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of a material fact contained in such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the indemnity agreement contained in this Section 10(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld); provided, further, that
the Company shall not be liable to Pacific, its directors and officers,
participating person or controlling person in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by Pacific, its
directors and officers, participating person or controlling person; and
provided, further, that the Company will not be liable to Pacific, its
directors and officers, participating person or controlling person in any such
case for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement
or preliminary prospectus that is corrected in the final registration
statement and prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage, liability or action purchased
Registrable Securities but was not sent or given a copy of the final
prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person in any
case where such delivery of the final registration statement and prospectus
(as amended or supplemented) is required by the Securities Act and such final
prospectus (as amended or supplemented) was previously delivered in a timely
manner to Pacific by the Company. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of Pacific,
its directors and officers, participating person or controlling person, and
shall survive the transfer of such securities by Pacific.
(b) Pacific shall indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each agent and any underwriter for the Company (within
the meaning of the Securities Act) to the same extent as the foregoing
indemnity from the Company to Pacific but only with reference to written
information relating to Pacific furnished to the Company expressly for use in
connection with such registration; provided, however, that the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Pacific (which consent shall not
be unreasonably withheld); and provided further, that the liability of Pacific
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense that is equal to the proportion that the net proceeds
from the sale of the shares sold by Pacific under such registration statement
bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds actually received
by Pacific from the sale of Registrable Securities by such registration
statement.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the name parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Pacific, in the case of parties indemnified pursuant to the second preceding
paragraph, and by the Company in the case of the parties indemnified pursuant
to the first preceding paragraph. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reasons of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in the first or second
paragraph of this Section 10 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 10, Pacific shall
not be required to contribute any amount in excess of the amount of net
proceeds received by Pacific from the sale of Registrable Securities covered
by such registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 10
are not exclusive and shall not limit any right or remedies that may otherwise
be available to any indemnified party at law or in equity.
Section 11. Transfer of Registration Rights.
The registration rights of Pacific under this Agreement may be
transferred to (a) any transferee of such Registrable Securities who acquires
all Registrable Securities of Pacific or (b) any affiliate of Pacific.
Section 12. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall
be personally delivered, transmitted via facsimile or overnight courier
service or mailed first-class postage prepaid, registered or certified mail,
(a) if to Pacific:
___________________________
with a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter, Chief General Counsel
Facsimile No. (713) 871-0155
(b) if to Company:
Monaco Finance, Inc.
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin L. Sandler, Executive Vice President
Facsimile No. (303) 405-6496
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given on the date when
personally delivered or when transmitted by facsimile (if confirmation of
facsimile receipt has been given), on the date after being deposited with an
overnight courier service, or, if sent by mail, four days after deposit in the
United States mail, postage prepaid. Any party may change its address for
notice by notifying the other party pursuant to the above notice provisions.
Section 13. Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed and delivered will be deemed to be
an original but all of which together will constitute one and the same
instrument.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard
to the application of choice of law principles, except to the extent that such
laws are superseded by federal law.
(c) Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
(d) Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Pacific and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(e) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
(f) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
IN WITNESS WHEREOF, this REGISTRATION RIGHTS AGREEMENT has been signed
and delivered by the parties as of the date first above written.
MONACO FINANCE, INC.,
a Colorado corporation
By:
Name:
Title:
_____________________________________
By:
Name: ______________________
Title: _______________________
<PAGE>
EXHIBIT M-3
Form of Monaco/NAFCO Registration Rights Agreement
SEE EXHIBIT M-2 ATTACHED HERETO.
<PAGE>
EXHIBIT M-4
Form of Monaco Pledge Agreement
PLEDGE AGREEMENT
This PLEDGE AGREEMENT, dated as of January 8, 1998, is entered into
between, on the one hand, MONACO FINANCE, INC., a Delaware corporation
("Debtor"), and, on the other hand, PACIFIC SOUTHWEST BANK, a federally
chartered savings bank ("PSB"), NAFCO Holding Company, LLC, a Delaware limited
liability company ("NAFCO"), and Advantage Funding Group, Inc., a Delaware
corporation ("Advantage"; PSB, NAFCO, and Advantage are sometimes hereinafter
collectively referred to as "Secured Party").
Recitals
A. Debtor, NAFCO, Advantage, PSB, Pacific USA Holdings, Inc., a Texas
corporation, and PCF Service, LLC, a Delaware limited liability company, have
entered into or are in the process of entering into that certain Asset
Purchase Agreement, dated as of January 8, 1998 (the "Asset Purchase
Agreement"), pursuant to which, among other things, Debtor has incurred
various obligations owing to each of NAFCO and Advantage.
B. It is a condition concurrent to the effectiveness of the Asset
Purchase Agreement that the parties hereto execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the above recitals and for other good
and valuable consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Certain Definitions. As used herein:
"Advantage" has the meaning set forth in the introduction hereto.
"Affiliate" means, as to any Person, any other Person directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, such Person. For purposes of this definition: (a) the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract, or otherwise; and (b)
beneficial ownership of five percent (5%) or more of the voting common equity
(on a fully diluted basis) or warrants or other rights to purchase such equity
(whether or not currently exercisable) of a Person shall be deemed to
constitute control of such Person.
"Agreement" means this Security Agreement between Debtor and Secured
Party.
"Asset Purchase Agreement" has the meaning set forth in the recitals
hereto.
"Asset Purchase Documents" has the meaning set forth in the Asset
Purchase Agreement.
"Closing Date" has the meaning set forth in the Asset Purchase
Agreement.
"Collateral" has the meaning set forth in Section 2.1.
"Debtor" has the meaning set forth in the introduction hereto, and
includes such Person's permitted successors and assigns.
"Determination Date" has the meaning set forth in the Asset Purchase
Agreement.
"Event of Default" means the occurrence of any of the following: (i)
if, pursuant to the terms and conditions of the Asset Purchase Agreement,
Debtor is required to issue certain of the Transaction Shares on the
Determination Date, Debtor fails to issue the required Transaction Shares on
the Determination Date; (ii) if, pursuant to the terms and conditions of the
Asset Purchase Agreement, Debtor is required to issue Notes and not
Transaction Shares, Debtor fails to issue any Note as and when required to be
issued in accordance with the terms and conditions of the Asset Purchase
Agreement; (iii) to the extent any Note is issued by Debtor pursuant to the
terms of the Asset Purchase Agreement, Debtor fails to pay when due and
payable or when declared due and payable all or any portion of the amounts due
under any such Note; (iv) Debtor fails or neglects to perform, keep, or
observe any term, provision, condition, covenant, agreement, warranty, or
representation contained in any Note (to the extent the same is issued in
accordance with the provisions of the Asset Purchase Agreement) or this
Agreement; (v) an Insolvency Proceeding is commenced by Debtor; or (vi) an
Insolvency Proceeding is commenced against Debtor and is not dismissed within
60 days following the filing thereof.
"Equity Rights" means, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such
Person.
"Insolvency Proceeding" means, as to any Person, any proceeding
commenced by or against such Person under any provision of the federal
Bankruptcy Code or under any other bankruptcy or insolvency law, including
assignments for the benefit of, or formal or informal moratoriums,
compositions, or extensions generally with, creditors.
"Issuer" means MF Receivables Corp. II, a Delaware corporation.
"Lien" means, with respect to any asset: (a) any mortgage, lien,
pledge, charge, security interest, or encumbrance of any kind in respect of
such asset; or (b) any undertaking by a Person not to grant any mortgage,
lien, pledge, charge, security interest, or encumbrance to another Person
(i.e., a "negative pledge") which has the effect of prohibiting, conditioning,
or limiting such a grant for the purpose of securing the Secured Obligations.
"NAFCO" has the meaning set forth in the introduction hereto.
"Notes" means, collectively, the Monaco/Advantage Note, the
Monaco/NAFCO Note, the Monaco/PSB Note, the Monaco/ANO Note I, and the
Monaco/ANO Note II (as each of those terms is defined in the Asset Purchase
Agreement).
"Permitted Liens" means, collectively: (a) statutory Liens of
landlords, carriers, warehousemen, mechanics, or materialmen, and other Liens
(other than Liens in connection with any environmental law and any Lien
imposed under ERISA) imposed by law and incurred in the ordinary course of
business of Debtor for sums either not yet delinquent or being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted and for which adequate reserves have been established in accordance
with generally accepted accounting principles (if so required); (b) Liens
(other than Liens in connection with any environmental law and any Lien
imposed under ERISA) incurred or deposits made in the ordinary course of
business of Debtor in connection with workers' compensation, unemployment
insurance, and other types of social security, or to secure the performance of
statutory obligations, surety and appeal bonds, leases, or other similar
obligations; (c) banker's Liens in the nature of rights of setoff arising in
the ordinary course of business of Debtor; (d) Liens for taxes, assessments or
other governmental charges or statutory obligations that are not delinquent or
remain payable without any penalty or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently conducted and
for which adequate reserves have been established in accordance with generally
accepted accounting principles (if so required); and (e) Liens in favor of
Secured Party.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust, or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledged Stock" has the meaning set forth in Section 2.1(a).
"PSB" has the meaning set forth in the introduction hereto.
"Secured Obligations" means, collectively: (a) if, pursuant to the
terms and conditions of the Asset Purchase Agreement, Debtor is required to
issue certain of the Transaction Shares on the Determination Date, the
obligation of Debtor to issue such required Transaction Shares on the
Determination Date in accordance with the terms and conditions of the Asset
Purchase Agreement; (b) if, pursuant to the terms and conditions of the Asset
Purchase Agreement, Debtor is required to issue the Notes and not the
Transaction Shares, the obligation of Debtor to issue the Notes as and when
required to be issued in accordance with the terms and conditions of the Asset
Purchase Agreement; and (c) to the extent the Notes, and not the Transaction
Shares, are required by the terms and conditions of the Asset Purchase
Agreement to be issued by Debtor, all debt and other obligations or
liabilities of Debtor of every kind and character, owed to PSB, NAFCO, or
Advantage, as applicable, arising out of or in connection with the Notes,
including any modifications, amendments, extensions, restatements or renewals
of, supplements to, or substitutions or replacements for, any one or more of
the Notes, and including all such debt, obligations, and liabilities, whether
for principal, interest (including interest that would have accrued but for
the filing of an Insolvency Proceeding with respect to Debtor), reimbursement
obligations, fees, costs, expenses, premiums, charges, attorneys' fees,
indemnity, whether heretofore, now, or hereafter made, incurred or created,
whether voluntarily or involuntarily arising, whether or not due, whether
absolute or contingent, liquidated or unliquidated, or determined or
undetermined and whether Debtor may be liable individually or jointly with
others.
"Secured Party" has the meaning set forth in the introduction hereto
and includes such Persons' permitted successors and assigns.
"Stock Collateral" has the meaning set forth in Section 2.1(a).
"Transaction Shares" has the meaning set forth in the Asset Purchase
Agreement.
"Trust Agreement" means that certain Trust and Security Agreement,
dated as of June 1, 1997 (as amended or modified from time to time), among the
Issuer, as the transferor, Debtor, as servicer, and Norwest Bank Minnesota
National Association, as indenture trustee and back-up servicer.
"UCC" means the Uniform Commercial Code as the same may from time to
time be in effect in the State of Texas, and any successor statute; provided
that, if, by reason of mandatory provisions of law, the validity or perfection
of any security interest granted herein is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than Texas, then, as to the validity
or perfection of such security interest, "UCC" shall mean the Uniform
Commercial Code as in effect from time to time in such other jurisdiction and
any successor statute.
Section 1.2 Certain Rules of Construction. Unless the context of
this Agreement clearly requires otherwise: (a) references to the plural
include the singular and to the singular include the plural; (b) references to
any gender include any other gender; (c) the part includes the whole; (d) the
terms "include" and "including" are not limiting; and (e) the term "or" has
the inclusive meaning represented by the phrase "and/or." The terms "hereof,"
"herein," "hereby," and "hereunder," and other similar terms in this
Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement. References in this Agreement to any
"determination," or any matter being "determined," by Secured Party include
good faith estimates (in the case of quantitative determinations), and good
faith beliefs (in the case of qualitative determinations) by Secured Party and
mean that any such determination so made shall be conclusive absent manifest
error. Unless otherwise specified, section and subsection references are to
this Agreement. Unless otherwise defined herein, all terms used herein which
are defined in the UCC shall have the meaning ascribed thereto therein. Any
reference to any statute, law, or regulation shall include all amendments
thereto and revisions thereof. Any reference to this Agreement or any Asset
Purchase Document includes all permitted alterations, amendments, changes,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable.
ARTICLE II
GRANT OF SECURITY INTEREST; COLLATERAL
Section 2.1 Grant of Security Interest. To secure the prompt
payment and performance in full of all of the Secured Obligations, Debtor
hereby grants to Secured Party a continuing security interest in and to, and a
lien upon, all of Debtor's now owned or hereafter acquired or arising right,
title, and interest in, to, and upon all now owned or hereafter acquired or
arising: (a) (i) shares of capital stock of Issuer now owned (as identified on
Schedule 1) or hereafter acquired by Debtor, together with, in each case,
the certificates representing the same (collectively, the "Pledged Stock");
and (ii) shares, securities, moneys or property representing a dividend on, or
a distribution or return of capital in respect of any of the Pledged Stock,
resulting from a split-up, revision, reclassification or other like change of
any of the Pledged Stock or otherwise received in exchange for any of the
Pledged Stock and all Equity Rights issued to the holders of, or otherwise in
respect of, any of the Pledged Stock (collectively, and together with the
property described in clause (i) above, the "Stock Collateral"), provided
that any dividend, distribution or return of capital in the form of cash
permitted by the provisions hereof shall not be a part of the Stock
Collateral; (b) to the extent related to all or any part of the other Stock
Collateral, all minute books, share transfer books/registers and records
relating to transactions with the Issuer; and (c) all proceeds and products in
whatever form of all or any portion of the foregoing (collectively, the
"Collateral").
Section 2.2 Perfection 2.2 Perfection . Concurrently with
the execution and delivery of this Agreement, Debtor shall (a) deliver to
Secured Party all certificates identified in Schedule 1, accompanied by
undated stock powers duly executed in blank and (b) take all such other
actions as shall be necessary or as Secured Party may reasonably request to
perfect and establish the priority of the Liens granted by this Agreement.
Section 2.3 Preservation and Protection of Security Interests 2.3
Preservation and Protection of Security Interests . Debtor shall:
(a) upon the acquisition after the Closing Date by Debtor of any
Stock Collateral, promptly either (i) transfer and deliver to Secured Party
all such Stock Collateral (together with the certificates representing any
securities included in such Stock Collateral, duly endorsed in blank or
accompanied by updated stock powers duly executed in blank) or (ii) take such
other action as Secured Party shall reasonably deem necessary or appropriate
to perfect, and establish the priority of, the Liens granted by this Agreement
in such Stock Collateral; and
(b) give, execute, deliver, file or record any and all financing
statements, notices, contracts, agreements or other instruments, obtain any
and all governmental approvals and take any and all steps that may be
necessary or as Secured Party may reasonably request to create, perfect,
establish the priority of, or to preserve the validity, perfection or priority
of, the Liens granted by this Agreement or to enable Secured Party to exercise
and enforce Secured Party's rights, remedies, powers and privileges under this
Agreement with respect to such Liens, including causing any or all of the
Stock Collateral to be transferred of record into the name of Secured Party or
Secured Party's nominee (and Secured Party agrees that if any Stock Collateral
is transferred into Secured Party's name or the name of Secured Party's
nominee, Secured Party will thereafter promptly give to Debtor copies of any
notices and communications received by Secured Party with respect to the Stock
Collateral pledged by Debtor).
Section 2.4 Grant of Proxy; Appointment of Secured Party as
Attorney-in-Fact 2.4 Grant of Proxy; Appointment of Secured Party as
Attorney-in-Fact .
(a) Subject to the rights of Debtor under Section 2.5, Debtor
hereby grants to Secured Party a proxy to vote all shares of the Pledged
Stock. Such proxy, being coupled with an interest, is irrevocable until all
of the Secured Obligations have been paid in full.
(b) DEBTOR HEREBY APPOINTS SECURED PARTY AND ANY DESIGNEE OF
SECURED PARTY AS DEBTOR'S ATTORNEY-IN-FACT AND AUTHORIZES SECURED PARTY OR
SUCH DESIGNEE, AT DEBTOR'S SOLE EXPENSE, TO EXERCISE AT ANY TIME IN SECURED
PARTY'S OR SUCH DESIGNEE'S DISCRETION ALL OR ANY OF THE FOLLOWING POWERS (SUCH
POWER OF ATTORNEY, BEING COUPLED WITH AN INTEREST, BEING IRREVOCABLE UNTIL ALL
OF THE SECURED OBLIGATIONS HAVE BEEN PAID IN FULL): (i) so long as an Event
of Default has occurred and is continuing: (A) to ask, demand, collect, sue
for, recover, receive and give receipt and discharge for amounts due and to
become due under and in respect of all or any part of the Collateral; (B) to
receive, endorse and collect any drafts, instruments, documents and chattel
paper in connection with clause (A) above; (C) to file any claims or take any
action or proceeding that Secured Party may deem necessary or advisable for
the collection of all or any part of the Collateral; (D) to execute, in
connection with any sale or disposition of the Collateral permitted hereunder,
any endorsements, assignments, bills of sale or other instruments of
conveyance or transfer with respect to all or any part of the Collateral; (E)
to use the materials, services, and books and records of Debtor for the
purpose of liquidating or collecting the Collateral, whether by foreclosure,
auction, or otherwise; (F) to remove the same to the premises of Secured Party
of any designated agent for such time as Secured Party may desire in order
effectively collect or liquidate the Collateral; and (G) to exercise (1) all
voting, consensual, and other rights and powers pertaining to the Collateral
(whether or not transferred into the name of Secured Party), at any meeting of
shareholders, partners, members, or otherwise, and (2) any and all rights of
conversion, exchange, subscription, and any other rights, privileges, or
options pertaining to the Collateral as if it were the absolute owner thereof;
and (b) to execute in the name of Debtor and file against Debtor in favor of
Secured Party or Secured Party's designee financing statements or amendments
with respect to the Collateral.
Section 2.5 Special Provisions Relating to Stock Collateral 2.5
Special Provisions Relating to Stock Collateral .
(a) So long as no Event of Default shall have occurred and be
continuing, Debtor shall have the right to exercise all voting, consensual and
other powers of ownership pertaining to the Stock Collateral for all purposes
not inconsistent with the terms of the Asset Purchase Agreement or any Asset
Purchase Document, provided that Debtor agrees that Debtor will not vote the
Stock Collateral in any manner that is inconsistent with the terms of the
Asset Purchase Agreement or any Asset Purchase Document. Secured Party shall,
at Debtor's expense, execute and deliver to Debtor or cause to be executed and
delivered to Debtor all such proxies, powers of attorney, dividend and other
orders and other instruments, without recourse, as Debtor may reasonably
request for the purpose of enabling Debtor to exercise the rights and powers
which Debtor is entitled to exercise pursuant to this Section 2.5(a).
(b) If any Event of Default shall have occurred and be
continuing, and whether or not Secured Party exercises any available right to
declare any Secured Obligations due and payable or seeks or pursues any other
right, remedy, power or privilege available to Secured Party under applicable
law, this Agreement or any Asset Purchase Document, Secured Party shall be
entitled to vote the proxy granted to Secured Party pursuant to Section
2.4(a).
(c) Debtor shall be entitled (to the extent not inconsistent
with the terms of the Asset Purchase Agreement or any Asset Purchase Document)
to receive and retain any interest, income, dividends, distributions and other
amounts paid or payable in respect of any Collateral (including Stock
Collateral); provided that, if an Event of Default shall have occurred and
be continuing (or would otherwise result by virtue thereof), and whether or
not Secured Party exercises any available right to declare any Secured
Obligations due and payable or seeks or pursues any other right, remedy, power
or privilege available to Secured Party under applicable law, this Agreement
or any Asset Purchase Document, all interest, dividends, distributions, and
other amounts paid or payable in respect of the Collateral shall be paid
directly to Secured Party and be retained by Secured Party as part of the
Collateral (except to the extent applied upon receipt to the payment of the
Secured Obligations). Upon the occurrence and during the continuation of an
Event of Default, Secured Party shall also be entitled to receive directly:
(i) all interest, income, dividends, distributions, or other amounts paid or
payable in cash or other property in respect of any Collateral in connection
with the dissolution, liquidation, recapitalization, or reclassification of
the capital of the applicable issuer to the extent representing (in the
reasonable judgment of Secured Party) an extraordinary, liquidating, or other
distribution in return of capital; and (ii) all additional membership
interests, warrants, options, or other securities or property (other than
cash) paid or payable or distributed or distributable in respect of any
Collateral in connection with any noncash dividend, distribution, return of
capital, spin-off, stock split, split-up, reclassification, combination of
shares or interests or similar arrangement. All interest, income, dividends,
distributions, or other amounts that are received by Debtor in violation of
the provisions hereof shall be received in trust for the benefit of Secured
Party, shall be segregated from other property or funds of Debtor, and shall
be forthwith delivered to Secured Party as Collateral in the same form as so
received (with any necessary endorsements).
Section 2.6 Termination 2.6 Termination . Upon the date
which is the earlier of (a) if, pursuant to the terms and conditions of the
Asset Purchase Agreement, Debtor is required to issue Transaction Shares on
the Determination Date and Debtor issues such required Transaction Shares, the
Determination Date and (b) the date on which all Secured Obligations shall
have been paid and performed in full, this Agreement shall automatically
terminate, and Secured Party shall forthwith cause to be assigned, transferred
and delivered, against receipt but without any recourse, warranty or
representation whatsoever, any remaining Collateral and money received in
respect of the Collateral, to or on the order of Debtor.
Section 2.7 Secured Party's Duties 2.7 Secured Party's
Duties . Secured Party shall have no duty to exercise any of the rights,
privileges or powers afforded to Secured Party hereunder and shall not be
responsible to Debtor, the Issuer or any other Person for any failure to do so
or delay in doing so. Notwithstanding anything to the contrary contained
herein, in the Asset Purchase Agreement, the Asset Purchase Documents, or any
other agreement, document, or instrument entered into in connection with the
foregoing, Secured Party agrees that, if it becomes the registered owner of
any or all of the Stock Collateral, it will not (a) take any action that would
cause Debtor or the Issuer to breach any of their respective covenants under
the Transaction Documents (as that term is defined in the Trust Agreement); or
(b) so long as the Trust Agreement is in effect, file any involuntary petition
or otherwise institute any bankruptcy, reorganization, insolvency or
liquidation proceeding or other proceeding under any federal or state
bankruptcy or similar law (for purposes of this section, any such petition or
proceeding is hereinafter referred to as an "insolvency proceeding") against
the Issuer or consent to, or otherwise permit, the inclusion of any assets of
the Issuer in any insolvency proceeding of Debtor, Secured Party, or any other
Person then holding any Stock Collateral.
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Debtor hereby represents, warrants, and covenants to Secured Party at all
times as follows:
Section 3.1 Title 3.1 Title . Debtor is the sole
beneficial owner of the Collateral in which Debtor purports to grant a Lien
pursuant to this Agreement, and such Collateral is free and clear of all Liens
(and, with respect to the Stock Collateral, of any Equity Right in favor of
any other Person), except Permitted Liens.
Section 3.2 Pledged Stock
(a) The Pledged Stock evidenced by the certificates identified
on Schedule 1 has been, and upon issuance any additional Pledged Stock will
be, duly authorized, validly existing, fully paid and non-assessable, and none
of such Pledged Stock is subject to any contractual restriction, or any
restriction under the charter or by-laws of the respective Issuer of such
Pledged Stock, upon the transfer of such Pledged Stock (except for any such
restriction contained in the Asset Purchase Agreement or any Asset Purchase
Document).
(b) The Pledged Stock evidenced by the certificate(s) identified
in Schedule 1 constitutes 100% of all of the issued and outstanding shares
of each class of capital stock of the Issuer, and all of such stock is
beneficially owned by Debtor on the Closing Date. Annex 1 correctly
identifies, as at the Closing Date, the class and par value of the shares
comprising such Pledged Stock and the number (and registered owner) of the
shares evidenced by each such certificate.
(c) No securities convertible into or exchangeable for any
shares of capital stock of the Pledged Stock, or any options, warrants or
other commitments entitling any Person to purchase or otherwise acquire any
shares of capital stock of the Pledged Stock, are issued and outstanding.
(d) There are no restrictions on the transferability of the
Pledged Stock to Secured Party or with respect to the foreclosure, transfer or
disposition thereof by Secured Party (except as set forth in the Transaction
Documents (as that term is defined in the Trust Agreement)), and there are no
shareholders agreements, voting trusts, proxy agreements or other agreements
or understandings which affect or relate to the voting or giving of written
consents with respect to any of the Pledged Stock.
Section 3.3 Enforceability; Priority of Security Interest This
Agreement (a) creates an enforceable perfected and first priority security
interest in and pledge of the Collateral upon delivery thereof pursuant to
Section 2.2, and (b) will create an enforceable perfected and first priority
security interest in and pledge of any additional Pledged Stock upon delivery
thereof pursuant to Section 2.2 (or upon the taking of such other action
with respect thereto as may be requested by Secured Party), in each case
securing the payment and performance of the Secured Obligations.
Section 3.4 Location of Debtor Debtor's place of business and
chief executive office is located at its address for notices set forth in the
Asset Purchase Agreement.
Section 3.5 Shareholders Agreements; Issuance of Additional Shares.
