U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996 Commission file number 0-25714
THE AEGIS CONSUMER FUNDING GROUP, INC.
Delaware 22-3008867
(State of Incorporation) (I.R.S. Employer Identification No.)
525 Washington Blvd.
Jersey City, NJ 07310
(Address of principal executive offices)
Telephone number: (201)418-7300
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Title of class Name of exchange on which registered
Common Stock, The Nasdaq National Market
$.01 par value
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for
the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the Registrant's Common
Stock held by non-affiliates on August 26, 1996 (based
upon the average of the high and low sales prices of
such stock as of such date) was approximately $20,800,000.
As of August 26, 1996, 15,762,550 shares of the
Registrant's Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REEFERENCE
The Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held in November, 1996 (the ''Proxy Statement")
is incorporated by reference in Part III of this Form 10-K to
the extent stated herein. Except with respect to information
specifically incorporated by reference in this Form 10-K,
the Proxy Statement is not deemed to be filed as a part hereof.
PART I
Item 1: Business.
General
The Aegis Consumer Funding Group, Inc. is a specialty consumer
finance company engaged in acquiring, securitizing and servicing automobile
retail installment contracts ("finance contracts") originated by factory
authorized new car dealers ("Dealers") in connection with the sale of
late-model used and to a lesser extent, new cars to consumers with sub-prime
credit. The Company targets the higher quality segment of the sub- prime
credit market, acquiring finance contracts primarily on used cars that, on
average, are 1.7 years old with an original balance of $12,290 and a term of
54 months as of June 30, 1996. The Company has acquired $630.2 million of
automobile finance contracts through June 30, 1996, $582.0 million of which
have been securitized in thirteen offerings of asset-backed securities.
The Company was organized in 1989 to participate in the growing market
for securitization of various consumer and other receivables. Following a
quasi-reorganization in March 1992, the Company focused its business on the
acquisition and securitization of high-yield consumer-based receivables.
Upon acquiring The Clearing House Corporation (renamed "Aegis Auto Finance,
Inc.") in June 1993, the Company began funding sub-prime automobile finance
contracts. Since its inception, the Company has completed over twenty
private placement securitizations of consumer and other receivables,
including sub-prime automobile finance contracts as well as medical equipment
leases, loans originated under the federal Department of Housing and Urban
Development's home improvement loans program ("HUD Title I Loans") and mutual
fund fee receivables. Beginning in 1994, the Company focused its business
exclusively on the automobile finance business.
The Company's strategy is to actively manage credit risk while
increasing the volume of finance contracts acquired, securitized and serviced.
Key elements of the Company's strategy are:
Active Credit Risk Management. The Company focuses its credit risk
management on all aspects of the Company s underwriting, securitization and
servicing, with emphasis on collections, of finance contracts. The Company
has a credit committee comprised of senior management that continually
evaluates the underwriting process, Dealer performance, collection efficiency
and portfolio performance. The Company's quality control department reviews,
on a sample basis, finance contracts, supporting documentation and compliance
with underwriting standards. The Company believes that effective credit risk
management will build institutional investor demand for the Company's
securitized finance contracts.
Consistent Underwriting Standards. Through training, proprietary
technology and intensive management review, the Company strives to maintain
consistent underwriting standards at its three regional processing centers.
These standards are designed both to achieve a low level of delinquencies and
charge-offs and to qualify the Company's finance contracts for securitization.
The Company's credit approval system monitors multiple evaluation criteria,
and performs in excess of 100 internal data integrity checks before the
Company approves a finance contract for acquisition.
Limited Loss Exposure. To reduce its potential losses on defaulted
finance contracts, the Company insures each finance contract it acquires
against damage to the financed vehicle through a vender's comprehensive
single interest physical damage insurance policy (the "VSI Policy"). In
addition, the Company purchases credit default insurance with respect to most
of the finance contracts it acquires, which limits the Company's
-2-
exposure to no more than 8.0% of the aggregate principal balance of the finance
contracts covered. Moreover, the Company limits loan-to-value ratios and
applies a purchase price discount to the finance contracts it acquires.
Experienced Management and State-of-the-Art Technology. The Company has
assembled a management team of experienced personnel who have backgrounds in
finance and capital markets, systems development, the automobile industry and
securitizations of a variety of receivables. The combined experience of the
Company's management has enabled it to develop internally its proprietary
AutoMate (finance contract acquisition) and PRIM (Product Reporting and
Information Management) computer systems and databases to effectively manage
each stage in the financing cycle.
Funding and Liquidity through Securitization. The Company uses warehouse
facilities to provide funds for the acquisition of automobile finance
contracts and securitization transactions, to reduce the impact of interest
rate fluctuations and to reduce its cost of capital relative to traditional
sources of corporate debt financing. Through June 30, 1996, the Company had
securitized $582.0 million of automobile finance contracts in thirteen
offerings of asset-backed securities, eight of which were rated A+ and one of
which was rated A, in each case by Duff & Phelps Credit Rating Co. ("Duff &
Phelps"), and three pools aggregating approximately $19.4 million which were
not rated. In addition, in December 1995, the Company entered into a
commitment to sell $175 million of sub-prime automobile finance contracts to
be resold as asset- backed securities (the "Owner Trust Facility"), of which
the Class A Notes are rated AAA by Standard & Poor's Ratings Services
("Standard & Poor's") and Aaa by Moody's Investor Services, Inc. ("Moody's").
As of June 30, 1996, the Company had sold approximately $97.8 million, of
automobile finance contracts into the Owner Trust Facility. The Company also
has a commitment from another lender to purchase and securitize up to $533.0
million of the Company's finance contract acquisitions (the "Securitization
Facility). Two securitizations aggregating $197.0 million which were rated
A+ by Duff & Phelps were completed as of June 1996 pursuant to the
Securitization Facility.
Nationwide Diversification with Centralized Operations. The Company currently
acquires finance contracts in 32 states and operates three regional
processing centers. The Company believes that its centralized operations are
a more efficient method of processing finance contracts than operating
numerous local facilities. The Company has successfully leveraged its
substantial infrastructure to penetrate new markets, increase the number of
active Dealers within existing markets and increase the volume of finance
contracts acquired per Dealer. The Company seeks to mitigate the risk of
loss due to regional economic downturns and to reduce dependency on a limited
number of local markets by maintaining a geographically diverse finance
contract portfolio. While the Company establishes and maintains
relationships with dealers through sales representatives located in the
geographic markets served by the Company, all of the Company's day-to-day
operations are centralized at the Company's processing centers in Jersey
City, New Jersey, Irvine, California, and Marietta, Georgia. This structure
allows the Company to closely monitor its underwriting and collections
operations and eliminates the expenses associated with full-service branch or
regional offices.
Distinctive Financing Program. The Company believes that a significant
competitive advantage is the financing flexibility it provides to its Dealer
base. The Company focuses primarily on the consumer's ability to pay and
secondarily on the value of the collateral in making credit decisions. The
Company responds to credit applications by determining monthly payment
amounts that consumers can afford, rather than limiting its approval to a
specific automobile, providing Dealers the flexibility to offer their customers
a wide range of automobiles. The Company s principal financing program is one
whereby the customer is able to purchase the vehicle without a cash down
payment and the Dealer has minimal recourse on the sale. To
-3-
mitigate its risk in the transaction the Company acquires finance contracts
generally at a 10% discount and limits its advance rate to no more than 105%
(exclusive of Company sponsored warranties) of manufacturer s suggested
retail price ( MSRP ) or Kelly Blue Book Guide ( Kelley Blue Book ) retail
value.
Superior Dealer Service. By providing prompt service, consistent credit
decisions and a reliable source of financing for sub-prime consumers, the
Company hopes to expand its Dealer base and increase the volume of finance
contracts acquired from each Dealer. The Company typically responds to credit
applications within three hours, and generally pays the Dealer within 24
hours of receipt of complete finance contract documentation.
The Company has experienced substantial growth since its entry into the
automobile finance business in 1993. The growth in acquisitions and
securitizations of sub-prime automobile finance contracts can be seen in
the following table:
<TABLE>
<CAPTION>
Number of Amount
Dealers at Number Amount of Finance
End of Number of of Finance of Finance Contracts
Quarter Ended Quarter(1) States(2) Contracts Contracts Securitized
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
September 30, 1993 200 8 282 $3.1 $7.5
December 31, 1993 250 8 263 2.9 --
March 31, 1994 300 9 880 9.8 --
June 30, 1994 375 14 1,539 18.0 18.5
September 30, 1994 550 15 1,723 20.7 23.3
December 31, 1994 900 20 1,583 19.2 21.0
March 31, 1995 1,000 22 2,688 32.8 21.0
June 30, 1995 1,200 25 4,901 59.6 54.0
September 30,1995 1,300 30 5,943 72.6 67.6
December 31,1996 1,600 31 8,190 100.6 85.4
March 31, 1996 1,700 31 10,569 128.8 130.1
June 30, 1996 2,200 32 12,037 149.6 149.3
<FN>
(1) Approximate number of Dealers based upon signed agreements with Dealers
from whom the Company will accept finance contract applications.
(2) Based upon those states in which the Company acquired finance contracts
during the related period.
</FN>
</TABLE>
Industry Background/Competition
The sub-prime credit market is comprised of consumers who are deemed
to be relatively high credit risks due to various factors, including, among
other things, previous credit problems, the absence or limited extent of
their prior credit history or limited financial resources. The sub-prime
consumer automobile finance market is highly fragmented, consisting of many
national, regional and local competitors. Historically, traditional
financing sources (commercial banks, savings and loan associations, credit
unions, captive finance companies and consumer lenders), many of which have
significantly greater resources than the Company and may be able to offer
more attractive finance contract acquisition prices to Dealers, have not
consistently served this market. However, such traditional financing sources
have been increasing their presence in this market. The Company believes that
increased regulatory oversight and capital requirements imposed by market
conditions and governmental agencies have limited the activities of many
banks and savings and loan associations in the sub-prime credit market.
As a result, the sub-prime credit market is primarily serviced by smaller
finance organizations that solicit business when and as their
-4-
capital resources permit. The Company believes no one of its competitors or
group of competitors has a dominant presence in the market. The Company's
strategy is designed to capitalize on the market's lack of a major national
financing source.
Finance Contract Profile
The following tables provide information regarding the automobile finance
contracts acquired and leases originated by the Company during the periods
indicated. The Company commenced lease originations in April 1994 and ceased
originations in the first quarter of its 1996 fiscal year.
<TABLE>
<CAPTION>
Finance Contract Acquisitions
Year Ended
<S> <C> <C> <C> <C>
June 30, 1993 June 30,1994 June 30,1995 June 30, 1996
(dollars in thousands)
Original Balance . $12,181 $33,738 $132,294 $451,536
Number acquired. . 1,148 2,964 10,895 36,739
Average Original balance $10.6 $11.4 $12.1 $12.3
Average discount on contracts
acquired . . . . . 8.1% 10.1% 9.9% 10.0%
Current balance(1) . $1,595 $11,765 $79,657 $420,120
Average Balance
Outstanding(1) . $4.0 $7.2 $9.6 $12.0
Weighted Average Original
Term (in months). . 54.0 54.0 55.1 54.1
Weighted Average Remaining
Term (in months)(1) . 18.0 29.3 40.3 50.3
Weighted Average Annual
Percentage Rate(1) . 20.5% 20.1% 20.2% 20.1%
Percentage New Cars(1) 36.9% 17.0% 12.8% 6.8%
Percentage Used Cars(1). 63.1% 83.0% 87.2% 93.2%
- ---------
<FN>
(1) As of July 31, 1996
</FN>
</TABLE>
<TABLE>
<CAPTION>
Lease Portfolio
Year Ended
June 30,1994 June 30,1995 June 30, 1996
(dollars in thousands)
<S> <C> <C> <C>
Original Balance . $1,571 $ 29,505 $436
Number originated. 92 1,914 25
Average Original balance $17.1 $ 15.6 $17.4
Average discount on contracts
originated . . . . 6.7% 7.1 7.2%
Current balance(1) . . $830 $9,478 $337
Average Balance Outstanding(1) $10.9 $ 11.2 $14
Weighted Average Original Term
(in months). . 56.8 55.4 56.5
Weighted Average Remaining Term
(in months)(1) 34.2 39.1 44.9
Weighted Average Annual
Percentage Rate(1) . . 15.9% 16.5% 17.0%
Percentage New Cars(1) 58.0% 16.8% 9.4%
Percentage Used Cars(1) 42.0% 83.2% 90.6%
- -------
<FN>
(1) As of July 31, 1996
</FN>
</TABLE>
Credit Evaluation and Procedures
Underwriting. The Company's automobile finance contract acquisition
program is designed to acquire automobile finance contracts originated
through factory-authorized new car Dealers, while offering them
an opportunity to increase vehicle sales to consumers who typically
do not qualify for traditional financing.
-5-
As of June 30, 1996, the Company had entered into agreements with
approximately 2,200 Dealers, located in 32 States, from whom the Company
will accept finance contract applications.
The Company continually strives to improve upon the effective evaluation of
credit risk, consistency in its credit decisions, the timely communication
of credit decisions and its reliability as a funding source. The Company
has developed, and is constantly refining, the "in house" processing systems
and controls specifically designed to support its evaluation process. The
Company utilizes these systems and controls to assess each applicant's
ability to repay the amounts due on the finance contract and the adequacy
of the financed vehicle as collateral. In addition, the Company utilizes
these systems to achieve consistent credit decisions and to reduce the
elapsed time between receipt of a credit application from a Dealer and the
Company's response to the Dealer. The Company requires each Dealer
submitting a finance contract for acquisition to provide certain information
to the Company, including a completed signed finance contract application
that lists the applicant's assets,liabilities, income, credit and
mployment history as well as other personal information. The Company does
not credit score. Rather, the Company evaluates the applicants' ability
to pay by verifying their residence, employment and income and by
considering the relationship of their monthly income to monthly auto
payment and monthly income to monthly debt burden, including expenses
relating to the finance contract under consideration and expenses relating
to automobile insurance. The Company also engages in a comprehensive
evaluation of at least one credit bureau report from an independent credit
bureau. The credit report typically contains information on matters such as
historical payment experience, credit history with merchants and lenders,
installment debt payments, defaults and bankruptcies, if any. The purpose
of this credit review is to eliminate individuals whose credit quality is
deteriorating or suggests too great a probability of default or whose credit
experience is too limited for the Company to assess the probability of
performance. The Company's underwriting guidelines and processes have
remained consistent throughout its history of acquiring automobile finance
contracts.
Based upon its review of information extracted from the credit bureau
reports and the credit application, the Company may either (i) approve the
credit application; (ii) approve the credit application with conditions; or
(iii) decline the application. The credit analyst documents the decision
and the Dealer is notified by facsimile transmission, typically within
hree hours of receipt by the Company of the credit application. In the
fiscal years ended June 30, 1994, 1995 and 1996, the Company approved
41.4%, 41.8% and 41.3%, respectively, and funded 12.1%, 12.8% and 10.6%,
respectively, of the credit applications received by it from Dealers.
Upon submission by the Dealer of the finance contract and related
documentation, the Company undertakes a series of processes and procedures
that are designed to: (i) substantiate the accuracy of information critical
to the Company's original credit decision; (ii) verify that the finance
contract submitted by the Dealer complies with both the conditions under
which the credit approval was granted and the Company's transaction
structure criteria, including any requirements for obtaining credit default
insurance and (iii) confirm that the documentation complies with the
Company's loss management requirements. These processes and procedures
include the verification of collateral, borrower references and insurance
prior to funding the finance contract. This verification process in many
instances requires submission of supporting documentation and is performed
solely by Company personnel.
The Company has designed its finance programs to limit the loss exposure
on each transaction. The Company seeks to control loss exposure by:
(i) determining whether the applicant meets the Company's underwriting
criteria, particularly whether the applicant has sufficient disposable
income to meet such applicant's existing obligations and the obligations
resulting from the proposed transaction; (ii) limiting the credit it
is willing to extend based upon its assessment of the applicant's ability
to meet payment obligations and value of the underlying collateral;
(iii) requiring that physical damage insurance naming the Company
-6-
as loss payee be maintained at all times by the obligor to protect the
Company's financial interest (if such insurance lapses, the Company is
nonetheless covered under the Company's vehicle single interest insurance
policy); (iv) acquiring a security interest in the vehicle financed; and
(v) obtaining credit default insurance with respect to most of its finance
contracts. The degree of exposure in any transaction is a function of:
(a) the creditworthiness of the applicant; (b) the extent of credit
granted compared to the value of the underlying collateral; (c) the
possibility of physical damage to, or the loss of the collateral; and
(d) the potential for any legal impediment to the collection of the
obligation or the repossession of the collateral. The Company determines
the value of collateral based upon the MSRP if new, or the Kelley Blue Book
Guide or other recognized pricing service if used. The Company has a
general policy of not extending credit exceeding 105% (exclusive of
Company sponsored warranties) of either the MSRP or the Kelley Blue Book
retail value for a finance contract. While the Company does not require a
down payment for finance contracts it acquires, a significant percentage
of consumers elect to make a down payment. In the fiscal year ended
June 30, 1996, 6.8% of the finance contracts acquired by the Company were
new car finance contracts and 93.2% were used car finance contracts.
Upon acquiring a finance contract, the Company acquires a security interest
in the vehicle financed. The finance contracts acquired by the Company during
the fiscal year ended June 30, 1994 averaged approximately $11,382 and had a
weighted average interest rate of approximately 20.1%. Finance contracts
acquired during the fiscal year ended June 30, 1995 averaged approximately
$12,143 and had a weighted average interest rate of approximately 20.2%.
Finance contracts acquired during the fiscal year ended June 30, 1996
averaged approximately $12,290 and had a weighted average interest rate of
approximately 20.1%. All finance contracts acquired by the Company are fully
amortizing (on the simple interest method) and provide for equal payments
over the term of the contract (averaging 54 months). The portions of such
payments allocable to principal and interest are, for payoff and deficiency
purposes, determined in accordance with the law of the state in which the
finance contract was acquired.
During the period the Company was actively funding leases, upon the funding
of a lease, the Company acquired title to the leased vehicle. Leases
originated during the fiscal year ended June 30, 1994 averaged approximately
$17,077, had a weighted average interest rate of approximately 15.8% and an
average term of 57 months. Leases originated during the fiscal year ended
June 30, 1995 averaged approximately $15,624, had a weighted average interest
rate of approximately 16.6% and an average term of 55 months. During the
year ended June 30, 1996, the Company originated $436,000 of leases. Leases
originated during the year ended June 30, 1996 averaged approximately
$17,436, had a weighted average interest rate of approximately 17.1% and
an average term of 57 months. All leases originated by the Company are
amortized to the estimated wholesale residual value using the direct
financing method and provide for equal payment over the term of the contract.
In the quarter ended September 30, 1995, the Company ceased funding leases
and has redirected all its efforts to acquiring finance contracts.
Dealers typically send credit applications to several financing sources.
After reviewing the credit application, each financing source will notify the
Dealer whether it is willing to acquire the finance contract and, if so,
under what conditions. If more than one finance source has offered to
acquire the finance contract, the Dealer typically will select the source
based on an analysis of the "buy rate," or the interest rate, discount fees,
finance contract amounts and other terms and conditions stipulated by the
financing source. The Company believes that its ability to process finance
contract applications and respond to Dealers quickly and efficiently
increases its chances of being selected by Dealers to acquire auto finance
contracts as long as the Company's rates are competitive. The Company
currently acquires finance contracts at a discount of 10% from Dealers.
Upon acquiring a finance contract, the Company issues a check to the Dealer,
and instructs the servicer to issue a "welcome" letter to the obligor,
which advises the obligor of certain payment procedures.
-7-
Auditing. The Company's quality control department seeks to minimize errors
and variances in underwriting procedures by internally auditing or
"re-underwriting" approximately 10% of all funded finance contracts. The
quality control staff performs each of the underwriting and auditing
functions on such finance contracts that were performed prior to the finance
contracts being approved and funded. Commonalities and variances in the
application of underwriting criteria and processes are then communicated to
senior management and underwriting personnel and used as a training tool.
Dealer Network
The Company is seeking to expand and develop its Dealer base through a team
of commissioned field sales representatives employed by the Company that has
grown from eight representatives as of July 1, 1994 to 50 representatives as
of June 30, 1996. Although these sales representatives have not worked for
the Company for a substantial period of time, they have an average of 5.5
years experience in the automobile business. These sales representatives
work under the supervision of a national sales manager who has 11 years
experience in the automobile business (including over two years with the
Company). The Company's sales representatives are assigned to designated
territories and are paid on a graduating volume incentive basis with respect
to each finance contract acquired.
In addition to commissioned sales representatives, the Company has also
engaged three independent exclusive marketing brokers who earn flat fees
per finance contract acquired in their designated territory. All of the
Company's business generated in such territories is the result of
introductions by the independent marketing brokers. In the fiscal year ended
June 30, 1996, approximately $97.0 million of finance contracts and $300,000
of leases, (approximately 21.5% and 68.8%, respectively, of all finance
contracts acquired and leases originated during such period), were acquired
or originated from Dealers in Florida and Alabama and approximately $37.6
million of all finance contracts acquired in such period (approximately 8.3%)
were acquired from Dealers in Louisiana and Mississippi introduced by such
independent marketing brokers. In the fiscal years ended June 30, 1994 and
1995, approximately $6.5 million and $32.1 million, respectively, of finance
contracts and leases (approximately 18.6% and 20.7%, respectively, of all
finance contracts acquired and leases originated during such periods), were
originated by Dealers in Florida and approximately $100,000 and $25.4
million, respectively, of all finance contracts acquired in the fiscal years
ended June 30, 1994 and 1995 (approximately 0.25% and 16.4%, respectively),
were originated by Dealers in Louisiana introduced by such independent
marketing brokers. Effective August 1, 1996, the Company will no longer
accept applications from Dealers located in the State of Louisiana until it
redefines the State's program.
The Company continues to explore new marketing strategies in an effort to
expand its Dealer base and finance contract acquisition and origination volume.
The Company offers four finance contract programs to Dealers: (i) its zero
down-payment program (which accounted for over 90% of the Company's finance
contract acquisitions in the fiscal years ended June 30, 1994, 1995, and
1996; (ii) a military program; (iii) a first time buyer program; and (iv)
a reduced income program. Recently, the Company implemented an extended
warranty program in connection with The Firemen's Fund Insurance Company.
The warranty program allows the cost of an extended warranty underwritten by
The Firemen's Fund Insurance Company to be funded above the Company's
typical 105% of MSRP or Kelly Blue Book retail value (with certain limits).
In return for each extended warranty purchased, the Company receives a cash
payment from The Firemen's Fund Insurance Company. Should the extended
warranty be cancelled or the finance contract not go to term, the Company
will receive a rebate of the unused premium financed.
The Company markets its programs solely to factory authorized new car
dealers, typically with used vehicle sales operations. The Company targets
factory authorized new car dealers for a number of reasons. The
-8-
Company believes that factory authorized new car dealers generally have
higher quality inventory than independent dealers and tend to attract
customers with more desirable credit performance characteristics.
Management of the Company also believes that factory authorized dealers are
generally backed by greater capital levels as compared to independent
dealers and are generally subject to periodic audits by their respective
manufacturers.
The Company's field sales representatives identify and target Dealers that
have established, or are considering establishing, customer solicitation
programs designed to attract sub-prime credit consumers. Each field sales
representative typically is responsible for pursuing and maintaining
relationships with 75 to 125 Dealers. The Company's field sales
representatives train the Dealer's personnel in the Company's finance
programs. This training is continuous since dealerships generally experience
a relatively high degree of personnel turnover. The training provided by
the Company is designed to assist the Dealer in identifying consumers who
will qualify for financing by the Company and structuring transactions
that meet the Company's requirements. Approved Dealers enter into a
non-exclusive written Dealer agreement with the Company (a "Dealer
Agreement"). The Dealer Agreements generally provide that finance contracts
are sold by the Dealer to the Company "without recourse" to the Dealer,
except in limited circumstances including, among others, that: (i) the
financed vehicle is not properly registered or titled showing the Company as
first lienholder; (ii) the full down payment specified in the contract,
if any, was not received by the Dealer; (iii) certain representations and
warranties by the Dealer regarding the finance contract, the financed
vehicle, the finance contract process and manner of sale are breached or
untrue; or (iv) the Dealer has failed to comply with applicable federal and
state consumer laws. The Company currently acquires finance contracts at
a discount of 10% from Dealers. The following table indicates, for the
states in which the Company acquired finance contracts in the fiscal years
ended June 30, 1993, 1994, 1995 and 1996, the total number of factory-
authorized Dealers in such states, the number of Dealers from which the
Company has acquired finance contracts and the finance contract acquisition
volume of the Company in dollars for such periods.