Debtor will not enter into any shareholders agreement, voting trust, proxy
agreement, tax sharing agreement or other agreement or understanding which
affects or relates to (a) the voting or giving of written consents or (b) the
making of distributions with respect to any of the Collateral that is
inconsistent with the terms of the Asset Purchase Agreement or any Asset
Purchase Document. Debtor will not consent to or approve, or allow any Issuer
to consent to or approve, the issuance to any Person of any additional shares
of any class of capital stock of such Issuer, or of any securities convertible
into or exchangeable for any such shares, or any warrants, options or other
rights to purchase or otherwise acquire any such shares.
Section 3.6 Notices to Secured Party Debtor will notify Secured
Party: (a) promptly, of any potentially material dispute between Debtor or
any of Debtor's Affiliates and any government authority; (b) promptly, of any
Event of Default; (c) not less than 60 days prior to any change in Debtor's or
the Issuer's name, legal structure, place of business, or chief executive
office, of any such change; or (d) promptly, of any loss, damage,
investigation, action, proceeding or claim relating to the Collateral.
Section 3.7 Certain Restricted Actions. Debtor shall not directly
or indirectly sell, lease, transfer, assign, further encumber, abandon or
otherwise dispose of any part of the Collateral, and Debtor will not assume or
allow any Lien on the Collateral except for Permitted Liens.
Section 3.8 Inspection of Property, Books andDebtor will keep
proper books of record and account in which full, true, and correct entries
shall be made of all dealings and transactions in relation to the Collateral.
Subject to limitations imposed by law or contract on access to and
dissemination of confidential information, Debtor will permit representatives
of Secured Party to inspect the Collateral at such reasonable times as may
reasonably be desired, upon reasonable advance notice to Debtor.
Section 3.9 Organization and Good Standing. Debtor is a
corporation duly organized, validly existing and in good standing under the
law of the State of Colorado and is qualified to transact business in each
state where the nature of its business requires it to qualify, except to the
extent that the failure to so qualify would not in the aggregate materially
adversely affect the ability of Debtor to perform its obligations hereunder.
Section 3.10 Authorization. Debtor has the power, authority and
legal right to execute, deliver and perform under the terms of this Agreement
and the execution, delivery and performance of this Agreement has been duly
authorized by Debtor by all necessary corporate action.
Section 3.11 Binding Obligation. This Agreement, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
a legal, valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its terms except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity.
Section 3.12 No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of Debtor, or any indenture, agreement,
mortgage, deed of trust or other instrument to which Debtor is a party or by
which it is bound (including the Trust Agreement), or in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
such indenture, agreement, mortgage, deed of trust or other such instrument,
or violate any law, or any order, rule or regulation applicable to Debtor of
any court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over Debtor or any of
its properties.
Section 3.13 Approvals. All approvals, authorizations, consents,
orders or other actions of any person, or of any court, governmental agency or
body or official, required in connection with the execution and delivery of
this Agreement have been or will be taken or obtained on or prior to the
Closing Date.
Section 3.14 Further Assurances Debtor will make, execute, endorse,
acknowledge, and deliver any amendments, modifications, or supplements hereto
and restatements hereof and any other agreements, documents, or instruments,
and take any and all other actions, as may from time to time be reasonably
requested by Secured Party to perfect and maintain the validity and priority
of the Liens granted pursuant hereto and to effect, confirm, or further assure
or protect and preserve the interests, rights, and remedies of Secured Party
under this Agreement.
<PAGE>
ARTICLE IV
RIGHTS AGAINST THIRD PARTIES; ELECTION OF REMEDIES; WAIVERS; PROCEEDS
Section 4.1 Certain Remedies
(a) Upon the occurrence and during the continuation of an Event
of Default, Secured Party shall have the right in Secured Party's discretion
to determine which rights, security, Liens, or remedies Secured Party shall at
any time pursue, relinquish, subordinate, modify or take any other action with
respect thereto, without in any way modifying or affecting any of them or any
of Secured Party's rights hereunder or the Secured Obligations, and Secured
Party, among Secured Party's other rights and remedies, shall have all of the
rights and remedies of a secured party under the UCC. Without in any way
limiting the generality of the foregoing, Secured Party may, upon the
occurrence and during the continuation of an Event of Default: (i) subject to
compliance with the terms of Section 9-504 of the UCC, cause the Collateral to
be transferred to Secured Party's name or in the name of a nominee and,
thereafter, exercise all of the rights, powers, and remedies of an owner
thereof; and (ii) sell, resell, assign and deliver, in Secured Party's
discretion, all or any of the Collateral, in one or more parcels, at public or
private sale, at any of Secured Party's offices or elsewhere (including on any
securities exchange on which any Investment Collateral may be listed), for
cash, upon credit, or for future delivery, at such time or times and at such
price or prices and upon such other terms as Secured Party may deem
satisfactory. No demand, presentment, protest, advertisement, or notice of
any kind (except any notice required by law, as referred to below), all of
which are hereby expressly waived by Debtor, shall be required in connection
with any sale or other disposition of all or any part of the Collateral. If
any notice of a proposed sale or other disposition of all or any part of the
Collateral shall be required under applicable law, Secured Party shall give
Debtor at least 10 days prior notice of the time and place of any public sale
and of the time after which any private sale or other disposition is to be
made, which notice Debtor agrees is commercially reasonable. Secured Party
shall not be obligated to make any sale of Collateral if Secured Party shall
determine not to do so, regardless of the fact that notice of sale may have
been given. Secured Party may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
adjourned. Upon each public sale and, to the extent permitted by applicable
law, upon each private sale, Secured Party may purchase all or any of the
Collateral being sold, free from any equity, right of redemption, or other
claim or demand, and may make payment therefor by endorsement and application
(without recourse) of the Secured Obligations in lieu of cash as a credit on
account of the purchase price for such Collateral. The enumeration of the
rights and remedies of Secured Party in this Article IV is not intended to
be exhaustive and the exercise of any such rights or remedies shall not
preclude the exercise of any other rights or remedies, all of which shall be
cumulative.
(b) Secured Party shall incur no liability as a result of the
sale, lease, or other disposition of all or any part of the Collateral at any
private sale pursuant to this Section 4.1 conducted in a commercially
reasonable manner. Debtor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which all or any portion of
the Collateral may have been sold at such private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if Secured Party accepts the first
offer received and does not offer such Collateral to more than one offeree.
(c) Debtor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state or
foreign securities laws, Secured Party may be compelled, with respect to any
sale of all or any portion of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral (or any portion
thereof) for their own account, for investment, and not with a view to
distribution or sale. Debtor acknowledges that any such private sales may be
at prices and on terms less favorable to Secured Party than those obtainable
through a public sale without such restrictions, and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that Secured Party shall have no
obligation to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit the respective
Issuer of such Collateral to register it for public sale.
Section 4.2 Application of Proceeds 4.2 Application of
Proceeds . The proceeds from any sale or other disposition of Collateral by
Secured Party shall first be applied to any costs and expenses incurred by
Secured Party or any of Secured Party's agents or representatives in
connection with any sale thereof, with the balance, if any, of such proceeds
to be applied toward the payment of any Secured Obligations in any manner
deemed appropriate by Secured Party. Any deficiency will be paid to Secured
Party forthwith upon demand. Any surplus will be paid by Secured Party,
subject to the claims of third Persons, to Debtor.
ARTICLE V
GENERAL PROVISIONS
Section 5.1 Notices. All notices, requests, and other
communications to any party under this Agreement shall be made in accordance
with the provisions of the Asset Purchase Agreement.
Section 5.2 Expenses; Indemnification. Debtor shall pay, if an
Event of Default occurs, all reasonable out-of-pocket expenses incurred by
Secured Party, including reasonable fees and disbursements of counsel, in
connection with such Event of Default and collection and other enforcement
proceedings resulting therefrom. Debtor shall also indemnify Secured Party
and hold Secured Party harmless from and against any and all liabilities,
losses, damages, costs, and expenses of any kind (including the reasonable
fees and disbursements of counsel of Secured Party in connection with, or
arising out of or attributable to any investigative, administrative, or
judicial proceeding, whether or not Secured Party shall be designated a party
thereto), which may be incurred by Secured Party, directly or indirectly
relating to or arising out of this Agreement; provided that Secured Party
shall not have the right to be indemnified hereunder for Secured Party's own
gross negligence or willful misconduct.
Section 5.3 Counterparts; Telefacsimile Signatures. This Agreement
may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if all signatures were upon the same
instrument. Delivery of an executed counterpart of the signature page to this
Agreement by telefacsimile shall be effective as delivery of a manually
executed counterpart of this Agreement, and any party delivering such an
executed counterpart of the signature page to this Agreement by telefacsimile
to any other party shall thereafter also promptly deliver a manually executed
counterpart of this Agreement to such other party, provided that the failure
to deliver such manually executed counterpart shall not affect the validity,
enforceability, or binding effect of this Agreement.
Section 5.4 Survival. All representations, warranties and
agree-ments herein contained on the part of Debtor shall be continuing and
effective so long as any Secured Obligations remain outstanding.
Section 5.5 Severability of Provisions. In the event any one or
more of the provisions contained in this Agreement is held to be invalid,
illegal or unenforceable in any respect, then such provision shall be
ineffective only to the extent of such prohibition or invalidity, and the
validity, legal-ity, and enforceability of the remaining provi-sions contained
herein shall not in any way be affected or impaired thereby.
Section 5.6 Amendment and Waiver. This Agreement may not be
changed, modi-fied, amended, or terminated except by a writing duly exe-cuted
by Debtor and Secured Party.
Section 5.7 No Waiver. No failure to exercise and no delay in
exercising any right, power, or remedy hereunder shall impair any right,
power, or remedy which Secured Party may have, nor shall any such delay be
construed to be a waiver of any of such rights, powers, or remedies, or any
acqui-escence in any breach or default hereunder; nor shall any waiver of any
breach or default of Debtor hereunder be deemed a waiver of any default or
breach subsequently occurring. All rights and remedies granted to Secured
Party hereunder shall remain in full force and effect notwithstanding any
single or partial exercise of, or any discontinuance of action begun to
enforce, any such right or remedy. The rights and remedies specified herein
are cumulative and not exclusive of each other or of any rights or remedies
which Secured Party would otherwise have. Any waiver, permit, consent or
approval by Secured Party of any breach or default hereunder must be in
writing and shall be effective only to the extent set forth in such writing
and only as to that specific instance.
Section 5.8 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of Debtor and Secured Party and their
respec-tive successors and assigns (as permitted by the Asset Purchase
Agreement.
Section 5.9 Consent to Jurisdiction; Waiver of Jury Trial.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT OR RELATING TO ANY
OTHER DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH PARTY AGREES (I) TO
THE EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT SITTING IN DALLAS,
TEXAS OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS A LEGAL ACTION, IT
SHALL BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(C) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY LEGAL ACTION RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the dated first
written above.
DEBTOR: MONACO FINANCE, INC.,
a Colorado corporation
By:
Name: Irwin L. Sandler
Title: Executive Vice President
SECURED PARTY: PACIFIC SOUTHWEST BANK,
a federally chartered savings bank
By:
Name: Bobby Hashaway
Title: Executive Vice President
NAFCO HOLDING COMPANY, LLC,
a Delaware limited liability company
By:
Name: Robert Womack
Title: Chief Financial Officer
ADVANTAGE FUNDING GROUP, INC,
a Delaware corporation
By:
Name: Robert Womack
Title: Vice President
<PAGE>
Schedule 1
SCHEDULE OF COLLATERAL
Issuer: MF Receivables Corp. II, a Delaware corporation
Certificate Number: 1
Representing: 1,000 Shares of Common Stock
<PAGE>
EXHIBIT M-5
Form of Monaco/PSB Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
______________, 1998, is made by and between Monaco Finance, Inc., a Colorado
corporation (the "Company") and ______________________________ ("Pacific").
For good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties do hereby covenant and agree as follows:
Section 1. Definitions
The following terms when used in this Agreement shall have the following
meanings:
"Class A Common Shares" means the _____________ shares of Class A Common
Stock, $.01 par value, of the Company issued to Pacific on the date hereof.
At Pacific's request, the Company shall register the Class A Common Shares in
the name of a wholly owned subsidiary of Pacific. In such event, the term
"Pacific" shall include such wholly owned subsidiary.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities and Exchange Act of 1934, and the
rules and regulations promulgated thereunder, as amended.
"Registrable Securities" means (i) the Class A Common Shares and (ii) any
capital stock of the Company issued as a dividend or other distribution with
respect thereto, or in exchange for or in replacement of, the Class A Common
Shares.
"Securities Act" means the Securities Act of 1933, and the rules and
regulations promulgated thereunder, as amended.
Section 2. Request for Registration
(a) Pacific (so long as it or any of its affiliates own at least 25%
of the Registrable Securities) may request in a written notice that the
Company file a registration statement under the Securities Act covering the
registration of all or part of the Registrable Securities. Following receipt
of any notice under this Section 2(a) the Company shall use its best efforts
to cause to be registered under the Securities Act all Registrable Securities
that Pacific has requested be registered in accordance with the manner of
disposition specified in such notice by Pacific.
(b) If Pacific intends to have the Registrable Securities distributed
by means of an underwritten offering, then Pacific shall enter into an
underwriting agreement in customary form with the underwriter or underwriters.
An underwriter or underwriters shall be selected by Pacific and shall be
approved by the Company, which approval shall not be unreasonably withheld;
provided (i) that all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of Pacific, (ii) that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement shall be conditions precedent to the
obligations of Pacific, and (iii) that Pacific shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties to or agreements regarding
Pacific, the Registrable Securities and Pacific's intended method of
distribution and any other representations required by law or reasonably
required by the underwriter.
(c) The Company shall not be obligated to effect more than two
registrations pursuant to this Section 2; provided that a registration
requested pursuant to this Section 2 shall not be deemed to have been effected
for purposes of this Section 2 unless (i) it has been declared effective by
the Commission, (ii) it has remained effective for the period set forth in
Section 6(a), (iii) the offering of Registrable Securities pursuant to such
registration is not subject to any stop order, injunction or other order of
requirement of the Commission (other than any such stop order, injunction, or
other requirement of the Commission prompted by any act or omission of
Pacific).
(d) If the Board of Directors of the Company, in its good faith
judgment, determines that any registration of Registrable Securities should
not be made or continued due to a valid need not to disclose confidential
information or because it would materially interfere with any material
financing, acquisition, corporate reorganization or merger or other material
transaction involving the Company (collectively, a "Valid Business Reason"),
the Company may postpone filing a registration statement relating to a request
for registration under this Section 2 until such Valid Business Reason no
longer exists, but in no event for more than three months from the date of the
notice referred to below, and, in case any such registration statement has
been filed the Company may cause such registration statement to be withdrawn
and its effectiveness terminated or may postpone amending or supplementing
such registration statement; and the Company shall give written notice (a
"Delay Notice") of its determination to postpone or withdraw a registration
statement and of the fact that the Valid Business Reason for such postponement
or withdrawal no longer exists, in each case, promptly after the occurrence
thereof. Upon the request of Pacific, the Company will disclose to Pacific
the nature of such Valid Business Reason in reasonable detail; provided that
Pacific executes a confidentiality agreement reasonably satisfactory to the
Company; provided further that any such confidentiality agreement shall
terminate upon the earlier of the public disclosure of such Valid Business
Reason or three months from the date of such Delay Notice. Notwithstanding
the foregoing provisions of this subparagraph (d), no registration statement
filed and subsequently withdrawn by reason of any existing or anticipated
Valid Business Reason as hereinabove provided shall count as one of the two
registration statements referred to in the limitation in Section 2(c) and the
Company shall be entitled to serve only one Delay Notice (i) within any period
of 180 consecutive days, or (ii) with respect to any three consecutive
registrations requested pursuant to this Section 2 or Section 5.
(e) In the event that Pacific shall determine for any reason not to
proceed with a registration at any time before the registration statement has
been declared effective by the SEC, and (i) Pacific requests the Company to
withdraw such registration statement, if theretofore filed with the SEC, with
respect to the Registrable Securities covered thereby, or if the offering is
not consummated for any reason and (ii) Pacific agrees to bear its expenses
incurred in connection therewith and to reimburse the Company for the expenses
incurred by it attributable to the registration of such Registrable
Securities, then Pacific shall not be deemed to have exercised its right to
require the Company to register Registrable Securities pursuant to this
Section 2.
(f) Without the written consent of Pacific, neither the Company nor
any other holder of securities of the Company may include securities in a
registration pursuant to this Section 2 if in the good faith judgment of the
managing underwriter of such public offering the inclusion of such securities
would interfere with the successful marketing of the Registrable Securities or
require the exclusion of any portion of the Registrable Securities to be
registered.
Section 3. Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act on any form (other than Form S-4 or Form
S-8) that would permit the inclusion of the Registrable Securities in
connection with the proposed offer and sale for money of any of its securities
by it or any of its security holders, the Company will give written notice of
its determination to Pacific. Upon the written request of Pacific given
within 30 days after receipt of any such notice from the Company, the Company
will, except as herein provided, cause all such shares of Registrable
Securities for which Pacific has so requested registration, to be included in
such registration statement, all to the extent requisite to permit the sale or
other disposition by Pacific of the Registrable Securities to be so
registered; provided, however, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any such registration initiated by
it. If any registration pursuant to this Section 3 shall be underwritten in
whole or in part, the Company may require that the Registrable Securities
requested for inclusion pursuant to this Section be included in the
underwriting on the same terms and conditions as the securities otherwise
being sold through the underwriters. If, in the written opinion of the
managing underwriter, the total amount of securities to be so registered,
including the Registrable Securities, will exceed the maximum amount of the
Company's securities that can be marketed (a) at a price reasonably related to
the then current market value of such securities, or (b) without otherwise
materially and adversely affecting the entire offering, then the Company shall
include in such registration (i) first, all the securities the Company
proposes to sell for its own account or is required to register on behalf of
any third party exercising rights similar to those granted in Section 2(a) and
without having the adverse effect referred to above, and (ii) second, to the
extent that the number of securities which the Company proposes to sell for
its own account pursuant to this Section 3 or is required to registered on
behalf of any third party exercising rights similar to those granted in
Section 2(a) is less than the number of equity securities which the Company
has been advised can be sold in such offering without having the adverse
effect referred to above, all Registrable Securities requested to be included
in such registration by Pacific pursuant to this Section 3; provided that if
the number of Registrable Securities requested to be included in such
registration by Pacific pursuant to this Section 3, together with the number
of securities to be included in such registration pursuant to clause (i) of
this Section 3, exceeds the number which the Company has been advised can be
sold in such offering without having the adverse effect referred to above, the
number of such Registrable Securities requested to be included in such
registration by Pacific shall be limited to such extent.
Section 4. Registration on Form S-3. If at any time (a) Pacific
requests in writing that the Company file a registration statement on Form S-3
or any successor thereto for a public offering of all or any portion of the
Registrable Securities held by Pacific, the reasonably anticipated aggregate
price to the public of which would exceed $1,000,000, and (b) the Company is a
registrant entitled to use Form S-3 or any successor thereto, then the Company
shall use its best efforts to register as soon as practicable under the
Securities Act on Form S-3 or any successor thereto, for public sale in
accordance with the method of disposition specified in such request, the
Registrable Securities specified in such request. Whenever the Company is
required by this Section 4 to use its best efforts to effect the registration
of Registrable Securities, each of the limitations, procedures and
requirements of Section 2(b) and (d) shall apply to such registration;
provided, however, that there shall be no limitation on the number of
registrations on Form S-3 that may be requested and obtained under this
Section 4. The Company will use its best efforts to qualify and maintain its
qualification as a registrant entitled to use Form S-3 or any successor
thereto.
Section 5. Obligations of the Company. Whenever required under Section
2 or Section 4 to use its best efforts to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective for the period of
the distribution contemplated thereby determined as provided hereafter;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by such registration statement, and furnish to Pacific copies of any
such amendments and supplements prior to their being used or filed with the
Commission;
(c) furnish to Pacific such numbers of copies of the registration
statements and the prospectus included therein (including each preliminary
prospectus and any amendments or supplements thereto in conformity with the
requirements of the Securities Act) and such other documents and information
as Pacific may reasonably request and make available for inspection by the
parties referred to in Section 5(d) below such financial and other information
and books and records of the Company, and cause the officers, directors,
employees, counsel and independent certified public accountants of the Company
to respond to such inquiries, as shall be reasonably necessary, in the
judgment of the respective counsel referred to in such Section, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities
Act;
(d) provide (i) Pacific, (ii) the underwriters (which term, for
purposes of this Agreement, shall include a person deemed to be an underwriter
within the meaning of Section 2(11) of the Securities Act), if any, thereof,
(iii) the sales or placement agent, if any, therefor, (iv) counsel for such
underwriters or agent, and (v) not more than one counsel for Pacific the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment or supplement thereto;
(e) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such other securities
or blue sky laws of such jurisdictions within the United States and Puerto
Rico as shall be reasonably appropriate for the distribution of the
Registrable Securities covered by the registration statement; provided,
however, that the Company shall not be required in connection therewith or as
a condition thereto to qualify to do business in or to file a general consent
to service of process in any jurisdiction wherein it would not but for the
requirements of this paragraph (e) be obligated to do so; and provided
further, that the Company shall not be required to qualify such Registrable
Securities in any jurisdiction in which the securities regulatory authority
requires that Pacific submit its Registrable Securities to the terms,
provisions and restrictions of any escrow, lockup or similar agreement(s) for
consent to sell Registrable Securities in such jurisdiction unless Pacific
agrees to do so;
(f) promptly notify Pacific, the sales or placement agent, if any,
and the managing underwriter or underwriters, if any, and confirm such advice
in writing (i) when such registration statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective amendment
has been filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
comments by the Commission or by any Blue Sky securities commissioner or
regulator of any state with respect thereto or any request by the Commission
for amendments or supplements to such registration statement or prospectus or
for additional information, (iii) of the issuance by the Commission of any
stop order suspending the effectiveness of the registration statement or the
initiation or threatening of any proceedings for the purpose, (iv) if at any
time the representations and warranties of the Company contained in any
underwriting agreement or other customary agreement cease to be true and
correct in all material respects, or (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for the sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(g) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(h) promptly notify Pacific at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make, in light of the circumstances under which they were made, the
statements therein not misleading, and at the request of Pacific promptly
prepare and furnish to Pacific a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make, in light of
the circumstances under which they were made, the statements therein not
misleading;
(i) furnish, at the request of Pacific, if the method of distribution
is by means of an underwriting on the date that the Registrable Securities are
delivered to the underwriters for sale pursuant to such registration or if
such Registrable Securities are not being sold through underwriters, on the
date that the registration statement with respect to such Registrable
Securities becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and if such Registrable
Securities are not being sold through underwriters, then to Pacific as to such
matters as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction; and (2) letters dated
such date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the underwriters, if any, and
if such Registrable Securities are not being sold through underwriters, then
to Pacific, and if such accountants refuse to deliver such letters to Pacific,
then to the Company (i) stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the opinion
of such accountants, the financial statements and other financial data of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (ii)
covering such other financial matters (including information as to the period
ending not more than five (5) business days prior to the date of such letters)
with respect to the registration in respect of which such letter is being
given as such underwriters or Pacific, as the case may be, may reasonably
request and as would be customary in such a transaction;
(j) enter into customary agreements (including if the method of
distribution is by means of an underwriting, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities
to be so included in the registration statement;
(k) use its best efforts to obtain the consent or approval of each
governmental agency or authority, whether federal, state or local, which may
be required to effect registration or the offering or sale in connection
therewith or to enable Pacific to offer, or to consummate the disposition of,
their Registrable Securities;
(l) use its best efforts to list the Registrable Securities covered
by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed.
For purposes of Sections 5(a) and 5(b), and with respect to (i) registration
required pursuant to Section 2, (A) the period of distribution of Registrable
Securities in a firm commitment underwritten public offering shall be deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it and (B) the period of distribution of Registrable
Securities in any other registration shall be deemed to extend until the
earlier of the sale of all Registrable Securities covered thereby and six (6)
months after the effective date thereof, and (ii) registrations required
pursuant to Section 4, the period of distribution of Registrable Securities in
any registration (firm commitment underwritten or otherwise) shall be deemed
to extend until the earlier of the sale of all Registrable Securities covered
thereby and three (3) months after the effective date thereof.
Pacific agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (h) of this Section 5,
Pacific will forthwith discontinue disposition of the Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until Pacific's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (h) of this Section 5, and, if so directed
by the Company, Pacific will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in Pacific's possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice; provided, however, that any period of time during
which Pacific must discontinue disposition of the Registrable Securities shall
not be included in the determination of a period of distribution for purposes
of Sections 5(a) and 5(b).
Section 6. Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Agreement,
that Pacific shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition
of such securities as the Company shall reasonably request and as shall be
required in connection with the action to be taken by the Company.
Section 7. Expenses of Registration. All expenses incurred in
connection with the first registration effected pursuant to Section 2, and
each registration pursuant to Section 3 and Section 4 of this Agreement,
excluding underwriter's discounts and commissions, but including without
limitation all registration, filing and qualification fees, word processing,
duplicating, printers' and accounting fees (including the expense of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance), fees of the National Association of Securities
Dealers, Inc. (the "NASD") or listing fees, messenger and deliver expenses,
all fees and expenses of complying with state securities or blue sky laws, and
fees and disbursements of counsel for the Company and Pacific, shall be paid
by the Company; provided, however, that if a registration request pursuant to
Section 2 of this Agreement is subsequently withdrawn at the request of
Pacific, Pacific shall bear such expenses; and provided further, that if a
registration request pursuant to Section 4 of this Agreement is subsequently
withdrawn at the request of Pacific, the Company shall not be required to pay
any expenses of such registration proceeding, and Pacific shall bear such
expenses. Pacific shall bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection
with any registration, filings, and qualifications made pursuant to this
Agreement. In addition, Pacific shall pay all expenses incurred in connection
with the second registration effected pursuant to Section 2.