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------
June 30, 1993 June 30, 1994
----------------------------------------------------------
(dollars in thousands)
Factory- Finance Finance
Authorized Originating Contract Originating Contract
State Dealers(1) Dealers Volume Dealers Dealers
<S> <C> <C> <C> <C> <C>
Volume
Alabama...... 370 3 $ 92 5 $ 689
Arizona .... 205 9 450 8 883
California .. 1,705 149 6,948 69 1,772
Colorado .... 270 - - - -
Connecticut.. 340 - - - -
Florida...... 935 - - 59 5,947
Georgia...... 590 37 4,259 84 12,357
Illinois..... 1,155 - - - -
Indiana...... 625 - - - -
Kansas....... 335 - - - -
Kentucky..... 350 - - - -
Louisiana.... 335 - - 4 91
Maryland..... 590 - - 1 12
Missouri..... 555 - - 3 85
Mississippi.. 245 - - - -
Nevada....... 90 6 127 2 20
New Jersey... 700 7 130 57 4,267
New Mexico... 135 2 32 - -
New York..... 1,350 - - - -
North Carolina 700 1 21 8 5,227
Ohio......... 1,070 - - - -
Pennsylvania. 1,410 - - 16 1,049
South Carolina 325 2 48 13 1,127
-9-
Tennessee.... 420 1 16 - -
Texas........ 1,329 - - - -
Virginia..... 580 1 22 2 -
West Virginia 220 - - - 212
Other........ 560 1 36 - -
------ --- ------- ---- -------
17,494 219 $12,181 331 $33,738
====== === ======= === =======
<FN>
(1) Source: National Automobile Dealers Association (data as of
January 1, 1996).
</FN>
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------
June 30, 1995 June 30, 1996
------------------- -------------------
Finance Finance
Originating Contract Originating Contract
State Dealers Volume Dealers Volume
<S> <C> <C> <C> <C>
Alabama... 2 $286 21 $3,609
Arizona... 13 1,451 21 1,843
California... 23 539 7 385
Colorado.. 2 47 28 1,381
Connecticut... 10 869 5 4,453
Florida.... 149 18,995 291 93,472
Georgia.... 107 16,900 164 64,933
Ilinois.... - - 58 2,839
Indiana.... 28 1,994 44 5,694
Kansas.... - - 27 2,444
Kentucky.... - - 40 3,426
Louisiana.... 67 25,402 96 30,355
Maryland.... 4 516 22 2,355
Missouri.... 3 31 54 6,108
Mississippi... 3 226 33 7,233
Nevada... 16 1,457 20 4,744
New Jersey... 66 4,576 75 8,934
New Mexico... 3 226 33 7,233
New York.... 45 3,250 116 10,009
North Carolina.. 51 28,928 103 68,459
Ohio........ 40 2,220 65 10,215
Pennsylvania.. 51 5,260 101 13,252
South Carolina..... 26 3,868 55 9,301
Tennessee...... 14 1,223 62 10,161
Texas....... 47 6,181 227 57,902
Virginia....... 19 1,930 85 10,816
West Virginia..... 21 5,699 54 14,585
Other........ 10 337 26 872
-- ----- -- ------
820 $13,294 1,916 $451,536
=== ======= ===== ========
</TABLE>
During the fiscal year ended June 30, 1996, no single Dealer accounted for
more than 1.5% of the finance contracts acquired, and only one group of
Dealers under common control accounted for approximately 5.1% of the finance
contracts acquired for the fiscal years ended June 30, 1996. During the
fiscal years ended June 30, 1994 and 1995, City Chevrolet Automotive Company,
in Charlotte, North Carolina, accounted for approximately 12.6% and 4.5%,
respectively, of the finance contracts acquired and leases originated by
the Company during such periods, and Dealers in the Hendrick Automotive
Group, including City Chevrolet Automotive Company, accounted for
approximately 16.5% and 12.5%, respectively, of the finance contracts and
leases acquired or originated during those periods. No other Dealer
accounted for more than 5.0% and 3.0% of the finance contracts acquired in
the fiscal years ended June 30, 1994 and 1995, respectively. The Company
believes that it has a good working relationship with the Hendrick
Automotive Group.
Warehouse Credit Facilities.
The Company currently operates under three warehouse credit facilities.
Two of the Company's warehouse credit facilities are provided by III Finance
Ltd.: one offering $100 million of credit (less amounts outstanding under
the lease facility provided by III Finance Ltd.) for the acquisition of
automobile finance contracts and the other offering $50 million for the
acquisition of automobile leases. At June 30, 1996, the Company had
aggregate principal and interest of $37.1 million and $439,000,
respectively, outstanding under these warehouse credit facilities. Under
the terms of these facilities, the loss of either Angelo R. Appierto or
Joseph F. Battiato in their present capacities with certain subsidiaries of
the Company would constitute an event of default. To the extent that the
Company would be unable to secure alternative sources of funding, the loss
of these facilities could have an adverse impact on the Company s finance
contract acquisition activities. The Company also obtained in May 1996 a
warehouse facility from Greenwich Capital, offering $100.0 million of credit
for the acquisition of automobile finance contracts. At June 30, 1996, the
Company had $100.0 million available under this facility.
Securitization Program
The periodic securitization of finance contracts is an integral part of the
Company's automobile finance program. Securitizations enable the Company to
reliquify and redeploy its capital resources and warehouse credit facilities
for the purchase of additional finance contracts. Through June 30, 1996,
the Company completed thirteen privately placed automobile finance contract
securitizations of approximately $582.0 million of automobile finance
contracts. Eight of such securitizations were rated A+ by Duff & Phelps.
In addition, in December 1995, the Company entered into a commitment to
sell $175 million of sub-prime automobile finance contracts to be resold as
asset-backed securities, which was rated AAA by Standard & Poor's and Aaa by
Moody's. As of June 30, 1996, the Company sold approximately $97.8 million
of automobile finance contracts into this facility. In May 1996, the Company
also obtained a firm commitment from Greenwich Capital to purchase and
securitize up to $533.0 million of the Company's finance contract
acquisitions until the commitment is filled, the first two securitizations
aggregating $197.0 million, were rated A+ by Duff & Phelps.
In its securitization transactions, the Company sells pools of finance
contracts to a special purpose subsidiary,
-10-
which then sells the receivables to a trust in exchange for certificates
("Certificates") representing either a 100% undivided interest in, or
secured obligations of, the trust. The Certificates are then sold to
investors who receive principal and a stated pass-through rate of interest
on the Certificate amount outstanding. The Company may also retain or sell
an indirect interest in the transferred receivables that is subordinate to
the interest of the Certificate holders. The retained interest entitles the
holder to receive the residual cash flows from the trust after payment to
investors, absorption of losses, if any, that arise in respect of the
securitized finance contracts and payment of the other expenses and
obligations of the trust. The Company is continually exploring other
structures of securitization which can meet the changing needs of the
financial and capital markets.
Upon each securitization, the Company recognizes the sale of finance
contracts and records a gain or loss in an amount which takes into account
the amounts expected to be received as a result of its retained interest,
net of acquisition discounts and other deferred origination costs.
The Company values each retained interest by calculating the net present
value of its expected residual cash distributions from the trust. The
calculation of the gain or loss and of the retained interest arising from
the securitizations embody prepayment, delinquency, default, recovery and
interest rate assumptions that the Company believes are reasonable and
consistent with assumptions that other market participants would use for
similar financial instruments, and are discounted assuming an interest
rate that the Company believes a third party purchaser of such financial
instrument would demand. If actual experience differs from these assumptions,
additional gains or losses to the Company would result. At June 30, 1996,
the Company held retained interests from the securitization of receivables
which were carried at an aggregate of $70.2 million, of which $70.0 million
had been pledged to secure borrowings of $29.8 million.
If the Company were unable to securitize finance contracts in a financial
reporting period, the Company would incur a significant decline in total
revenues and net income or report a loss for such period. If the Company
were unable to securitize its receivables and did not have sufficient credit
available, either under its warehouse credit facilities or from other
sources, the Company would have to sell portions of its portfolio directly
to investors or curtail its finance contract acquisition activities.
Servicing
The Company currently utilizes American Lenders Facilities, Inc. (a wholly
owned subsidiary of CIGNA Corporation) ("ALFI") as its servicing company.
The servicer accounts for and posts all payments received and provides
certain financial reporting with respect to the Company's automobile finance
receivables. The servicer's computer system provides its personnel with
daily access to all information contained in the customer's contract and
application, including the amount of the contract, maturity, interest rate,
vehicle and reference information and payment history. Furthermore, the
Company is provided with daily access to the servicer's data through
downloading to the Company's PRIM computer system, described below.
In April 1996, the Company renewed its sub-servicing agreement with its
third-party servicer, providing for the transfer of specific collection
functions to the Company. Through this arrangement, the Company assumed
responsibility for all consumer contact with respect to all leases and
finance contracts acquired that were included in the Company's December
1994 securitization transaction and all finance contracts acquired
thereafter. In addition, the Company assumed responsibility for
liquidation activities on its entire finance contract purchase program at
such time. The Company receives a fee from the third-party servicer for
performing these functions. The Company, as sub-servicer, monitors the
payment of the receivables, investigates delinquencies, communicates with
the consumer to obtain timely payments, when necessary (through
sub-contractors) repossesses and disposes of the financed vehicle and
generally polices the receivable and its related collateral. If payment is
not received within one day of its due date, the Company
-11-
takes action by either mailing a written notice to the consumer or contacting
the consumer by telephone. It is the Company's policy generally to work with
the consumer to permit the consumer to keep the vehicle and continue
payments. The Company believes that this policy is in the best interest of
the Company, the participating Dealer and the consumer, as it builds
goodwill and long term customer relationships and increases the possibility
of the ongoing collectibility of the amount due. If a consumer misses a
second monthly payment and is delinquent in his or her payment by more than
35 days and the Company has satisfactory reason to believe the consumer will
not pay, the Company will initiate the necessary steps to repossess the
vehicle. If the value received as a result of repossession and subsequent
sale is materially less than the remaining balance on the receivable, the
Company will seek to hold the consumer liable for the deficiency. The
Company utilizes third party collection agencies to pursue such deficiency
balances.
The Company intends to further the development of its servicing capabilities.
The Company has a wholly owned subsidiary, Systems & Services Technologies,
Inc. ("SST"), to conduct servicing activities. In July, 1996, SST financed
the purchase of a building located in St. Joseph, Missouri for the Company's
servicing activities with Commerce Bank. SST is currently renovating the
building to accommodate its business activities.
Delinquency Control And Collection Strategy
The Company and, with respect to a limited number of accounts, ALFI,
reviews any account that reaches 31 days of delinquency to assess the
collection efforts to date and to refine, if appropriate, the collection
strategy. The Company does not allow finance contracts to be re-written
but allows finance contracts to be extended in certain limited circumstances.
The Servicer and the Company generally will design a collection strategy
that includes a specific deadline within which the obligation must be
collected. Accounts that have not been collected during such period are
again reviewed, and, unless there are specific circumstances which warrant
further collection efforts, the account is assigned to independent bonded
agencies for repossession. Repossessed vehicles are generally resold by the
Servicer or the Company in its capacity as sub-servicer through wholesale
auctions which are attended principally by Dealers. Such auctions typically
result in an average recovery of 57.4% of the outstanding finance contract
balance or approximately 85.7% of the Kelley Blue Book wholesale value.
For financial reporting purposes, the Company recognizes losses based on
the aging profile of delinquent finance contracts. For purposes of
reporting charge-off ratios, the Company reports both gross and net losses
when all potential recoveries on a defaulted receivable have been realized.
For the fiscal years ended June 30, 1994, 1995, and 1996, the Company's net
loss ratio, based on the average outstanding finance contracts, including
those finance contracts sold in securitization transactions, was 0.2%, 0.8%
and 1.2%, respectively. Net losses reflect all recoveries including proceeds
for the sale of the repossessed vehicles, risk default and other insurance
proceeds, net of related repossession and disposition costs. As of June 30,
1996, the Company had 698 vehicles in repossession inventory with an
outstanding finance contract balance of $7.9 million (2.4% of the average
outstanding finance contract balance) and 1,552 finance contracts with an
outstanding finance contract balance of $9.2 million (2.8% of the average
outstanding finance contract balance) which were liquidated at auction and
awaiting other recoveries. In accordance with the Company's reporting
policy, the losses relating to these finance contracts will be reflected
in the charge off ratios reported in future reporting periods.
In August 1995, the Company renegotiated its credit default insurance policy
to allow the Company to delay its decision to insure its finance contract
acquisitions from the time of acquisition to any time from acquisition to
securitization or the sale of the finance contracts.
-12-
The Company believes that this flexibility allows it to better manage its
cash flow needs as well as defray the costs incurred to securitize or sell
its finance contracts. However, the Company may realize a higher degree of
losses on finance contracts held for sale during the period they are held
for sale because of the lack of credit default insurance on such finance
contracts. In conjunction with the renegotiation of the Company's insurance
policies, the Company's current insurance policy incorporates a deductible
amount on claims presented for payment as opposed to a cash reserve from
which claims are paid. As a result, the Company has reported an increase
in its net loss experience. This change does not adversely affect the
Company s results of operations. Upon receipt of all anticipated recoveries,
the Company charges off any remaining balance on a receivable-by-receivable
review.
Management Information Systems
The Company believes that high levels of automation are essential both for
its efficient operations and to maintain its competitive position. The
Company has spent in excess of $2.0 million developing the AutoMate,
LeaseMate and PRIM (Product Reporting and Information Management) computer
systems and databases. AutoMate is the acquisition software for finance
contracts and LeaseMate is the origination software for leases. They are
on-line, real-time systems employing advanced database management techniques.
In addition to accumulating all relevant borrower and asset information,
AutoMate and LeaseMate automatically request and receive credit reports
from credit bureaus, create and merge all Dealer, borrower or lessee and
internal documentation, automatically fax the appropriate documents to their
destinations and prompt underwriting personnel through verification phone
calls. An electronic copy of all documentation is kept on-line indefinitely.
Prior to funding, AutoMate and LeaseMate perform over 100 data integrity,
underwriting guideline and numerical accuracy checks.
Insurance
Each finance contract requires the borrower to obtain comprehensive and
collision insurance with respect to the related financed vehicle with the
Company named as a loss payee. The Company relies on a written
representation from the selling Dealer and independently verifies that a
borrower in fact has such insurance in effect when it purchases contracts.
Each finance contract acquired by the Company is covered from the time of
purchase by the VSI Policy. The VSI Policy has been issued to the Company
by Guaranty National Insurance ("Guaranty National").
Physical Damage and Loss Coverage. The Company initially relies on the
requirement, set in its underwriting criteria, that each consumer maintain
adequate levels of physical damage loss coverage on the respective financed
vehicles. ALFI tracks the physical damage insurance of consumers, and
contacts consumers in the event of a lapse in coverage or inadequate
documentation. Moreover, ALFI is obligated, as servicer, subject to certain
conditions and exclusions, to assist the processing of claims under the VSI
Policy. Guaranty National will insure each financed vehicle securing a
contract against: (i) all risk of physical loss or damage from any external
cause to financed vehicles which the Company holds as collateral; (ii) any
direct loss which the Company may sustain by unintentionally failing to
record or file the instrument evidencing each contract with the proper
public officer or public office, or by failing to cause the proper public
officer or public office to show the Company's encumbrance thereon, if such
instrument is a certificate of title; (iii) any direct loss sustained during
the term of the VSI Policy by reason of the inability of the Company to
locate the consumer or the related financed vehicle, or by reason of
confiscation of the financed vehicle by a public officer or public office;
and (iv) all risk of physical loss or damage from any external cause to a
repossessed financed vehicle for a period of 60 days while such financed
vehicle is (subject to certain exceptions) held by or being repossessed by
the Company.
The physical damage provisions of the VSI Policy generally provide coverage
for losses sustained on the value of the financed vehicle securing a finance
contract, but in no event is the coverage to exceed: (i) the
-13-
cost to repair or replace the financed vehicle with material of like kind
and quality; (ii) the actual cash value of the financed vehicle at the date
of loss, less its salvage value; (iii) the unpaid balance of the contract;
(iv) $50,000 per financed vehicle; or (v) the lesser of the amounts due the
Company under clauses (i) through (iv) above, less any amounts due under all
other valid insurance on the damaged financed vehicle less its salvage
value. No assurance can be given that the insurance will cover the amount
financed with respect to a financed vehicle.
There is no aggregate limitation or other form of cap on the number of
claims under the VSI Policy. Coverage on a financed vehicle is for the
term of the related contract and is noncancellable. The VSI Policy requires
that, prior to filing a claim, a reasonable attempt be made to repossess the
financed vehicle and, in the case of claims on skip losses, every
professional effort be made to locate the financed vehicle and the related
borrower.
Credit Default Insurance. In addition to physical damage and loss coverage,
the Company obtains credit default insurance policies for certain receivables it
acquires. Generally, these policies are obtained for each securitized pool
of receivables and as a result, benefit that pool's trustee and certificate
holders. The insurance provides indemnification for certain losses incurred
due to a deficiency balance following the repossession and resale of financed
vehicles securing defaulted finance contracts eligible for coverage.
Coverage under these credit default policies is strictly conditioned upon
the Company's maintaining and adhering to the credit underwriting criteria
set forth in each policy. Under these policies, losses on each eligible
contract are calculated in an amount equal to the Net Payoff Balance (as
defined below) less the sum of (i) the Actual Cash Value (as defined below)
of the financed vehicle plus (ii) the total amount recoverable from all
other applicable insurance, including refunds from cancelable add-on
products. The maximum coverage under these policies is $15,000 per contract.
From the time it commenced purchasing finance contracts until August 31,
1995, the Company relied upon a series of credit default insurance policies
purchased through Agricultural Excess and Surplus Insurance Company ("AESIC")
which were guaranteed by AESIC's parent, Great American Insurance Company.
Each of these policies required that Aegis make a deposit of certain moneys
to segregated accounts from which losses incurred under a policy would be
paid. Once the funds in an account have been depleted by losses incurred
under a policy, AESIC would directly reimburse the insured.
Since August 1995, the Company has relied upon a series of credit default
insurance policies purchased through The Connecticut Indemnity Company
("Connecticut Indemnity"). Unlike the insurance provided by AESIC, these
policies do not require the Company to deposit moneys to segregated accounts
to pay losses. Instead, each of the Connecticut Indemnity policies provide
that the Company bear losses until such loss exceeds 8% of the aggregate
amount insured under that policy. Connecticut Indemnity is obligated to pay
all losses in excess of this amount to the insured.
Credit default insurance was purchased for each of the finance contracts
sold to a securitization trust with the exception of Aegis Auto Receivables
Trust 1995-3 for which credit default insurance was purchased for only $31.8
million of the $60 million of finance contracts sold to that trust.
Furthermore, none of the finance contracts contributed to Aegis Auto Owners
Trust 1995 have the benefit of credit default insurance. As of June 30,
1996, the Company had contributed $97.8 million of finance contracts to the
Trust.
"Actual Cash Value," for the purposes of credit default insurance, means
gross proceeds from the sale of the repossessed automobile securing the
finance contract. Under certain circumstances, this amount could be
modified to reflect the greater of (i) gross proceeds from sale and (ii)
the wholesale market value at the time of the loss as determined by an
automobile guide provided by the insurer applicable to the region in
-14-
which the financed vehicle is sold.
"Net Payoff Balance," for the purposes of credit default insurance, means the
outstanding principal balance as of the default date plus late fees and
corresponding interest no more than 90 days after the date of default. In
no event shall Net Payoff Balance include non-approved fees, taxes, penalties
or assessments included in the original instrument, or repossession,
disposition, collection, remarketing expenses and fees or taxes incurred.
Regulation
The Company acts as a sales finance company in 38 states and is licensed
and/or registered in each state where it is required to be licensed.
The Company is subject to varying degrees of regulation and periodic
examination in such states. In addition, numerous federal and state consumer
protection laws impose requirements upon the origination and collection of
consumer receivables. The laws of some states impose finance charge ceilings
and other restrictions on consumer transactions and may require certain
contract disclosures in addition to those required under federal law.
These requirements impose specific statutory liabilities upon creditors who
fail to comply with their provisions. In addition, certain of these laws
make an assignee of such finance contract liable to the obligor thereon for
any violations by the assignor. The Company verifies the accuracy of
disclosure for each receivable that it purchases; however, the Company, as
an assignee of finance contracts, may be unable to enforce some of its
finance contracts or may be subject to liability to the obligors under some
of its finance contracts if such finance contracts do not comply with such
laws.
The Company is subject to numerous federal laws, including the Truth in
Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting
Act and the rules and regulations promulgated thereunder, and certain rules
of the Federal Trade Commission. These laws require the Company to provide
certain disclosures to applicants, prohibit misleading advertising and
protect against discriminatory financing or unfair credit practices. The
Truth in Lending Act and Regulation Z promulgated thereunder require
disclosure of, among other things, the terms of repayment, the amount
financed, the total finance charge and the annual percentage rate charged
on each automobile finance contract. The Equal Credit Opportunity Act
prohibits creditors from discriminating against finance contract applicants
(including finance contract obligors) on the basis of race, color, religion,
national origin, sex, age or marital status or on the basis that income is
derived from public assistance. Under the Equal Credit Opportunity Act and
Regulation B promulgated thereunder, creditors are required to make certain
disclosures regarding consumer rights and advise consumers whose credit
applications are not approved of the reasons for the rejection. The Fair
Credit Reporting Act requires the Company to provide certain information to
consumers whose credit applications are not approved on the basis of a report
obtained from a consumer reporting agency. The rules of the Federal Trade
Commission limit the types of property a creditor may accept as collateral
to secure a consumer finance contract and its holder in due course rules
provide for the preservation of the consumer's claims and defenses when a
consumer obligation is assigned to a subject holder. With respect to used
vehicles specifically, the Federal Trade Commission's Rule on Sale of Used
Vehicles requires that all sellers of used vehicles prepare, complete and
display a Buyer's Guide which explains any applicable warranty coverage for
such vehicles. In addition to limiting the types of property which may be
taken as collateral, the Credit Practices Rule of the Federal Trade
Commission imposes additional restrictions on finance contract provisions
and credit practices.
Certain of the states in which the Company operates prohibit Dealers from
charging a finance charge in excess of statutory maximum rates. Finance
charges include interest and any cash sale differential. The Company's
agreements and other communications with Dealers stress the importance of
Dealers' compliance with all
-15-
applicable laws. The Company's contractual agreements with Dealers obligate
Dealers to comply with all applicable laws, and provide that each Dealer
must indemnify the Company for any violation of law relating to a finance
contract acquired from the Dealer. Every obligor (as part of the standard
financing documentation) currently acknowledges by signing the retail
installment contract that the obligor is aware, and approves, of the
Dealer's intended sale of the finance contract at a discount to the Company.
To the best of the Company's knowledge, the obligor was not quoted a lower
price for a cash purchase. Further, it is the Company's policy to terminate
its relationship with any Dealer where the Company becomes aware of such
incidents perpetrated either with the knowledge or tacit assent of the
Dealer or by more than one salesperson at a particular Dealer. As of
June 30, 1996, no Dealer had been so terminated. To the knowledge of the
Company, no action has been brought or is currently threatened or
contemplated against the Company alleging that Dealers regularly charge cash
sale differentials. Nevertheless, if it were determined that a material
number of finance contracts acquired by the Company involved violations by
Dealers of applicable laws and regulations, the Company's financial position
could be materially adversely affected and a widespread pattern of violation
by Dealers could have a material adverse effect on the Company's future
prospects.