Section 8. Underwriting Requirements In connection with any
underwritten offering, the Company shall not be required under Section 3 to
include Registrable Securities in such underwritten offering, unless Pacific
accepts the terms of the underwriting of such offering that have been
reasonably agreed upon between the Company and the underwriters selected by
the Company.
Section 9. Rule 144 and Rule 144A Information. With a view to making
available the benefits of certain rules and regulations of the Commission
which may at any time permit the sale of the Registrable Securities to the
public without registration, at all times, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use its best efforts to file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities
Act and the Exchange Act; and
(iii) furnish to Pacific forthwith upon request a written statement by
the Company as to its compliance with the reporting requirements of such Rule
144 and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company as Pacific may reasonably request in availing itself
of any rule or regulation of the Commission allowing Pacific to sell any
Registrable Security without registration.
Notwithstanding anything contained in this Section 9, the Company may cease to
file reports with the Commission under Section 12 of the Exchange Act if it
then is permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder.
Section 10. Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) The Company shall indemnify and hold harmless Pacific, its
directors and officers, each person who participates in the offering of such
Registrable Securities, including underwriters (as defined in the Securities
Act), and each person, if any, who controls Pacific or participating person
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) to which they may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
proceedings in respect thereof) arise out of or are based on any untrue or
alleged untrue statement of a material fact contained in such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto or arise out of or are based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however,
that the indemnity agreement contained in this Section 10(a) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld); provided, further, that
the Company shall not be liable to Pacific, its directors and officers,
participating person or controlling person in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by Pacific, its
directors and officers, participating person or controlling person; and
provided, further, that the Company will not be liable to Pacific, its
directors and officers, participating person or controlling person in any such
case for any such loss, claim, damage, liability or action to the extent that
it arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement
or preliminary prospectus that is corrected in the final registration
statement and prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage, liability or action purchased
Registrable Securities but was not sent or given a copy of the final
prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Registrable Securities to such person in any
case where such delivery of the final registration statement and prospectus
(as amended or supplemented) is required by the Securities Act and such final
prospectus (as amended or supplemented) was previously delivered in a timely
manner to Pacific by the Company. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of Pacific,
its directors and officers, participating person or controlling person, and
shall survive the transfer of such securities by Pacific.
(b) Pacific shall indemnify and hold harmless the Company, each of
its directors and officers, each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, and each agent and any underwriter for the Company (within
the meaning of the Securities Act) to the same extent as the foregoing
indemnity from the Company to Pacific but only with reference to written
information relating to Pacific furnished to the Company expressly for use in
connection with such registration; provided, however, that the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Pacific (which consent shall not
be unreasonably withheld); and provided further, that the liability of Pacific
hereunder shall be limited to the proportion of any such loss, claim, damage,
liability or expense that is equal to the proportion that the net proceeds
from the sale of the shares sold by Pacific under such registration statement
bears to the total net proceeds from the sale of all securities sold
thereunder, but not in any event to exceed the net proceeds actually received
by Pacific from the sale of Registrable Securities by such registration
statement.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the name parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to the actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by
Pacific, in the case of parties indemnified pursuant to the second preceding
paragraph, and by the Company in the case of the parties indemnified pursuant
to the first preceding paragraph. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reasons of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in the first or second
paragraph of this Section 10 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified party in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of material or
omission or alleged omission to state a material fact, has been made by, or
relates to information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable by
a party as a result of the losses, claims, damages or liabilities referred to
above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 10(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 10, Pacific shall
not be required to contribute any amount in excess of the amount of net
proceeds received by Pacific from the sale of Registrable Securities covered
by such registration statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 10(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 10
are not exclusive and shall not limit any right or remedies that may otherwise
be available to any indemnified party at law or in equity.
Section 11. Transfer of Registration Rights.
The registration rights of Pacific under this Agreement may be
transferred to (a) any transferee of such Registrable Securities who acquires
all Registrable Securities of Pacific or (b) any affiliate of Pacific.
Section 12. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing and shall
be personally delivered, transmitted via facsimile or overnight courier
service or mailed first-class postage prepaid, registered or certified mail,
(a) if to Pacific:
_____________________________
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter, Chief General Counsel
Facsimile No. (713) 871-0155
(b) if to Company:
Monaco Finance, Inc.
370 Seventeenth Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin L. Sandler, Executive Vice President
Facsimile No. (303) 405-6496
and such notices and other communications shall for all purposes of this
Agreement be treated as being effective or having been given on the date when
personally delivered or when transmitted by facsimile (if confirmation of
facsimile receipt has been given), on the date after being deposited with an
overnight courier service, or, if sent by mail, four days after deposit in the
United States mail, postage prepaid. Any party may change its address for
notice by notifying the other party pursuant to the above notice provisions.
Section 13. Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered will be deemed to be an original but
all of which together will constitute one and the same instrument.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard
to the application of choice of law principles, except to the extent that such
laws are superseded by federal law.
(c) Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
(d) Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Pacific and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
(e) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
(f) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
IN WITNESS WHEREOF, this REGISTRATION RIGHTS AGREEMENT has been signed
and delivered by the parties as of the date first above written.
MONACO FINANCE, INC.,
a Colorado corporation
By:
Name:
Title:
___________________________________
By:
Name:
Title:
<PAGE>
EXHIBIT N-1
Form of NAFCO Loan Purchase Agreement
SEE EXHIBIT 10.66 FILED HEREWITH.
<PAGE>
EXHIBIT 3.5(C)
Form of Advantage Servicing Agreement
SEE EXHIBIT 10.67 FILED HEREWITH.
<PAGE>
EXHIBIT 3.5(D)
Form of NAFCO Servicing Agreement
SEE EXHIBIT 10.68 FILED HEREWITH.
<PAGE>
SCHEDULE A
Schedule of NAFCO Loan Originators
January 8, 1998
SCHEDULE OMITTED
<PAGE>
SCHEDULE B
Schedule of Selected NADA Associations
SCHEDULE OMITTED
<PAGE>
SCHEDULE R-1
Schedule of Restricted Warrants
SCHEDULE OMITTED
<PAGE>
SCHEDULE U-1
Schedule of Unrestricted Warrants as of the Closing Date
SCHEDULE OMITTED
<PAGE>
SCHEDULE 2.1(A)
Schedule of NAFCO Loans
SCHEDULE OMITTED
<PAGE>
SCHEDULE 2.1(B)
Schedule of Advantage Loans
SCHEDULE OMITTED
<PAGE>
EXHIBIT 10. 64
LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement (this "Agreement") is entered into as of
January 8, 1998 among ADVANTAGE FUNDING GROUP, INC., a Delaware corporation
(the "Seller"), MONACO FINANCE, INC., a Colorado corporation (the
"Purchaser"), PACIFIC USA HOLDINGS CORP., a Texas corporation ("Pacific USA")
and PACIFIC SOUTHWEST BANK, a federal savings bank ("PSB").
RECITALS:
A. The Seller owns certain consumer loans secured by new and used
automobiles and light trucks, including the Auto Loans (as defined below).
B. This Agreement is entered into pursuant to that certain Asset
Purchase Agreement dated as of September 30, 1997, as amended and restated on
January 8, 1998 (the "Asset Purchase Agreement"), among Purchaser, Seller,
NAFCO Holding Company, LLC, a Delaware limited liability company, Pacific USA
and PSB.
C. Subject to the terms hereof and of the Asset Purchase Agreement,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, the Auto Loans (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:
Section 1. Definitions. Except as otherwise expressly provided
herein or unless the context otherwise requires (i) capitalized terms used but
not defined herein shall have the meanings assigned to them in the Asset
Purchase Agreement and (ii) the following terms shall have the respective
meanings specified in this Section 1 for all purposes of this Agreement, and
the definitions of such terms are equally applicable to the singular and
plural forms of such terms and to the masculine, feminine and neuter genders
of such terms.
"Adverse Claim" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect of a lien or security interest
upon or with respect to any of the properties of the Seller other than in
favor of the Purchaser with respect to this Agreement.
"Application for Certificate of Title" means with regard to each
Automobile for which a Certificate of Title has not been issued naming Seller
(or its designee) as secured party, evidence that an application for a
Certificate of Title naming Seller (or its designee) as secured party has been
submitted with the appropriate authority.
"Asset Purchase Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Auto Loans" means the consumer Automobile contracts, including
installment sales contracts, arising from the sale of Automobiles, listed on
the Auto Loan Schedule, having an aggregate outstanding principal balance as
of the Cut-Off Date of $21,903,500.00.
"Auto Loan File" means with respect to any Auto Loan, a file containing
the original manually executed Auto Loan, the original credit application
executed by the Obligor thereunder, the related Certificate of Title or
Application for Certificate of Title, the related agreement to provide
insurance, all other documents required by the Auto Loan Funding Checklist (to
the extent contained therein), and all other documents Seller keeps on file
with respect to such Auto Loan in accordance with its customary procedures.
"Auto Loan Funding Checklist" means the checklist of all required
documentation relating to any Auto Loan, which checklist is attached hereto as
Exhibit "A".
"Auto Loan Schedule" means the list of Auto Loans, in form and substance
acceptable to each of Seller and Purchaser, attached hereto as Schedule A,
which schedule shall include the following with respect to each Auto Loan: (a)
a number identifying the Auto Loan; (b) the outstanding principal balance as
of the Cut-off Date; (c) all accrued and unpaid interest on the outstanding
principal balance as of the Cut-off Date (as well as the amount of time during
which such interest accrued); (d) the name of the Obligor; and (e) to the
extent the servicer can identify from its system, the name of the Originator
and the underwriting program such Auto Loan was originated under.
"Automobiles" means new and used automobiles and light trucks (i.e.,
light duty trucks with a maximum load capacity of 2,000 pounds), the purchase
of which the related Obligors financed by Auto Loans.
"Certificate of Title" means with regard to each Automobile, the original
certificate of title relating thereto, which names the related Obligor as the
owner of such Automobile, the original certificate of title relating thereto,
which names the related Obligor as the owner of such Automobile and Seller (or
its designee) as secured party.
"Cut-Off Date" means December 19, 1997.
"Dealer" means an automobile dealer that has entered into a Dealer
Agreement with the applicable Originator with respect to, among other things,
the origination of Auto Loans.
"Dealer Agreement" means the agreement between the applicable Originator
and a Dealer with respect to the origination of an Auto Loan.
"Interim Servicing Agreement" means the interim servicing agreement of
even date herewith between Seller and Purchaser.
"Obligor" means, with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
"Originator" means the originator of an Auto Loan.
"Originator Agreement" means the Loan Sale Agreement pursuant to which
Seller originally acquired an Auto Loan from the related Originator.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, governmental authority or any other entity of
whatever nature.
"Purchase Price" means, with respect to any Auto Loan and the Related
Loan Assets, an amount equal to the purchase price paid by Purchaser to Seller
under Section 2.2(b) of the Asset Purchase Agreement.
"Related Loan Assets" with respect to an Auto Loan includes, without
limitation, (a) all security interests, or liens, and property subject thereto
from time to time purporting to secure payment by the Obligor thereunder, (b)
all guarantees, indemnities and warranties, insurance policies, certificates
of title and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Auto Loan, excluding the
Seller's rights under the related Originator Agreement, it being understood
that certain of the Seller's rights and obligations under certain of its
Originator Agreements are being assigned to the Purchaser pursuant to the
Asset Purchase Agreement and that certain Assignment and Assumption Agreement
(as defined in the Asset Purchase Agreement) dated of even date herewith, (c)
all collections and records with respect to the foregoing, and (d) all
proceeds of any of the foregoing.
"Repurchase Price" means, with respect to any Auto Loan and the Related
Loan Assets which the Seller is obligated to repurchase pursuant to Section 4,
an amount (to be payable as set forth in Section 4(e) hereof) equal to 96% of
the principal balance of such Auto Loan as of the Cut-Off Date, less all
payments received by the Servicer on behalf of the Purchaser and applied by
the Servicer to reduce the principal balance of such Auto Loan, plus (b) the
lesser of (x) accrued and unpaid interest on such Auto Loan to the date of
repurchase and (y) 75 days of accrued and unpaid interest on such Auto Loan.
"Seller's knowledge" or "Seller's actual knowledge" or "to the best of
Seller's knowledge" or any other similar phrase means that actual awareness of
a particular fact or other matter that an individual serving as a director or
officer of Seller has.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
Section 2. Sale and Conveyance of Auto Loans.
(a) Subject to paragraph (c) below, the other terms and provisions of
this Agreement and the Asset Purchase Agreement, the Seller, effective as of
the Closing Date does hereby sell, transfer, assign, set over and otherwise
convey to the Purchaser without recourse but subject to the terms of this
Agreement, all of the right, title and interest of the Seller in and to the
Auto Loans and the Related Loan Assets, on a servicing released basis. Seller
agrees that substantially all of the Auto Loans sold, transferred, assigned,
and conveyed to Purchaser hereunder shall satisfy the criteria set forth in
Section 5(b) and (c) hereof and that substantially all of the related Loan
Assets acquired by Purchaser shall conform with all of the requirements
hereof. The Purchaser acknowledges that on or prior to the date hereof. On
the Closing Date, Seller shall deliver the Auto Loan Files related to the Auto
Loans to the Purchaser or the Purchaser's designee.
(b) The Purchase Price for the Auto Loans and the Related Loan Assets
shall be as set forth in and payable as provided in the Asset Purchase
Agreement.
(c) The Seller shall be entitled to receive all payments of principal
and interest received on the Auto Loans on or prior to the Cut-Off Date. The
Purchaser shall be entitled to all payments of principal and interest received
on the Auto Loans after the Cut-Off Date. The principal balance of each Auto
Loan as of the Cut-Off Date shall be determined after deduction of all
payments of principal received with respect to such Loan on or before the
close of business on the Cut-Off Date.
(d) Following payment of the Purchase Price by the Purchaser to the
Seller, the ownership of each Auto Loan and the Related Assets shall be vested
in the Purchaser, and the Seller shall not take any action inconsistent with
such ownership and shall not claim any ownership interest in any such Auto
Loan or such Related Loan Assets.
(e) From the date of this Agreement, the Seller shall indicate in its
records that each Auto Loan and the Related Loan Assets has been sold to the
Purchaser.
(f) In connection with the transfer contemplated by this Agreement,
on or before the Closing Date, Seller shall deliver (or shall have delivered)
to Purchaser the original Auto Loans, the Auto Loan Files (to the extent then
available), intervening assignments (if any) and intervening powers of
attorney (if any) related thereto, and a power of attorney in the form
attached hereto as Exhibit "B", all other documents (to the extent then
available) specified on the Auto Loan Funding Checklist, the Certificates of
Title (or, to the extent originals thereof are not provided by a particular
State, copies thereof); provided that, if a Certificate of Title with
respect to any Automobile is not available on the Closing Date, then Seller
shall deliver to Purchaser an Application for Certificate of Title with
respect to such Automobile on such date. Subject to Section 4, Seller
shall, on the Closing Date to the extent practicable, and, otherwise, as soon
as possible, deliver to Purchaser all other documents necessary to reflect
Norwest Bank Minnesota, National Association, Custodian, as Purchaser's
designee, as the lienholder on all Certificates of Title; in connection
therewith, Purchaser and Seller acknowledge and agree that: (i) in certain
States, it is necessary for Seller to obtain the original Certificate of Title
from the relevant Obligor or to obtain such Obligor's consent (by way of such
Obligor's signature) to the retitling of the relevant Automobile; (ii) such
obligations are solely those of Seller and are to be performed by Seller at
its sole expense; provided that Purchaser has agreed to assist Seller, at
Seller's sole expense, in obtaining such original Certificates of Title or
consents, as the case may be; and (iii) the failure of Seller, notwithstanding
Purchaser's agreement to assist Seller pursuant to the immediately preceding
clause (ii), to obtain from any such Obligor the original Certificate of
Title or consent, as the case may be, shall subject Seller to the repurchase
requirements of Section 4 as Purchaser's sole remedy. In addition, Seller
agrees to record and file immediately after the Closing Date, at its own
expense, financing statements with respect to the Related Loan Assets, meeting
the requirements of applicable law.
(g) Any action required or permitted to be taken by the Purchaser in
furtherance of its purchase of the Auto Loans, including enforcement of its
rights and receipt of documents with respect thereto, may be delegated by it
to one or more agents (including a servicer) designated by the Purchaser in
writing to the Seller.
Section 3. Intended Characterization. It is the intention of the
parties hereto that the transfer of the Auto Loans and the Related Loan Assets
made hereunder (the "Transfer") shall constitute a purchase and sale and not a
loan or financing. If, however, the Transfer is deemed for any reason to be a
secured financing, Seller shall be deemed hereunder to have granted to
Purchaser, and Seller does hereby grant to Purchaser, a first priority
security interest in all of the Auto Loans and the Related Loan Assets (except
with respect to any Auto Loans repurchased in accordance with the terms
hereof). For purposes of such grant, this Agreement shall constitute a
security agreement under applicable law.
Section 4. Repurchase of Auto Loans.
(a) If Seller is notified by Purchaser within ninety (90) days
following the Closing Date that any material document relating to an Auto Loan
is missing or defective (e.g., mutilated, damaged, defaced, incomplete,
improperly dated, clearly forged, or otherwise physically altered) in any
material respect or that any document set forth on the Auto Loan Funding
Checklist is not in the relevant Auto Loan File, then Seller shall correct or
cure such omission, defect, or other irregularity within 30 days of the date
on which Seller was notified by Purchaser of such condition. If Seller fails
to correct or cure such condition within such time period, then the Seller
shall repurchase, on or before the date of the expiration of such cure period,
such Auto Loan and the Related Loan Assets from Purchaser by paying the
applicable Repurchase Price to Purchaser.
(b) If Purchaser does not receive certificates of title naming
Norwest Bank Minnesota, National Association, Custodian, as lienholder with
respect to any Automobile the subject of an Auto Loan within 90 days following
the Closing Date, then Purchaser shall inform Seller within 5 business days
following such 90th day. If Seller has not provided Purchaser with a proper
reliened certificate of title with respect to such Auto Loan on or before the
date which is 120 days following the Closing Date, then the Seller shall
repurchase, on or before such 120th day, such Auto Loan and the other Loan
Assets related thereto from Purchaser in accordance with Section 4(e).
(c) If Seller or Purchaser discovers the breach of any
representations or warranties set forth in Section 5(b) or (c) that materially
and adversely affects the value of any Auto Loan or the interest of Purchaser
in any Auto Loan, then the party discovering such breach or condition shall
give prompt written notice to the other party and Seller shall, within 30 days
from the date which is the earlier of the date on which Seller was notified
of, or otherwise discovered, such breach or condition, cure such breach or
condition. If Seller fails to cure such breach or condition in the applicable
time period, then the Seller shall repurchase, on or before the expiration of
such cure period, the relevant Auto Loan and the Related Loan Assets from
Purchaser by paying the applicable Repurchase Price to Purchaser; provided,
that any repurchase required as a result of a breach of Section 5(c) shall be
limited to a repurchase of a sufficient number of non-qualifying loans
necessary to make the representation true as of the Cut-Off Date.
(d) If Seller fails to perform its repurchase obligation under any of
paragraphs (a) through (c) above, PSB shall (and if PSB fails to, Pacific USA
shall), no later than seven (7) business days after its receipt of a demand
therefor from Purchaser, perform such obligation by paying the applicable cash
portion of the Repurchase Price to Purchaser by wire transfer of immediately
available funds.
(e) If the Seller (or PSB or Pacific USA) must repurchase an Auto
Loan pursuant to this Section, then the Seller (or PSB or Pacific USA as the
case may be) shall pay the applicable Repurchase Price to Purchaser by a
combination (i) wire transfer of immediately available funds and (ii) by
delivering to Purchaser shares of Preferred Stock of a value equivalent to six
percent (6%) of the principal portion of the Repurchase Price, each share to
have a deemed value of $2.00 per share. It is agreed that the non-cash
portion of the Repurchase Price for Auto Loans repurchased during each
six-month period following the date hereof, will be delivered within thirty
(30) days following each such six-month period and Purchaser shall cooperate
to the extent required to reissue certificates of Preferred Stock to Seller
(or its designee) upon surrender of a certificate or certificates representing
more shares than required to pay the non-cash portion of the Repurchase Price
during such six-month period.
(f) With respect to Seller's obligations under paragraphs (a) and (c)
and PSB's and Pacific USA's obligations under paragraph (d) with respect to
such paragraphs, it shall be a condition to any such obligation that Purchaser
shall have used reasonable efforts to pursue available remedies against the
related Originator under the related Originator Agreement with respect to the
applicable Auto Loan.
(g) Upon the repurchase of an Auto Loan by Seller, PSB or Pacific
USA under this Section 4, Purchaser or its assignee shall sell, assign,
transfer, convey and deliver, but without representation or warranty (except
as expressly set forth herein), the relevant Auto Loan, the Related Loan
Assets related thereto, and all of Purchaser's rights under the related
Origination Agreement with respect to such Auto Loan (together with any
accessions thereto made by Purchaser) to Seller, PSB or Pacific USA, as
applicable (or its designee). Purchaser's representations and warranties
shall be limited to the following: Purchaser has not transferred its interest
in the Auto Loan to any Person (other than as security pursuant to financing
for the purchase, which such security interest shall be released upon payment
of the Repurchase Price); Purchaser has full right to transfer the Auto Loan
and Related Loan Assets to Seller; and such Auto Loan and the Related Loan
Assets are free and clear of any Adverse Claim created by Purchaser.
Section 5. Representations, Warranties and Covenants of the Seller,
PSB and Pacific USA.
(a) The Seller hereby represents and warrants to the Purchaser, as of
the date hereof, as follows:
(i) Organization and Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and each other State where the nature of its business requires it
to qualify, except to the extent that the failure to so qualify would not in
the aggregate materially adversely affect the ability of Seller to perform its
obligations hereunder.
(ii) Authorization. Seller has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by Seller by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to creditors'
rights generally and (B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of Seller, or any indenture, agreement, mortgage, deed of
trust or other instrument to which Seller is a party or by which it is bound,
or in the creation or imposition of any lien upon any of its properties
pursuant to the terms of such indenture, agreement, mortgage, deed of trust
or other such instrument, or violate any law, or any order, rule or regulation
applicable to Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Seller or any of its properties.
(v) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(vi) Principal Place of Business. The principal place of business and
chief executive office of the Seller are located at the address of the Seller
set forth in Section 8 of this Agreement and, there are now no, and during the
past four months there have not been, any other locations where the Seller is
located (as that term is used in the Uniform Commercial Code in effect in the
State of Texas) except that, with respect to such changes occurring after the
date of this Agreement, as shall have been specifically disclosed to the
Purchaser in writing.
(vii) Legal Name. The legal name of the Seller is as set forth at the
beginning of this Agreement and the Seller has not changed its name in the
last six years, and during such period, the Seller did not use, nor does the
Seller now use, any trade names, fictitious names, assumed names or "doing
business as" names except that, with respect to such changes occurring after
the date of this Agreement, as shall have been specifically disclosed to the
Purchaser in writing.
(viii) Tax and Accounting. For federal income tax, reporting,
regulatory and accounting purposes, the Seller will treat the sale of each
Auto Loan sold pursuant to this Agreement as a sale, or absolute assignment,
of its full right, title and ownership interest in such Auto Loan to the
Purchaser, and the Seller has not and will not account for or treat the
transactions contemplated by this Agreement in any other manner.