In the event of default by an obligor on a finance contract, the Company is
entitled to exercise the remedies of secured party under the Uniform
Commercial Code ("UCC"). The UCC remedies of a secured party include the
right to repossession by self-help means, unless such means would constitute
a breach of the peace. Unless the obligor voluntarily surrenders a vehicle,
self-help repossession by an independent repossession specialist engaged by
the Company is usually employed by the Company when an obligor defaults.
Self-help repossession is accomplished by retaking possession of the vehicle.
If a breach of the peace is likely to occur, or if applicable state law so
requires, the Company must obtain a court order from the appropriate state
court and repossess the vehicle in accordance with that order. None of the
states in which the Company presently does business, except for Louisiana,
has any law that would require the Company, in the absence of a probable
breach of the peace, to obtain a court order before it attempts to repossess
a vehicle.
In most jurisdictions, the UCC and other state laws require the secured
party to provide the obligor with reasonable notice of the date, time, and
place of any public sale or the date after which any private sale of the
collateral may be held. Unless the obligor waives his or her rights after
default, the obligor in most circumstances would have the right to redeem
the collateral prior to actual sale by paying the secured party all unpaid
installments of the receivable (less any required discount for prepayment)
plus reasonable expenses for repossessing, holding, and preparing the
collateral for disposition and arranging for its sale, plus in some
jurisdictions, reasonable attorneys' fees, or, in some states, by payment
of past-due installments. Repossessed vehicles are generally resold by the
Company through wholesale auctions which are attended principally by dealers.
The Company, through one of its operating subsidiaries, is licensed by the
Federal Housing Administration ("FHA") of the U.S. Department of Housing and
Urban Development as an issuer of securities collateralized by HUD Title I
Loans. As such, the Company is subject to certain regulations, including
requirements for the maintenance of certain minimum levels of capitalization,
and is subject to periodic examination by the FHA.
The Company believes it is in compliance with all material regulations
applicable to it.
Employees
As of June 30, 1996, the Company and its subsidiaries employed 340 persons,
including six in senior management and 334 in finance contract acquisition
and administrative support. None of the Company's employees is covered by a
collective bargaining agreement. The Company believes that its relationship
with
-16-
its employees is satisfactory.
Item 2: Properties.
Properties and Facilities
The Company's headquarters are located in approximately 30,000 square feet
of leased space at 525 Washington Boulevard, Jersey City, New Jersey. The
lease for such facility expires in August 2005. The Company's headquarters
contain the Company's executive offices as well as those related to
automobile finance contract acquisitions. The Company also has leases for
office space in Irvine, California (expiring April 1999); Marietta, Georgia
(expiring June 2005); and Merriam, Kansas (expiring December 1999)
aggregating approximately 50,800 square feet. Such facilities are used for
finance contract acquisitions, systems technology, sub-servicing and sales
support.
Item 3: Legal Proceedings.
Litigation
On April 28, 1996, Star Holdings, Inc. d/b/a The Sloane Organization filed
a complaint against the Company in the United States District Court for the
Southern District of New York, captioned Star Holdings, Inc. d/b/a The
Sloane Organization vs. Aegis Consumer Funding Group Inc., alleging that it
was entitled to certain fees under a finder's agreement entered into with
the Company on January 2, 1996. The amounts alleged to be due were in
connection with the Company's private placement of $92 million of
asset-backed securities through Greenwich Capital Markets, Inc. ("Greenwich
Capital") in March 1996. On July 3, 1996, Star amended its complaint (as
so amended, the "Amended Complaint") to claim fees under the finder's
agreement and under the same common law principles cited in the original
complaint, as well as additional theories asserted in the Amended Complaint
in connection with the series of financing arrangements entered into by the
Company and Greenwich Capital and in connection with a potential sale of
common stock of the Company beneficially owned by Patrick Bennett to a
purchaser allegedly introduced to Mr. Bennett by Star. The Amended
Complaint seeks damages of at least $15.8 million, punitive damages of at
least $525,000, reimbursement of expenses for $20,000, declaratory relief,
costs, administrative fees and such other relief as the court deems
appropriate. On July 15, 1996 the Plaintiff filed a motion (the "Attachment
Motion") to attach the Company's assets based on allegations that the
Company is dissipating its assets. The Company has filed responsive papers
to the Attachment Motion. Additionally, the Company has filed a Motion to
Dismiss most of the counts in the Amended Complaint. Star has filed a
response to the Company's Motion seeking summary judgment on the Amended
Complaint. The Company believes it has meritorious defenses to the
allegations in the Complaint, the Amended Complaint, the Attachment Motion
and the Motion for Summary Judgment and intends to defend the matter
vigorously.
On May 2, 1996, a purported class action lawsuit on behalf of Josephine
Thornton and other individuals, captioned Josephine C. Thornton, et al., on
behalf of themselves and all others similarly situated vs. Bennett Finance
Inc. et al., was filed in the New York Supreme Court for New York County
against Bennett Finance Inc. and various other persons and entities alleged
to have been affiliated with or employed by The Bennett Funding Group, Inc.
("Bennett Funding") and Bennett Management and Development Corp. ("Bennett
Management"). Other entities, including the Company, were named as
defendants because they were allegedly alter egos and agents for Patrick
Bennett, Michael Bennett, their parents and certain other named individual
defendants. It is further alleged that, as such alter egos and agents,
the corporate defendants, including the Company, engaged in common law fraud,
negligent misrepresentations, deceptive acts or practices, sale of
unregistered securities and breaches of fiduciary duty in connection with
the financing
-17-
activities of Bennett Funding and Bennett Management. Plaintiffs in this
action seek an accounting, unspecified compensatory and punitive damages,
injunctive relief, costs, attorneys' fees and such other relief as the court
deems appropriate. The Company believes that the allegations as set forth
in the complaint are without merit and intends to defend the matter
vigorously.
The Company is also subject to various legal proceedings and claims that
arise in the ordinary course of business. The Company believes that the
amount of any ultimate liability with respect to these actions, including
the actions described above, in the aggregate or individually will not
materially affect the results of operations, cash flows or financial
position of the Company.
Item 4: Submission of Matters to a of Vote of Security Holders.
The Annual Meeting of Stockholders of The Aegis Consumer Funding Group, Inc.
was held on June 3, 1996. Two directors, Felice Cutler and Paul Fitzpatrick,
were elected at the meeting. The following persons continue to serve as
Directors after the meeting:
Angelo R. Appierto Chairman of the Board and
Chief Executive Officer
Gary D. Peiffer Vice Chairman of the Board and
General Counsel
Carl Frischling Director
The following matters were voted upon at the meeting:
1.The election of Felice Cutler and Paul Fitzpatrick to the Board of
Directors.
2.The approval of the amendment of the Company's 1994 Stock Option Plan
(the "1994 Plan") by adopting the 1994 Plan as amended.
3.The approval of the adoption of the Company's 1996 Stock Option Plan.
4.Any and all other matters that may properly come before the meeting and
any adjournment thereof.
The results of the voting were as follows:
1. On Proposal Number 1 - The election of Felice
Cutler to the Board of Directors.
For 13,183,706
Against 0
Abstain 70,112
2. On Proposal Number 2-The election of Paul Fitzpatrick to the
Board of Directors.
For 13,183,706
Against 0
Abstain 70,112
3. On Proposal Number 3 - The approval of the amendment of the
1994 Plan by adopting the 1994 Plan, as amended.
For 10,312,335
Against 227,392
Abstain 115,085
4. On Proposal Number 4 - The approval of the adoption of the
Company's 1996 Stock Option Plan.
For 10,263,935
Against 233,692
Abstain 131,985
-18-
PART II
Item 5: Market for Common Equity and Related Stockholder Matters.
The Company's Common Stock is quoted on the Nasdaq National Market ("NNM")
under the symbol "ACAR". The following table sets forth, for the periods
indicated, the high and low per share sales prices for the Common Stock as
reported on the NNM.
<TABLE>
Price of Common Stock
<S> <C> <C>
Fiscal year ended June 30, 1995: High Low
Quarter Ended June 30, 1995 (from April 6, 1995) $8 1/4 $7 1/4
Fiscal year ended June 30, 1996
Quarter ended September 30, 1995 $8 3/8 $ 7
Quarter ended December 31, 1995 8 3/4 7
Quarter ended March 31, 1996 7 1/2 5 5/8
Quarter ended June 30, 1996 6 5/8 5
As of June 28, 1996, there were approximately 3,000 holders of record of
the Company's Common Stock.
The Company's capital stock consists of 30,000,000 authorized shares of
common stock, par value $.01 per share, of which, as of August 26, 1996,
15,842,550 shares were issued and 15,762,550 shares were outstanding; and
2,000,000 authorized shares of preferred stock, par value $.10 per share,
of which, as of August 26, 1996, 1,100 shares were authorized as Series C
with 920 shares issued and 385 shares were outstanding.
The Company has not paid any dividends on its common stock. The payment of
dividends, if any, in the future is within the discretion of the Board of
Directors and will depend on the Company's earnings, its capital
requirements and financial condition. It is the current intention of the
Board of Directors to retain all earnings, if any, for use in the Company's
business operations, and accordingly, the Board of Directors does not expect
to declare or pay any dividends in the foreseeable future.
The transfer agent and registrar for the Company's Common Stock is FCTC
Transfer Services, 111 Wood Avenue South, Suite 206, Iselin, NJ 08830.
-19-
Item 6: Selected Financial Data.
</TABLE>
<TABLE>
<CAPTION>
Year Ended June 30,
1993 1994 1995 1996
(dollars in thousands)
<S> <C> <C> <C> <C>
Statement of Income Data:
Auto Finance Revenues
Gains from securitization
transactions $ - $ 2,876(1) $9,523 $32,429
Interest Income - 1,321 6,710 13,406
Fees and commissions 438 2,294 259 274
Other income - - 230 113
--- ----- ---- ------
Total auto business revenues 438 6,491 16,722 46,222
Other business revenues(2) 5,926 4,686 1,088 106
----- ----- ----- ------
Total revenues 6,364 11,177 17,810 46,328
----- ------ ------ ------
Operating Expenses
Salaries and other employee costs 2,701 3,568 3,897 8,266
Interest expense - 968 4,794 10,091
Provision for credit losses - 287 941 3,505
Other operating expenses 3,016 3,599 4,511 6,898
----- ----- ----- ------
Total operating expenses 5,717 8,422 14,143 28,760
----- ----- ------ ------
Charge for release of Escrowed
Shares (3) - - 879 807
----- ----- ------ ------
Operating income 647 2,755 3,042 16,761
Provision for income taxes 334 1,352 1,768 7,472
---- ----- ----- -----
Net income $313 $1,403 $1,274 $9,289
==== ====== ====== ======
Net income available for
common stockholders $313 $1,178 $1,079 $9,018
==== ====== ====== ======
Portfolio Data:
Number of finance contracts
acquired 1,148 2,964 10,895 36,739
Amount of finance contracts
acquired $12,181 $33,738 $132,294 $451,536
Weighted average size of
finance contracts acquired $10.6 $11.4 $12.1 $12.3
Weighted average interest rate
of finance contracts acquired 20.6% 20.1% 20.2% 20.1%
Finance contract portfolio
securitized $4,289 $26,043 $119.251 $432,410
Repossession Inventory:
Number of vehicles 9 30 78 698
Defaulted principal balance $99 $322 $840 $7,861
Finance Contracts liquidated
awaiting other recoveries:
Number of vehicles 11 25 30 1,552
Defaulted principal balance $53 $124 $122 $9,212
Gross charge-off ratio(4)(5) 0.4% 2.1% 3.4% 2.4%
Net charge-off ratio(4)(6) N/M 0.2% 0.8% 1.2%
Number of leases originated(7) - 92 1914 25
Amount of leases originated(7) $ - $1,571 $29,025 $436
Weighted average interest rate
of leases originated(7) N/A 15.8% 16.6% 17.1%
Operating Data:
Finance contract
portfolio outstanding(8) $11,156 $38,844 $146,557 $500,694
Delinquency (>30 days) ratio(9) 3.8% 0.7% 6.5% 9.0%
Loans in repossession or
bankruptcy(10) 1.9% 2.7% 2.3% 4.2%
---- ---- ---- ----
Total delinquencies 5.7% 3.4% 8.8% 13.2%
==== ==== ===== =====
Number of states N/M 14 25 32
Number of Dealers N/M 375 1,200 2,200
Number of sales representatives N/M 8 24 49
-20-
At June 30,
1993 1994 1995 1996
Balance Sheet Data:
Cash and cash equivalents $495 $981 $5,971 $3,091
Automobile finance receivables, net - 15,788 39,784 41,058
Retained interests in securitized
receivables 1,243 4,434 23,985 70,243
Total assets 4,442 23,527 84,737 121,452
Warehouse credit facilities - 15,260 48,162 37,154
Notes payable - - 12,956 29,897
Stockholders' equity 2,677 4,083 15,697 33,991
<FN>
(1) Includes approximately $678,000 in gains realized from related
parties in connection with securitization transactions.
(2) Other business revenues represents revenues from the Company's
non-automobile finance related activities.
(3) Represents a charge for release of 113,386 shares in 1995 and
150,118 shares in 1996 of Common Stock placed in escrow by the executive
officers of the Company in connection with the Company s initial public
offering of Common Stock.
(4) The Company records both gross and net losses when all
potential recoveries on a defaulted finance contract have been realized.
(5) The gross charge-off ratio is calculated as losses after the
proceeds from repossessed vehicle sales, service contract rebates, consumer
insurance and VSI insurance; net of repossession and liquidation costs, as
a percentage of average outstanding principal balance of the finance
contract portfolio outstanding as of each period end.
(6) The net charge-off ratio equals the aggregate balance of
finance contracts liquidated (including those previously sold in
securitized transactions) plus repossession and liquidation expenses,
less all recoveries from the sale of the collateral, risk default and
other insurance proceeds or otherwise, as a percentage of average
outstanding principal balance of the finance contract portfolio as of each
period end.
(7) The Company ceased funding leases in the first quarter of its
1996 fiscal year.
(8) Principal balance of all finance contracts acquired, including those
previously sold in securitized transactions and excluding those which
are in repossession and no longer eligible for reinstatement as of each
period end.
(9) Percentage based on outstanding principal balance.
(10) Includes finance contracts in bankruptcy, authorized for repossession
and in repossession and still eligible for reinstatement.
N/M not meaningful.
</FN>
</TABLE>
QUARTERLY FINANCIAL DATA:
Summarized financial data is as follows (dollars in thousands, except for
per share amounts):
<TABLE>
<CAPTION>
Quarter Ended
Sept. 30, Dec.31, March 31, June 30,
1995 1995 1996 1996
<S> <C> <C> <C> <C>
Revenues $9,158 $9,405 $13,064 $14,700
----- ------ ------- -------
Interest expense 2,124 2,459 2,723 2,784
Other expenses 3,386 3,720 5,824 6,547
----- ----- ----- -----
Total expenses 5,511 6,179 8,547 9,331
----- ----- ----- -----
Net income before
income taxes 3,647 3,227 4,517 5,369
Provision for income taxes 1,641 1,384 1,988 2,460
----- ----- ----- -----
Net income $2,006 $1,844 $2,529 $2,909
====== ====== ====== ======
Net income available to
shareholders $2,006 $1,844 $2,529 $2,768
====== ====== ====== ======
Net income per common share:
Primary $0.15 $0.13 $0.17 $0.19
===== ===== ===== =====
Fully Diluted $0.14 $0.12 $0.16 $0.18
===== ===== ===== =====
The quarters ended December 31, 1995, March 31, 1996 and June 30, 1996
included write downs on retained interests in securitized receivables of
$1.5 million, $2.5 million and $3.5 million, respectively.
-21-
The quarter ended June 30, 1996, included a non-cash charge $807,000 from
the release of escrowed shares which was offset by an increase in
paid-in-capital. There was no impact on total stockholders' equity as a
result of the escrow share release and the resultant non-cash charge.
Item 7: Managements Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion of the financial condition and results of
operations of the Company relates to fiscal years ended June 30, 1994, 1995
and 1996, and should be read in conjunction with the preceding Selected
Financial Data and the Company's Consolidated Financial Statements and
Notes thereto included elsewhere in this annual report. All references to
full years are to the applicable fiscal year of the Company.
Overview
The Company is a specialty consumer finance company engaged in
acquiring, securitizing and servicing finance contracts originated by
Dealers in connection with the sale of late-model used and, to a lesser
extent, new cars to consumers with sub-prime credit. Since commencing the
acquisition of finance contracts in May 1992, through June 30, 1996, the
Company has acquired approximately $630.2 million of finance contracts, of
which $582 million have been securitized in thirteen offerings of
asset-backed securities.
The following table illustrates the Company's finance contract
acquisition volume, total revenue, securitization activity and servicing
portfolio during the past nine fiscal quarters.
</TABLE>
<TABLE>
<CAPTION>
For the Quarters Ended
--------------------------------------------------------------------------------------------
June 30, Sept. 30, Dec. 31, Mar.31, June 30, Sept. 30, Dec. 31. Mar. 31, June 30,
1994 1994 1994 1995 1995 1995 1995 1996 1996
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of finance contracts
acquired during period . 1,539 1,729 1,583 2,688 4,901 5,943 8,190 10,569 12,037
Average finance contract
balance . $11.7 $12.0 $12.1 $12.2 $12.2 $12.2 $12.3 $12.2 $12.4
Aggregate value of finance
contracts acquired during
period. 18,010 20,712 19,188 32,785 59,609 72,562 100,582 128,781 149,612
Gains from securitization
transactions(1)(2) . 645 1,600 741 1,984 5,197 6,023 7,424 12,759 10,824
Gains from whole loan sales. - 87 124 604 40 48 64 111 290
Net interest (expense) income.(63) 747 334 213 765 866 1,021 546 993
Total revenue. . 2,808 2,462 1,949 2,498 6,111 7,034 6,946 10,341 11,916
Finance contracts securitized
during period. . 18,539 23,251 21,000 21,000 54,000 67,630 85,368 130,138 149,274
Finance contracts sold during
period . . . . . - 998 1,750 8,561 1,000 1,000 1,801 2,752 2,250
Servicing portfolio
(at period end)(3) 38,844 55,032 69,248 94,576 146,557 197,911 287,481 401,704 500,694
<FN>
(1) Excludes gains from whole loan sales of finance contracts.
(2) The quarters ended December 31, 1995, March 31, 1996 are
before write downs of $3.1 million, $1.5 million and $3.5 million,
respectively, taken on prior retained interests in securitized receivables.
(3) Excludes finance contracts in bankruptcy, authorized for repossission
and still eligible for reinststement.
</FN>
</TABLE>
Revenues
The Company's primary sources of revenues consist of two components:
gains from securitization transactions and interest income.
Gains from Securitization Transactions. The Company warehouses the
finance contracts it acquires and periodically sells them to a trust, which
in turn sells asset-backed securities to investors. By securitizing its
finance contracts, the Company is able to lock in the difference (gross
spread ) between the annual rate
-22-
of interest paid by the consumer (APR) on the finance contracts acquired
and the interest rate on the asset-backed securities sold (certificate rate).
When the Company securitizes its finance contracts, it records a gain from
securitization transactions and establishes an asset referred to as retained
interest in securitized receivables. Gains from securitization transactions
are equal to the retained interest on the securitized receivables plus the
difference between the net proceeds from the securitization and the cost
(including the cost of VSI Policy and credit default premiums) to the
Company of the finance contracts sold. The retained interest on securitized
receivables represents the estimated present value of the estimated future
cash flows to be received by the Company, discounted at a market-based rate,
taking into consideration (i) contractual obligations of the obligors,
(ii) amounts due to the investors in asset-backed securities, (iii) various
costs of the securitizations, including the effects of hedging transactions,
if any, and (iv) adjustments to the cash flows to reflect estimated
prepayments of finance contracts and losses incurred in connection with
defaults. Subsequent to securitization, the Company continues to service the
securitized finance contracts, for which it recognizes servicing fees over
the life of the securitization. Retained interest in securitized receivables
represents the difference between the weighted average finance contract rate
earned and the rate paid on certificates issued to the investors in the
securitization, less servicing fees and other costs over the life of the
securitization. Retained interest in securitized receivables is computed
by taking into account certain assumptions regarding prepayments, defaults,
servicing and other costs. The Company reviews on a quarterly basis the
retained interest in securitized receivables. If actual experience differs
from the Company s assumptions or to the extent that market and economic
changes occur that adversely impact the assumptions utilized in determining
the retained interest in securitized receivables, the Company records a
charge against gains from securitization transactions. The discount rate
utilized in determining the retained interest in securitized receivables and
gain from securitization transactions is based on the Company's estimate of
the yield required by a third party purchaser of such instrument. The
Company also bases these assumptions on the performance characteristics of
the Company's finance contract portfolio to date. The Company's default
assumptions are based on estimated repossession rates, proceeds from the
liquidation of repossessed vehicles, proceeds from VSI Policy coverage and
recoveries from the Company s credit default insurance.
Interest Income. Interest income consists of: (i) interest income earned
on finance contracts (ii) interest income earned on leases (the Company
ceased funding leases in the quarter ended September 30, 1995),
(iii) servicing fees net of expenses, (iv) the accretion of finance contract
acquisition discounts net of related capitalized costs and (v) the
amortization of capitalized costs net of origination discounts for leases.
Other factors influencing interest income during a given fiscal period
include (a) the annual percentage rate of the finance contracts acquired,
(b) the aggregate principal balance of finance contracts acquired and funded
through the Company's warehouse credit facilities prior to securitization,
and (c) the length of time such finance contracts are funded by the
warehouse credit facilities prior to securitization. Finance contract
acquisition growth has a significant impact on the amount of interest
income earned by the Company.
The following table provides information for each of the Company's rated
securitizations:
<TABLE>
<CAPTION>
Weighted
Remaining Average Weighted
balance at Finance Average
Original June 30, Contract Certificate Gross Net
Securitizations Balance 1996 Rate Rate Ratings Spread(1) Spread(2)
- --------------- ------- ----- ------ ----- ----- ------- --------
Aegis Auto Receivables Trust,
Series:
<S> <C> <C> <C> <C> <C> <C> <C>
1994-A . . $18,539 $6,826 20.28% 7.74% A(3) 12.54% 8.70%
1994-2 . . 23,251 10,511 19.82 8.04 A+(3) 11.78 8.12
1994-3 . . 21,000(4) 11,139 19.66 9.46 A+(3) 10.20 6.46
1995-1 . . 21,000(4) 13,198 20.41 8.60 A+(3) 11.81 8.46
1995-2 . . 54,000(4) 38,152 19.94 7.16 A+(3) 12.78 8.98
-23-
1995-3 . . 60,000(4) 48,729 20.04 7.09 A+(3) 12.95 10.12
1995-4 . . 70,000(4) 62,366 19.88 6.65 A+(3) 13.23 10.41
1996-1 . . 92,000(4) 87,531 20.13 8.44(5) A+,BBB,BB/ 11.69 8.89
A+,BBB+,BB(6)
1996-2 . . 105,000(4)104,392 20.10 8.93(7)A+BBB+,BB(8) 11.17 8.40
Aegis Auto
Owners Trust 97,780 92,562 20.14 6.53AAA/Aaa,Baa2 (9)13.61 10.87(10)
<FN>
(1) Difference between the weighted average rate of interest on finance
contracts and the weighted average rate of interest on the trust
certificates (the "Weighted Average Certificate Rate").
(2) Difference between weighted average rate of interest on finance
contracts and the Weighted Average Certificate Rate, net of servicing and
trustee monthly fees and annualized issuance costs that include
underwriting fees and hedging gains or losses,if any.
(3) Indicates ratings by Duff & Phelps.
(4) Includes prefunded amounts which were transferred to the related
trust by the end of the quarter for 1995-1, 1995-2, 1995-3, 1995-4,1996-1,
1996-2 and by the first week of the next quarter for 1994-3.
(5) The Weighted Average Certificate Rate is composed of the following:
The Class A certificate rate is 8.39%, the Class B certificate rate is
7.86% and the Class C certificate rate is 12.14%.
(6) The 1996-1 Securitization has Class A Notes rated A+ by Duff &
Phelps and A+ by Fitch; Class B Notes rated BBB by Duff & Phelps and BBB+
by Fitch and Class C Notes rated BB by Duff & Phelps and BB by Fitch.
(7) The Weighted Average Certificate Rate is composed of the following:
The Class A certificate rate is 8.9%, the Class B certificate rate is 8.4%
and the Class C certificate rate is 11.65%
(8) The 1996-2 Securitization has Class A notes rated A+ by both Duff &
Phelps and Fitch; Class B Notes rated BBB by Duff and Phelps and
BBB+ by Fitch and Class C Notes rated BB by both Duff & Phelps and Fitch.
(9) The Company has a total funding commitment of $175.0 million, of
which $15.4 million was funded in the second quarter of the fiscal year
ended June 30, 1996, $38.1 million was funded in the third quarter of the
fiscal year ended June 30, 1996 , $44.3 million was funded in the fourth
quarter of fiscal year ended June 30, 1996 and the remaining $77.2 million
will be filled over the next nine months. The Owner Trust Facility has
Class A Notes rated AAA by Standard & Poor s and Aaa by Moody s and Class B
Certificates rated Baa2 by Moody's.
(10) Amortized over maximum $175.0 million facility.
</FN>
</TABLE>
Results of Operations
Fiscal Year Ended June 30, 1996 Compared To Fiscal Year Ended June 30, 1995.
Revenues
Revenues increased to $46.3 million for the fiscal year ended June 30, 1996
from $17.8 million for the fiscal ended June 30, 1995, an increase of $28.5
million or 160.1%.
Gains from Securitization Transactions. Gains from securitization
transactions increased to $32.4 million for the fiscal year ended June 30,
1996 from $9.5 million for the fiscal year ended June 30, 1995, an increase
of $22.9 million or 240.5%. The increase in securitized gains was offset
by write downs of $7.5 million taken on the retained interests in securitized
receivables from earlier securitizations and a $600,000 valuation allowance
on a note receivable from a then-related party created in a prior sale of a
retained interest. Additionally, the Company's securitization costs increased
by approximately $326,000 as a result of the inherent costs associated with
issuing warrants to Greenwich Capital in connection with the Securitization
Facility. Quarterly, the Company revalues its retained interests in
securitized receivables using actual experience on the respective underlying
securitization trust's finance contract performance. When the actual
experience differs from the original assumptions utilized in the initial
valuation in a detrimental direction, the Company can incur permanent losses
in the carrying value of these assets. During the year ended June 30, 1996,
the Company incurred $7.5 million of, what management believes to be,
permanent losses on its retained interests in securitized receivables
portfolio. The cause of the permanent impairment was higher than expected
default rates on the underlying finance contracts. As a result of these
increases, current assumptions utilized in current valuations have been
adjusted to reflect the higher default rates.
Interest Income. Interest income increased to $13.6 million for the fiscal
year ended June 30, 1996 from $6.9 million for the fiscal year ended
June 30, 1995, an increase of $6.7 million or 97.1%, primarily as
-24-
a result of the Company s increased finance contract volume. The Company s
weighted monthly average outstanding balance of finance contracts owned
increased to $50.3 million in the fiscal year ended June 30, 1996 from
$18.3 million for the fiscal year ended June 30, 1995, an increase of
$32.0 million or 174.9%. Since the Company s weighted average coupon has
remained at approximately 20.5%, the increase in interest income is partially
attributable to the increase in the weighted average outstanding balance of
$32.0 million during the fiscal year ended June 30, 1996 or approximately
$6.6 million. (Interest income is net of servicing fees paid and earned.)
Operating Expenses. Operating expenses increased to $29.6 million for the
fiscal year ended June 30, 1996 from $14.8 million for the fiscal year ended
June 30, 1995, an increase of $14.8 million or 100.2%.
Interest Expense. Interest expense increased to $10.1 million for the
fiscal year ended June 30, 1996 from $4.8 million for the fiscal year ended
June 30, 1995, an increase of $5.3 million or 110.5%, as a result of the
increased financing requirements caused by the Company s increased finance
contract acquisition activity. The increase in interest expense represents
51.1% of the total increase in operating expenses and is partially
attributable to the Company s warehouse credit facilities, which are at
fluctuating interest rates that ranged from as low as 9.0625% to as high as
10.125% for the fiscal year ended June 30, 1996 compared to a low of 8.5%
and a high of 10.1875% for the fiscal year ended June 30, 1995. In addition,
the Company s monthly average outstanding balance on its warehouse credit
facility increased to $74.4 million for the fiscal year ended June 30, 1996
from $37.6 million for the fiscal year ended June 30, 1995. The Company
also incurred interest on notes payable at a 12% interest rate on a monthly
average outstanding balance of $20.2 million for the fiscal year ended June
30, 1996 compared to a monthly outstanding average balance of $8.2 million
for the fiscal year ended June 30, 1995.
Salaries and Other Employee Costs. Salaries and other employee costs
increased to $8.3 million for the fiscal year ended June 30, 1996 from
$3.9 million for the fiscal year ended June 30, 1995, an increase of $4.4
million or 112.2%, due to an increase in the number of employees to
approximately 340 at June 30, 1996 from approximately 140 employees at
June 30, 1995 and approximately $2.0 million of bonus expense based on the
Company's pre-tax net income for the fiscal year ended June 30, 1996.
For the fiscal year ended June 30, 1995, certain members of senior
management elected to forgo bonuses that would have aggregated approximately
$200,000.
Provision for Credit Losses. The provision for credit losses increased to
$3.5 million for the fiscal year ended June 30, 1996 from $941,000 for the
fiscal year ended June 30, 1995, an increase of $2.3 million due to: (i) the
Company's increased acquisition volume of finance contracts; (ii) the
Company's decision to discontinue purchasing credit default insurance on its
lease origination effective January 1995; (iii) the Company's decision,
effective August 1995, to insure on a discretionary basis its finance
contract acquisitions (to the extent finance contracts remain uninsured for
default, the Company's loss ratio is higher); (iv) the increase in delinquent
automobile finance receivables (as discussed below); and (v) the higher
amount of finance contracts and leases owned by the Company at June 30, 1996
($41.1 million) as compared to June 30, 1995 ($39.8 million). These changes
also resulted in an increase in the Company's reserve rate as a percentage of
total automobile finance receivables held on the Company's balance sheet
(i.e., original balance net of receivables repaid, sold or charged off) to
7.1% in 1996 from 2.9% in 1995. The Company maintains residual value
insurance relating to its entire lease portfolio.
Charge for Release of Escrowed Shares. Charge for release of escrowed
shares decreased to $809,000 for the fiscal year ended June 30, 1996 from
$879,000 for the fiscal year ended June 30, 1995, a decrease of $72,000 or
8.2%. The decrease is a result of the decrease in the Company's quoted
market price of $5 3/8 at June 30, 1996 from $7 3/4 at June 30, 1995; the
market price is one of the components for
-25-
computing the charge. The other component is the number of shares released.
In fiscal 1996, 150,118 shares of the 1,078,308 remaining escrowed shares
were subject to the charge compared to 113,386 shares of the 814,455 released
in fiscal 1995. All escrowed shares owned by the executive officers were
subject to this charge. As of June 30, 1996, all escrowed shares are being
released, thus the Company will not incur this expense in future years.
Rent and Electricity, Office Expenses and Communications. Rent and
electricity charges increased to $1.3 million for the fiscal year ended
June 30, 1996 from $616,000 for the fiscal year ended June 30, 1995, an
increase of $634,000 or 102.9% due to all processing centers being opened
or expanded for the full fiscal year of 1996, whereas in the fiscal year
1995 two of the Company's processing centers were newly leased in the latter
part of the third quarter. In addition, in the second quarter of fiscal 1996,
the Company expanded its Jersey City Headquarters and in the third quarter
of fiscal 1996 the Company relocated and expanded its collections department
located in Irvine, California. Correspondingly, office expenses increased
to $900,000 for the fiscal year ended June 30, 1996 from $744,000 for the
fiscal year ended June 30, 1995, an increase of $156,000 or 20.9% and
communication expenses increased to $975,000 for the fiscal year ended
June 30, 1996 from $607,000 for the fiscal year ended June 30, 1995, an
increase of $368,000 or 60.8%. Communication expenses include expenses
relating to receiving and sending electronic data including expenses
relating to obtaining credit reports and other data services, telephone
charges, faxes, the linking of the collections department to the third party
servicer and the linking of all the offices to systems development location
in the Merriam, Kansas facility.
Professional fees. Professional fees, including those paid to related
parties, increased to $1.3 million for the fiscal year ended June 30, 1996
from $722,000 for the fiscal year ended June 30, 1995, an increase of
$534,000 or 74.0% due to the following: (i) an increase in accounting and
auditing fees of approximately $100,000 primarily as a result of the new
reporting requirements of the Company as a public company for the fiscal
year ended June 30, 1996; (ii) an increase in legal fees of approximately
$200,000 primarily as a result of the new reporting requirements of the
Company as a public company for the fiscal year ended June 30, 1996 and as
a result of defending primarily two lawsuits entered into against the
Company as previously discussed; (iii) an increase of approximately $110,000
in directors fees; and (iv) an increase of approximately $124,000 in
consulting fees (offset by a decrease in related party consulting fees of
$225,000). During the fiscal year ended June 30, 1996, the Company engaged
public relation firms to assist it in developing its marketing strategies in
both the sub-prime automobile finance industry and in the investor community;
whereas, these expenses were not incurred for the fiscal year ended June 30,
1995.
Equipment Rental. Equipment rental increased to $687,000 for the fiscal
year ended June 30, 1996 from $448,000 for the fiscal year ended June 30,
1995, an increase of $239,000 or 53.2% due to the increase in the number of
employees to 340 at June 30, 1996 from 140 employees at June 30, 1995, the
majority of the new employees require computers, the most significant
component of equipment rental costs.
All Other Operating Expenses. Other operating expenses increased to
$1.8 million for the fiscal year ended June 30, 1996 from $1.2 million for
the fiscal year ended June 30, 1995, an increase of $709,000 or 63.2%.
This increase is the result of the following: (i) an increase in travel
and entertainment expense of $173,000 due to the Company's expansion into
new territories including seven new states; (ii) an increase in amortization
and depreciation of $158,000 due to increased purchases of fixed assets,
including leasehold improvements to expanded office space and (iii) an
increase of $378,000 in other expenses such as insurance, advertising and
promotional expenses, other taxes, such as state privilege taxes and other
miscellaneous taxes and miscellaneous expenses.
Income Taxes. Income taxes increased to $7.5 million (an effective tax rate
of 44.6%) for the fiscal
-26-
year ended June 30, 1996 from $1.8 million (an effective tax rate of 58.2%)
for the fiscal year ended June 30, 1995, an increase of $5.7 million. The
decrease in the Company's effective tax rate of 13.5% is a result of the
decrease in the impact of permanent differences (primarily from the charge
for the release of escrowed shares discussed above that is not tax deductible)
between book and taxable income. For the fiscal year ended June 30, 1996,
the impact of the charge for the release of escrowed shares decreased to
1.7% from 10.0% for the fiscal year ended June 30, 1995, a decrease of 8.3%,
the other significant component is the state and local tax benefit which
decreased to 7.1% for the fiscal year ended June 30, 1996 from 12.0% for the
fiscal year ended June 30, 1995, a decrease of 4.9%.
Net Income
Net income increased to $9.3 million for the fiscal year ended June 30,
1996 from $1.3 million for the fiscal ye ar ended June 30 , 1995, an increase
of $8.0 million or 629.3%. This increase resulted primarily from the
increase in the size of automobile securitization transactions to $364.0
million for the fiscal year ended June 30, 1996 from $119.3 million for the
fiscal year ended June 31, 1995.
Fiscal Year Ended June 30, 1995 Compared to Fiscal Year Ended June 30, 1994.
Revenues
Revenues increased to $17.8 million for the fiscal year ended June 30, 1995
from $11.2 million for the fiscal year ended June 30, 1994, an increase of
$6.6 million or 58.9%.
In the fiscal year ended June 30, 1995, the Company increasingly focused on
its automobile finance business, and its dependence on related party
transactions declined. Revenues from non-automobile related businesses
decreased to $1.1 million for the fiscal year ended June 30, 1995 from $4.7
million for the fiscal year ended June 30, 1994, a decrease of $3.6 million
or 76.8%, or from 6.1% of total revenues for the fiscal year ended June 30,
1995 to 41.9% of total revenues for the fiscal year ended June 30, 1994.
Non-automobile related revenues were derived mainly from related party
consulting and other fee based engagements that involved analysis,
administration and securitization of consumer-based receivable portfolios.
Revenues from related party transactions (consisting entirely of
non-automobile related consulting fees) decreased to $275,000 for the fiscal
year ended June 30, 1995 from $4.1 million (consisting of $678,000 of
automobile business revenues and $3.4 million of non-automobile related
management and consulting fees) for the fiscal year ended June 30, 1994,
a decrease of $3.8 million, or from 1.5% of total revenues for the fiscal
year ended June 30, 1995 to 36.5% of total revenues for the fiscal year ended
June 30, 1994.
Revenues from the Company's automobile finance business increased to $11.9
million for the fiscal year ended June 30, 1995 from $5.6 million for the
fiscal year ended June 30, 1994, an increase of $6.3 million or 112.5%.
This increase was primarily attributable to an increase in interest income
to $6.7 million for the fiscal year ended June 30, 1995 from $1.3 million
for the fiscal year ended June 30, 1994 and an increase in gains from
securitization transactions to $9.5 million (including no related party
revenues) for the fiscal year ended June 30, 1995 from $2.9 million
(including related party revenues of $757,000) for the fiscal year ended
June 30, 1994, an increase of $6.7 million or 231.1%. This increase was
offset in part by a decrease in fees and commissions earned to $260,000 for
the fiscal year ended June 30, 1995 from $2.3 million for the fiscal year
ended June 30, 1994. The increases in automobile finance revenues are a
result of the Company's efforts to focus on the automobile finance business
versus its commission and fee based business.
Revenues from the Company's non-automobile businesses declined to $1.1
million for the fiscal year
-27-
ended June 30, 1995 from $4.7 million for the fiscal year ended June 30, 1994,
a decrease of $3.6 million or 76.8%. This decrease in revenues from
non-automobile businesses resulted from the significant reduction in the
fiscal year ended June 30, 1995 of related party fees and commissions, gains
from non-automobile securitization transactions and management fee revenues,
which had decreased to $275,000 for the fiscal year ended June 30, 1995 from
$3.4 million for the fiscal year ended June 30, 1994, a decrease of $3.1
million representing a 91.9% decline in related party revenues. There was
also a decrease in fees and commissions and other income earned from
non-related parties in the non-automobile business to $813,000 for the fiscal
year ended June 30, 1995 from $1.3 million for the fiscal year ended June 30,
1994, a decrease of $468,000 or 36.5%. These decreases are attributable to
the Company's efforts and resources being focused on its automobile business.
Other income was derived from trailing revenues earned from transactions in
previous periods and a forfeiture of a good faith deposit from a terminated
transaction, both relating to the Company's HUD Title I Loan business line.
Gains from securitization transactions. Gains from securitization
transactions increased to $9.5 million for the fiscal year ended June 30,
1995 from $2.2 million for the fiscal year ended June 30, 1994, an increase
of $7.3 million or 324.7%.
Interest income. Interest income increased to $6.9 million for the fiscal
year ended June 30, 1995 from $1.3 million for the fiscal year ended June 30,
1994, an increase of $5.5 million or 418.7%, primarily as a result of the
Company's increased finance contract volume. The Company s weighted monthly
average outstanding balance of finance contracts owned increased to $18.3
million in the fiscal year ended June 30, 1996 from $9.5 million for the
fiscal year ended June 30, 1995, an increase of $8.7 million or 91.9%.
The Company s weighted average coupon is approximately 20.8% at June 30,
1995 and thus $1.8 million of the increase in interest income is attributable
to the increase in the weighted average outstanding balance of $8.7 million.
(Interest income is net of servicing fees paid and earned.) In addition,
the Company s leases held increased to a weighted monthly average outstanding
of $17.8 million in the fiscal year ended June 30, 1995 from a weighted
monthly average outstanding of $174,000, an increase of $17.6 million.
The Company s weighted average interest rate on its lease portfolio at
June 30, 1995 is 16.5%, thus the increase in interest on the lease portfolio
represents approximately $2.9 million. The remaining difference of
approximately $800,000 is attributable to the Company s weighted average
interest rate on finance contracts increasing to 20.8% at June 30, 1995 from
19.9% at June 30, 1994, an increase of 0.9% and its weighted average
interest on its leases increasing to 16.5% at June 30, 1995 from 15.7% at
June 30, 1994, an increase of 0.8%.
Operating Expenses. Operating expenses increased to $14.8 million for the
fiscal year ended June 30, 1995 from $8.4 million for the fiscal year ended
June 30, 1994, an increase of $6.4 million or 75.4%.
Interest expense. Interest expense increased to $4.8 million for the
fiscal year ended June 30, 1995 from $1.0 million for the fiscal year ended
June 30, 1994, an increase of $3.8 million or 60.3% of the total increase in
operating expenses. The increase is a result of the increased financing
need required by the Company's increased finance contract acquisition and
lease origination activity. In addition, the Company's warehouse credit
facilities are at fluctuating interest rates that ranged from a low of 8.5%
to a high of 10.1875% for the fiscal year ended June 30, 1995 compared to
a low of 7.125% and a high of 8.5% for the fiscal year ended June 30, 1994.
The Company also incurred related party interest expense of $253,000 for
the fiscal year ended June 30, 1995 compared to $104,000 for the fiscal year
ended June 30, 1994, an increase of $149,000 or 143.3%. The Company repaid
its borrowings under the related party credit facility in April 1995 and has
not borrowed under it subsequently.
Salaries and Other Employee Costs. Salaries and other employee costs
increased to $3.9 million for the fiscal year ended June 30, 1995 from
$3.6 million for the fiscal year ended June 30, 1994, an increase of
-28-
$328,000 or 9.2% due to the increase in the number of employees to
approximately 140 at June 30, 1995 from approximately 60 at June 30, 1994
(an increase of approximately 75%) offset by the increased amount of
direct origination costs ultimately capitalized in accordance with relevant
accounting rules incurred to acquire finance contracts and originate leases
for the fiscal year ended June 30, 1995 as compared to the fiscal year ended
June 30, 1994. For the fiscal year ended June 30, 1995, certain members of
senior management elected to forgo bonuses that would have aggregated
approximately $100,000, net of income tax effect. Had such bonuses been
paid, net income for the fiscal year ended June 30, 1995 would have been $1.1
million, 11.2% less than reported net income.
Provision for Credit Losses. The provision for credit losses increased to
$941,000 for the fiscal year ended June 30, 1995 from $287,000 for the fiscal
year ended June 30, 1994, an increase of $654,000 or 227.9% due to the
Company's increased acquisition volume in finance contracts and origination
volume in leases and the Company's decision to discontinue purchasing credit
default insurance on its lease originations effective January 1995. As a
result of this discontinuance, the Company's reserve rate as a percentage of
total consumer receivables held on the Company's balance sheet (i.e.,
original balance net of receivables repaid or sold) increased to 2.9% for
the fiscal year ended June 30, 1995 from 1.7% for the fiscal year ended June
30, 1994. The Company maintains residual value insurance relating to its
entire lease portfolio.
Charge for Release of Escrowed Shares. Another significant component of
the increase in operating expense was the charge for the release of Escrowed
Shares of $879,000 (representing 13.8% of the total increase) for the fiscal
year ended June 30, 1995 with no comparable charge for the fiscal year ended
June 30, 1994.
Rent and Electricity, Office Expenses and Communications. Rent and
electricity charges increased to $616,000 for the fiscal year ended June 30,
1995 from $320,000 for the fiscal year ended June 30, 1994, an increase of
$296,000 or 92.5% due to an increase in the number of processing centers to
three for the fiscal year ended June 30, 1995 from two for the fiscal year
ended June 30, 1994 and the expansion of the Company's systems and
development facility in Kansas City and its headquarters facility and
operation center in Jersey City. Correspondingly, office expenses increased
to $744,000 for the fiscal year ended June 30, 1995 from $434,000 for the
fiscal year ended June 30, 1994, an increase of $310,000 or 71.4% and
communication expenses increased to $607,000 for the fiscal year ended
June 30, 1995 from $282,000 for the fiscal year ended June 30, 1994, an
increase of $325,000 or 115.2%. Communication expenses include expenses
relating to receiving and sending electronic data including expenses
relating to obtaining credit reports and other data services, telephone
charges, faxes and the linking of all the offices to systems development
location in the Merriam, Kansas City facility.
All Other Operating Expenses. Other operating expenses increased to
$989,000 for the fiscal year ended June 30, 1995 from $478,000 for the
fiscal year ended June 30, 1994, an increase of $510,000 or 106.7% (included
in other operating expenses is an increase in equipment rental to $500,000
for the fiscal year ended June 30, 1995 from $200,000 for the fiscal year
ended June 30, 1994, an increase of $300,000) due to the increase in finance
contract acquisitions and lease originations and an additional operation
center opened in 1995. These increases were offset by the following:
(i) a 100% decrease in a one-time expense of a purchase of a Dealer list and
related support services for the fiscal year ended June 30, 1994 for $500,000
from a company in which a significant stockholder of the Company had a
significant beneficial ownership interest; (ii) a decrease in professional
fees to $722,000 for the fiscal year ended June 30, 1995 from $919,000 for
the fiscal year ended June 30, 1994, a decrease of $196,000 or 21.3% that
resulted substantially from the termination of a consulting agreement when
the Company completed its initial public offering on April 6, 1995; and
(iii) travel and entertainment expense decreased to $127,000 for the fiscal
year ended June 30, 1995 from $285,000 for the fiscal year ended June 30,
1994, a decrease of $158,000 or 55.5% due to changes in
-29-
the composition of the Company's sales force and due to increases in
capitalization of such expenses that are deemed to be a direct cost of
acquisitions and in accordance with relevant accounting rules.
Income Taxes. Income taxes increased to $1.8 million (an effective tax
rate of 58.1%) for the fiscal year ended June 30, 1995 from $1.4 million
(an effective tax rate of 49.0%) for the fiscal year ended June 30, 1994,
an increase of $416,000 or 30.7%. The increase in the Company's effective
tax rate of 9.1% is primarily due to the non-cash charge of $879,000
relating to the release of Escrowed Shares which is not a deductible expense
for tax purposes. This difference caused a 10.0% increase in the Company's
effective tax rate. Other factors affecting the Company's effective tax
rate were a decrease in the Company's state taxes, net of federal benefit,
to a rate of 12.0% for the fiscal year ended June 30, 1995 from a rate of
15.0% for the fiscal year ended June 30, 1994, a net decrease of 3.0% and
other factors increasing 2.0%. The decrease in state taxes is attributed
to the Company moving its headquarters and northeast operating facility
from New York, New York to Jersey City, New Jersey.
Net Income. Net income decreased to $1.3 million for the fiscal year ended
June 30, 1995 from $1.4 million for the fiscal year ended June 30, 1994, a
decrease of $100,000 or 9.2%. The net income for the fiscal year ended
June 30, 1995 includes a non-cash charge of $879,000 for the release of
Escrowed Shares (which is not deductible for tax purposes); excluding this
charge, net income for the fiscal year ended June 30, 1995 would have been
$2.2 million, or an increase of $750,000 or 53.4% from the fiscal year ended
June 30, 1994. These increases resulted primarily from the increase in the
number and size of automobile securitization transactions to four such
transactions aggregating approximately $119.3 million for the fiscal year
ended June 30, 1995 from one such transaction amounting to approximately
$18.5 million for the fiscal year ended June 30, 1994. For the fiscal year
ended June 30, 1995, certain members of senior management elected to forgo
bonuses to which they were contractually entitled that would have aggregated
$100,000, net of income tax effect. Had such bonuses been paid, the
Company's net income would have been $1.1 million for the fiscal year ended
June 30, 1995.