(b) The Seller represents and warrants to the Purchaser with respect
to each Auto Loan sold pursuant to this Agreement, as of the date hereof, as
follows:
(i) to Seller's knowledge, Originator verified all of the information
customarily verified in the consumer finance industry which is contained in
the Auto Loan File relating to such Auto Loan (including the Automobile
description, the Obligor's payment history, the Obligor's employment history,
the Obligor's income, the Obligor's residence, and the existence of automobile
insurance at the time of the origination of such Auto Loan);
(ii) such Auto Loan includes either (A) a validly perfected first priority
security interest in the Automobile in favor of the Purchaser as secured party
which has not been released from such lien in whole or in part or (B) copies
of the documentation (as filed with the appropriate governmental authority)
necessary to obtain such first priority perfected security interest; at the
time of the origination of such Auto Loan, the related Automobile was covered
by a comprehensive and collision insurance policy (1) in an amount at least
equal to the lesser of (a) the actual cash value of such Automobile, or (b)
the unpaid balance owing on such Auto Loan and (b) insuring against loss and
damage due to fire, theft, transportation, collision and other risks generally
covered by comprehensive and collision coverage;
(iii) such Auto Loan has not been satisfied, subordinated or rescinded;
and no provision of the Auto Loan or any Related Loan Asset has been waived,
altered or modified in any respect, except by instruments or documents
included in the related Loan File;
(iv) such Auto Loan is not and will not be subject to any right of
rescission, set-off, recoupment, counterclaim or defense, whether arising out
of transactions concerning the Auto Loan between the Obligor and the Seller,
or to Seller's actual knowledge, Obligor and the Dealer, the Obligor and the
Originator or otherwise; and no such right has been asserted against Seller
with respect thereto;
(v) immediately prior to assigning such Auto Loan and the Related Loan
Assets to the Purchaser, the Seller was the sole owner and had full right to
transfer the Auto Loan and the Related Loan Assets to the Purchaser; and such
Auto Loan and the Related Loan Assets was free and clear of any Adverse Claim;
(vi) such Auto Loan is not in monetary default for a period in excess of
59 days, and, to the best of Seller's knowledge, other than with respect to
the maintenance of insurance, there is no other default, breach, violation, or
event permitting acceleration under the Auto Loan or repossession of the
related Automobile;
(vii) the contractual documents contained in the Auto Loan File constitute
the entire agreement with respect to the Auto Loan and the Related Loan Assets
between (A) to Seller's actual knowledge, the Obligor and the Dealer and (B)
the Obligor and the Seller;
(viii) to Seller's actual knowledge, the down payment described in the
Loan File was paid to the Dealer in the manner stated in the Loan File, the
proceeds thereof were fully disbursed, there is no requirement for further
advances thereunder; and all fees and expenses in connection therewith have
been paid;
(ix) to the best of Seller's knowledge, the Automobile secured by the
Auto Loan has been delivered to and accepted by the Obligor;
(x) such Auto Loan is denominated and payable in United States dollars;
(xi) the documents evidencing the Auto Loan (A) constitute the legal,
valid and binding obligations of the Obligor thereunder enforceable against
the Obligor in accordance with their respective provisions (except as may be
limited by laws affecting creditors' rights generally), (B) the Auto Loan
contains enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the collateral for the
benefit of the security afforded thereby and (C) do not limit the personal
liability of the Obligor thereof;
(xii) Seller has no actual knowledge that any party to such Auto Loan did
not have the capacity to execute the Auto Loan and the signature of the
Obligor matches that appearing on the Obligor's driver's license forwarded by
the Dealer;
(xiii) such Auto Loan was acquired by the Seller in the ordinary course of
its business and to Seller's actual knowledge such Auto Loan was originated by
the related Dealer in the ordinary course of its business;
(xiv) to Seller's actual knowledge, all amounts due by the Originator to
the applicable Dealer with respect to a Auto Loan have been paid in full to
such Dealer on a timely basis and Seller has, with respect to such Auto Loan
(but only to the extent not repurchased by Seller pursuant to Section 4), no
outstanding claim against any third party relating to such Auto Loan;
(xv) to Seller's actual knowledge, a Dealer Agreement between the
Originator and the Dealer selling the Automobile purchased pursuant to the
Auto Loan is in effect and includes, but is not limited to, a provision
whereby the Dealer warrants title to the Automobile and indemnifies the
Originator against fraud and misrepresentation by the Dealer and its employees
with regard to the Auto Loan sold hereunder; and the Originator's rights
thereunder have been validly assigned from the Originator to the Seller and
from the Seller to the Purchaser and are enforceable against the Dealer by the
Purchaser, along with any other rights of recourse which Originator or the
Seller has against the Dealer, without prejudice to any rights the Purchaser
may have against the Seller;
(xvi) to Seller's actual knowledge, the Automobile was purchased by the
Obligor from a Dealer (A) duly licensed by and authorized to sell Automobiles
by governmental authorities and the other appropriate entities as applicable,
and (B) as to which the Originator had not received notice from the Seller
prior to the related purchase date by Seller that such Dealer is an Ineligible
Dealer (as such term is defined in the related Originator Agreement), and the
Auto Loan was acquired by the Originator or Seller in a transaction that was
not an extension of financing to the related Dealer but was a transaction
constituting a "true sale" under applicable state law;
(xvii) the Auto Loan was sold to the Originator and by the Originator to
Seller without any conduct constituting fraud or misrepresentation on the part
of the Seller and, to Seller's actual knowledge, the Originator, and the
Seller has no knowledge of any fact which leads it to believe such Auto Loan
would not be paid in full when due;
(xviii) except as to any requirement that Purchaser be licensed or
registered in the appropriate jurisdiction, or because of any action or
inaction by, or status of, or order applicable to, Purchaser, such Auto Loan
was not originated in and is not subject to the laws of any jurisdiction, the
laws of which would make the transfer of the Auto Loan to the Purchaser
unlawful;
(xix) such Auto Loan and the Related Loan Assets do not (A) violate or
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating
to usury, consumer protection, truth-in-lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy) or (B) impose any liability or obligation of the Dealer or the Seller
on the Purchaser with respect to such Auto Loan or the Related Loan Assets;
(xx) there is no procedure or investigation pending or, to Seller's actual
knowledge, threatened before any governmental authority (A) asserting the
invalidity of such Auto Loan or the Related Loan Assets, (B) asserting the
bankruptcy or insolvency of the related Obligor, (C) seeking the payment of
such Auto Loan or (D) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of such Auto
Loan or the Related Loan Assets or the ability of the Seller to perform its
Obligations hereunder;
(xxi) the Seller has duly fulfilled all obligations on its part to be
fulfilled under or in connection with the Auto Loan and the Related Loan
Assets and has done nothing to impair the rights of the Purchaser in the Auto
Loan or the Related Loan Assets; by way of illustration and not by way of
limitation, the Seller has paid in full all taxes and other charges payable in
connection with the Auto Loan and the transfer of the Auto Loan to the
Purchaser, which could impair or become a lien prior to the Purchaser's
interest in such Auto Loan;
(xxii) as of the Closing Date, the Seller has obtained acknowledgment
copies of proper financing statements (on Forms UCC-3), if any, necessary to
release all security interests and other rights of any Person (other than
Purchaser) in any Auto Loan and the Related Loan Assets previously granted by
the Seller, including, without limitation, all such releases specified by the
Purchaser prior to the date hereof;
(xxiii) the current servicing agreement covering the Auto Loans requires
the Servicer to conduct its servicing operations in the same manner, and with
the same care, skill, prudence and diligence with which it services and
administers auto loans of similar credit quality for other portfolios, giving
due consideration to customary and usual standards of practice of prudent
institutional automobile loan services, and in accordance with all applicable
laws and regulations;
(xxiv) each Auto Loan complied with the underwriting criteria contained in
the Originator Agreement under which the Seller acquired such Auto Loan;
(xxv) this Agreement constitutes a valid transfer, assignment, set-over
and conveyance to the Purchaser of all right, title and interest of the Seller
in and to the Auto Loan sold hereunder now existing and hereafter created;
(xxvi) Seller (A) is not in violation of any laws, ordinances,
governmental rules, or regulations to which it is subject, and (B) is not in
violation of any term of any agreement, charter instrument, bylaw, or
instrument to which it is a party or by which it may be bound, which violation
or failure would materially adversely affect any Auto Loan or the Related Loan
Assets or Seller's ability to perform its obligations hereunder; and
(xxvii) there is only one original of the retail installment sale contract
or promissory note and security agreement that would constitute "chattel
paper" for purposes of the UCC in effect evidencing such Auto Loan, such
original has been delivered to Purchaser, and there are no custodial
agreements in effect that would adversely affect the ability of Purchaser to
maintain possession thereof pursuant to the terms hereof.
(c) The Seller represents and warrants to the Purchaser with respect
to all Auto Loans sold pursuant to this Agreement, that as of the Cut-Off Date
(i) none of the Auto Loans is in monetary default for a period in excess of 59
days, (ii) no more than 12% of the total NAFCO Loans and Advantage Loans are
in monetary default for a period in excess of 30 days and (iii) to the best of
Seller's knowledge, other than with respect to the maintenance of insurance,
there is no other default, breach, violation, or event permitting acceleration
under the Auto Loan or repossession of the related Automobile.
(d) PSB represents and warrants to the Purchaser, as of the date
hereof, as follows:
(i) Organization and Good Standing. PSB is a Federal Savings Bank duly
organized, validly existing and in good standing under the laws of the United
States and each other State where the nature of its business requires it to
qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the ability of PSB to perform its
obligations hereunder.
(ii) Authorization. PSB has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by PSB by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of PSB, enforceable against PSB in accordance with its terms except
that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to creditors'
rights generally and (B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of PSB, or any indenture, agreement, mortgage, deed of
trust or other instrument to which PSB is a party or by which it is bound, or
in the creation or imposition of any lien upon any of its properties pursuant
to the terms of such indenture, agreement, mortgage, deed of trust or other
such instrument, or violate any law, or any order, rule or regulation
applicable to PSB of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over PSB or any of its properties.
(iv) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(e) Pacific USA represents and warrants to the Purchaser, as of the
date hereof, as follows:
(i) Organization and Good Standing. Pacific USA is a corporation duly
organized, validly existing under the laws of the State of Texas and is in
good standing under the laws of the State of Texas and each other State where
the nature of its business requires it to qualify, except to the extent that
the failure to so qualify would not in the aggregate materially adversely
affect the ability of Pacific USA to perform its obligations hereunder.
(ii) Authorization. Pacific USA has the power, authority and legal
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by Pacific USA by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of Pacific USA, enforceable against Pacific USA in accordance with
its terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of Pacific USA, or any indenture, agreement, mortgage,
deed of trust or other instrument to which Pacific USA is a party or by which
it is bound, or in the creation or imposition of any lien upon any of its
properties pursuant to the terms of such indenture, agreement, mortgage, deed
of trust or other such instrument, or violate any law, or any order, rule or
regulation applicable to Pacific USA of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Pacific USA or any of its properties.
(v) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Seller hereby covenants and agrees with Purchaser as follows:
(i) Except as hereinafter provided, Seller will keep in full effect its
existence, rights and franchises as a limited liability company, and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and to perform its duties hereunder. Any
person into which Seller may be merged or consolidated, or any entity
resulting from any merger, conversion or consolidation to which Seller shall
be a party, or any person succeeding to the business of Seller shall become
the successor to Seller hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. If Seller sells substantially all of
its assets, it shall not distribute, as a dividend, return of capital, or
otherwise (except for repayment of indebtedness, including debt owed to PSB)
any portion of the consideration received in connection with such sale unless
it has established appropriate reserves for its obligations under this
Agreement.
(ii) Within 10 days after the Closing Date, Seller will deliver to its
agent for filing proper financing statements (Forms UCC-1) in respect of the
Auto Loans and the Related Loan Assets, naming Seller as the assignor and
Purchaser as the assignee, or other similar instruments or documents specified
in writing by Purchaser on or before the Closing Date, as may be necessary or,
in the opinion of Purchaser, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect Purchaser's ownership interests
in all Auto Loans and the Related Loan Assets in which an interest may be
assigned hereunder.
(iii) Seller will not change its name, identity, or corporate structure in
any manner that would, could, or might make any financing statement or
continuation statement misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given Purchaser at least 10 business days prior
written notice thereof and shall have provided evidence of the making of all
appropriate UCC filings. Seller will give Purchaser at least 30 days prior
written notice of any relocation of its chief executive office or chief place
of business, and if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement, Seller
shall provide evidence of the making of all appropriate UCC filings.
(iv) After the Closing Date, Seller acknowledges that it will not have any
right to change or modify the terms of the Auto Loans (except as contemplated
in the Interim Servicing Agreement) and will do nothing to impair the rights
of Purchaser in the Auto Loans or the Automobiles. After the Closing Date, if
the rights of Purchaser under any Auto Loan Contract are not assignable or
have, in fact, not been assigned to Purchaser, Seller will take such actions
as may be reasonably requested to enforce such rights on behalf of Purchaser
at Purchaser's sole cost and expense. Seller will execute or endorse,
acknowledge, and deliver to Purchaser from time to time such schedules,
confirmatory assignments, conveyances, powers of attorney, and other
reassurances or instruments and take such further similar actions relating to
the Auto Loans, the related Automobiles, and the rights covered by this
Agreement as Purchaser may reasonably request to preserve and maintain title
to and enforce the Auto Loans and the Related Loan Assets and the rights of
Purchaser therein against the claims of all persons.
(c) PSB hereby covenants and agrees with Purchaser that, except as
hereinafter provided, PSB will keep in full effect its existence, rights and
franchises as a federal savings bank, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement and to perform its duties hereunder. Any Person into which PSB may
be merged or consolidated, or any entity resulting from any merger, conversion
or consolidation to which PSB shall be a party, or any Person succeeding to
the business of PSB (through a stock acquisition but not a sale of
substantially all of the assets) shall be the successor of PSB hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Notwithstanding the foregoing, PSB shall cause such successor to execute an
agreement or assumption, in form and substance reasonably satisfactory to
Purchaser, to perform every obligation of PSB under this Agreement.
Purchaser acknowledges that PSB intends to sell substantially all of its
assets and dissolve its federal savings bank charter in 1998; upon such event
Pacific USA agrees to assume all liabilities of PSB hereunder.
(d) Pacific USA hereby covenants and agrees with Purchaser that, except as
hereinafter provided, Pacific USA will keep in full effect its existence,
rights and franchises as a corporation, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement and to perform its duties hereunder. Any Person into which Pacific
USA may be merged or consolidated, or any entity resulting from any merger,
conversion or consolidation to which Pacific USA shall be a party, or any
Person succeeding to the business of Pacific USA shall be the successor of
Pacific USA hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Notwithstanding the foregoing, Pacific USA shall
cause such successor to execute an agreement or assumption, in form and
substance reasonably satisfactory to Purchaser, to perform every obligation of
Pacific USA under this Agreement. If Pacific USA sells substantially all of
its assets, it shall not distribute, as a dividend, return of capital, or
otherwise any portion of the consideration received in connection with such
sale unless either (i) it has established appropriate reserves for its
obligations under this Agreement, or (ii) its parent company has assumed the
obligation of Pacific USA under Section 4(d) hereof.
Section 6 Survival of Representations and Warranties. The
representations and warranties set forth in Section 5 shall survive the sale
of the Auto Loans and the Related Loan Assets to the Purchaser and shall
continue so long as any Auto Loan shall remain outstanding. Monaco shall
notify Pacific USA in writing when the last Auto Loan has been paid off or
liquidated.
Section 7. Indemnity. Seller, PSB and Pacific USA shall, jointly
and severally, indemnify and hold harmless Monaco, its directors, officers,
agents, employees, attorneys, accountants, and assignees, from and against any
loss, liability, expense, damage or injury suffered or sustained by any such
Person, including any judgment, award, settlement, reasonable attorneys' fees,
and other costs and expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim, which arises as a result of
the violation by any of Seller, PSB, Pacific USA or any of such Persons'
respective agents of any state or federal laws, rules or regulations relating
to the Auto Loans (including, without limitation, the Uniform Commercial Code,
if applicable) applicable to fair credit billing, fair credit reporting, and
collection, including fair debt collection, practices.
Section 8 Notices, Etc.. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing and mailed or
tele-communicated, or delivered as to each party hereto, at its address set
forth as follows:
To the Purchaser:
Monaco Finance, Inc.
370 17th Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin Sandler
Phone: (303) 592-9411
Fax: (303) 405-6496
To the Seller:
Advantage Funding Group, Inc.
79 Milk Street, 7th Floor
Boston, MA 02109
Attn: Robert D. Womack
Phone: (617) 457-0999
Fax: (800) 622-5722
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
To PSB:
Pacific Southwest Bank
4144 N. Central Expressway
Suite 800
Dallas, Texas 75204
Attn: Bobby Hashaway
Phone: (214) 841-8890
Fax: (214) 841-8889
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
To Pacific USA:
Pacific USA Holdings Corp.
5999 Summerside Drive
Suite 112
Dallas, Texas 75252
Attn: Bill C. Bradley
Phone: (972) 248-5022
Fax: (972) 248-5023
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
All such notices and communications shall not be effective until received by
the party to whom such notice or communication is addressed.
Section 9. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Seller and the Purchaser, and
their respective successors and permitted assigns. Subject to Section 2(g),
no party may assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the other.
Section 10. Amendments; Consents and Waivers; Entire Agreement. No
modification, amendment or waiver of, or with respect to, any provision of
this Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by any party from any of the terms or
conditions thereof shall be effective unless it shall be in writing and signed
by each of the parties hereto. Any waiver or consent shall be effective only
in the specific instance and for the purpose for which given. This Agreement
and the documents referred to herein (including the Asset Purchase Agreement
and the agreements executed pursuant thereto) embody the entire agreement of
the Seller and the Purchaser with respect to the Auto Loans and supersede all
prior agreements and understandings relating to the subject hereof.
Section 11. Severability. In case any provision in or obligation
under this Agreement 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, shall not in
any way be affected or impaired thereby in any other jurisdiction.
Section 12. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT OR RELATING TO ANY
OTHER DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH PARTY AGREES (I) TO
THE EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT SITTING IN DALLAS,
TEXAS OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS A LEGAL ACTION, IT
SHALL BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(C) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY LEGAL ACTION RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
Section 13. Cooperation. The parties hereby agree to cooperate
with each other in connection with all reasonable requests for information in
connection with the transactions contemplated hereby on a timely basis.
Section 14. Execution in Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and both of which when taken together shall
constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
MONACO FINANCE, INC., as Purchaser
By: /s/ Irwin L. Sandler
Name : Irwin L. Sandler
Title: Executive Vice President
ADVANTAGE FUNDING GROUP, INC., as Seller
By: /s/ Robert D. Womack
Name: Robert D. Womack
Title: Vice President
PACIFIC SOUTHWEST BANK
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Chief Financial Officer
PACIFIC USA HOLDINGS CORP.
By: /s/ Bill C. Bradley
Name: Bill C. Bradley
Title: Chief Executive Officer
<PAGE>
SCHEDULE A
Schedule of Auto Loans
<PAGE>
EXHIBIT "B"
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that ADVANTAGE FUNDING GROUP, INC., a
Delaware corporation ("Seller"), having its principal place of business at 79
Milk Street, 7th Floor, Boston, Massachusetts 02109, in connection with
certain security interests and liens created in the name of Norwest Bank
Minnesota, National Association, as Custodian, pursuant to the agreement
attached hereto as Exhibit "A", in the motor vehicles securing the loan
contracts described in Schedule A annexed hereto (the "Automobiles"), has and
hereby affirms that it has made, constituted and appointed, and by these
presents does make, constitute and appoint, Monaco Finance, Inc. ("Monaco"),
having its principal place of business at 370 17th Street, Suite 5060, Denver,
Colorado 80202, Seller's true and lawful attorney-in-fact and in Seller's
name, place and stead to act:
FIRST: To execute and/or endorse any certificates of title, applications
for certificate of title or other documents necessary or appropriate to
evidence the assignment, sale and transfer of the Automobiles or Seller's
security interest in the Automobiles.
SECOND: To execute and/or endorse any loan agreement, promissory note,
security agreement, financing statement, certificate of title or other
document, instrument or agreement, or any amendment, modification or
supplement of any of the foregoing, and perform any act and covenant in any
way which Seller itself could do (to the fullest extent that Seller is
permitted by law to act through an agent), which is necessary or appropriate
to modify, amend, renew, extend, release, terminate and/or extinguish (i) any
and all liens and security interests granted to or created in favor of Seller
in and to or affecting any of the Automobiles, or (ii) any indebtedness
secured by any such lien or security interest or any right or obligation of
the obligor of such indebtedness secured by an Automobile, in each case upon
such terms and conditions deemed, in the sole discretion of said
attorney-in-fact, necessary or appropriate in connection with such
modification, amendment, renewal extension, release, termination and/or
extinguishment.
THIRD: To agree and to contract with any person, in any manner and upon
terms and conditions deemed, in the sole discretion of said attorney-in-fact,
necessary or appropriate for the accomplishment of any such modification,
amendment, renewal, extension, release, termination and/or extinguishment of
any such lien, security interest, indebtedness, right or obligation referred
to above with respect to the Automobiles; to perform, rescind, reform, release
or modify any such agreement or contract or any similar agreement or contract
made by or on behalf of Seller; to execute acknowledge, seal and deliver any
contract, agreement, certificate of title or other document, agreement or
instrument creating, evidencing, securing or secured by any such lien,
security interest, indebtedness, right or obligation; and to take all such
other actions and steps, pay or receive such moneys and to execute,
acknowledge, seal and deliver all such other certificates, documents and
agreements and said attorney-in-fact may deem necessary or appropriate to
consummate any such modification, amendment, renewal, extension, release,
termination and/or extinguishment of any such security interest, lien,
indebtedness, right or obligation or in furtherance of any of the transactions
contemplated by the foregoing.
FOURTH: With full and unqualified authority to delegate any or all of the
foregoing powers to any person or persons whom said attorney-in-fact shall
select.
FIFTH: This power of attorney shall not be affected by the subsequent
disability or incompetence of Seller.
SIXTH: This power of attorney shall be irrevocable and coupled with an
interest.
SEVENTH: To induce any third party to act hereunder, Seller hereby agrees
that any third party receiving a duly executed copy or facsimile of this
instrument may act hereunder, and that any notice of revocation or termination
hereof or other revocation or termination hereof by operation of law shall be
ineffective as to such third party.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on behalf of Seller as of this _______ day of January, 1998.
ADVANTAGE FUNDING GROUP, INC.,
a Delaware Corporation
By:_______________________________
<PAGE>
Name: Robert D. Womack
Title: Vice President
STATE OF TEXAS
COUNTY OF ______
This instrument was acknowledged before me on this _______ day of
January, 1998, by Robert D. Womack, Vice President of Advantage Funding Group,
Inc., a Delaware corporation, on behalf of said corporation.
_____________________________________
Notary Public
_____________________________________
Printed Name
My Commission Expires:_______________
<PAGE>
EXHIBIT "A"
CUSTODIAN AGREEMENT
<PAGE>
SCHEDULE A
SCHEDULE OF AUTO LOANS
<PAGE>
EXHIBIT 10.65
EXHIBIT L-1
LOAN LOSS REIMBURSEMENT AGREEMENT
This Loan Loss Reimbursement Agreement (this "Agreement") is entered into
as of January 8, 1998 between, on the one hand PACIFIC SOUTHWEST BANK, a
federally chartered savings bank ("PSB"), NAFCO HOLDING COMPANY, LLC, a
Delaware limited liability company ("NAFCO"), and ADVANTAGE FUNDING GROUP,
INC., a Delaware corporation ("Advantage"), and, on the other hand, MONACO
FINANCE, INC., a Colorado corporation ("Monaco").
RECITALS
A. PSB, NAFCO, Advantage, and Pacific USA Holdings Corp., a Texas
corporation ("Pacific USA"), and PCF Service, LLC, a Delaware limited
liability company are parties to that certain Amended and Restated Asset
Purchase Agreement, dated as of January 8, 1998 (as amended or modified from
time to time, the "Asset Purchase Agreement").
B. The execution of this Agreement is required pursuant to the Asset
Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms, when used herein, will have the following
meanings:
"Acquired Loans" has the meaning set forth in the Asset Purchase
Agreement; provided that "Acquired Loans" shall not include any Repurchased
Auto Loan after the date of the repurchase thereof.
"Advantage Loan Purchase Agreement" has the meaning set forth in the
Asset Purchase Agreement.
"Auto Loan" means a consumer Automobile loan, including installment sales
contracts, arising from the sale of Automobiles.
"Auto Loan Balance" means, at any time any determination thereof is to be
made: (a) the aggregate outstanding principal balance of the Acquired Loans
as of the close of business on the Cut-Off Date, determined after deduction of
all payments of principal received with respect to the Acquired Loans on or
before the close of business on the Cut-Off Date; minus (b) the principal
balance (as of the Cut-Off Date) of any Repurchased Auto Loans.
"Automobiles" means new and used automobiles and light trucks (i.e.,
light duty trucks with a maximum load capacity of 2,000 pounds), the purchase
of which the related Obligors financed by Auto Loans.
"Business Day" means any day, other than a Saturday or a Sunday, or
another day on which commercial banks in the States of New York, Colorado, or
Texas are required, or authorized by law, to close.
"Closing Date" has the meaning set forth in the Asset Purchase Agreement.
"Covered Loss" means either a Net Initial Loss or a Net Subsequent Loss
and "Covered Losses" means, subject to Section 2(a)(i) hereof, all Net
Initial Losses and/or Net Subsequent Losses; provided that "Covered Losses"
shall not include accrued and unpaid interest pertaining to Net Uncovered
Losses.
"Cut-Off Date" has the meaning set forth in the Asset Purchase Agreement.
"Defaulted Acquired Loan" means any Acquired Loan (a) that, by its terms,
has more than ten percent (10%) of any installment of principal or interest
that is 120 or more days contractually past due as measured from the date such
Scheduled Payment is due in accordance with the provisions of such Acquired
Loan or (b) that the applicable Servicer has determined to be uncollectible in
accordance with the governing Servicing Agreement and the written credit
procedures and policies (consistent with the requirements of this Agreement
and the Servicing Agreement) in effect from time to time of such Servicer as
approved by PSB (which approval shall not be unreasonably withheld).
"Designee" means any Person to which Monaco has assigned, in accordance
with the provisions of this Agreement, any of its rights to receive payments
of Covered Losses, its rights under this Agreement, including, without
limitation, Monaco's rights to enforce the duties and obligations of the
Related Parties under this Agreement with respect to any Acquired Loan, and
Monaco's rights under and with respect to the Letters of Credit.
"Expenses" means, with respect to Defaulted Acquired Loans and at any
time any determination thereof is to be made, all expenses (without
duplication of amounts) incurred by Monaco (or the Designee(s)) or any
Servicer in connection with the foreclosure, conservation, collection, and/or
liquidation of such Defaulted Acquired Loans and/or the related Automobiles,
as more specifically identified and subject to the limitations set forth on
Exhibit E-1 attached hereto.
"Federal Funds Rate" means, for any day, the rate, per annum (rounded
upwards, if necessary, to the nearest 0.01%), equal to the weighted average of
the rates of overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day as published by
the Federal Reserve Bank of New York on the Business Day immediately following
such day; provided that, if the day for which such rate is to be determined
is not a Business Day, then the "Federal Funds Rate" for such day shall be
such rate on such transactions on the immediately following Business Day as
published on the Business Day immediately following such Business Day.