Financial Condition
Automobile Finance Receivables, Net. Automobile finance receivables
consists of finance contracts held for sale, finance contracts held for
investment (including vehicles held for repossession) and the Company's
lease portfolio. The Company suspended originating leases in the first
quarter of its 1996 fiscal year.
Automobile finance receivables, net of allowance for credit losses,
increased to $41.1 million at June 30, 1996 from $39.8 million at June 30,
1995, an increase of $1.3 million or 3.3%. Finance contracts held for sale
increased to $12.9 million at June 30, 1996 from $9.5 million at June 30,
1995, an increase of $3.4 million or 35.8%. Finance contracts held for
investment increased to $11.4 million at June 30, 1996 from $2.2 million at
June 30, 1995, an increase of $9.2 million or 418.2%. As of June 30, 1996,
approximately $3.7 million of finance contracts held for investment were in
the repossession process. The increase in the finance contracts held for
investment was due primarily to the increased volume of finance contract
acquisitions. These increases were offset, in part, by an increase in the
allowance for credit losses to $3.1 million in 1996 from $1.2 in 1995 and a
decrease in automobile leases held for investment to $19.8 million at
June 30, 1996 from $28.0 million at June 30, 1995, a decrease of $8.2 million
or 29.3%, primarily due to normal amortization and write offs.
The number and principal balance of finance contracts held are largely
dependent upon the timing and size of the Company's securitizations. The
Company plans to securitize finance contracts on a regular quarterly basis.
-30-
Retained Interests in Securitized Receivables. The following table provides
historical data regarding the retained interests in securitized receivables
for the periods shown:
<TABLE>
<CAPTION>
Year Ended June 30,
1994 1995 1996
(dollars in thousands)
<S> <C> <C> <C>
Beginning balance. . $ 1,243 $ 4,434 $23,985
Additions. . . . . . 6,117 21,347 56,749
Amortization . . . . (123) (1,796) (2,991)
Sales. . (2,803) - -
Write downs. . . . . - - (7,500)
------ ------ -------
Ending Blance $4,434 $23,985 $70,243
======= ======= ========
</TABLE>
Delinquency Experience
The following tables reflect the delinquency experience of all finance
contracts acquired or leases originated, including those sold in whole
finance contract sales or securitizations, by the Company at the dates shown:
<TABLE>
<CAPTION>
Finance Contract Portfolio
June 30,
1994 1995 1996
(dollars in thousnads)
<S> <C> <C> <C>
Principal balance
outstanding(1) . $38,844 $146,557 $500,694
Number of finance contracts
outstanding (1). . . 3,785 13,345 44,600
Delinquent loans
31-59 days. . . 195 0.5% $7,974 5.4% $33,625 6.7%
60-89 days . . 36 0.1% 1,186 0.8% 9,172 1.8%
90 days and over. . . . . . 40 0.1% 410 0.3% 2,054 0.4%
----- ---- ------ ---- ------ ----
Total 271 0.7% 9,570 6.5% 44,851 8.9%
Finance contracts in
repossession or
bankruptcy(2) 1,051 2.7% 3,384 2.3% 21,022 4.2%
----- ---- ----- ---- ------ ----
Grand Total $1,322 3.4% $12,954 8.8% $65,874 13.1%
====== ==== ======= ==== ======= =====
<FN>
(1) Excludes contracts for which notice of intent to liquidate has
expired and those having an outstanding balance less than or equal to $500.
(2) Excludes finance contracts in bankruptcy, authorized for
repossession and in repossession and still eligible for reinstatement.
</FN>
</TABLE>
<TABLE>
Lease Portfolio(1)
At June 30,
1994 1995 1996
(dollars in thousands)
<S> <C> <C> <C>
Principal balance
outstanding. . . $1,391 $27,756 $21,261
Number of contracts
outstanding . . 82 1,976 1,890
Delinquent loans (2)
31-59 days. . . 44 3.1% $2,221 8.0% $1,976 9.3%
60-89 days . . 0 0.0% 688 2.5% 75 2.2%
90 days and over. . . . . . 0 0.0% 160 0.6% 384 1.8%
----- ---- ------ ---- ----- ----
Total $ 44 3.1% $3,069 11.1% $2,834 13.3%
==== ==== ====== ===== ====== =====
<FN>
(1) The Company began originating leases in April 1994 and ceased
funding leases in the first quarter of its 1996 fiscal year.
(2) Percentages based on outstanding principal balance;
includes vehicles in repossession and/or in bankruptcy.
</TABLE>
-31-
Credit Loss Experience
An allowance for credit losses is maintained for all finance contracts held
for sale and for all finance contracts held for investment. Management
evaluates the reasonableness of the assumptions employed by reviewing credit
loss experience, delinquencies, repossession trends, the size of the finance
contract portfolio and general economic conditions and trends. If necessary,
assumptions are changed to reflect historical experience to the extent it
deviates materially from that which was assumed.
If a delinquency exists and a default is deemed inevitable or the collateral
is in jeopardy, and in no event later than the 35th day of delinquency, the
Company's collections department will initiate the repossession of the
financed vehicle. Bonded, insured outside repossession agencies are used to
secure involuntary repossessions. In most jurisdictions, notice to the
borrower of the Company's intention to sell the repossessed automobile is
required, whereupon the borrower may exercise certain rights to cure his or
her default or redeem the automobile. Following the expiration of the
legally required notice period, the repossessed vehicle is sold at a
wholesale auto auction, usually within 150 days of the repossession. The
Company monitors vehicles set for auction, and procures an appraisal under
the VSI Policy prior to sale. Liquidation proceeds are applied to the
borrower's outstanding obligation under the finance contract and loss
deficiency claims under the VSI Policy and credit default insurance policy
are then filed. The Company reports the remaining deficiency as a net
charge-off against the allowance for credit losses for automobile finance
receivables owned by the Company. For finance contracts held in
securitization trusts, charge-offs are accounted for in accordance with the
underlying pooling and servicing agreements.
Because of the Company's limited operating history, its finance contract
portfolio is unseasoned. Accordingly, delinquency and charge-off rates in
the portfolio may not fully reflect the rates that may apply when the
average holding period for finance contracts in the portfolio is longer.
Increases in the delinquency and/or charge-off rates in the portfolio would
adversely affect the Company's ability to obtain credit or securitize its
finance contracts and would have an adverse effect on the Company's results
of operations and financial condition.
The following table shows the Company's repossession and loss experience
for its managed finance contract portfolio for the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
1994 1995 1996
(dollars in thousands)
<S> <C> <C> <C>
Average principal balance outstanding(1) . .$26,062 $96,569 $333,183
Balance of finance contracts at the time
of repossession . . . . 1,707 7,722 40,258
Number of repossessions. . . . 172 722 3,494
Repossession ratio (2) . . . . . . 6.8% 8.2% 13.0%
Default balance of fully liquidated vehicles $1,391 $6,719 $15,920
Proceeds from liquidation, net of
repossession costs . 914 3,393 7,964
Gross charge offs(3) . . . . . . . 477 3,326 7,956
Credit default insurance proceeds (4). . . . 436 2,669 4,092
Net charge offs (5). . . . . . . . 41 657 3,864
Net charge offs as a percentage of
liquidations(6) . 2.9% 9.8% 12.0%
Net charge offs as a percentage of average
principal balance outstanding. . . 0.2% 0.8% 1.2%
<FN>
(1) Arithmetic mean of beginning and ending outstanding principal
balance of all finance contracts acquired including those previously sold
in securitization transactions.
(2) Balance of finance contracts at the time of repossession divided by
average principal balance outstanding during the period.
-32-
(3) Gross charge offs equals the aggregate balance of finance contracts
liquidated, including those previously sold in securitization transactions,
less all recoveries from the sale of the financed vehicles. Repossession and
liquidation expenses are included in gross charge offs.
(4) Since August 1995, the Company no longer deposits money to a
segregated account from which losses incurred under a policy would be paid.
(5) Net charge offs are gross charge offs reduced by credit default
insurance proceeds received relating to the defaulted finance contracts.
(6) Net charge off amount divided by the aggregate balance of finance
contracts relating to vehicles liquidated.
</FN>
</TABLE>
The Company has prepared analyses, based on its own credit experience and
available industry data, to identify the relationship between finance
contract delinquency and default rates at the various stages of a finance
contract repayment term. The results of these analyses, which have been
incorporated into the Company's methodology of determining gains from
securitization transactions suggest that the probability of a finance
contract becoming delinquent or going into default is highest during the
"seasoning period" that occurs between the sixth to the eighteenth month
payment period from the acquisition date.
If the rate of the Company's finance contract acquisition volume continues
to escalate, an increasingly greater portion of the Company's finance
contract portfolio is expected to fall into the "seasoning period"
described above, which may cause a rise in the overall finance contract
portfolio delinquency and default rates, without regard to underwriting
performance. Assuming no changes in any other factors that may affect
delinquency and default rates, the Company believes this trend should
stabilize or reverse when the volume of mature finance contracts (with
lower delinquency and default rates) is sufficient to offset the total
finance contract portfolio delinquency and default rates.
The Company believes delinquencies and losses can be mitigated through an
in-house collection program. Accordingly, the Company responded to the
increased rates of delinquencies and losses in the fiscal year ended
June 30, 1995 by entering into a sub-servicing agreement with its
third-party servicer in April 1995, providing for the transfer of specific
collection functions to the Company. Through this arrangement the Company
assumed responsibility for all customer contact with respect to all existing
leases and with respect to finance contracts that were included in the
Company's December 1994 securitization transaction and all finance contracts
acquired thereafter. In addition, the Company assumed responsibility for
liquidation activities on its entire finance contract portfolio (including
securitized finance contracts) at such time.
Because of the Company's limited operating history and the rapid growth of
its finance contract acquisitions, a significant portion of its finance
contract portfolio is unseasoned. Accordingly, delinquency and loss rates
in the portfolio may not be indicative of rates the Company may experience
over time. There can be no assurance that the performance of the Company's
portfolio will be maintained, or that the rate of future defaults and/or
losses will be consistent with prior experience or at levels that will not
adversely affect the Company's profitability.
Repossession Experience - Static Pool Analysis
The Company's finance contract portfolio is continuing to grow rapidly. The
Company does not record its provision for credit losses based on a percentage
of the Company's finance contract portfolio outstanding because percentages
can be favorably affected by large balances of recently acquired finance
contracts. The Company utilizes actual dollar levels of delinquencies and
charge-offs and analyzes the data on a "static pool" basis. The Company's
goal is to complete the liquidation process as quickly as possible. All
repossessed vehicles are sold at wholesale auction. The Company is
responsible for the costs of repossession, transportation and storage. The
Company's net charge-off per repossession equals the unpaid balance less the
auction proceeds (net of associated costs) and less proceeds from insurance
claims.
-33-
The following table provides static pool analysis of the Company's portfolio
as of June 30, 1996 for the periods shown. In this table, all finance
contracts have been segregated by month of acquisition. All repossessions
have been segregated by the month in which the repossessed finance contract
was originally acquired by the Company. Cumulative repossessions equals the
ratio of repossessions as a percentage of finance contracts acquired for each
segregated month. Annualized repossessions equals an annual equivalent of
the cumulative repossession ratio for each segregated month. This table
provides information regarding the Company's repossession experience over
time. For example, recently acquired finance contracts demonstrate very few
repossessions. After approximately one year of seasoning, frequency of
repossessions appear to reach a plateau. Based on industry statistics and
the performance experience of the securitizations, the Company believes that
finance contracts seasoned in excess of approximately 18 months will start
to demonstrate declining repossession frequency.
<TABLE>
<CAPTION>
Fiscal Year
and Month of Repos by Repo Frequency Finance Contracts NetCharge-Off
Acquisition Month Acquired Cum.(1) Annual(2) Acquired Per Unit
Units Amount Units Amount Amount
(Dollars in (Dollars in (Actual Dollars)
Thousands) thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Fiscal 1994
July . . 18 $162 14.2% 4.7% 103 $1,138 $1,385
August . 22 195 17.5% 6.0% 98 1,113 822
September. 15 134 15.7% 5.5% 81 856 598
October. 12 127 15.8% 5.8% 74 801 995
November . 17 158 23.0% 8.6% 64 685 1,522
December . 28 245 17.7% 6.9% 125 1,382 991
January. 37 382 20.0% 8.0% 174 1,913 1,770
February . 50 511 21.0% 8.7% 220 2,436 1,281
March. . 99 990 18.3% 7.9% 486 5,403 1,330
April. . 116 1,207 21.1% 9.4% 496 5,719 1,645
May. . . 103 1,146 20.6% 9.5% 476 5,573 1,447
June . . 123 1,283 19.1% 9.2% 567 6,718 1,625
Fiscal 1995
July . . 109 1,144 18.1% 9.1% 530 6,320 1,584
August . 129 1,417 19.3% 10.1% 606 7,327 1,587
September.117 1,343 19.0% 10.4% 587 7,064 2,205
October. 106 1,171 20.6% 11.8% 476 5,674 1,983
November 98 1,064 16.0% 9.6% 542 6,658 2,378
December .104 1,156 16.9% 10.6% 565 6,856 2,615
January. 133 1,596 19.2% 12.8% 676 8,334 3,376
February .163 1,866 19.2% 13.5% 798 9,736 2,364
March. . 231 2,717 18.5% 13.9% 1,214 14,715 2,779
April. . 253 2,990 17.8% 14.2% 1,391 16,843 2,945
May. . . 251 2,972 15.7% 13.5% 1,550 18,906 2,598
June . . 323 3,809 16.0% 14.7% 1,960 23,860 2,798
Fiscal 1996.
July . . 260 3,058 13.7% 13.7% 1,809 22,401 2,464
August . 259 3,142 12.6% 13.7% 2,057 25,024 4,877
September 190 2,287 9.1% 10.9% 2,077 25,137 5,620
October. 245 2,885 10.1% 13.5% 2,347 28,449 5,472
November 201 2,396 7.0% 10.5% 2,803 34,391 -
December 173 2,109 5.6% 9.6% 3,040 37,743 -
January. 119 1,453 3.6% 7.3% 3,265 39,922 -
February . 45 547 1.4% 3.3% 3,301 39,875 -
March. . 14 169 0.4% 1.0% 4,003 48,984 -
April. . 0 0 0.0% 0.00% 3,803 46,952 -
May. . . 0 0 0.0% 0.00% 4,033 50,025 -
June . . 0 0 0.0% 0.00% 4,201 52,635 -
<FN>
(1) For each month, cumulative repossession frequency equals the dollar
amount of repossessions divided by the dollar amount of finance contracts
acquired.
-34-
(2) Annualized repossession frequency converts cumulative repossession
frequency into an annual equivalent (e.g., for December 1994, $245
repossessions divided by $1,382, divided by 30 months outstanding times
12 equals an annualized repossession frequency of 6.9%).
(3) The increase in fiscal 1996 is due to the change in the Company's
credit default insurance policy. Since August 1995, the Company no longer
deposits money to a segregated account from which losses incurred under the
policy would be paid. The new policies provide for the Company to bear all
losses until a deductible amount is met. The rise in Net Charge-Off Per
Unit cost commencing in August 1995 reflects the application of the
deductible under the policy.
</FN>
</TABLE>
The following table provides static pool information regarding the Company's
rated securitization transactions as of June 30, 1996:
<TABLE>
<CAPTION>
Gross Gross Net
Loss Loss Loss
Percent of per Default Pool, Pool
Issue Original Current Original Cum. Receivable Cum. Cum.
Date Amount Amount Amount(1) Repos(1)(2) (1)(3) (1)(3)(4) (1)(5)
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aegis Auto
Receivable
Trust
Series
1994-A. Jun-94 $18,539 $6,826 36.82% 16.60% 47.44% 6.92% 2.06%
AegisAuto
Receivable
Trust
Series
1994-2. Sep-94 23,251 10,511 45.21 17.60 49.10 7.38 1.99
Aegis Auto
Receivable
Trust
Series
1994-3. Dec-94 21,000 11,139 53.04 17.11 48.07 6.33 2.30
Aegis Auto
Receivable
Trust
Series
1995-1. Mar-95 21,000 13,198 62.85 16.98 48.52 5.49 2.21
Aegis Auto
Receivable
Trust
Series
1995-2. Jun-95 54,000 38,152 70.65 15.45 48.00 4.07 1.88
Aegis Auto
Receivable
Trust
Series
1995-3. Sep-95 60,000 48,729 81.21 11.99 48.45 1.07 0.81
Aegis Auto
Receivable
Trust
Series
1995-4. Dec-95 70,000 62,366 89.09 8.10 0.00 0.00 0.00
Aegis Auto
Receivable
Trust
Series
1996-1. Mar-96 92,000 87,531 95.14 1.71 0.00 0.00 0.00
Aegis Auto
Receivable
Trust
Series
1996-2. Jun-96 105,000 104,392 99.42 0.00 0.00 0.00 0.00
Aegis Auto
Owners
Trust
1995-A Dec-95 -
Jun-96 97,780 92,562 94.66 1.26 0.00 0.00 0.00
Total
Managed
Portfolio. . $629,574 $516,122 81.98% 7.97% 48.06% 1.88% 0.75%
<FN>
(1) Data computed from trustee reports of July 1996 reflecting servicer
data of June 30, 1996 and from Company's records as of June 30, 1996.
(2) Cumulative repos reflect the total dollar volume of finance contracts
that have been liquidated, or are in the liquidation process (but in
any event can no longer be reinstated), as a percentage of the original
pool balance.
(3) Receivable gross losses are calculated as losses after the proceeds
from repossessed vehicle sales, service contract rebates, consumer
insurance and VSI insurance, net of repossession and liquidation costs,
as a percentage of the defaulted receivable balance.
(4) Gross loss is calculated as the receivable gross losses for the pool as
a percentage of the original pool balance.
(5) Net loss is calculated as the receivable gross losses less proceeds
received from credit default insurance, as a percentage of the original
pool balance.
</FN>
</TABLE>
Liquidity and Capital Resources
The Company's business requires substantial cash to support its operating
activities. The principal cash requirements include (i) amounts necessary
to acquire automobile finance contracts pending securitization and (ii) cash
held from time to time in restricted spread accounts to support
securitizations and other securitization expenses. The Company also uses
material amounts of cash for operating expenses and debt service and, on
occasion, to hedge interest rate risk. The Company has operated on a
negative operating cash flow basis and expects to continue to do so for so
long as the Company's volume of finance contract acquisition continues to
grow. The Company has funded these negative operating cash flows principally
through borrowings from financial institutions and sales of equity
securities, among other resources. There can be no assurance that the
Company will have access to capital markets in the future or that financing
will be available to satisfy the Company's operating and debt service
requirements or to fund future growth. If these resources are not available
on terms acceptable to the Company, the Company may have to curtail its
finance contract acquisition volume levels.
-35-
The Company's external capital resources primarily consist of the warehouse
credit facilities and the Company's securitization program. When the Company
securitizes finance contracts it repays a portion of its outstanding
warehouse indebtedness with the proceeds from such securitizations, making
such portion available for future borrowing. The Company expects to
securitize its assets at least quarterly, although there can be no assurance
that the Company will be able to do so. The Company also continues to seek
additional arrangements with financial institutions with respect to the
disposition of its portfolio assets. In addition, the Company has borrowed
against its retained interests to increase liquidity. The Company is
exploring the feasibility of securitizing pools of its leases or selling
whole leases as possible complements to its current financing arrangements.
The Company ceased the funding of leases in the first quarter of fiscal 1996.
The following table sets forth the major components of the increase
(decrease) in cash and cash equivalents for the periods shown:
Year Ended June 30,
1994 1995 1996
(dollars in thousands)
Net cash used in operating activities(1) $(18,986) $(49,208) $(15,782)
Net cash provided by (used in) investing
activities(2). . . . 2,180 745 (390)
Net cash provided by financing activities 17,291 53,452 13,292
------ ------ ------
Net increase (decrease) in cash and cash
equivalents $485 $4,989 $(2,880)
==== ====== ========
(1) Includes net cash used in acquisition of automobile finance
contracts of $(16,075) in fiscal 1994, $(32,523) in fiscal 1995, and
$(6,324) in fiscal 1996.
(2) Includes net cash (used in) provided by warehouse credit facilities
of $15,260 in fiscal 1994, $32,902 in fiscal 1995, and $(10,960)
in fiscal 1996.
Net cash used in operating activities primarily represents cash flows
utilized to support the Company's acquisition of automobile finance
contracts, including amounts representing capitalized acquisition costs, net
of cash proceeds of sales, including through securitizations, and repayments
from automobile finance receivables. The cash used to acquire automobile
finance contracts is generated primarily by financing activities under the
Company's warehouse credit facilities, discussed below.
A further significant source of cash used in operating activities is
net income offset by non-cash revenue items, most notably unrealized gains on
securitization transactions, which is expected to generate cash in future
periods. The unrealized gains principally represent the discounted present
value of the amount of anticipated collections from securitized receivables
over the amounts due to investors in the securitizations. These amounts were
$4.3 million, $21.4 million and $54.0 million for the fiscal years ended
June 30, 1994, 1995 and 1996, respectively. During the years ended June 30,
1994, 1995 and 1996, the Company received cash proceeds of $123,000, $1.8
million and $3.0 million, respectively, from its retained interests in
securitized receivables which were utilized in meeting both its operating
needs and its debt repayment requirements under the related financing
agreements. During the first quarter of the fiscal year ended June 30, 1994,
the Company also sold substantially all of its previously acquired retained
interests in securitized receivables, resulting in a non-cash use of
operating funds of $1.9 million. The Company generated cash proceeds from
investing activities in these transactions of $2.1 million, providing it
with excess cash receipts of $200,000, which were also utilized in meeting
its operating cash needs.
Other non-cash adjustments include depreciation and amortization, which
amounted to $381,000 for the fiscal year ended June 30, 1994, $454,000 for
the fiscal year ended June 30, 1995 and $612,000 for the
-36-
fiscal year ended June 30, 1996; provision for credit losses, which
amounted to $287,000 for the fiscal year ended June 30, 1994, $942,000 for
the fiscal year ended June 30, 1995 and $3.5 million for fiscal year ended
June 30, 1996; and provision (benefit) for deferred income taxes of
$(156,000) for the fiscal year ended June 30, 1994, $1.5 million for the
fiscal year ended June 30, 1995 and $5.9 million for the fiscal year
ended June 30, 1996. In addition, as of June 30, 1995 and 1996, the Company
released 814,455 and 1,078,308, respectively, of the Escrowed Shares (of
which 113,386 shares were released to the executive officers of the Company
in 1995 and 150,118 shares were released to the executive officers of the
Company in 1996) and consequently incurred non-cash charges of $879,000 and
$807,000, respectively. The charges did not affect the Company's total
stockholders' equity or working capital. The Company also incurred non-cash
charges of $7.5 million and $600,000 for the fiscal year ended June 30, 1996
for write downs and valuations allowances, respectively, on retained
interests in securitized receivables and a note receivable, respectively,
with no such charges in the prior periods.
To the extent that the foregoing activities were net users of cash,
such cash was provided primarily by borrowings under notes payable of $16.0
million for the fiscal year ended June 30, 1995 and $39.4 million for the
fiscal year ended June 30, 1996 secured by retained interests in securitized
receivables created in the Company's automobile finance contract
securitizations. Principal repayments are made from the Company's proceeds
received from pay downs on such assets, which amounted to $1.8 million for
the fiscal year ended June 30, 1995 and $3.0 million for the comparable 1996
period. The borrowing base on the retained interests in securitized
receivables is determined on each transaction through a calculation that
incorporates prevailing prepayment default and loss experience.
Consequently, as each securitization transaction becomes seasoned, it
experiences a period of higher incidence of default and loss, resulting in a
repayment on the notes secured by the allocable retained interests in
securitized receivables. The Company made additional principal pay downs of
$1.3 million in excess of proceeds received for the fiscal year ended
June 30, 1995 and $8.6 million for the comparable 1996 period.
The Company's cash flows and results of operations may be affected
adversely in the near term by rising interest rates, since not all costs of
funds, which under the Company's warehouse credit facilities are at floating
rates of interest, can be immediately passed on to consumers, whose finance
contracts are at fixed rates of interest. In addition, rising interest
rates would result in a decrease in the Company's net spreads on
securitization transactions thereby decreasing future projected cash flows
from retained interests in securitized receivables. Furthermore, the
Company's discount rate utilized in determining its borrowing base may also
rise, decreasing the amount available to borrow. Moreover, interest rates
charged by the Company may be more significantly affected by factors other
than prevailing interest rates, most notably geographic distribution and
varying state interest rate limitations. The Company has a hedging policy
which seeks to limit the risks associated with changes in interest rates.
In connection with its securitization transactions, the Company enters
into pooling and servicing agreements (the "Agreements") in which its
finance contracts are sold to a Trust which, in turn, sells securities to
investors. Generally, the Company is required to make an initial cash
deposit to the Trust as form of a credit enhancement for the securitization.
The terms of the Agreements generally require that the excess servicing cash
flows of the finance contracts be retained in a bank account under the
control of the Trustee (the "Reserve Fund") until the Reserve Fund meets
predetermined deposit requirements. Any cash flows in excess of Reserve Fund
requirements are released to the Company on a monthly basis. For the fiscal
years ended June 30, 1994, 1995 and 1996, the Company received $123,000,
$1.8 million and $3.0 million, respectively, in excess servicing cash flows
from Reserve Funds. In the event that the finance contracts owned by the
Trusts fail to meet predetermined delinquency and loss performance measures,
the Agreements require that the Trustee retain excess servicing cash flows
until the Reserve Fund attains pre-set incrementally higher levels of credit
enhancements. The predetermined performance measures are not always
maintained on a consistent
-37-
monthly basis, thus deferring the release of the cash flows to the Company
from the Reserve Fund of the applicable Trust. In addition, certain of the
Agreements required the Company to deposit additional cash into the Trust's
Reserve Fund if its initial minimum required levels were not met within a
predetermined time frame. For the fiscal year ended June 30, 1996, the
Company paid additional cash contributions to certain Reserve Funds of
$2.3 million and in August 1996 paid a $2.4 million deposit which, management
believes to be its final payment to Reserve Funds under the existing
Agreements.
The Company's warehouse credit facility with III Finance Ltd. for
automobile finance contracts provides that the Company may borrow the lesser
of $100 million (less the amount outstanding under the Company's lease
warehouse credit facility with III Finance Ltd. described below ($14.1
million as of August 20, 1996)) or the sum of (A) 100% of the outstanding
principal amount of performing, insured, finance contracts and (B) the lesser
of 90% of the outstanding principal amount of delinquent finance contracts
(which percentages are reduced to 80% and 70%, respectively, if the Company's
automobile insurer fails to maintain an A.M. Best Company rating of "A" or
better (defined by A.M. Best Company as an "excellent" rating regarding the
insurer's financial strength and ability to meet its obligations to
policyholders)) and $1.0 million plus 92% (declining 1% per month for each
month the receivable is outstanding past 180 days) of the outstanding
principal amount of uninsured automobile finance contracts for the purpose of
acquiring automobile finance contracts in accordance with the Company's
underwriting guidelines. The Company has a warehouse credit facility for
originating its lease transactions, which provides the Company with a $50.0
million credit line on substantially the same terms as the automobile finance
contract facility. These facilities are secured primarily by the Company's
auto finance receivables and bear interest at the rate of the one-month
LIBOR plus 4.0%, adjusted monthly (9.4844% for July, 1996). Under these
warehouse credit facilities, principal payments are made monthly to the
extent of principal payments received on the underlying collateral, and
interest payments are made quarterly in arrears and on the date of any
prepayment of principal on the underlying collateral. The Company's ability
to continue to borrow under these warehouse credit facilities is dependent
upon its compliance with the terms thereof, including the maintenance by the
Company of certain minimum capital levels. Under each warehouse credit
facility, the Company is required to prepay 5% of the outstanding principal
balance of finance contracts held by the Company for more than 180 days.
In addition, each warehouse credit facility requires a prepayment fee of
0.25% of the outstanding principal balance of the finance contracts
voluntarily prepaid, including in connection with the sale of finance
contracts. In the event the prepayment occurs within the same month of the
borrowings, the prepayment fee is 0.125% of the outstanding principal
balance. As of June 30, 1996, the Company had approximately $62.8 million
of borrowings available through the warehouse credit facility arrangements
with III Finance Ltd. In addition, the Company has a $50.0 million warehouse
credit facility dedicated to the purchase of HUD Title I Loans, which the
Company does not anticipate utilizing at this time. All three warehouse
credit facilities with III Finance, Ltd. expire in November 1997.
In the quarters ended June 1994, September 1994, December 1994,
March 1995, June 1995, September 1995, December 1995, March 1996 and
June 1996, the Company securitized approximately $18.5 million, $23.3 million,
$21.0 million, $21.0 million, $54.0 million, $60.0 million, $85.4 million,
$130.1 million and $149.3 million, respectively, of finance contracts and used
the net proceeds to pay down borrowings under its warehouse credit facilities.
In each of its last seven securitizations, the Company has utilized a
"pre-funding account" that enabled the Company to fund certain finance
contract acquisitions without committing its warehouse credit facility for an
extended period of time. Additionally, the Company directly sold in the
form of whole finance contract sales, approximately $20.1 million
(approximately $7.8 million in the fiscal year ended June 30, 1996) of
automobile finance contracts as of June 30, 1996 and used part of the
proceeds to pay down borrowings under its warehouse credit facility.
-38-
In December 1995, the Company entered into a commitment to sell $175.0
million of sub-prime automobile finance contracts to be resold as
asset-backed securities through Rothschild, Inc. During the fiscal year
ended June 30, 1996, the Company sold approximately $97.8 million of
automobile receivables into this facility. This facility requires the
Company to directly sell between $8.0 million and $15.0 million per month
for a fifteen-month funding period subsequent to the initial funding date.
If the Company fails to meet the minimum target, the terms of the facility
provide that the Company may not be able to sell future finance contracts to
the facility. As of June 30, 1996 the Company has a remaining commitment of
$77.2 million.
In February 1996, the Company issued $9,200,000 of Series C Convertible
Preferred Stock (the "Preferred Stock") under Regulation S of the Securities
Act. The Preferred Stock is convertible into Common Stock at the lower of
$6.425 per share of Common Stock or 85% of the fair market value of the
Common Stock at the time of conversion. The Company can redeem the Preferred
Stock upon conversion at the fair market value of the Common Stock into which
such Preferred Stock is convertible. The Preferred Stock has an 8.0% annual
dividend payable in Common Stock at the time of conversion. The Preferred
Stock is automatically converted into Common Stock on the third anniversary
of its issuance. For the fiscal year ended June 30, 1996, the Company
redeemed 88 shares of Preferred Stock for $1.1 million and converted 307
shares of Preferred Stock into 679,114 shares of Common Stock.
In May 1996, the Company secured an additional warehouse credit
facility with Greenwich Capital., a subsidiary of Long Term Credit Bank of
Japan (which has recently entered into an agreement to sell Greenwich
Capital, to NatWest Markets) for $100.0 million, which will provide the
Company with additional flexibility to purchase greater volumes of
receivables or warehouse automobile receivables for longer periods. The
facility is secured primarily by the Company's finance contracts and bears
interest at the rate of the one- month LIBOR plus 3.0% (8.4297% at August 22,
1996), adjusted monthly. Principal payments are made to the extent that
principal is paid on the underlying collateral, and are required to be made
if the underlying collateral does not meet certain specified conditions.
Prepayment of principal is not permitted, except in connection with
securitization transactions and whole loan sales. The Company's ability to
continue to borrow under this facility is dependent on its compliance with
the terms thereof, including the maintenance by the Company of certain
minimum capital levels. As of June 30, 1996, the Company had approximately
$100.0 million of borrowings available through this facility. In addition
to the warehouse financing, the Company also secured a one-year $5.0 million
revolving credit facility (with a six-month renewal option) from Greenwich
Capital (the Company utilized $2.0 million of the revolving credit facility
in August 1996) and a one-year commitment from Greenwich Capital to purchase
and securitize up to $533.0 million of the Company's finance contract
acquisitions until the commitment is filled, subject to customary conditions.
Two securitizations aggregating $197.0 million were completed as of June 30,
1996 pursuant to this commitment. In connection with these facilities, the
Company granted warrants to Greenwich Capital to purchase 1,116,335 shares
of common stock at an exercise price of $6.50 per share (subject to
adjustment as defined in the agreement). The Greenwich Capital warehouse
credit facility is for a one year term with a one year renewal option. In
addition, the agreement provides the Company, at its option (expiring in
December 1996), to increase the facility up to $150 million with a 90 day
notice.
The Company believes that cash flows from operations, available lines
of credit and its warehouse credit facilities along with the proceeds
received from the Series C Convertible Preferred Stock or through other
financing arrangements are adequate to support its current and near-term
funding and operations needs at current levels. The Company is currently in
the process of seeking additional capital; however, there can be no assurance
as to the availability or timing of such transactions.
-39-
Inflation
While inflation has not had a material impact upon the Company's
results of operations, there can be no assurance that the Company's business
will not be affected by inflation in the future. Increases in the inflation
rate generally result in increased interest rates and can be expected to
result in increases in the Company's operating expenses. As the Company
borrows funds at variable rates and generally acquires finance contracts at
an average interest rate of approximately 20.2%, increased interest rates
will increase the borrowing costs of the Company, and such increased
borrowing costs may not be offset by increases in the interest rates with
respect to finance contracts acquired.
Seasonality
The Company's operations are affected to some extent by seasonal
fluctuations. Finance contract acquisitions tend to increase in March
through June and September and October, while finance contract acquisitions
are lowest in December and January. Delinquencies also tend to be higher
during certain holiday periods, particularly at calendar year end.
Item 8: Financial Statements and Supplementary Data.
The information required under this item is indexed on page F-1 herein and
is contained on the pages following said page F-1.
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
None.
PART III
Item 10: Directors and Executive Officers of the Registrant.
The information required by Item 10 will be contained in the Registrant's
Definitive Proxy Statement for its 1997 Annual Meeting of Shareholders,
(the "1996 Proxy Statement") called to be held in November 1996, which
the Registrant intends to file with the Commission in October 1996, and
such information is incorporated herein by reference.
Item 11: Executive Compensation.
The information required by Item 11 will be contained in the 1996
Proxy Statement, and such information is incorporated herein by reference.
Item 12: Security Ownership of Certain Beneficial Owners and Management.
The information required by Item 12 will be contained in the 1996
Proxy Statement, and such information is incorporated herein by reference.
Item 13: Certain Relationships and Related Transactions.
The information required by Item 13 will be contained in the 1996
Proxy Statement, and such information is incorporated herein by reference.
-40-
PART IV
Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents filed as part of this Report:
(1) The financial statements and schedules listed in the accompanying
index to Financial Statements and Schedules on page F-1 are filed
as part of the Annual Report on Form 10K.
(2) Exhibits. See Exhibit Index beginning on page 43.
(b) No current Reports on Form 8-K were filed by the Company during the
fourth quarter ended June 30, 1996.
-41-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE AEGIS CONSUMER FUNDING GROUP, INC.
By: S/Angelo R. Appierto
Angelo R. Appierto
Chairman of the Board and
Chief Executive Officer
Date: September 9, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
S/Angelo R. Appierto Chairman of the Board, September 9, 1996
Angelo R. Appierto Chief Executive Officer
and Director
S/Joseph F. Battiato President September 9 , 1996
Joseph F. Battiato
S/Dina L. Penepent Chief Financial Officer, September 9, 1996
Dina L. Penepent Executive Vice President,
Secretary, Principal Financial
and Accounting Officer
S/Gary D. Peiffer General Counsel, September 9, 1996
Gary D. Peiffer Vice-Chairman and Director
S/Felice Cutler Director September 9, 1996
Felice Cutler
S/Carl Frischling Director September 9, 1996
Carl Frischling
S/Paul Fitzpatrick Director September 9, 1996
- ------------------
Paul Fitzpatrick
-42-
INDEX OF EXHIBITS
Listed below are all Exhibits filed as part of this report. Certain Exhibits
are incorporated herein by reference to (1) the Company's Registration
Statement on Form SB-2 originally filed on April 6, 1995 (File No. 33-85836)
and (2) documents previously filed by the Company with The Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended.
Exhibit No. Description Page No.
3.1 Certificate of Incorporation(1). . . . . . . . . .
3.2 By-laws(1). . . . . . . . . . . . . . . . . . . . .
3.3 Form of Amended and Restated Certificate of Incorporation(1). .
3.4 Form of Amended and Restated By-laws(1) . . . . . .
3.5 Certificate of Designation of Series C Preferred Stock(2) . . .
4.1 Specimen Common Stock Certificate(1). . . . . . . .
4.2 Warrant issued to Drew Schaefer(1). . . . . . . . .
4.3 Underwriters' Warrant Agreement(1). . . . . . . . .
4.4 Form of Escrow Agreement(1) . . . . . . . . . . . .
4.6 Voting Agreement dated February 15, 1996(1) . . . .
4.6 Irrevocable Proxy dated February 15, 1995(1). . . .
4.7 Warrants to purchase 114,553 shares of Common Stock (2) . . . .
4.8 Warrant issued to Chaneil Associates(2). . . . . . . .
4.9 Warrant issued to Beckett Reserve Fund, L.L.C.(2). . .
4.10 Warrant issued to Bjorn Ahlstrom. . . . . . . . . .
5.1 Opinion of Shereff, Friedman, Hoffman & Goodman, LLP(1) . . . .
10.1 Revolving Credit Facility Agreement, dated July 23, 1993, between
The Bennett Funding Group, Inc. and the Company(1).
10.2 Loan and Security Agreement, dated as of February 28, 1994, among Aegis
Acceptance Corp., Aegis Consumer Finance, Inc. and III Finance Ltd(1).
10.2.1 Form of Promissory Note relating to Exhibit 10.2(1) .
10.2.2 Aging Receivables Report relating to Exhibit 10.2(1).
10.2.3 Form of Dealer Agreement relating to Exhibit 10.2(1).
10.2.4 GAP Auto Protection Insurance Policy relating to Exhibit 10.2.(1) . .
10.2.5 Form of Lease relating to Exhibit 10.2(1) . . . . .
10.2.6 Liability Insurance Policy relating to Exhibit 10.2(1). . . . .
10.2.7 Risk Default Policy relating to Exhibit 10.2(1) . .
10.2.8 Residual Value Insurance Policy relating to Exhibit 10.2(1) . .
10.2.9 Underwriting Criteria relating to Exhibit 10.2(1) .
10.2.10 Vendor Single Interest Physical Damage Insurance Policy relating to
Exhibit 10.2(1) . . . . . . . . . . . . . . . . . .
10.2.11 Form of Custodian Confirmation relating to Exhibit 10.2(1). . .
10.2.12 List of Closing Documents relating to Exhibit 10.2(1)
10.3 Loan and Security Agreement, dated as of November 8, 1993, between
Aegis Capital Markets, Inc., Aegis Acceptance Corp.,
Aegis Auto Finance, Inc. and III Finance Ltd.(1). .
10.3.1 Form of Promissory Note relating to Exhibit 10.3(1) .
10.3.2 Aging Receivables Report relating to Exhibit 10.3(1).
10.3.3 Form of Dealer Agreement relating to Exhibit 10.3(1).
-43-
10.3.4 Form of RDI Policy relating to Exhibit 10.3(1). . .
10.3.5 Underwriting Criteria relating to Exhibit 10.3(1)
10.3.6 Form of VSI Policy relating to Exhibit 10.3(1). .
10.3.7 Form of Servicer's Confirmation relating to Exhibit 10.3(1) . .
10.3.8 List of Closing Documents relating to Exhibit 10.3(1)
10.4 Loan and Security Agreement, dated as of July 1, 1993, between Aegis
Securitized Assets, Inc. and III Finance Ltd.(1). .
10.4.1 Underwriting Criteria relating to Exhibit 10.4(1) .
10.5 1994 Stock Option Plan of the Company(1). . . . . .
10.5.1 1994 Stock Option Plan of the Company, as amended(2).
10.5.2 1996 Stock Option Plan of the Company(2). . . . . .
10.6 Employment Agreement with Angelo R. Appierto(1) . .
10.6.1 Amendment to Employment Agreement with Angelo R. Appierto(2). .
10.6.2 Form of Amendment to Employment Agreement with Angelo R. Appierto(2)
10.6.3
10.7 Employment Agreement with Gary D. Peiffer(1). .
10.7.1 Amendment to Employment Agreement with Gary D. Peiffer(2) . . .
10.7.2 Form of Amendment to Employment Agreement with Gary D. Peiffer(2) . .
10.7.3
10.8 Employment Agreement with Joseph F. Battiato(1) . .
10.8.1 Amendment to Employment Agreement with Joseph F. Battiato(2). .
10.8.2 Form of Amendment to Employment Agreement with Joseph F. Battiato(2).
10.8.3
10.9 Employment Agreement with Matthew B. Burns(1) . . .
10.9.1 Amendment to Employment Agreement with Matthew B. Burns(2). . .
10.9.2 Amendment to Employment Agreement of Matthew B. Burns,
dated as of October 11, 1995.(2) . . . . . . . . .
10.10 Employment Agreement with Jorge G. Rios(1). . . . . .
10.11 Employment Agreement with Robert G. Nelson(1) . . . .
10.12 Consulting Agreement with Drew E. Schaefer and Nustar Financial
Corp.(1). . .
10.13 Termination of Consulting Agreement with Drew E. Schaefer
Nustar Financial Corporation(1) . . . . . . . . . . .
10.14 Lease, dated June 29, 1992, by and between the Company and First Pac
Limited, with respect to 33 Whitehall St., New York, New York(1). . .
10.15 Additional Space Agreement, dated September 30, 1993, by and
between the Company and First Pac Limited(1) . . . .
10.16 Sublease, dated September 27, 1993, by and between the Company as
subtenant and Centre Reinsurance Company and International Insurance
Advisors, Inc., as sublessors(1). . . . . . . . . . .
10.17 Sublease, dated as of October 1, 1993, by and between the Company as
sublessor and Americorp Financial Services, Inc. as subtenant(1). . .
10.18 Master Servicing Agreement, dated as of February 28, 1994, between
American Lenders Facilities, Inc. and Aegis Consumer Finance, Inc.(1)
10.19 Program Management Agreement, dated as of November 16, 1992, by and
between Aegis Financial Advisers, Inc., and The Bennett Funding
Group, Inc(1) . . . . . . . . . . . . . . . . . . . .
10.20 Program Management Agreement Amendment No. 1, dated as of
July 1, 1993 by and between Aegis Financial Advisers, Inc. and
The Bennett Funding Group, Inc.(1). . . . . . . . . .
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10.21 Loan and Security Agreement, dated as of August 11, 1994, between Aegis
Consumer Finance, Inc. and III Finance Ltd.(1). . . .
10.21.1 Form of Promissory Note relating to Exhibit 10.21(1) .
10.21.2 Form of Cash Flow Valuation Report relating to Exhibit 10.21(1).
10.21.3 Aegis Auto Receivables 1994-A, L.P., Agreement of Limited Partnership
relating to Exhibit 10.21(1). . . . . . . . . . . . .
10.21.4 Pooling and Servicing Agreement relating to Exhibit 10.21.(1). .
10.21.5 List of Closing Documents relating to Exhibit 10.21.(1). . . . .
10.21.6 See Exhibit 10.3.4.(1) .
10.21.7 See Exhibit 10.3.6.(1) .
10.22 Loan and Security Agreement, dated as of September 28, 1994, between
Aegis Consumer Finance, Inc. and III Finance Ltd.(1) .
10.22.1 Form of Promissory Note relating to Exhibit 10.22(1) .
10.22.2 See Exhibit 10.21.2(1) .
10.22.3 See Exhibit 10.21.3(1) .
10.22.4 See Exhibit 10.21.4(1) .
10.22.5 See Exhibit 10.21.5(1) .
10.22.6 See Exhibit 10.3.4(1). .
10.22.7 See Exhibit 10.3.6.(1) .
10.23 Form of Dealer Agreement(1) . . . . . . . . . . . . .
10.24 Form of Customer Credit Application(1). . . . . . . .
10.25 Partnership Agreement of Aegis Investment Partners(1) . . . . . . . .
10.26 Employment Termination Agreement, dated as of February 22, 1995,
between the Company and Robert Nelson(1). . . . . . .
10.27 Servicing Agreement with American Lenders Facility, Inc.(2) . . . . .
10.28 Loan and Security Agreement, dated as of December 22, 1994
between Aegis Consumer Finance, Inc. and III Finance Ltd.(2). . . . .
10.28.1 Form of Promissory Note relating to Exhibit 10.28(2) .
10.28.2 Exhibit 10.21.2 Form of Cash Flow Valuation Report relating to
Exhibit 10.21(1). . . . . . . . . . . . . . . . . . .
10.28.3 Exhibit 10.21.3 Aegis Auto Receivables 1994-A, L.P., Agreement of
Limited Partnership relating to Exhibit 10.21(1). . .
10.28.4 Exhibit 10.21.4 Pooling and Servicing Agreement relating to
Exhibit 10.21(1). . . . . . . . . . . . . . . . . . .
10.28.5 Exhibit 10.21.5 List of Closing Documents relating to Exhibit 10.21(1)
10.28.6 Exhibit 10.3.4 Form of RDI policy relating to Exhibit 10.3(1). .
10.28.7 Exhibit 10.3.6 Form of VSI Policy relating to Exhibit 10.3(1). .
10.29 Loan and Security Agreement dated as of March 22, 1995,
between Aegis Consumer Finance, Inc. and III Finance LTD.(2). . .
10.29.1 Form of Promissory Note relating to Exhibit 10.29(2) .
10.29.2 Exhibit 10.21.2 Form of Cash Flow Valuation Report relating to
Exhibit 10.21(1). . . . . . . . . . . . . . . . . . .
10.29.3 Exhibit 10.21.3 Aegis Auto Receivables 1994-A, L.P., Agreement of
Limited Partnership relating to Exhibit 10.21(1). . .
10.29.4 Exhibit 10.21.4 Pooling and Servicing Agreement relating to
Exhibit 10.21(1). . . . . . . . . . . . . . . . . . .
10.29.5 Exhibit 10.21.5 List of Closing Documents relating to Exhibit 10.21(1)
10.29.6 Exhibit 10.3.4 Form of RDI Policy relating to Exhibit 10.3(1). .
10.29.7 Exhibit 10.3.6 Form of VSI Policy relating to Exhibit 10.3(1). .
-45-
10.39 Employment Agreement with Dina L. Penepent(2) . . . .
10.40 Master Amendment to Loan and Security Agreements, dated as of August
24, 1995 between Aegis Auto Finance, Inc. and III Finance Ltd(2).
10.41 Amendment No. 4 to Loan and Security Agreement, dated as of September
12, 1995 between Aegis Acceptance Corp., Aegis Consumer Finance, Inc.
and III Finance Ltd.(2)
10.42 Amendment No. 5 to Loan and Security Agreement, dated as of October
18, 1995 between Aegis Acceptance Corp., Aegis Consumer Finance, Inc.
and III Finance Ltd.(2)
10.43 Amendment No.5 to Loan and Security Agreement, dated as of September
13, 1995, between Aegis Auto Finance, Inc. and III Finance Ltd.(2)
10.44 Amendment No. 6 to Loan and Security Agreement, dated as of October
18, 1995,between Aegis Auto Finance, Inc. and III Finance Ltd.(2). .
10.45 Purchase Agreement dated as of 611/95 by and between Aegis Auto
Finance, Inc. as Seller and Aegis Auto Funding Corp. as Purchaser(2).
10.46 Purchase Agreement dated as of 6/20/95 by and between Aegis Auto
Funding Corp. as Seller and Smith Barney Inc. as Purchaser.(2). .
10.47 Loan and Security Agreement, dated as of June 20, 1995 between Aegis
Auto Finance, Inc. as Borrower and III Finance Ltd. as Lender.(2). .