"Insurance Proceeds" means, with respect to any Acquired Loan and at any
time any determination thereof is to be made, an amount equal to the proceeds
paid by any insurer pursuant to any insurance policy covering such Acquired
Loan or the related Automobile or any other insurance policy that relates to
such Acquired Loan, but excluding the proceeds of any such insurance policy
that are applied to the restoration or repair of the related Automobile or
released to the Obligor in accordance with customary loan servicing
procedures.
"Letter of Credit" means, as appropriate, the Net Initial Losses Letter
of Credit and the Net Subsequent Losses Letter of Credit.
"Letter of Credit Bank" means: (a) Bankers Trust Company; (b) any other
financial institution whose long term debt, as of the date of its proposed
issuance of a Letter of Credit, is rated at least A3 by Moody's Investors
Service, Inc. and A- by Standard & Poor's Rating Services; (c) any other
financial institution that meets all of the following criteria: (i) such
financial institution has a total risk based capital ratio of not less than
10%; (ii) such financial institution has a Tier 1 ratio of not less than 6;
(iii) such financial institution has a CAMELS rating of 1 or 2; and (iv) such
financial institution has total assets of not less than $2,000,000,000; or (d)
any other financial institution that is acceptable to Monaco and/or the
Designee(s) in its and/or their sole discretion.
"Letters of Credit" means, collectively, the Net Initial Losses Letter of
Credit and the Net Subsequent Losses Letter of Credit.
"Loan Purchase Agreements" has the meaning set forth in the Asset
Purchase Agreement.
"Monaco's Accountants" means, at any time, the firm of independent
accountants retained by Monaco.
"NAFCO Loan Purchase Agreement" has the meaning set forth in the Asset
Purchase Agreement.
"Net Initial Losses" means the initial amount of Net Losses incurred up
to an aggregate amount equal to seven and one-half percent (7.5%) of the Auto
Loan Balance.
"Net Initial Losses Letter of Credit" means: (a) an irrevocable stand-by
letter of credit, substantially in the form attached hereto as Exhibit N-1,
with such changes, if any, as Monaco and the Designee(s) may approve, in the
original face amount of seven and one-half percent (7.5%) of the Auto Loan
Balance as of the close of business on the Cut-Off Date, issued by a Letter of
Credit Bank on behalf of PSB, NAFCO, and Advantage, and naming Monaco and/or
the Designee(s) as sole beneficiary(ies), and any amendments or extensions
thereof as permitted by the terms thereof or by the terms of Sections
2(a)(iv)(A) and (C) hereof; or (b) any letter of credit issued, in accordance
with the terms hereof (including Sections 2(a)(iv)(A) and (C) hereof), in
substitution for (i) the letter of credit referred to in clause (a) of this
definition or (ii) any letter of credit previously issued in accordance with
the terms hereof (including Section 2(a)(iv)(A) and (C) hereof) in
substitution for the letter of credit referred to in clause (a) of this
definition.
"Net Losses" means, at any time any determination thereof is to be made
for the period commencing on the Cut-Off Date and ending on such determination
date, an amount (not less than zero) equal to the sum of: (a) the Unpaid
Principal Balance of all Defaulted Acquired Loans minus all actual Net
Recoveries; plus (b) all accrued and unpaid interest on the Unpaid Principal
Balance of each Defaulted Acquired Loan for a period not to exceed
seventy-five (75) days; plus (c) all Expenses. For purposes of calculating
"Net Losses," accrued and unpaid interest with respect to any Defaulted
Acquired Loan that is a Precomputed Auto Loan shall be calculated as if such
Auto Loan were bearing interest calculable on a simple interest basis.
"Net Losses Report" means a report in the form of Exhibit N-2 attached
hereto.
"Net Principal Balance" means, with respect to any Precomputed Auto Loan,
the net payoff therefor less any accrued but unpaid late charges, all as of
the due date of the last full Scheduled Payment or, if more recent, the due
date of the last periodic payment of principal thereon.
"Net Recoveries" means, at any time any determination thereof is to be
made, an amount equal to all recoveries with respect to all Defaulted Acquired
Loans from whatever source, including, without limitation, all Proceeds, all
Insurance Proceeds, all payments from the related Obligor, and all amounts
recovered from the related Originator pursuant to the applicable Originator
Agreement or otherwise.
"Net Subsequent Losses" means Net Losses, up to an aggregate amount equal
to seven and one-half percent (7.5%) of the Auto Loan Balance, which are
incurred after the Net Initial Losses and the Net Uncovered Losses have been
incurred.
"Net Subsequent Losses Letter of Credit" means: (a) an irrevocable
stand-by letter of credit, substantially in the form attached hereto as
Exhibit N-1, with such changes, if any, as Monaco and the Designee(s) may
approve, in the original face amount of seven and one-half percent (7.5%) of
the Auto Loan Balance as of the close of business on the Cut-Off Date, issued
by a Letter of Credit Bank on behalf of PSB, NAFCO, and Advantage, and naming
Monaco and/or the Designee(s) as sole beneficiary(ies), and any amendments or
extensions thereof as permitted by the terms thereof or by the terms of
Sections 2(a)(iv)(B) and (C) hereof; or (b) any letter of credit issued, in
accordance with the terms hereof (including Sections 2(a)(iv)(B) and (C)
hereof), in substitution for (i) the letter of credit referred to in clause
(a) of this definition or (ii) any letter of credit previously issued in
accordance with the terms hereof (including Sections 2(a)(iv)(B) and (C)
hereof) in substitution for the letter of credit referred to in clause (a)
of this definition.
"Net Uncovered Losses" means Net Losses, up to an aggregate amount equal
to ten percent (10%) of the Auto Loan Balance, which are incurred after the
Net Initial Losses have been incurred.
"Obligor" means, with respect to an Acquired Loan, the Person primarily
obligated to make payments in respect thereto.
"Originator" means the originator of an Acquired Loan.
"Originator Agreement" means the agreement pursuant to which Advantage or
NAFCO, as the case may be, originally acquired an Acquired Loan.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, governmental authority or any other entity of
whatever nature.
"Precomputed Auto Loan" means any Acquired Loan under which earned
interest (which may be referred to in the Acquired Loan as an "add-on finance
charge") and principal is determined according to the sum of periodic balances
or the sum of monthly balances or the sum of digits or any equivalent method
commonly referred to as the "Rule of 78s."
"Procedures" means the agreed upon accountants' review procedures set
forth on Exhibit P-1 attached hereto.
"Proceeds" means, with respect to a Defaulted Acquired Loan, any cash
amounts received in connection with the liquidation of such Defaulted Acquired
Loan, whether through foreclosure sale or other final disposition of such
Defaulted Acquired Loan or the related Automobile (other than Insurance
Proceeds), and any other cash amounts received in connection with the sale or
other disposition of such Defaulted Acquired Loan or the related Automobile.
"PSB's Accountants" means, at any time, the firm of independent
accountants retained by PSB, which, initially, shall be KPMG Peat Marwick.
"Related Parties" means, collectively, PSB, NAFCO, and Advantage.
"Reported Net Losses" shall have the meaning set forth in Section
2(b)(i) hereof.
"Repurchased Auto Loan" means any Acquired Loan repurchased (a) pursuant
to Section 4 of the Advantage Loan Purchase Agreement, or (b) pursuant to
Section 4 of the NAFCO Loan Purchase Agreement.
"Responsible Officers" means, with respect to any Person, the President,
any Executive Vice President, any Senior Vice President, the Chief Financial
Officer, the servicing manager, and any other officer of such Person having
responsibility or knowledge of the matters being reviewed.
"Scheduled Payment" means each payment due in respect of, and in
accordance with the provisions relating to, any Acquired Loan.
"Servicer" means the servicer of an Acquired Loan.
"Servicing Agreement" means an agreement pursuant to which a third party
Servicer agrees to service the Acquired Loans.
"Settlement Accountants" means Deloitte & Touche, L.L.P.
"Stated Amount" means, at any time any determination thereof is to be
made, the maximum amount available to be drawn under the Letter of Credit
without regard to whether any conditions to drawing could then be met.
"Unpaid Principal Balance" means, at any time any determination thereof
is to be made with respect to any Defaulted Acquired Loan: (a) if such
Defaulted Acquired Loan is an Auto Loan bearing interest calculable on a
simple interest basis, the then unpaid principal amount of Defaulted Acquired
Loan; or (b) if such Defaulted Acquired Loan is a Precomputed Auto Loan, the
then Net Principal Balance thereof.
Section 2. Covered Losses Reimbursement.
(a) Reimbursement for Covered Losses. On the Closing Date, the
Related Parties shall cause the Letters of Credit to be issued for the benefit
of Monaco and the Designee(s).
(i) Maximum Covered Losses. Monaco and the Designee(s)
may make a drawing under the Letters of Credit solely in accordance with the
terms and conditions thereof and the terms and conditions set forth herein
and, specifically, in Section 2(a)(ii) hereof. Neither Monaco nor any of
the Designees shall be entitled to be reimbursed for Covered Losses (whether
under the Letters of Credit, this Agreement, or otherwise) in an aggregate
amount in excess of fifteen percent (15%) of the Auto Loan Balance; provided
that the foregoing shall not limit Monaco's and/or any Designee's right to a
drawing in accordance with Section 2(a)(ii)(A)(2) and/or Section
2(a)(ii)(B)(2) hereof.
(ii) Timing and Amount of Drawings.
(A) All drawings under the Net Initial Losses Letter
of Credit shall be made solely in accordance with the terms thereof. Monaco
(or the Designee(s)) shall be entitled to make a drawing under the Net Initial
Losses Letter of Credit: (1) for any Net Initial Losses detailed in a Net
Losses Report one (1) Business Day following the date such report and the
related Accountants' Letter have been delivered to PSB in accordance with
Section 2(b)(i); and (2) for the Stated Amount thereof on or within five (5)
Business Days of the current expiration date of such Letter of Credit if it is
not extended or an alternative Letter of Credit (issued in accordance with the
terms hereof) is not provided prior to five (5) Business Days prior to the
current expiration date of such Letter of Credit.
(B) All drawings under the Net Subsequent Losses
Letter of Credit shall be made solely in accordance with the terms thereof.
Monaco (or the Designee(s)) shall be entitled to make a drawing under the Net
Subsequent Losses Letter of Credit: (1) for any Net Subsequent Losses
detailed in a Net Losses Report one (1) Business Day following the date such
report and the related Accountants' Letter have been delivered to PSB in
accordance with Section 2(b)(i); and (2) for the Stated Amount thereof on or
within five (5) Business Days days of the current expiration date of such
Letter of Credit if it is not extended or an alternative Letter of Credit
(issued in accordance with the terms hereof) is not provided prior to five (5)
Business Days prior to the current expiration date of such Letter of Credit.
(iii) Excess Drawings. If:
(A) pursuant to Section 2(b)(iv), either (1)
Monaco's Accountants and PSB's Accountants have resolved all exceptions
contained in an Exception Report (including, without limitation, the
determination of the actual amount of a disputed Net Loss which is a Covered
Loss), or (2) the Settlement Accountants have resolved the exceptions
contained in an Exception Report (including, without limitation, the
determination of the actual amount of a disputed Net Loss which is a Covered
Loss); and, as a result of such resolution and/or determination, the amount of
drawings made by Monaco and/or the Designee(s) under any Letter of Credit at
the time of such determination exceeds the amount to which Monaco and/or the
Designee(s) were otherwise entitled to draw; or
(B) a Net Losses Report indicates that, as a result of
the receipt of actual Net Recoveries, the amount of drawings made by Monaco
and/or the Designee(s) under any Letter of Credit exceeds the amount to which
Monaco and/or the Designee(s) were otherwise entitled to draw (any excess
amount under Section 2(a)(iii)(A) or this Section 2(a)(iii)(B) being an
"Excess Amount");
then such Excess Amount shall be subtracted from the next succeeding amount of
Covered Losses for which Monaco and/or the Designee(s) may draw under the
Letters of Credit; provided that, if no such succeeding amount may be drawn,
Monaco shall (or shall cause the Designee(s) to) refund, within ten (10) days
following written demand therefor, such amount to PSB together with interest
thereon from the date drawn until paid at the Federal Funds Rate; provided
that, if such amount is not repaid within thirty (30) days following demand
therefor, then the interest rate thereon shall thereafter automatically
increase to the Federal Funds Rate plus five percent (5%) per annum.
(iv) Changes to the Letters of Credit. If, at any time,
the Stated Amount of the Letters of Credit exceeds, by Two Hundred Fifty
Thousand Dollars ($250,000) or more, fifteen percent (15%) of the then Auto
Loan Balance minus the amount of all drawings previously made under the
Letters of Credit, then the Related Parties shall be entitled:
(A) to either: (1) on their behalf, cause the
issuance, in substitution for the then existing Net Initial Losses Letter of
Credit, by a Letter of Credit Bank of a new irrevocable stand-by letter of
credit, substantially in the form attached hereto as Exhibit N-1, with such
changes, if any, as Monaco and the Designee(s) may approve, and naming Monaco
and/or the Designee(s) as sole beneficiary(ies), in an original face amount
equal to the sum of (y) seven and one-half percent (7.5%) of the then Auto
Loan Balance minus (z) the amount of all drawings previously made under the
Net Initial Losses Letter of Credit; or (2) cause an amendment of the then
existing Net Initial Losses Letter of Credit to reduce the Stated Amount
thereof to an amount equal to the sum of (1) seven and one-half percent (7.5%)
of the then Auto Loan Balance minus (2) the amount of all drawings previously
made under the Net Initial Losses Letter of Credit; and
(B) to either: (1) on their behalf, cause the
issuance, in substitution for the then existing Net Subsequent Losses Letter
of Credit, by a Letter of Credit Bank of a new irrevocable stand-by letter of
credit, substantially in the form attached hereto as Exhibit N-1, with such
changes, if any, as Monaco and the Designee(s) may approve, and naming Monaco
and the Designee(s) as sole beneficiary(ies), in an original face amount equal
to the sum of (y) seven and one-half percent (7.5%) of the then Auto Loan
Balance minus (z) the amount of all drawings previously made under the Net
Subsequent Losses Letter of Credit; or (2) cause an amendment of the Net
Subsequent Losses Letter of Credit to reduce the Stated Amount thereof to an
amount equal to the sum of (1) seven and one-half percent (7.5%) of the then
Auto Loan Balance minus (2) the amount of all drawings previously made under
the Net Subsequent Losses Letter of Credit.
(C) Notwithstanding anything to the contrary contained
in this Section 2(a)(iv), no more than two (2) substitute letters of credit
and/or amendments to each Letter of Credit may be obtained under this Section
2(a)(iv) in any calendar year during the term hereof. All costs and expenses
of Monaco and/or any of the Designees incurred in connection with any such
substitute letters of credit and/or amendments to any Letter of Credit shall
be paid for by the Related Parties.
(b) Net Losses Reports.
(i) Delivery of Reports. No later than three (3)
Business Days prior to the fourteenth day of each calendar month during the
term of this Agreement, Monaco shall submit to PSB (and concurrently submit a
copy to PSB's Accountants and the Designee(s)) a Net Losses Report detailing
all Net Losses (for any period, the "Reported Net Losses") incurred during the
calendar month then ended or, in the case of the first Net Losses Report, if
applicable, during the period from the Cut-Off Date through the end of the
first calendar month following month of the Closing Date. Each Net Losses
Report submitted to PSB shall be certified as being true and correct in all
material respects and in compliance with this Agreement in all material
respects by the Chief Financial Officer of Monaco. Such Net Losses Report
shall also be accompanied by the related Accountants' Letter.
(ii) Accountants' Letters. Prior to submitting to PSB
the Net Losses Report required by Section 2(b)(i), Monaco shall submit a
draft Net Losses Report to Monaco's Accountants for review. Within five (5)
Business Days of receipt of such draft, Monaco's Accountants shall execute and
deliver (by fax on otherwise) a letter to Monaco (with respect to any draft
Net Losses Report, an "Accountants' Letter") stating that: (A) such
accountants have reviewed such draft Net Losses Report in accordance with the
Procedures; and (B) based upon such accountants' review, such accountants did
not have any exceptions to the calculations set forth therein.
(iii) Exception Reports. Each Net Losses Report
delivered to PSB shall be reviewed by PSB's Accountants in accordance with the
Procedures. Within ten (10) Business Days of receipt by PSB of the Net Losses
Report for each of the months of March, June, September, and December during
the term hereof, if PSB's Accountants shall, in connection with their review
of such Net Losses Report and the Net Losses Reports for the immediately
preceding two (2) calendar months, have noted any exceptions to such Net
Losses Reports, then PSB's Accountants shall deliver an exception report (with
respect to such Net Losses Reports, an "Exception Report") to PSB, Monaco, the
Designee(s), and Monaco's Accountants detailing such exception(s). Failure to
timely deliver an Exception Report on or before the expiration of the ten (10)
Business Day review period set forth above shall constitute PSB's acceptance
of each of the related Net Losses Reports.
Resolution of Exceptions. If an Exception Report is timely delivered,
Monaco's Accountants and PSB's Accountants shall attempt to resolve the
exceptions noted therein (including, without limitation, the amount of any
disputed Net Loss(es) or the amount of any excess drawing(s) under any Letter
of Credit). If Monaco's Accountants and PSB's Accountants cannot resolve the
exceptions within five (5) Business Days following the delivery of a timely
Exception Report, such accountants shall jointly submit the applicable Net
Losses Report(s) and the related Exception Report(s) to the Settlement
Accountants. Within ten (10) Business Days of receiving such documents, the
Settlement Accountants shall finally and conclusively resolve all exceptions
(including, without limitation, the amount of any disputed Net Loss(es) or the
amount of any excess drawing(s) under any Letter of Credit). The costs and
expenses of the services of the Settlement Accountants shall be paid equally
by Monaco and PSB.
Section 3. Covenants of Monaco.
(a) Compliance with Laws. Monaco shall comply in all material
respects with all applicable laws, rules, regulations and orders with respect
to it, its business and properties and all Acquired Loans.
(b) Inspection. Monaco shall provide, and shall use its best
efforts to cause each other Servicer, if any, to provide (and shall use its
best efforts to include an express covenant in the Servicing Agreement
requiring such Servicer to provide) PSB and its authorized agents and
representatives (i) reasonable access during regular business hours to all
records of Monaco and such Servicer relating to the Acquired Loans and any
assets related thereto and (ii) reasonable access during normal business hours
to Responsible Officers of Monaco and such Servicer to provide information and
answer questions concerning the Acquired Loans and any assets related thereto.
Any on-site examination pursuant to this paragraph shall be conducted in a
manner that does not unreasonably interfere with Monaco's or such Servicer's
normal operations, and all fees and expenses incurred by PSB in connection
with any such examination shall be borne by PSB.
(c) Servicing Reports. Monaco shall, with respect to each Acquired
Loan for which it is the Servicer, and shall use its best efforts to cause
each other Servicer, if any, to (and shall use its best efforts to include an
express covenant in the Servicing Agreement requiring such Servicer to), (i)
provide to PSB the servicing reports specified and described in, and at the
times set forth in, the Servicing Agreement ("Servicing Reports") with respect
to the Acquired Loans serviced by such Servicer and (ii) provide to PSB such
other information related to the Acquired Loans or any assets related thereto
as PSB may reasonably request. Monaco shall, with respect to each Acquired
Loan for which it is the Servicer, and shall use its best efforts to cause
each other Servicer to (and shall use its best efforts to include an express
covenant in the Servicing Agreement requiring such Servicer to), prepare
separate Servicing Reports covering only the Acquired Loans serviced by such
Servicer.
(d) Standard of Care. Irrespective of whether Monaco (and/or the
Designee(s)) shall have made a drawing under the Letter(s) of Credit with
respect to any Acquired Loan that is a Defaulted Acquired Loan, Monaco shall,
with respect to each Acquired Loan for which it is the Servicer, and shall
require that each other Servicer, if any, (and shall include an express
covenant in the Servicing Agreement requiring such Servicer to) to, in
managing, administering, servicing, enforcing and making collections on the
Acquired Loans serviced by it and the related Automobiles, exercise that
degree of skill, care, prudence and diligence consistent with customary and
usual standards of practice of prudent institutional servicers of motor
vehicle loan portfolios of credit quality similar to the Acquired Loans, and
with at least the same degree of skill, care, prudence, and diligence which
the applicable Servicer customarily exercises with respect to motor vehicle
loan contracts of similar credit quality and interest in motor vehicle loans
owned or originated by it.
(e) Servicer Replacement. Except to the extent Monaco is required
to change or terminate any Servicer in connection with a securitization or
warehouse facility transaction, Monaco shall not change or terminate any
Servicer without the prior written consent of PSB, which consent shall not
unreasonably withheld; provided that Monaco may, without the consent of PSB,
terminate either Electronic Data Systems or CSC Logic/MSA L.L.P. d/b/a Loan
Servicing Enterprises as Servicer as long as Monaco is the successor Servicer.
Monaco shall not permit any material change to any servicing procedures or
standards applicable to any Acquired Loan which would have the effect of
lowering existing servicing standards, without the prior written consent of
PSB which consent shall not be unreasonably withheld.
(f) Certain Actions. Monaco shall, with respect to each
Acquired Loan for which it is the Servicer, and shall use its best efforts to
cause each other Servicer, if any (and shall use its best efforts to include
an express covenant in the Servicing Agreement requiring such Servicer to),
to, pursue reasonable remedies available against the applicable Obligor and
Originator in order to minimize Net Losses with respect to each Acquired Loan.
Section 4 Representations and Warranties of Monaco.
(a) Organization and Good Standing. Monaco is a corporation
duly organized, validly existing and in good standing under the law of the
State of Colorado and is qualified to do business in each other state where
the nature of its business requires it to qualify, except to the extent that
the failure to so qualify would not in the aggregate materially adversely
affect the ability of Monaco to perform its obligations hereunder.
(b) Authorization. Monaco has the power, authority and legal
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by Monaco by all necessary corporate action.
(c) Binding Obligation. This Agreement, assuming the due
authorization, execution and delivery hereof by the other parties hereto,
constitutes a legal, valid and binding obligation of Monaco, enforceable
against Monaco in accordance with its terms except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to certain equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought, whether a proceeding at law or in
equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws of Monaco, or any indenture, agreement,
mortgage, deed of trust or other instrument to which Monaco is a party or by
which it is bound, or in the creation or imposition of any lien upon any of
its properties pursuant to the terms of such indenture, agreement, mortgage,
deed of trust or other such instrument, or violate any law, or any order, rule
or regulation applicable to Monaco of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Monaco or any of its properties.
(e) Approvals. All approvals, authorizations, consents,
orders or other actions of any person, or of any court, governmental agency or
body or official, required in connection with the execution and delivery of
this Agreement have been or will be taken or obtained on or prior to the
Closing Date.
Section 5. Representations, Warranties, and Covenants of the Related
Parties.
(a) Organization and Good Standing. PSB is a bank duly
organized, validly existing and in good standing under the laws of the United
States of America and is qualified to do business in each other State where
the nature of its business requires it to qualify, except to the extent that
the failure to so qualify would not in the aggregate materially adversely
affect the ability of PSB to perform its obligations hereunder. NAFCO is a
limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and is qualified to do
business in each other state where the nature of its business requires it to
qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the ability of NAFCO to perform its
obligations hereunder. Advantage is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in each other state where the nature of its business
requires it to qualify, except to the extent that the failure to so qualify
would not in the aggregate materially adversely affect the ability of
Advantage to perform its obligations hereunder.
(b) Authorization. Each of the Related Parties has the power,
authority and legal right to execute, deliver and perform under the terms of
this Agreement and the execution, delivery and performance of this Agreement
has been duly authorized by each of the Related Parties by all necessary
corporate or other necessary action.
(c) Binding Obligation. This Agreement, assuming the due
authorization, execution and delivery hereof by Monaco, constitutes a legal,
valid and binding obligation of each of the Related Parties, enforceable
against each of the Related Parties in accordance with its terms except that
(A) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws (whether statutory, regulatory or decisional)
now or hereafter in effect relating to creditors' rights generally and (B) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to certain equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought, whether a
proceeding at law or in equity.
(d) No Violation. The consummation of the transactions
contemplated by the fulfillment of the terms of this Agreement will not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under the
organizational documents or bylaws, as applicable, of each of the Related
Parties, or any indenture, agreement, mortgage, deed of trust or other
instrument to which any of the Related Parties is a party or by which any of
the Related Parties is bound, or in the creation or imposition of any lien
upon any of its properties pursuant to the terms of such indenture,
agreement, mortgage, deed of trust or other such instrument, or violate any
law, or any order, rule or regulation applicable to any of the Related Parties
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over any of the
Related Parties or any of their respective properties.
(e) Approvals. All approvals, authorizations, consents,
orders or other actions of any person, or of any court, governmental agency or
body or official, required in connection with the execution and delivery of
this Agreement have been or will be taken or obtained on or prior to the
Closing Date.
(f) Letter of Credit Bank. Notwithstanding anything to
the contrary contained herein, the Related Parties shall use their best
efforts to have each Letter of Credit Bank be a financial institution referred
to in clause (a) or clause (b) of the definition of "Letter of Credit
Bank" contained herein. The use of such Persons' best efforts shall include,
but not be limited to, the provision of cash collateral to fully secure the
Related Parties' (or any of their) reimbursement obligations to such financial
institution in respect of the Letter(s) of Credit.
Section 6 No Third Party Beneficiary. Except as contemplated by
Section 9 hereof, no creditor or third party having dealings with Monaco
shall have the right to enforce the duties or obligations of any of the
Related Parties hereunder or to pursue any other right or remedy hereunder or
at law or in equity, it being understood and agreed that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, Monaco and the Designee(s).
Section 7 Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
and delivered as to each party hereto, the Designee(s), the Monaco
Accountants, and the PSB Accountants, by a nationally recognized overnight
courier, at its address set forth as follows:
To Monaco and/or the Designee(s):
Monaco Finance, Inc.
370 17th Street, Suite 5060
Denver, Colorado 80202
Attention: Irwin Sandler
Phone: (303) 592-9411
Fax: (303) 405-6496
To PSB, NAFCO, or Advantage:
c/o Pacific USA Holdings Corp.
5999 Summerside Drive, Suite 112
Dallas, Texas 75252
Attn: Michael K. McCraw
Phone: (972) 248-5022
Fax: (972) 248-5023
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
Monaco's Accountants:
Ehrhardt, Keefe, Steiner & Hottman
7979 E. Tufts Avenue, Suite 400
Denver, Colorado 80237
Attn: Steven L. Schenbeck
Phone: (303) 740-9400
Fax: (303) 740-9009
PSB's Accountants:
KPMG Peat Marwick
200 Crescent Court, Suite 300
Dallas, Texas 75201
Attn: Stan Peebles
Phone: (214) 754-2000
Fax: (214) 754-2297
All such notices and communications shall not be effective until received by
the party to whom such notice or communication is addressed.
Section 8 No Waiver; Remedies. No failure on the part of either
party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right hereunder 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 other remedies provided by law.
Section 9 Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the parties hereto, and their
respective successors and permitted assigns. None of the Related Parties may
assign its rights or obligations under this Agreement without the express
prior written consent of Monaco. Notwithstanding anything to the contrary
contained in Section 6hereof, Monaco may assign all of its rights hereunder
(including, without limitation, its rights to receive payments for Covered
Losses, its rights to enforce the duties and obligations of the Related
Parties hereunder with respect to any Acquired Loan, and its rights under and
with respect to the Letter of Credit) upon prior written notice of the same to
PSB of the identity of such assignee and the terms of the assignment;
provided that such assignment may be made by Monaco solely: (a) in
connection with a securitization or warehouse facility transaction; and (b) in
connection with any such securitization or warehouse facility transaction, to
the trustee or the servicer or to a subsidiary of Monaco that is a special
purpose entity. PSB shall have no right to consent to or otherwise approve or
disapprove any such assignee; however, Monaco shall provide PSB a copy of the
executed assignment document (and all other documents which relate to such
assignment) within five (5) Business Days of the execution thereof. Except as
otherwise permitted under this Section 9, Monaco may not assign its
obligations hereunder (including but not limited to all obligations of Monaco
under Sections 2 and 3 hereof) or otherwise assign its rights hereunder
without the express prior written consent of PSB.
Section 10 Amendments; Consents and Waivers; Entire Agreement. No
modification, amendment or waiver of, or with respect to, any provision of
this Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by any party from any of the terms or
conditions thereof shall be effective unless it shall be in writing and signed
by each of the parties hereto (including any Designee(s)). Any waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. This Agreement and the documents referred to herein embody
the entire agreement of the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to the
subject hereof.
Section 11 Securitization Matters. Notwithstanding anything to the
contrary contained herein, each of the parties hereto agrees that, in
connection with any securitization transaction contemplated under Section 9
hereof, such party shall take such actions (including, without limitation, the
amendment or modification of this Agreement or the Letter of Credit and the
delivery of opinions of counsel) as shall be reasonably required by MBIA
Insurance Corporation (or similar entity) and/or any rating agency involved in
any such securitization transaction; provided that Monaco shall pay all of
the reasonable out-of-pocket expenses, including, without limitation,
attorneys' fees, incurred by each such party in taking such action(s);
provided further that no party hereto shall be required to take any such
action if, in the good faith determination of such party, such action would
materially and adversely affect such party.
Section 12 Severability. In case any provision in or obligation
under this Agreement 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, shall not in
any way be affected or impaired thereby in any other jurisdiction.
Section 13 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT OR
RELATING TO ANY OTHER DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH
PARTY AGREES (I) TO THE EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT
SITTING IN DALLAS, TEXAS OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS
A LEGAL ACTION, IT SHALL BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN
SUBPARAGRAPH (I) ABOVE.
(C) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
Section 14 Termination of Agreement. This Agreement shall
terminate upon the earlier of (a) the reimbursement to Monaco (or its assigns
under Section 9 hereof) of all Covered Losses required to be reimbursed
under Section 2(a) hereof, or (b) the date all Acquired Loans have either
been paid in full, or become Defaulted Acquired Loans and any amounts
reimbursable to Monaco in accordance with Section 2 hereof have been paid to
Monaco (or its assigns under Section 9 hereof). Upon termination of this
Agreement, Monaco shall deliver to the Related Parties a written termination
and release of this Agreement.
Section 15 Execution in Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and both of which when taken
together shall constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
PACIFIC SOUTHWEST BANK,
a federally chartered savings bank
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Executive Vice President
NAFCO HOLDING COMPANY, LLC,
a Delaware limited liability company
By: /s/ Robert Womack
Name: Robert Womack
Title: Chief Financial Officer
ADVANTAGE FUNDING GROUP, INC.,
a Delaware corporation
By: /s/ Robert Womack
Name: Robert Womack
Title: Vice President
MONACO FINANCE, INC.,
a Colorado corporation
By: /s/ Irwin L. Sandler
Name:
Title: Executive Vice President
<PAGE>
EXHIBIT E-1
EXPENSE CATEGORIES AND LIMITATIONS
1. All costs related to the sale of a vehicle:
-- Auction
-- Sales fees
-- Commissions
2. All costs related to repossessions of vehicles paid to outside
parties:
-- Repossession fees
-- Skip Tracing fees
-- Storage fees
-- Investigation fees
-- Transport fees
-- Legal fees and court costs
3. All repair costs of repossessed and abandoned vehicles:
-- Non-insured repair costs
-- Insured repair costs subject to subsequent reimbursement
-- Repair costs for abandoned vehicles
-- Repair costs for skips
4. Force Placed or VSI insurance premiums
<PAGE>
EXHIBIT N-1
FORM OF LETTERS OF CREDIT
Please see attached.
<PAGE>
EXHIBIT N-2
FORM OF NET LOSSES REPORT
Please see attached.
<PAGE>
EXHIBIT P-1
AGREED UPON ACCOUNTANTS' REVIEW PROCEDURES
Monaco Finance, Inc.
Pacific Southwest Bank
NAFCO Holding Company LLC
Advantage Funding Group, Inc.
We have performed the procedures described in Schedule A, which were agreed to
by Monaco Finance, Inc., Pacific Southwest Bank, NAFCO Holding Company LLC,
and Advantage Funding Group, Inc. (the "Specified Users") solely to assist
with you with respect to the accompanying schedule of Covered Losses. That
schedule shows the computation of the Covered Losses as of __________ on which
Net Losses were to be reimbursed to Monaco Finance, Inc. under the terms of
the Loan Loss Reimbursement Agreement, dated as of January 8, 1998 (as amended
or modified from time to time, the "Loan Loss Reimbursement Agreement"),
between, on the one hand Pacific Southwest Bank, NAFCO holding Company, LLC,
Advantage Funding Group, Inc., and, on the other hand, Monaco Finance, Inc.
Unless otherwise defined herein, capitalized terms used herein have the
meaning set forth in the Loan Loss Reimbursement Agreement.
This engagement to apply agreed-upon procedures was performed in accordance
with standards established by the American Institute of Certified Public
Accountants. The sufficiency of the procedures is solely the responsibility
of the specified users of the report. Consequently, we make no representation
regarding the sufficiency of the procedures described below either for the
purpose for which this report has been requested or for any other purpose.
Our procedures and findings are described in Schedule A.
We are not engaged to, and did not, perform and audit, the objective of which
would be the expression of an opinion on the specified elements, accounts, or
items. Accordingly, we do not express such an opinion. Had we performed
additional procedures, other matters might have come to our attention that
would have been reported to you.
This report is intended solely for the use of the Specified Users listed above
and should not be used by those who have not agreed to the procedures and
taken responsibility for the sufficiency of the procedures for their purposes.
Ehrhardt Keefe Steiner & Hottman PC
Denver, Colorado
Date _________________
<PAGE>
SCHEDULE A TO
EXHIBIT P-1
AGREED-UPON PROCEDURES AND FINDINGS
We compared the Net Losses on the Net Losses Report for the month ended
_______, to the Auto Loan Schedule attached to the Loan Purchase Agreement
between Monaco Finance, Inc. and NAFCO Holding Company, LLC/Advantage Funding
Group, Inc. to assure that all Acquired Loans listed on such Net Losses Report
were listed on the original Auto Loan Schedule.
For each Net Loss tested on such Net Losses Report, we compared the Net
Losses, including the Unpaid Principal Balance plus accrued and unpaid
interest (as allowed under the Loan Loss Reimbursement Agreement), less all
actual Net Recoveries, to Monaco Finance, Inc.'s records.
We reviewed the application of Monaco Finance, Inc.'s charge off policies and
procedures to the Net Losses tested to assure that Monaco Finance, Inc.'s
standard policies and procedures were applied in accordance with the written
charge off policies. For each Net Loss tested, we reviewed Monaco Finance,
Inc.'s documented collection and recovery efforts.
<PAGE>
EXHIBIT 10.66
LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement (this "Agreement") is entered into as of
January 8, 1998 among NAFCO HOLDING COMPANY, L.L.C., a Delaware limited
liability company (the "Seller"), MONACO FINANCE, INC., a Colorado corporation
(the "Purchaser"), PACIFIC USA HOLDINGS CORP., a Texas corporation ("Pacific
USA") and PACIFIC SOUTHWEST BANK, a federal savings bank ("PSB").
RECITALS:
A. The Seller owns certain consumer loans secured by new and used
automobiles and light trucks, including the Auto Loans (as defined below).
B. This Agreement is entered into pursuant to that certain Asset
Purchase Agreement dated as of September 30, 1997, as amended and restated on
January 8, 1998 (the "Asset Purchase Agreement"), among Purchaser, Seller,
Advantage Funding Group, Inc., a Delaware corporation, Pacific USA and PSB.
C.. Subject to the terms hereof and of the Asset Purchase Agreement,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from
Seller, the Auto Loans (as defined below).
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, Seller and Purchaser agree as follows:
Section 1. Definitions. Except as otherwise expressly provided
herein or unless the context otherwise requires (i) capitalized terms used but
not defined herein shall have the meanings assigned to them in the Asset
Purchase Agreement and (ii) the following terms shall have the respective
meanings specified in this Section 1 for all purposes of this Agreement, and
the definitions of such terms are equally applicable to the singular and
plural forms of such terms and to the masculine, feminine and neuter genders
of such terms.
"Adverse Claim" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other type
of preferential arrangement having the effect of a lien or security interest
upon or with respect to any of the properties of the Seller other than in
favor of the Purchaser with respect to this Agreement.
"Application for Certificate of Title" means with regard to each
Automobile for which a Certificate of Title has not been issued naming Seller
(or its designee) as secured party, evidence that an application for a
Certificate of Title naming Seller (or its designee) as secured party has been
submitted with the appropriate authority.
"Asset Purchase Agreement" has the meaning assigned to such term in the
Recitals to this Agreement.
"Auto Loans" means the consumer Automobile contracts, including
installment sales contracts, arising from the sale of Automobiles, listed on
the Auto Loan Schedule, having an aggregate outstanding principal balance as
of the Cut-Off Date of $59,211,732.89.
"Auto Loan File" means with respect to any Auto Loan, a file containing
the original manually executed Auto Loan, the original credit application
executed by the Obligor thereunder, the related Certificate of Title or
Application for Certificate of Title, the related agreement to provide
insurance, all other documents required by the Auto Loan Funding Checklist (to
the extent contained therein), and all other documents Seller keeps on file
with respect to such Auto Loan in accordance with its customary procedures.
"Auto Loan Funding Checklist" means the checklist of all required
documentation relating to any Auto Loan, which checklist is attached hereto as
Exhibit "A".
"Auto Loan Schedule" means the list of Auto Loans, in form and substance
acceptable to each of Seller and Purchaser, attached hereto as Schedule A,
which schedule shall include the following with respect to each Auto Loan: (a)
a number identifying the Auto Loan; (b) the outstanding principal balance as
of the Cut-off Date; (c) all accrued and unpaid interest on the outstanding
principal balance as of the Cut-off Date (as well as the amount of time during
which such interest accrued); (d) the name of the Obligor; and (e) to the
extent the servicer can identify from its system, the name of the Originator
and the underwriting program such Auto Loan was originated under.
"Automobiles" means new and used automobiles and light trucks (i.e.,
light duty trucks with a maximum load capacity of 2,000 pounds), the purchase
of which the related Obligors financed by Auto Loans.
"Certificate of Title" means with regard to each Automobile, the original
certificate of title relating thereto, which names the related Obligor as the
owner of such Automobile, the original certificate of title relating thereto,
which names the related Obligor as the owner of such Automobile and Seller (or
its designee) as secured party.
"Cut-Off Date" means December 19, 1997.
"Dealer" means an automobile dealer that has entered into a Dealer
Agreement with the applicable Originator with respect to, among other things,
the origination of Auto Loans.
"Dealer Agreement" means the agreement between the applicable Originator
and a Dealer with respect to the origination of an Auto Loan.
"Interim Servicing Agreement" means the interim servicing agreement of
even date herewith between Seller and Purchaser.
"Obligor" means, with respect to any Auto Loan, the Person primarily
obligated to make payments in respect thereto.
"Originator" means the originator of an Auto Loan.
"Originator Agreement" means the Loan Sale Agreement pursuant to which
Seller originally acquired an Auto Loan from the related Originator.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, governmental authority or any other entity of
whatever nature.
"Purchase Price" means, with respect to any Auto Loan and the Related
Loan Assets, an amount equal to the purchase price paid by Purchaser to Seller
under Section 2.2(a) of the Asset Purchase Agreement.
"Related Loan Assets" with respect to an Auto Loan includes, without
limitation, (a) all security interests, or liens, and property subject thereto
from time to time purporting to secure payment by the Obligor thereunder, (b)
all guarantees, indemnities and warranties, insurance policies, certificates
of title and other agreements or arrangements of whatever character from time
to time supporting or securing payment of such Auto Loan, excluding the
Seller's rights under the related Originator Agreement, it being understood
that certain of the Seller's rights and obligations under certain of its
Originator Agreements are being assigned to the Purchaser pursuant to the
Asset Purchase Agreement and that certain Assignment and Assumption Agreement
(as defined in the Asset Purchase Agreement) dated of even date herewith, (c)
all collections and records with respect to the foregoing, and (d) all
proceeds of any of the foregoing.
"Repurchase Price" means, with respect to any Auto Loan and the Related
Loan Assets which the Seller is obligated to repurchase pursuant to Section 4,
an amount (to be payable as set forth in Section 4(e) hereof) equal to 96% of
the principal balance of such Auto Loan as of the Cut-Off Date, less all
payments received by the Servicer on behalf of the Purchaser and applied by
the Servicer to reduce the principal balance of such Auto Loan, plus (b) the
lesser of (x) accrued and unpaid interest on such Auto Loan to the date of
repurchase and (y) 75 days of accrued and unpaid interest on such Auto Loan.
"Seller's knowledge" or "Seller's actual knowledge" or "to the best of
Seller's knowledge" or any other similar phrase means that actual awareness of
a particular fact or other matter that an individual serving as a director or
officer of Seller has.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
Section 2. Sale and Conveyance of Auto Loans.
(a) Subject to paragraph (c) below, the other terms and provisions of
this Agreement and the Asset Purchase Agreement, the Seller, effective as of
the Closing Date does hereby sell, transfer, assign, set over and otherwise
convey to the Purchaser without recourse but subject to the terms of this
Agreement, all of the right, title and interest of the Seller in and to the
Auto Loans and the Related Loan Assets, on a servicing released basis. Seller
agrees that substantially all of the Auto Loans sold, transferred, assigned,
and conveyed to Purchaser hereunder shall satisfy the criteria set forth in
Section 5(b) and (c) hereof and that substantially all of the related Loan
Assets acquired by Purchaser shall conform with all of the requirements
hereof. The Purchaser acknowledges that on or prior to the date hereof. On
the Closing Date, Seller shall deliver the Auto Loan Files related to the Auto
Loans to the Purchaser or the Purchaser's designee.
(b) The Purchase Price for the Auto Loans and the Related Loan Assets
shall be as set forth in and payable as provided in the Asset Purchase
Agreement.
(c) The Seller shall be entitled to receive all payments of principal
and interest received on the Auto Loans on or prior to the Cut-Off Date. The
Purchaser shall be entitled to all payments of principal and interest received
on the Auto Loans after the Cut-Off Date. The principal balance of each Auto
Loan as of the Cut-Off Date shall be determined after deduction of all
payments of principal received with respect to such Loan on or before the
close of business on the Cut-Off Date.
(d) Following payment of the Purchase Price by the Purchaser to the
Seller, the ownership of each Auto Loan and the Related Assets shall be vested
in the Purchaser, and the Seller shall not take any action inconsistent with
such ownership and shall not claim any ownership interest in any such Auto
Loan or such Related Loan Assets.
(e) From the date of this Agreement, the Seller shall indicate in its
records that each Auto Loan and the Related Loan Assets has been sold to the
Purchaser.
(f) In connection with the transfer contemplated by this Agreement,
on or before the Closing Date, Seller shall deliver (or shall have delivered)
to Purchaser the original Auto Loans, the Auto Loan Files (to the extent then
available), intervening assignments (if any) and intervening powers of
attorney (if any) related thereto, and a power of attorney in the form
attached hereto as Exhibit "B", all other documents (to the extent then
available) specified on the Auto Loan Funding Checklist, the Certificates of
Title (or, to the extent originals thereof are not provided by a particular
State, copies thereof); provided that, if a Certificate of Title with
respect to any Automobile is not available on the Closing Date, then Seller
shall deliver to Purchaser an Application for Certificate of Title with
respect to such Automobile on such date. Subject to Section 4, Seller
shall, on the Closing Date to the extent practicable, and, otherwise, as soon
as possible, deliver to Purchaser all other documents necessary to reflect
Bankers Trust, Trustee, as Purchaser's designee, as the lienholder on all
Certificates of Title; in connection therewith, Purchaser and Seller
acknowledge and agree that: (i) in certain States, it is necessary for Seller
to obtain the original Certificate of Title from the relevant Obligor or to
obtain such Obligor's consent (by way of such Obligor's signature) to the
retitling of the relevant Automobile; (ii) such obligations are solely those
of Seller and are to be performed by Seller at its sole expense; provided
that Purchaser has agreed to assist Seller, at Seller's sole expense, in
obtaining such original Certificates of Title or consents, as the case may be;
and (iii) the failure of Seller, notwithstanding Purchaser's agreement to
assist Seller pursuant to the immediately preceding clause (ii), to obtain
from any such Obligor the original Certificate of Title or consent, as the
case may be, shall subject Seller to the repurchase requirements of Section
4 as Purchaser's sole remedy. In addition, Seller agrees to record and file
immediately after the Closing Date, at its own expense, financing statements
with respect to the Related Loan Assets, meeting the requirements of
applicable law.
(g) Any action required or permitted to be taken by the Purchaser in
furtherance of its purchase of the Auto Loans, including enforcement of its
rights and receipt of documents with respect thereto, may be delegated by it
to one or more agents (including a servicer) designated by the Purchaser in
writing to the Seller.
Section 3. Intended Characterization. It is the intention of the
parties hereto that the transfer of the Auto Loans and the Related Loan Assets
made hereunder (the "Transfer") shall constitute a purchase and sale and not a
loan or financing. If, however, the Transfer is deemed for any reason to be a
secured financing, Seller shall be deemed hereunder to have granted to
Purchaser, and Seller does hereby grant to Purchaser, a first priority
security interest in all of the Auto Loans and the Related Loan Assets (except
with respect to any Auto Loans repurchased in accordance with the terms
hereof). For purposes of such grant, this Agreement shall constitute a
security agreement under applicable law.
Section 4. Repurchase of Auto Loans.
(a) If Seller is notified by Purchaser within ninety (90) days
following the Closing Date that any material document relating to an Auto Loan
is missing or defective (e.g., mutilated, damaged, defaced, incomplete,
improperly dated, clearly forged, or otherwise physically altered) in any
material respect or that any document set forth on the Auto Loan Funding
Checklist is not in the relevant Auto Loan File, then Seller shall correct or
cure such omission, defect, or other irregularity within 30 days of the date
on which Seller was notified by Purchaser of such condition. If Seller fails
to correct or cure such condition within such time period, then the Seller
shall repurchase, on or before the date of the expiration of such cure period,
such Auto Loan and the Related Loan Assets from Purchaser by paying the
applicable Repurchase Price to Purchaser.
(b) If Purchaser does not receive certificates of title naming
Bankers Trust, Trustee, as lienholder with respect to any Automobile the
subject of an Auto Loan within 90 days following the Closing Date, then
Purchaser shall inform Seller within 5 business days following such 90th day.
If Seller has not provided Purchaser with a proper reliened certificate of
title with respect to such Auto Loan on or before the date which is 120 days
following the Closing Date, then the Seller shall repurchase, on or before
such 120th day, such Auto Loan and the other Loan Assets related thereto from
Purchaser in accordance with Section 4(e).
(c) If Seller or Purchaser discovers the breach of any
representations or warranties set forth in Section 5(b) or (c) that materially
and adversely affects the value of any Auto Loan or the interest of Purchaser
in any Auto Loan, then the party discovering such breach or condition shall
give prompt written notice to the other party and Seller shall, within 30 days
from the date which is the earlier of the date on which Seller was notified
of, or otherwise discovered, such breach or condition, cure such breach or
condition. If Seller fails to cure such breach or condition in the applicable
time period, then the Seller shall repurchase, on or before the expiration of
such cure period, the relevant Auto Loan and the Related Loan Assets from
Purchaser by paying the applicable Repurchase Price to Purchaser; provided,
that any repurchase required as a result of a breach of Section 5(c) shall be
limited to a repurchase of a sufficient number of non-qualifying loans
necessary to make the representation true as of the Cut-Off Date.
(d) If Seller fails to perform its repurchase obligation under any of
paragraphs (a) through (c) above, PSB shall (and if PSB fails to, Pacific USA
shall), no later than seven (7) business days after its receipt of a demand
therefor from Purchaser, perform such obligation by paying the applicable cash
portion of the Repurchase Price to Purchaser by wire transfer of immediately
available funds.
(e) If the Seller (or PSB or Pacific USA) must repurchase an Auto
Loan pursuant to this Section, then the Seller (or PSB or Pacific USA as the
case may be) shall pay the applicable Repurchase Price to Purchaser by a
combination (i) wire transfer of immediately available funds and (ii) by
delivering to Purchaser shares of Preferred Stock of a value equivalent to six
percent (6%) of the principal portion of the Repurchase Price, each share to
have a deemed value of $2.00 per share. It is agreed that the non-cash
portion of the Repurchase Price for Auto Loans repurchased during each
six-month period following the date hereof, will be delivered within thirty
(30) days following each such six-month period and Purchaser shall cooperate
to the extent required to reissue certificates of Preferred Stock to Seller
(or its designee) upon surrender of a certificate or certificates representing
more shares than required to pay the non-cash portion of the Repurchase Price
during such six-month period.
(f) With respect to Seller's obligations under paragraphs (a) and (c)
and PSB's and Pacific USA's obligations under paragraph (d) with respect to
such paragraphs, it shall be a condition to any such obligation that Purchaser
shall have used reasonable efforts to pursue available remedies against the
related Originator under the related Originator Agreement with respect to the
applicable Auto Loan.
(g) Upon the repurchase of an Auto Loan by Seller, PSB or Pacific
USA under this Section 4, Purchaser or its assignee shall sell, assign,
transfer, convey and deliver, but without representation or warranty (except
as expressly set forth herein), the relevant Auto Loan, the Related Loan
Assets related thereto, and all of Purchaser's rights under the related
Origination Agreement with respect to such Auto Loan (together with any
accessions thereto made by Purchaser) to Seller, PSB or Pacific USA, as
applicable (or its designee). Purchaser's representations and warranties
shall be limited to the following: Purchaser has not transferred its interest
in the Auto Loan to any Person (other than as security pursuant to financing
for the purchase, which such security interest shall be released upon payment
of the Repurchase Price); Purchaser has full right to transfer the Auto Loan
and Related Loan Assets to Seller; and such Auto Loan and the Related Loan
Assets are free and clear of any Adverse Claim created by Purchaser.
Section 5. Representations, Warranties and Covenants of the Seller,
PSB and Pacific USA.
(a) The Seller hereby represents and warrants to the Purchaser, as of
the date hereof, as follows:
(i) Organization and Good Standing. Seller is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Delaware and each other State where the nature of its business
requires it to qualify, except to the extent that the failure to so qualify
would not in the aggregate materially adversely affect the ability of Seller
to perform its obligations hereunder.
(ii) Authorization. Seller has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by Seller by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its terms
except that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to creditors'
rights generally and (B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of Seller, or any indenture, agreement, mortgage, deed of
trust or other instrument to which Seller is a party or by which it is bound,
or in the creation or imposition of any lien upon any of its properties
pursuant to the terms of such indenture, agreement, mortgage, deed of trust
or other such instrument, or violate any law, or any order, rule or regulation
applicable to Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over Seller or any of its properties.