10.47.1 Promissory Note relating to Exhibit 10.45.(2). . . . .
10.48. Exhibit 10.30.2 Form of Cash Flow Valuation Report relating to
Exhibit 10.29.2, relating to Exhibit 10.21.3, relating to Exhibit
10.21(1). . . .
10.48.1 Exhibit 10.30.3 Pooling and Servicing Agreement relating to Exhibit
10.29.4, relating to Exhibit 10.21.4, relating to Exhibit 10.21(1).
10.48.2 Exhibit 10.30.4 List of Closing Documents relating to Exhibit 10.29.5,
relating to Exhibit 10.21.5, relating to Exhibit 10.21(1).. . .
10.48.3 Exhibit 10.30.5 Form of RDI Policy relating to Exhibit 10.29.6,
relating to Exhibit 10.3.4, relating to Exhibit 10.3(1).. . . . .
10.48.4 Exhibit 10.30.6 Form of VSI Policy relating to Exhibit 10.29.7,
relating to Exhibit 10.3.6, relating to Exhibit 10.3(1).. .
10.49 Purchase Agreement dated as of 9/1/95 by and between Aegis Auto
Finance, Inc. as Seller and Aegis Auto Funding Corp. as Purchaser.(2)
10.50 Purchase Agreement dated as of 9/20/95 by and between Aegis Auto
Funding Corp. as Seller and Smith Barney Inc. as Purchaser.(2).
10.51 Loan and Security Agreement, dated as of September 25, 1995 between
Aegis Auto Finance, Inc. as Borrower and III Finance Ltd. as
Lender.(2) . . . .
10.51.1 Promissory Note relating to Exhibit 10.49.(2). . . . .
10.52 Exhibit 10.46 Form of Cash Flow Valuation Report relating to Exhibit
10.30.2, relating to Exhibit 10.29.2, relating to Exhibit 10.21.3,
relating to Exhibit 10.21(1). . . . . . . . .
10.52.1 Exhibit 10.46.1 Pooling and Servicing Agreement relating to Exhibit
10.30.3, relating to Exhibit 10.29.4, relating to Exhibit 10.21.4,
relating to Exhibit 10.21(1). . . . .
10.52.2 Exhibit 10.46.2 List of Closing Documents relating to Exhibit 10.30.4,
relating to Exhibit 10.29.5, relating to Exhibit 10.21.5, relating to
Exhibit 10.21(1). . . .
10.52.3 Exhibit 10.46.3 Form of RDI Policy relating to Exhibit 10.30.5,
relating to Exhibit 10.29.6, relating to Exhibit 10.3.4, relating
to Exhibit 10.3(1). . . .
10.52.4 Exhibit 10.46.4 Form of VSI Policy relating to Exhibit 10.30.6,
relating to Exhibit
-46-
10.29.7, relating to Exhibit 10.3.6, relating to Exhibit 10.3(1). .
10.53 Purchase Agreement dated as of 11/7/95 by and between Aegis Auto
Finance, Inc. as Seller and Cameron State Bank as Purchaser.(2) . .
10.54 Purchase Agreement dated as of 11/7/95 by and between Aegis Auto
Finance, Inc. as Seller and City Savings Bank and Trust as
Purchaser.(2)
10.55 Amendment No. 1 to 6/20/95 Loan and Security Agreement, dated as of
October 27, 1995 between Aegis Auto Finance, Inc. and III Finance
LTD.(2) . . . .
10.56 Amendment No. 1 to 9/25/95 Loan and Security Agreement, dated as of
October 27, 1995 between Aegis Auto Finance, Inc. and III Finance
LTD.(2) . . . .
10.57 Form of Regulation S Subscription Agreement (2) . . .
10.57.1 Registration Rights Agreement relating to Exhibit 10.57 (2). . .
10.58 Loan and Security Agreement, dated as of 11/7/95 between The Aegis
Consumer Funding Group, Inc., as Borrower, and both Aegis Consumer
Finance, Inc., and Aegis Auto Funding Corp.,as Guarantors, and
Beckett Reserve Fund, L.L.C., as Lender. (2) . .
10.58.1 Promissory Note relating to Exhibit 10.58.(2). . . . .
10.59 Purchase Agreement dated as of 11/7/95 between Aegis Auto Finance,
Inc., as Seller, and City Savings Bank and Trust as Purchaser.(2)
10.60 Purhase Agreement dated as of 11/7/95 between Aegis Auto Finance,
Inc., as Seller, and Cameron State Bank as Purchaser.(2).
10.61 Agreement of Sublease dated as of 11/10/95 between Aegis Consumer
Funding Group, Inc., and Peterson & Ross.(2). . . . .
10.62 Purchase Agreement dated as of 12/12/95 between Aegis Auto Finance,
Inc. as Seller and Calcasieu Marine National Bank as Purchaser.(2) .
10.63 Funding Agreement dated as of 4/4/95 between U.S. Investment Group,
Inc., and The Aegis Consumer Funding Group, Inc.(2) . .
10.63.1 Amendment dated as of 8/4/95 relating to Exhibit 10.63.(2) . . .
10.64 Fee Agreement dated as of 12/20/95 with Chaneil Associates.(2). . .
10.65 Loan Purchase Agreement dated as of 12/1/95 between Aegis Auto
Finance, Inc. and Aegis Auto Funding Corp. II, as Purchaser.(2) . .
10.65.1 Trust Purchase Agreement dated as of 12/1/95 between Aegis Auto
Owner Trust 1995 as Issuer, and Aegis Auto Funding Corp. II, as
Seller.(2) . . . . . . . .
10.65.2 Trust Agreement dated as of 12/1/95 among Aegis Auto Funding Corp.
II, as Depositor, and Bankers Trust as Owner Trustee.(2). . . . .
10.65.3 Indenture dated as of 12/1/95 between Aegis Auto Owner Trust 1995,
as Issuer, and Norwest Bank Minnesota, National Association, as
Indenture Trustee.(2). .
10.65.4 Insurance Agreement dated as of 12/1/95 by and between MBIA Insurance
Corporation, as Insurer, Aegis Auto Funding Corp. II, as Seller, Aegis
Auto finance, Inc., as Servicer, Aegis Auto Owner Trust 1995, as
Issuer, Norwest Bank Minnesota, National association, as Indenture
Trustee, and Norwest Bank Minnesota, National Association, as
Back-up Servicer.(2). . . . . . . . .
10.65.5 Servicing Agreement dated as of 12/1/95 among Aegis Auto Finance,
Inc., as Servicer, Aegis Auto Funding Corp. II, as Seller, Aegis
Auto Owner Trust 1995, as Issuer, and Norwest Bank Minnesota,
National Association, as Back-up Servicer.(2) . .
10.65.6 Addendum to Servicing Agreement, relating to Exhibit 10.65.5.(2) .
10.65.7 Placement agency Agreement dated as of 12/13/95, relating to Exhibit
10.65.2.(2) . .
10.65.8 Note Purchase Agreement dated as of 12/20/95, by and between
Aegis Auto Owner Trust 1995,
Issuer, Aegis Auto Finance, Inc, as Servicer, Aegis Auto Funding
Corp., as Seller, Market Street Capital Corporation, as Purchaser.(2) .
10.65.9 Administration Agreement dated as of 12/20/95 between
-47-
Aegis Auto Finance, Inc., as Servicer, and Rothschild Inc., as
Administrator.(2). . . . . . . . . . . . . .
10.70 Lease Agreement dated as of 11/14/94, between Newport L.G.-I, Inc.,
as Landlord, and The Aegis Consumer Funding Group, Inc., as
Tenant.(2). .
10.70.1 Amendment to Lease, dated as of 12/23/94 between Newport L.G.-I,
Inc., as Landlord, and The Aegis Consumer Funding Group, Inc., as
Tenant, relating to Exhibit 10.70.(2) . . . . . . . . . . . . .
10.70.2 Second Amendment to Lease, dated as of 12/29/95 between Newport
L.G.-I, Inc., as Landlord, and The Aegis Consumer Funding
Group, Inc.,as Tenant, relating to Exhibit 10.70 (2). . . . . . . .
10.71 Fee Agreement dated as of 12/20/95 with U.S. Investment Group, Inc.,
relating to Exhibit 10.63.
10.72 Purchase Agreement dated as of 12/1/95 by and between Aegis Auto
Finance, Inc. as Seller and Aegis Auto Funding Corp., as Purchaser.
(2). . . . . . . . .
10.73 Purchase Agreement dated as of 12/20/95 by and between
Aegis Auto Funding Corp. as Seller and Smith Barney Inc., as
Purchaser.(2). .
10.74 Loan and Security Agreement dated as of 12/20/95 between Aegis Auto
Finance, Inc. as Borrower and III Finance Ltd., as Lender.(2). . .
10.74.1 Form of Promissory Note relating to Exhibit 10.60.(2).
10.75 Exhibit 10.48 Form of Cash Flow Valuation Report, relating to
Exhibit 10.30.2, relating to Exhibit 10.29.2, relating to Exhibit
10.21.3, relating to Exhibit 10.21(1). . . . . . . . . . .
10.75.1 Exhibit 10.48.1 Pooling and Servicing Agreement, relating to
Exhibit 10.30.3, relating to Exhibit 10.29.4, relating to Exhibit
10.21.4, relating to Exhibit 10.21(1).. . . . . . . . . . . . . . .
10.75.2 Exhibit 10.48.2 List of Closing Documents, relating to Exhibit
10.30.4, relating to Exhibit 10.29.5, relating to Exhibit 10.21.5,
relating to Exhibit 10.21(1). . . . . . . . . . .
10.75.3 Exhibit 10.48.3 Form of RDI Policy, relating to Exhibit 10.30.5,
relating to Exhibit 10.29.6 relating to Exhibit 10.3.4, relating
to Exhibit 10.3(1).. . .
10.75.4 Exhibit 10.48.4 Form of VSI Policy, relating to Exhibit 10.30.6,
relating to Exhibit 10.29.7, relating to Exhibit 10.3.6, relating
to Exhibit 10.3(1).. . . . . . . . .
10.76 Form of Servicing Agreement dated as of 12/1/95 by and between
Aegis Auto Finance, Inc. as Seller and Aegis Auto Funding Corp.
as Purchaser.(2). . . . . . . . . . . . . .
10.77 Consultant/Advisor Agreement dated as of 1/2/96, between The
Sloane Organization, as Consultant, and The Aegis Consumer Funding
Group, Inc., as the Consultee.(2) . . . . . . . . . . . . . .
10.77.1 Sloane Letter Agreement dated as of 1/3/96, relating to Exhibit
10.77.(2).
10.78 Purchase Agreement dated as of 1/19/96 between Aegis Auto Finance,
Inc. as Seller and United Bank and Trust Company as Purchaser.(2) .
10.79 Purchase Agreement dated as of 1/24/96 between Aegis Auto Finance,
Inc. as Seller and Gulf Coast Bank as Purchaser.(2). . . .
10.79.1 Reserve Account Agreement, relating to Exhibit 10.79.(2) . . . .
10.80 Notice of Annual Meeting of Stockholders and Proxy Statement.(2). .
10.80.1 Proxy Card, relating to 10.80.(2). . . . . . . . . . .
10.81 Purchase Agreement dated as of 2/29/96 between Aegis Auto Finance,
Inc. as Seller and First Bank of Eunice as Purchaser.(2). . .
10.82 Purchase Agreement dated as of 3/21/96 between Aegis Auto Finance,
Inc. as Seller and United Bank and Trust Company as Purchaser.(2) .
10.83 Purchase Agreement dated as of 3/1/96 by and between Aegis Auto
Finance, Inc. as Seller and Aegis Auto Funding Corp., as
Purchaser.(2). .
10.84 Purchase Agreement dated as of 3/22/96 by and between Aegis Auto
Funding Corp. as Seller and Greenwich Capitol Markets, Inc., as
Purchaser.(2) . .
10.85 Loan and Security Agreement dated as of 3/22/96 between Aegis Auto
Finance, Inc. as Borrower and III Finance Ltd., as Lender.(2). . . .
10.85.1 Form of Promissory Note relating to Exhibit 10.85(2) .
-48-
10.86 Exhibit 10.75 Form of Cash Flow Valuation Report, relating to
Exhibit 10.48 relating to Exhibit 10.30.2, relating to Exhibit
10.29.2, relating to Exhibit 10.21.3, relating to Exhibit 10.21(1). .
10.86.1 Exhibit 10.75.1 Pooling and Servicing Agreement, relating to Exhibit
10.48.1, relating to Exhibit 10.30.3, relating to Exhibit 10.29.4,
relating to Exhibit 10.21.4, relating to Exhibit 10.21(1).. . . . .
10.86.2 Exhibit 10.75.2 List of Closing Documents, relating to Exhibit
10.48.2, relating to Exhibit 10.30.4, relating to Exhibit 10.29.5,
relating to Exhibit 10.21.5, relating to Exhibit 10.21(1). . . . .
10.86.3 Exhibit 10.75.3 Form of RDI Policy, relating to Exhibit 10.48.3,
relating to Exhibit 10.30.5, relating to Exhibit 10.29.6, relating
to Exhibit 10.3.4, relating to Exhibit 10.3(1).. . . . . . . . . .
10.86.4 Exhibit 10.75.4 Form of VSI Policy, relating to Exhibit 10.48.4,
relating to Exhibit 10.30.6, relating to Exhibit 10.29.7, relating
to Exhibit 10.3.6, relating to Exhibit 10.3(1).. . . . . . . . . .
10.87 Servicing Agreement dated as of 3/1/96 by and between Aegis Auto
Finance, Inc. as Servicer and Norwest Bank Minnesota, National
Association in its capacity as Backup Servicer and Norwest Bank
Minnesota, National Association in its capacity as Trustee.(2) . . .
10.88 Master Servicing Agreement dated as of 4/6/96 by and between
American Lenders Facilities, Inc. as Servicer and Aegis Consumer
Finance, Inc. as Company.(2) . . . . . . . . . . . . . . . . . . . . .
10.89 Subcontracting Agreement dated as of 4/6/96 by and between American
Lenders Facilities, Inc. as Servicer and Aegis Consumer Finance,
Inc. as Subcontractor.(2) . .
10.90 Form of Greenwich Capital Markets, Inc. Warrant
("Greenwich Warrant") to purchase Common Stock of The Aegis
Consumer Funding Group, Inc.(2) . . . . . . . . . . . . . . .
10.90.1 Form of Escrow letter concerning Greenwich Warrant, relating to
Exhibit 10.90.(2). .
10.90.2 Form of Acknowledgement letter concerning the adequacy of the
Greenwich Warrant, relating to Exhibit 10.90.(2)
10.91 Exhibit 10.86 Form of Cash Flow Valuation Report, relating to
Exhibit 10.75, relating to Exhibit 10.48, relating to Exhibit
10.30.2, relating to Exhibit 10.29.2, relating to Exhibit 10.21.3,
relating to Exhibit 10.21(1).. . . .
10.91.1 Exhibit 10.86.1 Pooling and Servicing Agreement, relating to
Exhibit 10.75.1, relating to Exhibit 10.48.1, relating to Exhibit
10.30.3, relating to Exhibit 10.29.4, relating to Exhibit 10.21.4,
relating to Exhibit 10.21(1).. . . . . . . .
10.91.2 Exhibit 10.86.2 List of Closing Documents, relating to
Exhibit 10.75.2, relating to Exhibit 10.48.2, relating to
Exhibit 10.30.4, relating to Exhibit 10.29.5, relating to
Exhibit 10.21.5, relating to Exhibit 10.21(1).. . . . . . . .
10.91.3 Exhibit 10.86.3 Form of RDI Policy, relating to Exhibit 10.75.3,
relating to Exhibit 10.48.3, relating to Exhibit 10.30.5, relating
to Exhibit 10.29.6, relating to Exhibit 10.3.4, relating to Exhibit
10.3(1).. . . . . . . . .
10.91.4 Exhibit 10.86.4 Form of VSI Policy, relating to Exhibit 10.75.4,
relating to Exhibit 10.48.4, relating to Exhibit 10.30.6, relating
to Exhibit 10.29.7, relating to Exhibit 10.3.6, relating to Exhibit
10.3(1).. . . . . . . . .
10.91.5 Form of Purchase Agreement dated as of 6/01/96 by and between Aegis
Auto Finance, Inc. as Seller and Aegis Auto Funding Corp., as
Purchaser.. . . . . . . .
10.91.6 Form of Purchase Agreement dated as of 6/01/96 by and between Aegis
Auto Funding Corp. III, as seller and Aegis Auto Finance, Inc., as
Purchaser.. . . . .
10.91.7 Form of Servicing Agreement dated as of 6/1/96 by and between Aegis
Auto Finance, Inc.
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as Servicer and Norwest Bank Minnesota, National Association in its
capacity as Backup Servicer and Norwest Bank Minnesota, National
Association in its capacity as Trustee.(2) . .
10.91.8 Form of Purchase Agreement as of May 17, 1996, by and between Aegis
Auto Finance, Inc. as Seller and Aegis Auto Funding Corp. III as
Purchaser. . . . . . .
10.92 Form of Rothschild Placement Agency Agreement Letter. . . . . . . .
10.93 Greenwich Capital Commitment Letter . . . . . . . .
10.93.1 Amendment to Greenwich Capital Commitment Letter . . .
10.94 Warehouse Lending Agreement dated as of May 17, 1996 by and between
The Aegis Consumer Funding Group, Inc. as Guarantor, Aegis Auto
Funding Corp. III and Greenwich Capital Financial Products, Inc., as
Lender . . . . . . . .
10.94.1 Form of Note relating to Exhibit 10.94 . . . . . . . .
10.94.2 Form of Security Agreement relating to Exhibit 10.94 .
10.94.3 Form of Servicing Agreement relating to Exhibit 10.94.
10.95 Credit Agreement Dated as of May 17, 1996, Among The Aegis
Consumer Funding Group, Inc. as borrower, Aegis Consumer Finance,
Inc., as Guarantor, Aegis Auto Finance, Inc., as Guarantor, and
Greenwich Capital Financial Products, Inc., as Lender . . . . . . .
10.95.1 Form of Note relating to Exhibit 10.95 . . . . . . . .
10.95.2 Form of Aegis Consumer Finance, Inc. Security and Pledge Agreement
relating to Exhibit 10.95 . . . . . . . . . . . . . . . . . . .
10.95.3 Form of Aegis Auto Finance, Inc. Security and Pledge Agreement
relating to Exhibit 10.95 . . . . . . . . . . . . . .
10.96 Loan and Security Agreement dated June 25, 1996, between Aegis
Consumer Finance, Inc. and III Finance, Inc. LTD.. . . . . . .
10.96.1 Form of Promissory Note relating to Exhibit 10.9611 Computation of
Earnings Per Share . . . . . . . . . .
21 Subsidiaries of the Company(1). . . . . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . .
-50-
THE AEGIS CONSUMER FUNDING GROUP, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Auditors F-2
Consolidated Statements of Financial Condition at June30,1995 and 1996 F-3
Consolidated Statements of Income for the fiscal years ended
June 30, 1994, 1995 and 1996 F-4
Consolidated Statements of Changes in Stockholders'
Equity for the fiscal years ended June 30, 1994, 1995 and 1996 F-5
Consolidated Statements of Cash Flows for the fiscal
years ended June 30, 1994, 1995 and 1996 F-6
Notes to Consolidated Financial Statements F-7
F-1
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
The Aegis Consumer Funding Group, Inc.
We have audited the accompanying consolidated statements of financial
condition of The Aegis Consumer Funding Group, Inc. and subsidiaries
(the "Company") as of June 30, 1996 and 1995 and the related consolidated
statements of income, changes in stockholders' equity, and cash flows for
the three years in the period ended June 30, 1996. These consolidated
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of the Company as of June 30, 1996 and 1995 and the consolidated results of
its operations and its cash flows for the three years in the period ended
June 30, 1996, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
August 14, 1996
New York, New York
F-2
The Aegis Consumer Funding Group, Inc.
Consolidated Statements of Financial Condition
Assets
June 30,
------------------
1995 1996
---- ----
Cash and cash equivalents $5,970,571 $3,090,624
Interest and other receivables 4,492,370 1,660,442
Automobile finance receivables, net 39,783,558 41,058,222
Retained interests in securitized receivables 23,985,222 70,242,773
Notes receivable 7,867,505 -
Note receivable from related party 600,000 -
Fixed assets, net of accumulated
depreciation of $723,726 in 1995 and
$712,073 in 1996 1,053,176 1,817,356
Other assets 984,545 3,582,337
--------- ---------
$84,736,947 $121,451,754
=========== ============
Liabilities and stockholders' equity
Warehouse credit facilities $48,162,271 $37,202,342
Notes payable 12,956,123 29,848,859
Accounts payable and accrued expenses 6,115,756 11,220,644
Income taxes payable 1,805,477 9,188,444
--------- ---------
Total liabilities 69,039,627 87,460,289
========== ==========
Stockholders' equity:
Common stock, $.01 par value; 30,000,000
shares authorized; 14,776,844 shares issued
and outstanding in 1995 and 15,455,958 shares
issued and outstanding in 1996 147,768 154,560
Preferred stock, Series C, $0.10 par value;
1,100 shares authorized; 920 shares
issued and 525 shares outstanding in 1996 - 53
Paid-in capital 13,030,222 22,199,545
Other transactions with stockholders (100,000) -
Retained earnings, since date of
recapitalization (March 1, 1992) 2,619,330 11,637,307
--------- ----------
Total stockholders' equity 15,697,320 33,991,465
---------- ----------
$84,736,947 $121,451,754
=========== ============
See notes to these consolidated financial statements.
F-3
The Aegis Consumer Funding Group, Inc.
Consolidated Statements of Income
Years Ended June 30,
-----------------------------
1994 1995 1996
---- ---- -----
Revenues:
Gains from securitization
transactions, net $2,242,189 $9,522,648 $32,428,861
Gains from securitization transactions
with related parties 756,604 - -
Interest income 1,321,299 6,853,819 13,576,948
Fees and commissions earned 3,309,987 769,953 283,319
Fees and commissions earned - related
parties 3,074,037 275,000 -
Management fees from related parties 252,766 - -
Other income 219,914 388,881 38,759
-------- ------- ---------
11,176,796 17,810,301 46,327,887
---------- ---------- ----------
Operating Expenses:
Interest 863,751 4,541,006 10,090,712
Interest paid to related parties 104,429 252,879 -
Salaries and other employee costs 3,568,333 3,896,697 8,267,376
Provision for credit losses 286,892 941,354 3,504,622
Charge for release of escrowed shares -- 878,739 806,886
Office expenses 434,404 744,149 899,667
Professional fees 376,594 372,324 1,131,759
Professional fees to related parties 542,000 350,000 125,000
Rent and electricity 319,733 615,749 1,249,557
Communications 281,709 606,523 974,979
Amortization and depreciation 380,899 453,821 611,833
Travel and entertainment 284,657 126,640 300,042
Dealer list purchased from related parties 500,000 -- -
Other 478,386 988,775 1,604,816
------- ------- ---------
8,421,787 14,768,656 29,567,249
--------- ---------- ----------
Net income before income taxes 2,755,009 3,041,645 16,760,638
Income taxes 1,352,338 1,768,024 7,472,022
--------- --------- ----------
Net income $1,402,671 $1,273,621 $9,288,616
========== ========== ==========
Net income available for common
stockholders $1,177,571 $1,079,423 $9,017,976
========== ========== ==========
Net income per common and common
equivalent share:
Primary Earnings Per Share:
Historical basis N/A $0.09 $0.65
=== ===== =====
Pro-forma basis N/A $0.12 N/A
=== ===== ===
Fully Diluted Earnings Per Share:
Historical basis N/A $0.08 $0.61
=== ===== =====
Pro forma basis N/A $0.11 N/A
=== ===== =====
See notes to these consolidated financial statements.
F-4
The Aegis Consumer Funding Group, Inc.