(v) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(vi) Principal Place of Business. The principal place of business and
chief executive office of the Seller are located at the address of the Seller
set forth in Section 8 of this Agreement and, there are now no, and during the
past four months there have not been, any other locations where the Seller is
located (as that term is used in the Uniform Commercial Code in effect in the
State of Texas) except that, with respect to such changes occurring after the
date of this Agreement, as shall have been specifically disclosed to the
Purchaser in writing.
(vii) Legal Name. The legal name of the Seller is as set forth at the
beginning of this Agreement and the Seller has not changed its name in the
last six years (except for the change from "NAFCO Holding Company, Inc." to
"NAFCO Holding Company, L.L.C.") , and during such period, the Seller did not
use, nor does the Seller now use, any trade names, fictitious names, assumed
names or "doing business as" names except that, with respect to such changes
occurring after the date of this Agreement, as shall have been specifically
disclosed to the Purchaser in writing.
(viii) Tax and Accounting. For federal income tax, reporting,
regulatory and accounting purposes, the Seller will treat the sale of each
Auto Loan sold pursuant to this Agreement as a sale, or absolute assignment,
of its full right, title and ownership interest in such Auto Loan to the
Purchaser, and the Seller has not and will not account for or treat the
transactions contemplated by this Agreement in any other manner.
(b) The Seller represents and warrants to the Purchaser with respect
to each Auto Loan sold pursuant to this Agreement, as of the date hereof, as
follows:
(i) to Seller's knowledge, Originator verified all of the information
customarily verified in the consumer finance industry which is contained in
the Auto Loan File relating to such Auto Loan (including the Automobile
description, the Obligor's payment history, the Obligor's employment history,
the Obligor's income, the Obligor's residence, and the existence of automobile
insurance at the time of the origination of such Auto Loan);
(ii) such Auto Loan includes either (A) a validly perfected first priority
security interest in the Automobile in favor of the Purchaser as secured party
which has not been released from such lien in whole or in part or (B) copies
of the documentation (as filed with the appropriate governmental authority)
necessary to obtain such first priority perfected security interest; at the
time of the origination of such Auto Loan, the related Automobile was covered
by a comprehensive and collision insurance policy (1) in an amount at least
equal to the lesser of (a) the actual cash value of such Automobile, or (b)
the unpaid balance owing on such Auto Loan and (b) insuring against loss and
damage due to fire, theft, transportation, collision and other risks generally
covered by comprehensive and collision coverage;
(iii) such Auto Loan has not been satisfied, subordinated or rescinded;
and no provision of the Auto Loan or any Related Loan Asset has been waived,
altered or modified in any respect, except by instruments or documents
included in the related Loan File;
(iv) such Auto Loan is not and will not be subject to any right of
rescission, set-off, recoupment, counterclaim or defense, whether arising out
of transactions concerning the Auto Loan between the Obligor and the Seller,
or to Seller's actual knowledge, Obligor and the Dealer, the Obligor and the
Originator or otherwise; and no such right has been asserted against Seller
with respect thereto;
(v) immediately prior to assigning such Auto Loan and the Related Loan
Assets to the Purchaser, the Seller was the sole owner and had full right to
transfer the Auto Loan and the Related Loan Assets to the Purchaser; and such
Auto Loan and the Related Loan Assets was free and clear of any Adverse Claim;
(vi) such Auto Loan is not in monetary default for a period in excess of
59 days, and, to the best of Seller's knowledge, other than with respect to
the maintenance of insurance, there is no other default, breach, violation, or
event permitting acceleration under the Auto Loan or repossession of the
related Automobile;
(vii) the contractual documents contained in the Auto Loan File constitute
the entire agreement with respect to the Auto Loan and the Related Loan Assets
between (A) to Seller's actual knowledge, the Obligor and the Dealer and (B)
the Obligor and the Seller;
(viii) to Seller's actual knowledge, the down payment described in the
Loan File was paid to the Dealer in the manner stated in the Loan File, the
proceeds thereof were fully disbursed, there is no requirement for further
advances thereunder; and all fees and expenses in connection therewith have
been paid;
(ix) to the best of Seller's knowledge, the Automobile secured by the
Auto Loan has been delivered to and accepted by the Obligor;
(x) such Auto Loan is denominated and payable in United States dollars;
(xi) the documents evidencing the Auto Loan (A) constitute the legal,
valid and binding obligations of the Obligor thereunder enforceable against
the Obligor in accordance with their respective provisions (except as may be
limited by laws affecting creditors' rights generally), (B) the Auto Loan
contains enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the collateral for the
benefit of the security afforded thereby and (C) do not limit the personal
liability of the Obligor thereof;
(xii) Seller has no actual knowledge that any party to such Auto Loan did
not have the capacity to execute the Auto Loan and the signature of the
Obligor matches that appearing on the Obligor's driver's license forwarded by
the Dealer;
(xiii) such Auto Loan was acquired by the Seller in the ordinary course of
its business and to Seller's actual knowledge such Auto Loan was originated by
the related Dealer in the ordinary course of its business;
(xiv) to Seller's actual knowledge, all amounts due by the Originator to
the applicable Dealer with respect to a Auto Loan have been paid in full to
such Dealer on a timely basis and Seller has, with respect to such Auto Loan
(but only to the extent not repurchased by Seller pursuant to Section 4), no
outstanding claim against any third party relating to such Auto Loan;
(xv) to Seller's actual knowledge, a Dealer Agreement between the
Originator and the Dealer selling the Automobile purchased pursuant to the
Auto Loan is in effect and includes, but is not limited to, a provision
whereby the Dealer warrants title to the Automobile and indemnifies the
Originator against fraud and misrepresentation by the Dealer and its employees
with regard to the Auto Loan sold hereunder; and the Originator's rights
thereunder have been validly assigned from the Originator to the Seller and
from the Seller to the Purchaser and are enforceable against the Dealer by the
Purchaser, along with any other rights of recourse which Originator or the
Seller has against the Dealer, without prejudice to any rights the Purchaser
may have against the Seller;
(xvi) to Seller's actual knowledge, the Automobile was purchased by the
Obligor from a Dealer (A) duly licensed by and authorized to sell Automobiles
by governmental authorities and the other appropriate entities as applicable,
and (B) as to which the Originator had not received notice from the Seller
prior to the related purchase date by Seller that such Dealer is an Ineligible
Dealer (as such term is defined in the related Originator Agreement), and the
Auto Loan was acquired by the Originator or Seller in a transaction that was
not an extension of financing to the related Dealer but was a transaction
constituting a "true sale" under applicable state law;
(xvii) the Auto Loan was sold to the Originator and by the Originator to
Seller without any conduct constituting fraud or misrepresentation on the part
of the Seller and, to Seller's actual knowledge, the Originator, and the
Seller has no knowledge of any fact which leads it to believe such Auto Loan
would not be paid in full when due;
(xviii) except as to any requirement that Purchaser be licensed or
registered in the appropriate jurisdiction, or because of any action or
inaction by, or status of, or order applicable to, Purchaser, such Auto Loan
was not originated in and is not subject to the laws of any jurisdiction, the
laws of which would make the transfer of the Auto Loan to the Purchaser
unlawful;
(xix) such Auto Loan and the Related Loan Assets do not (A) violate or
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating
to usury, consumer protection, truth-in-lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy) or (B) impose any liability or obligation of the Dealer or the Seller
on the Purchaser with respect to such Auto Loan or the Related Loan Assets;
(xx) there is no procedure or investigation pending or, to Seller's actual
knowledge, threatened before any governmental authority (A) asserting the
invalidity of such Auto Loan or the Related Loan Assets, (B) asserting the
bankruptcy or insolvency of the related Obligor, (C) seeking the payment of
such Auto Loan or (D) seeking any determination or ruling that might
materially and adversely affect the validity or enforceability of such Auto
Loan or the Related Loan Assets or the ability of the Seller to perform its
Obligations hereunder;
(xxi) the Seller has duly fulfilled all obligations on its part to be
fulfilled under or in connection with the Auto Loan and the Related Loan
Assets and has done nothing to impair the rights of the Purchaser in the Auto
Loan or the Related Loan Assets; by way of illustration and not by way of
limitation, the Seller has paid in full all taxes and other charges payable in
connection with the Auto Loan and the transfer of the Auto Loan to the
Purchaser, which could impair or become a lien prior to the Purchaser's
interest in such Auto Loan;
(xxii) as of the Closing Date, the Seller has obtained acknowledgment
copies of proper financing statements (on Forms UCC-3), if any, necessary to
release all security interests and other rights of any Person (other than
Purchaser) in any Auto Loan and the Related Loan Assets previously granted by
the Seller, including, without limitation, all such releases specified by the
Purchaser prior to the date hereof;
(xxiii) the current servicing agreement covering the Auto Loans requires
the Servicer to conduct its servicing operations in the same manner, and with
the same care, skill, prudence and diligence with which it services and
administers auto loans of similar credit quality for other portfolios, giving
due consideration to customary and usual standards of practice of prudent
institutional automobile loan services, and in accordance with all applicable
laws and regulations;
(xxiv) each Auto Loan complied with the underwriting criteria contained in
the Originator Agreement under which the Seller acquired such Auto Loan;
(xxv) this Agreement constitutes a valid transfer, assignment, set-over
and conveyance to the Purchaser of all right, title and interest of the Seller
in and to the Auto Loan sold hereunder now existing and hereafter created;
(xxvi) Seller (A) is not in violation of any laws, ordinances,
governmental rules, or regulations to which it is subject, and (B) is not in
violation of any term of any agreement, charter instrument, bylaw, or
instrument to which it is a party or by which it may be bound, which violation
or failure would materially adversely affect any Auto Loan or the Related Loan
Assets or Seller's ability to perform its obligations hereunder; and
(xxvii) there is only one original of the retail installment sale contract
or promissory note and security agreement that would constitute "chattel
paper" for purposes of the UCC in effect evidencing such Auto Loan, such
original has been delivered to Purchaser, and there are no custodial
agreements in effect that would adversely affect the ability of Purchaser to
maintain possession thereof pursuant to the terms hereof.
(c) The Seller represents and warrants to the Purchaser with respect
to all Auto Loans sold pursuant to this Agreement, that as of the Cut-Off Date
(i) none of the Auto Loans is in monetary default for a period in excess of 59
days, (ii) no more than 12% of the total NAFCO Loans and Advantage Loans are
in monetary default for a period in excess of 30 days and (iii) to the best of
Seller's knowledge, other than with respect to the maintenance of insurance,
there is no other default, breach, violation, or event permitting acceleration
under the Auto Loan or repossession of the related Automobile.
(d) PSB represents and warrants to the Purchaser, as of the date hereof,
as follows:
(i) Organization and Good Standing. PSB is a Federal Savings Bank duly
organized, validly existing and in good standing under the laws of the United
States and each other State where the nature of its business requires it to
qualify, except to the extent that the failure to so qualify would not in the
aggregate materially adversely affect the ability of PSB to perform its
obligations hereunder.
(ii) Authorization. PSB has the power, authority and legal right to
execute, deliver and perform under the terms of this Agreement and the
execution, delivery and performance of this Agreement has been duly
authorized by PSB by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of PSB, enforceable against PSB in accordance with its terms except
that (A) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws (whether statutory,
regulatory or decisional) now or hereafter in effect relating to creditors'
rights generally and (B) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to certain equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of PSB, or any indenture, agreement, mortgage, deed of
trust or other instrument to which PSB is a party or by which it is bound, or
in the creation or imposition of any lien upon any of its properties pursuant
to the terms of such indenture, agreement, mortgage, deed of trust or other
such instrument, or violate any law, or any order, rule or regulation
applicable to PSB of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over PSB or any of its properties.
(iv) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(e) Pacific USA represents and warrants to the Purchaser, as of the
date hereof, as follows:
(i) Organization and Good Standing. Pacific USA is a corporation duly
organized, validly existing under the laws of the State of Texas and is in
good standing under the laws of the State of Texas and each other State where
the nature of its business requires it to qualify, except to the extent that
the failure to so qualify would not in the aggregate materially adversely
affect the ability of Pacific USA to perform its obligations hereunder.
(ii) Authorization. Pacific USA has the power, authority and legal
right to execute, deliver and perform under the terms of this Agreement and
the execution, delivery and performance of this Agreement has been duly
authorized by Pacific USA by all necessary corporate action.
(iii) Binding Obligation. This Agreement, assuming due authorization,
execution and delivery by Purchaser, constitutes a legal, valid and binding
obligation of Pacific USA, enforceable against Pacific USA in accordance with
its terms except that (A) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws (whether
statutory, regulatory or decisional) now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to certain
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions contemplated by
the fulfillment of the terms of this Agreement will not conflict with, result
in any breach of any of the terms and provisions of or constitute (with or
without notice, lapse of time or both) a default under the organizational
documents or bylaws of Pacific USA, or any indenture, agreement, mortgage,
deed of trust or other instrument to which Pacific USA is a party or by which
it is bound, or in the creation or imposition of any lien upon any of its
properties pursuant to the terms of such indenture, agreement, mortgage, deed
of trust or other such instrument, or violate any law, or any order, rule or
regulation applicable to Pacific USA of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Pacific USA or any of its properties.
(v) Approvals. All approvals, authorizations, consents, orders or other
actions of any person, or of any court, governmental agency or body or
official, required in connection with the execution and delivery of this
Agreement have been or will be taken or obtained on or prior to the Closing
Date.
(f) Seller hereby covenants and agrees with Purchaser as follows:
(i) Except as hereinafter provided, Seller will keep in full effect its
existence, rights and franchises as a limited liability company, and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement and to perform its duties hereunder. Any
person into which Seller may be merged or consolidated, or any entity
resulting from any merger, conversion or consolidation to which Seller shall
be a party, or any person succeeding to the business of Seller shall become
the successor to Seller hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding. If Seller sells substantially all of
its assets, it shall not distribute, as a dividend, return of capital, or
otherwise (except for repayment of indebtedness, including debt owed to PSB)
any portion of the consideration received in connection with such sale unless
it has established appropriate reserves for its obligations under this
Agreement.
(ii) Within 10 days after the Closing Date, Seller will deliver to its
agent for filing proper financing statements (Forms UCC-1) in respect of the
Auto Loans and the Related Loan Assets, naming Seller as the assignor and
Purchaser as the assignee, or other similar instruments or documents specified
in writing by Purchaser on or before the Closing Date, as may be necessary or,
in the opinion of Purchaser, desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect Purchaser's ownership interests
in all Auto Loans and the Related Loan Assets in which an interest may be
assigned hereunder.
(iii) Seller will not change its name, identity, or corporate structure in
any manner that would, could, or might make any financing statement or
continuation statement misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given Purchaser at least 10 business days prior
written notice thereof and shall have provided evidence of the making of all
appropriate UCC filings. Seller will give Purchaser at least 30 days prior
written notice of any relocation of its chief executive office or chief place
of business, and if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement, Seller
shall provide evidence of the making of all appropriate UCC filings.
(iv) After the Closing Date, Seller acknowledges that it will not have any
right to change or modify the terms of the Auto Loans (except as contemplated
in the Interim Servicing Agreement) and will do nothing to impair the rights
of Purchaser in the Auto Loans or the Automobiles. After the Closing Date, if
the rights of Purchaser under any Auto Loan Contract are not assignable or
have, in fact, not been assigned to Purchaser, Seller will take such actions
as may be reasonably requested to enforce such rights on behalf of Purchaser
at Purchaser's sole cost and expense. Seller will execute or endorse,
acknowledge, and deliver to Purchaser from time to time such schedules,
confirmatory assignments, conveyances, powers of attorney, and other
reassurances or instruments and take such further similar actions relating to
the Auto Loans, the related Automobiles, and the rights covered by this
Agreement as Purchaser may reasonably request to preserve and maintain title
to and enforce the Auto Loans and the Related Loan Assets and the rights of
Purchaser therein against the claims of all persons.
(g) PSB hereby covenants and agrees with Purchaser that, except as
hereinafter provided, PSB will keep in full effect its existence, rights and
franchises as a federal savings bank, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement and to perform its duties hereunder. Any Person into which PSB may
be merged or consolidated, or any entity resulting from any merger, conversion
or consolidation to which PSB shall be a party, or any Person succeeding to
the business of PSB (through a stock acquisition but not a sale of
substantially all of the assets) shall be the successor of PSB hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Notwithstanding the foregoing, PSB shall cause such successor to execute an
agreement or assumption, in form and substance reasonably satisfactory to
Purchaser, to perform every obligation of PSB under this Agreement.
Purchaser acknowledges that PSB intends to sell substantially all of its
assets and dissolve its federal savings bank charter in 1998; upon such event
Pacific USA agrees to assume all liabilities of PSB hereunder.
(h) Pacific USA hereby covenants and agrees with Purchaser that, except as
hereinafter provided, Pacific USA will keep in full effect its existence,
rights and franchises as a corporation, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and enforceability of this
Agreement and to perform its duties hereunder. Any Person into which Pacific
USA may be merged or consolidated, or any entity resulting from any merger,
conversion or consolidation to which Pacific USA shall be a party, or any
Person succeeding to the business of Pacific USA shall be the successor of
Pacific USA hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Notwithstanding the foregoing, Pacific USA shall
cause such successor to execute an agreement or assumption, in form and
substance reasonably satisfactory to Purchaser, to perform every obligation of
Pacific USA under this Agreement. If Pacific USA sells substantially all of
its assets, it shall not distribute, as a dividend, return of capital, or
otherwise any portion of the consideration received in connection with such
sale unless either (i) it has established appropriate reserves for its
obligations under this Agreement, or (ii) its parent company has assumed the
obligation of Pacific USA under Section 4(d) hereof.
Section 6 Survival of Representations and Warranties. The
representations and warranties set forth in Section 5 shall survive the sale
of the Auto Loans and the Related Loan Assets to the Purchaser and shall
continue so long as any Auto Loan shall remain outstanding. Monaco shall
notify Pacific USA in writing when the last Auto Loan has been paid off or
liquidated.
Section 7. Indemnity. Seller, PSB and Pacific USA shall, jointly
and severally, indemnify and hold harmless Monaco, its directors, officers,
agents, employees, attorneys, accountants, and assignees, from and against any
loss, liability, expense, damage or injury suffered or sustained by any such
Person, including any judgment, award, settlement, reasonable attorneys' fees,
and other costs and expenses incurred in connection with the defense of any
actual or threatened action, proceeding, or claim, which arises as a result of
the violation by any of Seller, PSB, Pacific USA or any of such Persons'
respective agents of any state or federal laws, rules or regulations relating
to the Auto Loans (including, without limitation, the Uniform Commercial Code,
if applicable) applicable to fair credit billing, fair credit reporting, and
collection, including fair debt collection, practices.
Section 8 Notices, Etc.. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing and mailed or
tele-communicated, or delivered as to each party hereto, at its address set
forth as follows:
To the Purchaser:
Monaco Finance, Inc.
370 17th Street, Suite 5060
Denver, Colorado 80202
Attn: Irwin Sandler
Phone: (303) 592-9411
Fax: (303) 405-6496
To the Seller:
NAFCO Holding Company, L.L.C.
17103 N. Preston Road, Suite 100
Dallas, Texas 75248
Attn: Robert D. Womack
Phone: (972) 732-8626
Fax: (972) 732-8955
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
To PSB:
Pacific Southwest Bank
4144 N. Central Expressway
Suite 800
Dallas, Texas 75204
Attn: Bobby Hashaway
Phone: (214) 841-8890
Fax: (214) 841-8889
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
To Pacific USA:
Pacific USA Holdings Corp.
5999 Summerside Drive
Suite 112
Dallas, Texas 75252
Attn: Bill C. Bradley
Phone: (972) 248-5022
Fax: (972) 248-5023
With a copy to:
Pacific USA Holdings Corp.
3200 Southwest Freeway, Suite 1220
Houston, Texas 77027
Attn: Cathryn L. Porter
Phone: (713) 871-0111
Fax: (713) 871-0155
All such notices and communications shall not be effective until received by
the party to whom such notice or communication is addressed.
Section 9. Binding Effect; Assignability. This Agreement shall be
binding upon and inure to the benefit of the Seller and the Purchaser, and
their respective successors and permitted assigns. Subject to Section 2(g),
no party may assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the other.
Section 10. Amendments; Consents and Waivers; Entire Agreement. No
modification, amendment or waiver of, or with respect to, any provision of
this Agreement, and all other agreements, instruments and documents delivered
thereto, nor consent to any departure by any party from any of the terms or
conditions thereof shall be effective unless it shall be in writing and signed
by each of the parties hereto. Any waiver or consent shall be effective only
in the specific instance and for the purpose for which given. This Agreement
and the documents referred to herein (including the Asset Purchase Agreement
and the agreements executed pursuant thereto) embody the entire agreement of
the Seller and the Purchaser with respect to the Auto Loans and supersede all
prior agreements and understandings relating to the subject hereof.
Section 11. Severability. In case any provision in or obligation
under this Agreement 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, shall not in
any way be affected or impaired thereby in any other jurisdiction.
Section 11. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(A) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF TEXAS.
(B) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT OR RELATING TO ANY
OTHER DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH PARTY AGREES (I) TO
THE EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT SITTING IN DALLAS,
TEXAS OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS A LEGAL ACTION, IT
SHALL BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(C) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS AGREEMENT. INSTEAD, ANY LEGAL ACTION RESOLVED IN COURT WILL BE RESOLVED
IN A BENCH TRIAL WITHOUT A JURY.
Section 13. Cooperation. The parties hereby agree to cooperate
with each other in connection with all reasonable requests for information in
connection with the transactions contemplated hereby on a timely basis.
Section 14. Execution in Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and both of which when taken together shall
constitute one and the same agreement.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
MONACO FINANCE, INC., as Purchaser
By: /s/Irwin L. Sandler
Name Irwin L. Sandler
Title: Executive Vice President
NAFCO HOLDING COMPANY, L.L.C., as Seller
By: /s/ Robert D. Womack
Name: Robert D. Womack
Title: Chief Operating Officer
PACIFIC SOUTHWEST BANK
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Chief Financial Officer
PACIFIC USA HOLDINGS CORP.
By: /s/ Bill C. Bradley
Name: Bill C. Bradley
Title: Chief Executive Officer
<PAGE>
SCHEDULE A
Schedule of Auto Loans
<PAGE>
EXHIBIT "B"
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that NAFCO HOLDING COMPANY, L.L.C., a
Delaware limited liability company ("Seller"), having its principal place of
business at 17103 Preston Road, Suite 100, Dallas, Texas 75248, in connection
with certain security interests and liens created in the name of Bankers Trust
Company, Trustee, as collateral agent for Seller, pursuant to the agreement
attached hereto as Exhibit "A", in the motor vehicles securing the loan
contracts described in Schedule A annexed hereto (the "Automobiles"), has and
hereby affirms that it has made, constituted and appointed, and by these
presents does make, constitute and appoint, Monaco Finance, Inc. ("Monaco"),
having its principal place of business at 370 17th Street, Suite 5060, Denver,
Colorado 80202, Seller's true and lawful attorney-in-fact and in Seller's
name, place and stead to act:
FIRST: To execute and/or endorse any certificates of title, applications
for certificate of title or other documents necessary or appropriate to
evidence the assignment, sale and transfer of the Automobiles or Seller's
security interest in the Automobiles.
SECOND: To execute and/or endorse any loan agreement, promissory note,
security agreement, financing statement, certificate of title or other
document, instrument or agreement, or any amendment, modification or
supplement of any of the foregoing, and perform any act and covenant in any
way which Seller itself could do (to the fullest extent that Seller is
permitted by law to act through an agent), which is necessary or appropriate
to modify, amend, renew, extend, release, terminate and/or extinguish (i) any
and all liens and security interests granted to or created in favor of Seller
in and to or affecting any of the Automobiles, or (ii) any indebtedness
secured by any such lien or security interest or any right or obligation of
the obligor of such indebtedness secured by an Automobile, in each case upon
such terms and conditions deemed, in the sole discretion of said
attorney-in-fact, necessary or appropriate in connection with such
modification, amendment, renewal extension, release, termination and/or
extinguishment.
<PAGE>
THIRD: To agree and to contract with any person, in any manner and upon
terms and conditions deemed, in the sole discretion of said attorney-in-fact,
necessary or appropriate for the accomplishment of any such modification,
amendment, renewal, extension, release, termination and/or extinguishment of
any such lien, security interest, indebtedness, right or obligation referred
to above with respect to the Automobiles; to perform, rescind, reform, release
or modify any such agreement or contract or any similar agreement or contract
made by or on behalf of Seller; to execute acknowledge, seal and deliver any
contract, agreement, certificate of title or other document, agreement or
instrument creating, evidencing, securing or secured by any such lien,
security interest, indebtedness, right or obligation; and to take all such
other actions and steps, pay or receive such moneys and to execute,
acknowledge, seal and deliver all such other certificates, documents and
agreements and said attorney-in-fact may deem necessary or appropriate to
consummate any such modification, amendment, renewal, extension, release,
termination and/or extinguishment of any such security interest, lien,
indebtedness, right or obligation or in furtherance of any of the transactions
contemplated by the foregoing.
FOURTH: With full and unqualified authority to delegate any or all of the
foregoing powers to any person or persons whom said attorney-in-fact shall
select.
FIFTH: This power of attorney shall not be affected by the subsequent
disability or incompetence of Seller.
SIXTH: This power of attorney shall be irrevocable and coupled with an
interest.
SEVENTH: To induce any third party to act hereunder, Seller hereby agrees
that any third party receiving a duly executed copy or facsimile of this
instrument may act hereunder, and that any notice of revocation or termination
hereof or other revocation or termination hereof by operation of law shall be
ineffective as to such third party.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
on behalf of Seller as of this _______ day of January, 1998.
NAFCO HOLDING COMPANY, L.L.C.,
a Delaware Limited Liability Company
By:_______________________________
<PAGE>
Name: Robert D. Womack
Title: Chief Financial Officer
STATE OF TEXAS
COUNTY OF ______
This instrument was acknowledged before me on this _______ day of
January, 1998, by Robert D. Womack, Chief Financial Officer of NAFCO Holding
Company, L.L.C., a Delaware limited liability company, on behalf of said
company.
_____________________________________
Notary Public
_____________________________________
Printed Name
My Commission Expires:_______________
<PAGE>
EXHIBIT "A"
Collateral Agent Agreement
<PAGE>
SCHEDULE A
SCHEDULE OF AUTO LOANS
<PAGE>
EXHIBIT 10.67
INTERIM SERVICING AGREEMENT
This INTERIM SERVICING AGREEMENT (this "Agreement"), dated as of January
8, 1998, is entered into between, on the one hand, Monaco Finance, Inc., a
Colorado corporation ("Monaco"), and, on the other than, Advantage Funding
Group, Inc., a Delaware corporation ("Advantage"), Pacific USA Holdings Corp.,
a Texas corporation ("Pacific USA"), and Pacific Southwest Bank, a federally
chartered savings bank ("PSB").
WHEREAS Monaco, Advantage, Pacific USA, PSB, NAFCO Holding Company, LLC,
a Delaware limited liability company ("NAFCO"), and PCF Service, LLC, a
Delaware limited liability company, are parties to that certain Amended and
Restated Asset Purchase Agreement, dated as of January 8, 1998 (as amended or
modified from time to time, the "Asset Purchase Agreement");
WHEREAS, in connection with the Asset Purchase Agreement, Monaco, Pacific
USA, PSB, and Advantage have entered into the Advantage Loan Purchase
Agreement, pursuant to which Advantage has agreed to sell, and Monaco has
agreed to purchase, the Advantage Loans (a schedule of which Advantage Loans
is attached hereto as Exhibit A);
WHEREAS the Advantage Loans are currently being administered and serviced
for Advantage by CSC Logic/MSA L.L.P. d/b/a Loan Servicing Enterprises
("LSE"), as primary servicer, and First Performance Corp. ("FPC"), as provider
of certain collection services (LSE and FPC are sometimes hereinafter
collectively referred to as the "Sub-Servicers"), in each case pursuant to
documentation (the "Sub-Servicer Agreements," certified copies of which (in
each case as amended, modified, or supplemented to date) are attached hereto
as Exhibit B;
WHEREAS, pursuant to the Asset Purchase Agreement and the Advantage Loan
Purchase Agreement, Monaco and Advantage are required to enter into an
"Interim Servicing Agreement" relative to such administration and servicing of
the Advantage Loans;
WHEREAS Monaco desires that Advantage act as servicer of the Advantage
Loans to a date no later than June 30, 1998, and, in such capacity, to
administer and service the Advantage Loans, all in accordance with the terms
and conditions contained herein;
WHEREAS, Advantage desires to continue to have LSE act as primary
servicer of the Advantage Loans and FPC as provider of certain collection
services in respect of the Advantage Loans, on the terms and conditions
contained herein, and Monaco is willing to have the Sub-Servicers continue to
act in their capacities in respect of the Advantage Loans on the terms and
conditions contained herein; and
WHEREAS Monaco desires that Pacific USA and PSB support, and Pacific USA
and PSB are willing to so support, certain of the obligations of Advantage
hereunder;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITION OF TERMS.
Capitalized terms used herein have the meaning set forth in the Asset
Purchase Agreement, unless otherwise defined herein.
2. DUTIES OF ADVANTAGE.
Compliance. In its performance hereunder, Advantage shall comply with
all applicable federal, state, and local laws and regulations and shall
maintain all necessary licenses and authorizations.
Access, Review and Audit. Advantage shall provide, and shall use its
best efforts to cause each Sub-Servicer to provide, Monaco and its authorized
agents and representatives (i) reasonable access during regular business hours
to all records of Advantage and such Sub-Servicer relating to the Advantage
Loans and (ii) reasonable access during normal business hours to responsible
officers of Advantage and such Sub-Servicer to provide information and answer
questions concerning the Advantage Loans. Any on-site examination pursuant to
this paragraph shall be conducted in a manner that does not unreasonably
interfere with Advantage's or such Sub-Servicer's normal operations.
Reports. Advantage shall use its best efforts to cause each
Sub-Servicer to (i) provide to Monaco the servicing reports (and the
electronic data supporting same) specified and described in, and at the times
set forth in, Exhibit B hereto ("Servicing Reports") with respect to the
Advantage Loans, and (ii) provide to Monaco such other information related to
the Advantage Loans as Monaco may reasonably request.
Servicing Standards. Advantage shall require each Sub-Servicer to, in
managing, administering, servicing, enforcing and making collections on the
Advantage Loans serviced by it and the related Automobiles, exercise that
degree of skill, care, prudence and diligence consistent with customary and
usual standards of practice of prudent institutional servicers of motor
vehicle loan portfolios of credit quality similar to the Advantage Loans, and
with at least the same degree of skill, care, prudence, and diligence which
the applicable servicer customarily exercises with respect to motor vehicle
loan contracts of similar quality owned or originated by it.
Changes in Procedures or Standards. Advantage shall not consent to any
material change to any servicing procedures or standards applicable to any
Advantage Loan that would have the effect of lowering existing servicing
standards, without the prior written consent of Monaco. Notwithstanding
anything to the contrary contained herein, Advantage shall not consent to any
amendment of, departure from, or termination of, any of the terms and
conditions of the Sub-Servicer Agreements without the express prior written
consent of Monaco. In addition, Advantage shall use its best efforts to cause
the administration and/or servicing of the Advantage Loans by the
Sub-Servicers to be performed pursuant to the terms of the Sub-Servicer
Agreements; provided that in no event shall Monaco have any liability to
either Sub-Servicer in under or with respect to the Sub-Servicer Agreements.
Remittances. Advantage shall, on a daily basis during the term of this
Agreement: (i) calculate the net change in general ledger balances reflecting
disbursements made, reimbursable costs and expenses paid for, and payments and
proceeds received on behalf of Monaco (for any day, the "Settlement Amount");
and (ii) prepare a statement respecting the Settlement Amount, in form and
substance satisfactory to Monaco (for any day, the "Settlement Statement").
During the term of this Agreement, Advantage shall, on a weekly basis: (y)
wire transfer funds to Monaco in an amount equal to the Settlement Amounts
accumulated during the previous week to an account designated by Monaco; and
(z) provide Monaco with the Settlement Statements for the prior week. If
Monaco notifies Advantage that it believes that any Settlement Amount has been
calculated incorrectly, or if Advantage discovers that any Settlement Amount
has been calculated incorrectly, then Advantage shall promptly review such
payment and make any necessary adjustment within five (5) business days.
3. SERVICING FEES.
In consideration of the servicing obligations to be undertaken by Advantage,
Monaco will pay Advantage a monthly fee equal to the following formula: the
outstanding principal balance of the Advantage Loans on the first business day
of the previous month multiplied by 1/12th of 2.50% ("Servicing Fee").
Advantage shall calculate the Servicing Fees earned and any reasonable
out-of-pocket expenses incurred and not otherwise settled, and shall account
for these fees and expenses through the settlement procedure described in
Section 2(f) herein. Advantage shall send to Monaco, on the first day of
each month, an invoice indicating the amount of the Servicing Fee. The
Servicing Fee shall be due and payable no later than the twenty-third day of
the month. In the event that this Agreement commences or is terminated during
a month, the Servicing Fee shall be pro-rated based on the number of days in
the month that the Agreement was in effect. Notwithstanding anything to the
contrary contained herein or in the Sub-Servicer Agreements, Monaco shall have
no obligation to pay any of the fees, costs, and expenses of, or owing to, any
Sub-Servicer in connection with the transactions contemplated hereby and/or
the transactions contemplated by the Sub-Servicer Agreements.
4. SERVICING TRANSITION TO MONACO.
Advantage shall use its best efforts, and shall use its best efforts to
cause the Sub-Servicers to, transfer all information regarding the Advantage
Loans and the administration and servicing of the Advantage Loans to Monaco so
as to enable Monaco to commence servicing the Advantage Loans immediately upon
the termination of this Agreement. Monaco shall use its best efforts to
commence the administration and servicing of the Advantage Loans as soon as
possible.
5. INDEMNIFICATION.
Advantage, Pacific USA, and PSB shall, jointly and severally, indemnify and
hold harmless Monaco, its directors, officers, agents, employees, attorneys,
accountants, and assignees (collectively, the "Indemnified Parties"), from and
against all losses, liabilities, expenses, penalties, claims, fines,
forfeitures, attorneys' fees and related costs, judgments, and any other
costs, fees, and expenses, that any Indemnified Party may sustain: (a) that
are directly and primarily the result of Advantage's failure to perform its
duties in compliance with the terms of this Agreement; (b) that result from
Monaco's non-compliance with the terms and provisions of the Servicing
Agreement attached hereto as Exhibit C solely to the extent that Monaco's
non-compliance results directly and primarily from the servicing of the
Advantage Loans by Advantage and/or the Sub-Servicers during the term of this
Agreement (irrespective of whether Advantage and/or the Sub-Servicers are in
compliance with the terms hereof); (c) that arise as a result of the breach by
Advantage or any Sub-Servicer, or any of such Persons' respective agents, of
any state or federal laws, rules or regulations (including, without
limitation, the Uniform Commercial Code) applicable to fair credit billing,
fair credit reporting, and collection, including fair debt collection,
practices; and/or (d) by virtue of Advantage's, or any Sub-Servicer's, failure
to perform under any of the Sub-Servicer Agreements.
6. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns. Advantage may
not assign this Agreement, nor may it delegate its rights, duties and
obligations hereunder, by operation of law or otherwise, without Monaco's
prior written approval; provided that it is understood that Advantage's
duties and obligations hereunder relating to the servicing of the Advantage
Loans are being delegated to the Sub-Servicers during the term of this
Agreement in accordance with the terms and conditions of the Sub-Servicer
Agreements. Monaco may assign its rights hereunder upon prior written notice
of the same to Advantage of the identity of such assignee and the terms of the
assignment. Advantage (and the Sub-Servicers) shall have no right to consent
to or otherwise approve or disapprove any such assignee; however, Monaco shall
provide Advantage with a copy of the executed assignment document (and all
other documents which relate to such assignment) immediately upon execution
thereof.
7. TERM AND TERMINATION.
This Agreement shall terminate on the date which is the earlier of: (a) the
date which is five days following written notice from Monaco to Advantage of
its desire to terminate this Agreement; and (b) June 30, 1998.
8. GENERAL PROVISIONS.
a. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be made in accordance
with the provisions of the Asset Purchase Agreement.
b. Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered will be deemed to be an original but
all of which together will constitute one and the same instrument. Delivery
of an executed counterpart of the signature page to this Agreement by
telefacsimile shall be effective as delivery of a manually executed
counterpart of this Agreement, and any party delivering such an executed
counterpart of this Agreement by telefacsimile to any other party shall
thereafter also promptly deliver a manually executed counterpart of this
Agreement to such other party; provided that the failure to deliver such
manually executed counterpart shall not affect the validity, enforceability,
or binding effect of this Agreement.
c. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
(2) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT RELATING TO ANY OTHER
DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH PARTY AGREES (I) TO THE
EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT SITTING IN DALLAS, TEXAS
OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS A LEGAL ACTION, IT SHALL
BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(3) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY LEGAL ACTION RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
d. Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
e. Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Advantage and Monaco, or in the case
of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
e. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
f. Certain Rules of Construction. Unless otherwise specified
herein, section, exhibit, and schedule references are to this Agreement. All
of the exhibits and schedules hereto are incorporated herein by this
reference. Headings used herein are for convenience of reference only.
h. Effectiveness. This Agreement shall become effective as of the
date first written above upon the execution and delivery of a counterpart
hereof by each of the parties hereto and the consummation of the Closing.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed and delivered by the
parties hereto as of the date first written above.
MONACO FINANCE, INC.,
a Colorado corporation
By: /s/ Irwin L. Sandler
Name: Irwin L. Sandler
Title: Executive Vice President
ADVANTAGE FUNDING GROUP, INC.,
a Delaware corporation
By: /s/ Robert Womack
Name: Robert Womack
Title: Vice President
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ Bill C. Bradley
Name: Bill C. Bradley
Title: Chief Executive Officer
PACIFIC SOUTHWEST BANK,
a federally chartered savings bank
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Executive Vice President
<PAGE>
EXHIBIT 10.68
INTERIM SERVICING AGREEMENT
This INTERIM SERVICING AGREEMENT (this "Agreement"), dated as of January
8, 1998, is entered into between, on the one hand, Monaco Finance, Inc., a
Colorado corporation ("Monaco"), and, on the other than, NAFCO Holding
Company, LLC, a Delaware limited liability company ("NAFCO"), Pacific USA
Holdings Corp., a Texas corporation ("Pacific USA"), and Pacific Southwest
Bank, a federally chartered savings bank ("PSB").
WHEREAS Monaco, NAFCO, Pacific USA, PSB, Advantage Funding Group, Inc., a
Delaware corporation ("Advantage"), and PCF Services, LLC, a Delaware limited
liability company, are parties to that certain Amended and Restated Asset
Purchase Agreement, dated as of January 8, 1998 (as amended or modified from
time to time, the "Asset Purchase Agreement");
WHEREAS, in connection with the Asset Purchase Agreement, Monaco, Pacific
USA, PSB, and NAFCO have entered into the NAFCO Loan Purchase Agreement,
pursuant to which NAFCO has agreed to sell, and Monaco has agreed to purchase,
the NAFCO Loans (a schedule of which NAFCO Loans is attached hereto as
Exhibit A);
WHEREAS the NAFCO Loans are currently being administered and serviced for
NAFCO by Electronic Data Systems Corporation ("EDS"), as primary servicer, and
First Performance Corp. ("FPC"), as provider of certain collection services
(EDS and FPC are sometimes hereinafter collectively referred to as the
"Sub-Servicers"), in each case pursuant to documentation (the "Sub-Servicer
Agreements," certified copies of which (in each case as amended, modified, or
supplemented to date) are attached hereto as Exhibit B;
WHEREAS, pursuant to the Asset Purchase Agreement and the NAFCO Loan
Purchase Agreement, Monaco and NAFCO are required to enter into an "Interim
Servicing Agreement" relative to such administration and servicing of the
NAFCO Loans;
WHEREAS Monaco desires that NAFCO act as servicer of the NAFCO Loans to a
date no later than June 30, 1998, and, in such capacity, to administer and
service the NAFCO Loans, all in accordance with the terms and conditions
contained herein;
WHEREAS, NAFCO desires to continue to have EDS act as primary servicer of
the NAFCO Loans and FPC as provider of certain collection services in respect
of the NAFCO Loans, on the terms and conditions contained herein, and Monaco
is willing to have the Sub-Servicers continue to act in their capacities in
respect of the NAFCO Loans on the terms and conditions contained herein; and
WHEREAS Monaco desires that Pacific USA and PSB support, and Pacific USA
and PSB are willing to so support, certain of the obligations of NAFCO
hereunder;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITION OF TERMS.
Capitalized terms used herein have the meaning set forth in the Asset
Purchase Agreement, unless otherwise defined herein.
2. DUTIES OF NAFCO.
Compliance. In its performance hereunder, NAFCO shall comply with all
applicable federal, state, and local laws and regulations and shall maintain
all necessary licenses and authorizations.
Access, Review and Audit. NAFCO shall provide, and shall use its best
efforts to cause each Sub-Servicer to provide, Monaco and its authorized
agents and representatives (i) reasonable access during regular business hours
to all records of NAFCO and such Sub-Servicer relating to the NAFCO Loans and
(ii) reasonable access during normal business hours to responsible officers of
NAFCO and such Sub-Servicer to provide information and answer questions
concerning the NAFCO Loans. Any on-site examination pursuant to this
paragraph shall be conducted in a manner that does not unreasonably interfere
with NAFCO's or such Sub-Servicer's normal operations.
Reports. NAFCO shall use its best efforts to cause each Sub-Servicer
to (i) provide to Monaco the servicing reports (and the electronic data
supporting same) specified and described in, and at the times set forth in,
Exhibit B hereto ("Servicing Reports") with respect to the NAFCO Loans, and
(ii) provide to Monaco such other information related to the NAFCO Loans as
Monaco may reasonably request.
Servicing Standards. NAFCO shall require each Sub-Servicer to, in
managing, administering, servicing, enforcing and making collections on the
NAFCO Loans serviced by it and the related Automobiles, exercise that degree
of skill, care, prudence and diligence consistent with customary and usual
standards of practice of prudent institutional servicers of motor vehicle loan
portfolios of credit quality similar to the NAFCO Loans, and with at least the
same degree of skill, care, prudence, and diligence which the applicable
servicer customarily exercises with respect to motor vehicle loan contracts of
similar quality owned or originated by it.
Changes in Procedures or Standards. NAFCO shall not consent to any
material change to any servicing procedures or standards applicable to any
NAFCO Loan that would have the effect of lowering existing servicing
standards, without the prior written consent of Monaco. Notwithstanding
anything to the contrary contained herein, NAFCO shall not consent to any
amendment of, departure from, or termination of, any of the terms and
conditions of the Sub-Servicer Agreements without the express prior written
consent of Monaco. In addition, NAFCO shall use its best efforts to cause the
administration and/or servicing of the NAFCO Loans by the Sub-Servicers to be
performed pursuant to the terms of the Sub-Servicer Agreements; provided
that in no event shall Monaco have any liability to either Sub-Servicer in
under or with respect to the Sub-Servicer Agreements.
Remittances. NAFCO shall, on a daily basis during the term of this
Agreement: (i) calculate the net change in general ledger balances reflecting
disbursements made, reimbursable costs and expenses paid for, and payments and
proceeds received on behalf of Monaco (for any day, the "Settlement Amount");
and (ii) prepare a statement respecting the Settlement Amount, in form and
substance satisfactory to Monaco (for any day, the "Settlement Statement").
During the term of this Agreement, NAFCO shall, on a weekly basis: (y) wire
transfer funds to Monaco in an amount equal to the Settlement Amounts
accumulated during the previous week to an account designated by Monaco; and
(z) provide Monaco with the Settlement Statements for the prior week. If
Monaco notifies NAFCO that it believes that any Settlement Amount has been
calculated incorrectly, or if NAFCO discovers that any Settlement Amount has
been calculated incorrectly, then NAFCO shall promptly review such payment and
make any necessary adjustment within five (5) business days.
3. SERVICING FEES.
In consideration of the servicing obligations to be undertaken by NAFCO,
Monaco will pay NAFCO a monthly fee equal to the following formula: the
outstanding principal balance of the NAFCO Loans on the first business day of
the previous month multiplied by 1/12th of 2.50% ("Servicing Fee"). NAFCO
shall calculate the Servicing Fees earned and any reasonable out-of-pocket
expenses incurred and not otherwise settled, and shall account for these fees
and expenses through the settlement procedure described in Section 2(f)
herein. NAFCO shall send to Monaco, on the first day of each month, an
invoice indicating the amount of the Servicing Fee. The Servicing Fee shall
be due and payable no later than the twenty-third day of the month. In the
event that this Agreement commences or is terminated during a month, the
Servicing Fee shall be pro-rated based on the number of days in the month that
the Agreement was in effect. Notwithstanding anything to the contrary
contained herein or in the Sub-Servicer Agreements, Monaco shall have no
obligation to pay any of the fees, costs, and expenses of, or owing to, any
Sub-Servicer in connection with the transactions contemplated hereby and/or
the transactions contemplated by the Sub-Servicer Agreements.
4. SERVICING TRANSITION TO MONACO.
NAFCO shall use its best efforts, and shall use its best efforts to cause
the Sub-Servicers to, transfer all information regarding the NAFCO Loans and
the administration and servicing of the NAFCO Loans to Monaco so as to enable
Monaco to commence servicing the NAFCO Loans immediately upon the termination
of this Agreement. Monaco shall use its best efforts to commence the
administration and servicing of the NAFCO Loans as soon as possible.
5. INDEMNIFICATION.
NAFCO, Pacific USA, and PSB shall, jointly and severally, indemnify and hold
harmless Monaco, its directors, officers, agents, employees, attorneys,
accountants, and assignees (collectively, the "Indemnified Parties"), from and
against all losses, liabilities, expenses, penalties, claims, fines,
forfeitures, attorneys' fees and related costs, judgments, and any other
costs, fees, and expenses, that any Indemnified Party may sustain: (a) that
are directly and primarily the result of NAFCO's failure to perform its duties
in compliance with the terms of this Agreement; (b) that result from Monaco's
non-compliance with the terms and provisions of the Servicing Agreement
attached hereto as Exhibit C solely to the extent that Monaco's
non-compliance results directly and primarily from the servicing of the NAFCO
Loans by NAFCO and/or the Sub-Servicers during the term of this Agreement
(irrespective of whether NAFCO and/or the Sub-Servicers are in compliance with
the terms hereof); (c) that arise as a result of the breach by NAFCO or any
Sub-Servicer, or any of such Persons' respective agents, of any state or
federal laws, rules or regulations (including, without limitation, the Uniform
Commercial Code) applicable to fair credit billing, fair credit reporting, and
collection, including fair debt collection, practices; and/or (d) by virtue of
NAFCO's, or any Sub-Servicer's, failure to perform under any of the
Sub-Servicer Agreements.
6. ASSIGNMENT.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and permitted assigns. NAFCO may not
assign this Agreement, nor may it delegate its rights, duties and obligations
hereunder, by operation of law or otherwise, without Monaco's prior written
approval; provided that it is understood that NAFCO's duties and obligations
hereunder relating to the servicing of the NAFCO Loans are being delegated to
the Sub-Servicers during the term of this Agreement in accordance with the
terms and conditions of the Sub-Servicer Agreements. Monaco may assign its
rights hereunder upon prior written notice of the same to NAFCO of the
identity of such assignee and the terms of the assignment. NAFCO (and the
Sub-Servicers) shall have no right to consent to or otherwise approve or
disapprove any such assignee; however, Monaco shall provide NAFCO with a copy
of the executed assignment document (and all other documents which relate to
such assignment) immediately upon execution thereof.
7. TERM AND TERMINATION.
This Agreement shall terminate on the date which is the earlier of: (a) the
date which is five days following written notice from Monaco to NAFCO of its
desire to terminate this Agreement; and (b) June 30, 1998.
8. GENERAL PROVISIONS.
a. Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be made in accordance
with the provisions of the Asset Purchase Agreement.
b. Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered will be deemed to be an original but
all of which together will constitute one and the same instrument. Delivery
of an executed counterpart of the signature page to this Agreement by
telefacsimile shall be effective as delivery of a manually executed
counterpart of this Agreement, and any party delivering such an executed
counterpart of this Agreement by telefacsimile to any other party shall
thereafter also promptly deliver a manually executed counterpart of this
Agreement to such other party; provided that the failure to deliver such
manually executed counterpart shall not affect the validity, enforceability,
or binding effect of this Agreement.
c. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
(1) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS.
(2) IN ANY LEGAL ACTION RELATING TO THIS AGREEMENT RELATING TO ANY OTHER
DEALINGS AND NEGOTIATIONS BETWEEN THE PARTIES, EACH PARTY AGREES (I) TO THE
EXERCISE OF JURISDICTION OVER IT BY A FEDERAL COURT SITTING IN DALLAS, TEXAS
OR DENVER, COLORADO; AND (II) IF EITHER PARTY BRINGS A LEGAL ACTION, IT SHALL
BE INSTITUTED IN ONE OF THE COURTS SPECIFIED IN SUBPARAGRAPH (I) ABOVE.
(3) THE PARTIES EACH HEREBY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY LEGAL ACTION WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS
AGREEMENT. INSTEAD, ANY LEGAL ACTION RESOLVED IN COURT WILL BE RESOLVED IN A
BENCH TRIAL WITHOUT A JURY.
d. Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
e. Amendments; No Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by NAFCO and Monaco, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure
or delay by any party in exercising any right, power or privilege hereunder
shall operate as waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
e. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions be consummated as originally contemplated to the fullest
extent possible.
f. Certain Rules of Construction. Unless otherwise specified
herein, section, exhibit, and schedule references are to this Agreement. All
of the exhibits and schedules hereto are incorporated herein by this
reference. Headings used herein are for convenience of reference only.
h. Effectiveness. This Agreement shall become effective as of the
date first written above upon the execution and delivery of a counterpart
hereof by each of the parties hereto and the consummation of the Closing.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed and delivered by the
parties hereto as of the date first written above.
MONACO FINANCE, INC.,
a Colorado corporation
By: /s/ Irwin L. Sandler
Name: Irwin L. Sandler
Title: Executive Vice President
ADVANTAGE FUNDING GROUP, INC.,
a Delaware corporation
By: /s/ Robert Womack
Name: Robert Womack
Title: Vice President
PACIFIC USA HOLDINGS CORP.,
a Texas corporation
By: /s/ Bill C. Bradley
Name: Bill C. Bradley
Title: Chief Executive Officer
PACIFIC SOUTHWEST BANK,
a federally chartered savings bank
By: /s/ Bobby Hashaway
Name: Bobby Hashaway
Title: Executive Vice President