Consolidated Statements of Changes in Stockholders'Equity
Years Ended June 30, 1994 , 1995 and 1996
<TABLE>
<CAPTION>
Other
Transactions
Common Preferred Stock Paid-in With Retained
Stock Series B Series C Capital Shareholders Earnings Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1993 $86,188 $25 $ - $2,228,759 ($210,000)$ 362,336 $2,467,308
Issuance of common stock,
net 36,375 - - 113,625 (125,000) - 25,000
Utilization of net
operating loss
carryforward - - - 188,000 - - 188,000
Net income - - - - - 1,402,671 1,402,671
Series B preferred stock
dividends - - - 225,100 - (225,100) -
----- ----- ----- ------- --------- --------- ---------
Balance, June 30, 1994 122,563 25 - 2,755,484 (335,000) 1,539,907 4,082,979
Issuance of common stock
from initial public
offering, net 21,921 - - 11,824,936 - - 11,846,857
Issuance of common stock
from exercise
of warrants 3,284 - - 23,716 - - 27,000
Amortization of
common stock issued - - - - 25,000 - 25,000
Redemption of
preferred stock - (25) - (2,452,653) - - (2,452,678)
Repayment of stockholder
receivable - - - - 210,000 - 210,000
Net income - - - - - 1,273,621 1,273,621
Release of escrowed shares - - - 878,739 - - 878,739
Series B preferred
stock dividends - - - - - (194,198) (194,198)
------ ----- ---- --------- -------- -------- ------------
Balance, June 30, 1995 147,768 - - 13,030,222 (100,000) 2,619,330 15,697,320
Issuance of Series
C preferred stock - - 92 8,463,908 - - 8,464,000
Conversions of Series
C preferred stock
to common stock 6,792 - (31) (6,761) - - -
Redemptions of Series
C preferred stock - - (8) (1,104,413) - - (1,104,421)
Issuance of warrants
from debt agreements - - - 739,064 - - 739,064
Amortization of common stock
issued - - - - 100,000 - 100,000
Net income - - - - - 9,288,616 9,288,616
Release of escrow shares - - - 806,886 - - 806,886
Series C preferred
stock dividends - - - 270,639 - (270,639) -
---- ---- ---- ------- ------ ---------- --------
Balance, June 30, 1996 $154,560 $ - $53 $22,199,545 $ - $11,637,307 $33,991,465
======== ==== ==== =========== ====== =========== ===========
</TABLE>
See notes to these consolidated financial statement.
F-5
The Aegis Consumer Funding Group, Inc.
Consolidated Statements of Cash Flows
Years Ended June 30,
--------------------------------
1994 1995 1996
---- ---- ----
Cash flows from operating activities:
Net income $1,402,671 $1,273,621 $9,288,616
Adjustments to reconcile net income
to net cash used in operating activities:
Amortization and depreciation 380,899 453,821 611,833
Provision for credit losses 286,892 941,354 3,504,622
Valuation allowance on note receivable - - 600,000
Provision (benefit) for deferred
income taxes (156,000) 1,546,540 5,918,034
Release of Escrowed shares - 878,739 806,886
Unrealized gains on securitization
transactions (4,273,088) (21,439,207) (53,950,552)
Realized gains on sale of retained
interests in securitized
receivables (1,861,185) - -
Write down of retained interests in
securitized receivables - - 7,500,000
Automobile finance receivables portfolio:
Purchases of automobile finance
receivables (42,822,907) (162,154,536)(451,972,152)
Sales of automobile finance
receivables 26,043,429 123,899,778 432,582,175
Repayments of automobile finance
receivables 1,275,895 6,515,100 15,930,459
Increase in prepaid insurance and
direct costs of acquisition net
of deferred acquisition fees (571,615) (757,582) (1,319,746)
Decrease in note receivable - - 7,651,985
Decrease (increase) in interest and
other receivables 1,147,904 (4,182,398) 3,047,448
Increase in other assets (253,763) (217,500) (2,551,691)
(Decrease) increase in accounts payable
and accrued expenses (827,068) 5,017,747 5,104,868
Increase (decrease) in income
taxes payable 1,242,000 (983,063) 1,464,933
--------- --------- ----------
Net cash used in operating
activities (18,985,936)(49,207,586) (15,782,282)
----------- ---------- ------------
Cash flows from investing activities:
Additional payments to
securitized receivable trusts - - (2,335,562)
Proceeds on sale of retained
interests in securitized
receivables, net 2,061,185 - -
Distributions from retained
interests in securitized receivables 122,871 1,796,173 2,991,063
Purchases of fixed assets (161,815) (802,419) (1,045,553)
Purchase of sales territory - (248,490) -
Proceeds from sale of fixed assets 157,807 - -
------- --------- ----------
Net cash provided by
(used in) investing activities 2,180,048 745,264 (390,052)
---------- --------- -----------
Cash flows from financing activities:
Proceeds from borrowings under
warehouse credit facilities 37,103,820 161,641,043 468,882,721
Repayment of borrowings under
warehouse credit facilities (21,843,679)(128,738,913)(479,842,650)
Proceeds from borrowings under
notes payable - 16,044,277 39,416,908
Repayment of borrowings under
notes payable - (3,088,154) (22,524,171)
Proceeds from borrowings under
revolving credit facility 3,897,475 5,273,006 -
Repayment of borrowings under
revolving credit facility (2,053,807) (7,116,673) -
Utilization of net operating
loss carryforward 188,000 - -
Proceeds from initial public
offering, net - 11,846,857 -
Exercise of warrants to purchase
common stock - 27,000 -
Preferred stock, Series B
dividends paid - (194,198) -
Proceeds from repayment of
stockholder receivable - 210,000 -
Redemption of preferred stock,
Series B in 1995, Series C in 1996 - (2,452,678) (1,104,421)
Proceeds from preferred stock issue,
Series C - - 8,464,000
---------- ---------- ----------
Net cash provided by
financing activities 17,291,809 53,451,567 13,292,387
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 485,921 4,989,245 (2,879,947)
Cash and cash equivalents,
beginning of year 495,405 981,326 5,970,571
--------- ----------- ----------
Cash and cash equivalents, end of year $981,326 $ 5,970,571 $3,090,624
========= =========== ===========
See notes to these consolidated financial statements.
F-6
THE AEGIS CONSUMER FUNDING GROUP, INC.
Notes to Consolidated Financial Statements
Years ended June 30, 1994, 1995 and 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of The Aegis
Consumer Funding Group, Inc.(ACFG), and its wholly owned subsidiaries
(collectively, the "Company"). Such subsidiaries are engaged primarily in
automobile finance (acquiring automobile retail installment contracts and
from April 1994 through August 1995 originated automobile leases), the
capital markets business (structuring the securitizations of the Company),
and providing financial advise to institutional investors. All material
intercompany balances and transactions have been eliminated.
ACFG was formed for the purpose of providing management and operational
services to its subsidiaries. Its principal subsidiary, Aegis Consumer
Finance, Inc. (ACF), was formed for the purpose of providing operational
services, warehouse facility arrangements and marketing support for its
subsidiaries.
On March 1, 1992, the Company underwent a significant recapitalization;
at that time, the approximately $3,000,000 deficit from the operations of
the Company since the date of formation (October 4, 1989) were transferred
to paid in capital. The carrying amount of the Company's assets and
liabilities approximated their fair values at that time.
Certain prior year financial statement line items have been reclassified
to conform to current year presentation.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include
cash and short-term investments with an original maturity of less than ninety
days.
Automobile Finance Receivables
Automobile finance receivables held for sale (through the securitization
process) are carried at the lower of cost or market value. Market value is
estimated based on the characteristics of the finance contracts held for sale
and the terms of recent securitizations of similar finance contracts completed
by the Company and others. Automobile finance receivables held as
investments are receivables the Company believes it can not currently
securitize and are carried at their amortized cost.
The Company's evaluation of its allowance for credit losses is based
upon the Company's historical and expected future default rates, the
liquidation value of the underlying collateral in the existing portfolio,
estimates of repossession expenses and any recoveries expected from insurance
proceeds. The Company's charge off policy is based on a
receivable-by-receivable review. Interest on automobile finance receivables
is accrued and credited to interest income based upon the daily principal
amount outstanding using the interest method. If an automobile receivable
becomes more than 60 days delinquent in its payment of interest and principal,
the Company no longer accrues interest revenue and reverses all interest
previously accrued and uncollected.
Loan acquisition fees received, insurance premiums paid and direct costs
incurred for the underwriting and acquisition of automobile finance
receivables held for sale are deferred until the related automobile finance
receivables are securitized and sold. Origination fees received, insurance
premiums paid at origination, and direct costs incurred for the underwriting
and origination of automobile finance receivables held for investment are
deferred and amortized to interest income over their contractual lives using
the interest method. Unamortized amounts are recognized in income at the
time that automobile finance receivables are sold or paid in full.
Retained Interests in Securitized Receivables
Retained interests in securitized receivables represent the discounted
amount of expected collections from securitized receivables in excess of the
amounts due to investors in the securitizations. Amortization of the
carrying value amount is based on the declines during the period in the
present value of the currently projected collections using the same discount
rate as was appropriate at the time of securitization.
F-7
THE AEGIS CONSUMER FUNDING GROUP, INC.
Notes to Consolidated Financial Statements
Years ended June 30, 1994, 1995 and 1996
Fixed Assets
The Company depreciates fixed assets on a straight-line basis over
their estimated useful lives which range from three to seven years.
Leasehold improvements are amortized over the lesser of the estimated useful
life of the asset or the remaining life of the lease.
Fees and Commissions
Fees and commissions earned are recorded as income at the closing date
of the related transaction or as they are earned in accordance with the terms
of the underlying agreements.
Income Taxes
Deferred income taxes are determined by recognizing deferred tax assets
and liabilities for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. The realization of deferred tax
assets is assessed and a valuation allowance is provided when it is more
likely than not that some portion of the deferred tax asset will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Use of Estimates and Judgements
The Company's consolidated financial statements include amounts
determined using estimaes and assumptions. For example, estimates and
assumptions are used in determining asset valuations and allowances for
retained interests in securitized receivables, automobile finance receivables
and interest receivable. While these estimtes are based on the best
judgement of management, actual results could differ from these estimates.
Impact of New Accounting Pronouncements
The Company has not adopted Statement of Financial Accounting Standards
No. 123, "Accounting for Stock- Based Compensation" ("SFAS 123"), which was
issued by the Financial Accounting Standards Board in October 1995. SFAS 123
provides for companies to recognize compensation expense associated with stock
based compensation plans over the anticipated service period based on the fair
value of the award on the date of grant. SFAS 123 is effective for fiscal
years beginning after December 15, 1995. Upon adoption, and as allowed under
SFAS 123, the Company plans to elect to adopt SFAS 123's disclosure only
alternative and will continue to account for stock-based compensation as
prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees."
Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
("SFAS 125"), was issued by the Financial Accounting Standards Board in June
1996. SFAS 125 provides for companies, upon a transfer of financial assets,
to recognize financial and servicing assets it controls, derecognize
financial assets when control has been surrendered and derecognize
liabilities when extinguished. SFAS 125 is effective for transfers and
servicing of financial assets and extinguishment of liabilities occurring
after December 31, 1996. SFAS 125 will not have a material impact on the
Company's consolidated financial statements.
2. AUTOMOBILE FINANCE RECEIVABLES, NET
ACF, through its subsidiaries, acquires retail installment contracts
("finance contracts") and from April 1994 through August 1995 originated
direct finance receivables ("leases") maturing within a range of three to
five years. At June 30, 1995, 32%, 22%, 15% and 12% of automobile
receivables outstanding were purchased in Florida, Georgia, Louisiana and
North Carolina, respectively, with the remaining 19% being generated in 19
other states. At June 30, 1996, 27%, 22%, and 15%, respectively of
automobile finance receivables outstanding were acquired in Georgia,
Louisiana and North Carolina, respectively, with the remaining 36% being
originated in 29 other states. Automobile finance receivables are acquired
through the Company's established dealership base to individual consumers
with sub-prime credit.
F-8
THE AEGIS CONSUMER FUNDING GROUP, INC.
Notes to Consolidated Financial Statements
Years ended June 30, 1994, 1995 and 1996
2. AUTOMOBILE FINANCE RECEIVABLES, NET (CONTINUED)
During the years ended June 30, 1994, 1995 and June 30, 1996, separate
groups of Dealers with common ownership accounted for 16.5%, 12.5% and 8.4%
respectively, of the finance contracts and leases acquired or originated by
the Company. In addition, during the fiscal year ended June 30, 1994,
approximately 36.6%, 17.6%, 15.5% and 12.6% of all automobile finance
receivables were purchased in Georgia, Florida, North Carolina and New
Jersey, respectively. During the fiscal year ended June 30, 1995,
approximately 20.3%, 19.1%, 16.3% and 15.1% of all automobile finance
receivables were purchased in North Carolina, Florida, Louisiana and Georgia,
respectively. During the fiscal year ended June 30, 1996, 20.7%, 15.2%,
14.4% and 12.8% of all automobile finance receivables were purchased in
Florida, North Carolina, Georgia and Texas. Independent marketing brokers
are engaged by the Company to introduce Dealers in Florida and Louisiana.
ACF periodically packages and securitizes, as asset-backed securities,
portions of its automobile finance receivables to sell to institutional
investors. During the years ended June 30, 1994, 1995 and 1996, the Company
securitized $26.0 million, $119.3 million and $424.8 million, respectively,
of its automobile loans. During the years ended June 30, 1995 and 1996, the
Company also sold $12.3 million and $7.8 million, respectively, of its
automobile finance receivables in whole loan sales. The Company contracts
with a third party agent to perform all servicing for its automobile finance
receivables. Effective in April 1995, the Company entered into a
sub-servicing agreement, whereby it performs certain collection functions on
designated automobile finance receivables and receives a sub-servicing fee.
This servicer is also retained by the purchasers of the asset-backed
securitization transactions.
Automobile finance receivables consist of the following:
<TABLE>
<CAPTION>
Year Ended June 30,
-------------------------------
1995 1996
--------- ---------
Automobile loans -
<S> <C> <C>
Held for sale $9,533,460 $12,930,864
Held for investment 2,150,747 11,426,903
Automobile leases - held for investmen 39,972,450 25,991,174
Unearned income on automobile leases (12,003,191) (6,156,486)
Unamortized prepaid insurance and
direct costs of acquisition,
net of deferred acquisition fees 1,314,080 9,451
---------- ----------
40,967,546 44,201,906
Less allowance for credit losses (1,183,988) (3,143,684)
----------- -----------
$39,783,558 $41,058,222
=========== ===========
Weighted average interest rates:
Loans 20.84% 20.10%
===== =====
Leases 16.52% 16.53%
===== =====
The Company's expected future minimum lease payments from performing loans
to be received as of June 30, 1996 are as follows:
Year Ending
June 30 Amount
------------ ----------
1997 $5,549,000
1998 5,462,000
1999 4,539,000
2000 1,469,000
-----------
$17,019,000
============
F-9
THE AEGIS CONSUMER FUNDING GROUP, INC.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
2. AUTOMOBILE FINANCE RECEIVABLES, NET (CONTINUED)
An analysis of the allowance for credit losses follows:
Year Ended June 30,
------------------------
1995 1996
---- ----
Balance, beginning of year $ 268,194 $1,183,988
Provision charged to income 941,354 3,504,622
Charge-offs (25,560) (1,544,926)
--------- -----------
Balance, end of year $1,183,988 $3,143,684
=========== ==========
As of June 30, 1995 and 1996, substantially all automobile finance
receivables are pledged as security under the Company's warehouse facility
arrangements.
At June 30, 1995 and 1996, the estimated fair value of the Company's
automobile finance receivables held for sale approximated $10,600,000 and
$13,461,000, respectively, which is $908,000 and $931,000, respectively, in
excess of book value. The estimated fair values of the Company's automobile
finance receivables held for investment at June 30, 1995 and 1996
approximated their book values of $30,091,000 and $28,528,000, respectively.
3. RETAINED INTERESTS IN SECURITIZED RECEIVABLES
Retained interests in securitized receivables are computed by taking
into account certain assumptions regarding prepayments, defaults, servicing
and other costs. The Company reviews on a quarterly basis the retained
interests in securitized receivables. If actual experience differs from the
Company's assumptions or to the extent that market and economic changes occur
that adversely impact the assumptions utilized in determining the retained
interests in securitized receivables, the Company records a charge against
gains from securitization transactions. The discount rate utilized in
determining the retained interest in securitized receivables and gain from
securitization transactions is based on the Company's estimate of the yield
required by a third party purchaser of such instrument. The Company also
bases these assumptions on the performance characteristics of the Company's
finance contract portfolio to date. The Company's default assumptions are
based on estimated repossession rates, proceeds from the liquidation of
repossessed vehicles, proceeds from VSI Policy coverage and recoveries from
the Company s credit default insurance.
An analysis of the retained interests in securitized receivables follows
(in thousands):
Year Ended June 30,
----------------------------
1995 1996
---- ----
Balance, beginning of year $4,434 $23,985
Additions 21,347 56,749
Amortization (1,796) (2,991)
Write-downs - (7,500)
------- -------
Balance, end of year $23,985 $70,243
======= =======
The estimated fair values of the Company retained interests in securitized
receivables at June 30, 1995 and 1996 approximated their book values of
$24.0 million and $70.2 million, respectively.
F-10
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
4. NOTES RECEIVABLE
At June 30, 1995, the Company had a note receivable from III Limited
Partnership of $7,651,985 payable upon demand at an interest rate of 10.125%
per annum and had related interest receivable of $133,431 which was included
in interest and other receivables. The note and related interest was paid in
full in July 1995. In connection with the Company terminating an agreement
with its former originator of HUD Title I Loans, the originator owed the
Company monies in connection with certain transactions and signed a note to
the Company in the amount of $220,000. At June 30, 1995 and 1996 the Company
had approximately $215,000 and $0, respectively, due under this note.
5. WAREHOUSE AND OTHER CREDIT FACILITIES
ACF has two separate two-year Loan and Security agreements with III
Finance Ltd. ("III Finance"), (the "Auto Agreements") whereby, as borrower,
it may borrow, in total, the lesser of $100,000,000 or the sum of the
outstanding principal amount of auto loans or leases, as defined, for the
purpose of financing auto loans or leases in accordance with ACF's underwriting
guidelines. Interest is charged at the annual rate of the one-month LIBOR plus
4.0%, adjusted monthly. As of June 30, 1995 and 1996, amounts outstanding under
the Auto Agreements were $48,162,271 and $37,154,404, respectively, and the
applicable interest rate was 10.0625% and 9.4805%, respectively. The Auto
Agreements expire in November 1997.
Principal payments are made monthly in an amount equal to principal
payments received from the underlying collateral. Prepayments of principal
occurs when the Company securitizes and sells the underlying collateral.
Interest payments are made quarterly in arrears and on the date of any
principal prepayments on the unpaid principal amount of each loan or lease
made in accordance with the Auto Agreements.
The Company also has a Loan and Security agreement (the "Title I
Agreement") whereby, as borrower, it may borrow the lesser of $50,000,000 or
the sum of the outstanding principal amount of mortgage loans and 90% of the
then outstanding principal amount of deficient mortgage loans, as defined,
for the purpose of purchasing or financing home improvement and mortgage
loans from originators and servicers of HUD Title I Loans in connection with
separate purchase agreements that are approved by the lender. Interest is
charged at an annual rate of the one-month LIBOR plus 4.0%. As of June 30,
1995 and 1996, no amounts were outstanding under the Title I Agreement.
The Title I Agreement expires in November 1997.
Under the Auto Agreements and the Title I Agreement, ACF and the Company
may also borrow funds to sell 90-day Eurodollar futures contracts as a hedge
against interest rate fluctuations. At June 30, 1995 and 1996, the Company
had no futures contracts outstanding.
In May 1996, the Company secured an additional warehouse credit facility
with Greenwich Capital Markets, Inc., a subsidiary of Long Term Credit Bank of
Japan (which has recently entered into an agreement to sell Greenwich Capital
Markets, Inc. to NatWest Markets) ("Greenwich Capital") for $100.0 million,
which will provide the Company with additional flexibility to purchase greater
volumes of receivables or warehouse automobile receivables for longer periods.
The facility is secured primarily by the Company's finance contracts and bears
interest at the rate of the one-month LIBOR plus 3.0% (8.4805% at June 30,
1996), adjusted monthly. Principal payments are made to the extent that
principal is paid on the underlying collateral, and are required to be made
if the underlying collateral does not meet certain specified conditions.
Prepayment of principal is not permitted, except in connection with
securitization transactions and whole loan sales. The Company's ability to
continue to borrow under this facility is dependent on its compliance with
the terms thereof, including the maintenance by the Company of certain
minimum capital levels. As of June 30, 1996, the Company had approximately
$100.0 million of borrowings available through this facility. This facility
expires in May 1997 and has a one year renewal option.
F-11
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995, and 1996
5. WAREHOUSE AND OTHER CREDIT FACILITIES (CONTINUED)
In addition to the warehouse financing, the Company has also secured a
$5.0 million revolving credit agreement from Greenwich Capital (the "Credit
Agreement") and a commitment from Greenwich Capital to purchase and
securitize up to $533.0 million of the Company's finance contract
acquisitions until the commitment is filled, subject to customary conditions.
As of June 30, 1996, two securitizations aggregating $197.0 million were
completed pursuant to the securitization commitment. The Credit Agreement
expires in May 1997 and bears interest at the rate of 15.0% or LIBOR plus
9.0% determined by the Company at the time of borrowing. As of June 30,
1996, the Company had $5.0 million available under the Credit Agreement.
The Company had a $10,000,000 revolving credit facility with an
affiliated entity of one of its former significant stockholders. The
proceeds under this facility were used by the Company for working capital
purposes and certain other specific costs incurred in originating or
acquiring auto loans or leases, as defined in the agreement. Interest was
charged at an annual rate of 12%. The revolving credit facility was
cancelled in March 1996. Under the revolving credit facility, the Company
incurred interest expense of $252,879 and $0 for the years ended June 30,
1995 and 1996, respectively. As of June 30, 1995, the Company had fully paid
its outstanding obligations made under the revolving credit facility
including any interest owed.
6. NOTES PAYABLE
The Company has entered into several two-year Loan and Security
Agreements (the "Financing Agreements") with III Finance, whereby, it may
borrow the lesser of an aggregate amount of $66.4 million or the maximum
borrowing base, as defined under the Financing Agreements. As of June 30,
1995 and 1996, the Company had notes payable aggregating $12,956,123 and
$29,848,859, respectively (which approximates their fair value) and related
interest payable of $41,330 and $93,486, respectively, under the Financing
Agreements. The notes bear interest at 12.0% per annum and are secured by
certain of the Company's retained interests in securitized receivables with
carrying values aggregating approximately $22.5 million and $70.0 million at
June 30, 1995 and 1996, respectively, which approximates their fair value.
As of June 30, 1996, the Company had $30.5 million available under the
Financing Agreements. These Financing Agreements expire at varying dates
through June 1998.
7. COMMITMENTS AND CONTINGENCIES
The Company leases its office space and certain of its office equipment
under noncancelable operating leases. The Company also has subleased certain
of its office space and offsets its rent expense by the amount collected under
the subleases.
The Company's minimum rental payments as of June 30, 1996 are:
Year Ending Gross Sub-lease Net
June 30, Amount Amount Amount
--------- ---------- ---------- ---------
1997 $2,937,000 $(634,000) $2,303,000
1998 2,882,000 (637,000) 2,245,000
1999 2,249,000 (371,000) 1,878,000
2000 1,040,000 - 1,040,000
2001 977,000 - 977,000
Thereafter 3,916,000 - 3,916,000
--------- --------- ----------
$14,001,000 $(1,642,000) $12,359,000
========== ========== ==========
F-12
The Aegis Consumer Funding Group, Inc.
Note to Consolidated Financial Satements
Years Ended June 1994, 1995 and 1996
7. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company has employment agreements with several of its key employees
and officers which expire at various times through June 30, 1999. Under the
terms of these agreements, the Company is obligated to pay minimum annual
payments of $1,268,333, $1,185,000 and $733,750, respectively, during each of
the years ending June 30, 1997 through June 30, 1999. In addition to the
minimum payments, the Company is further obligated to pay incentive bonuses
based on its earnings, as defined in the respective agreements, or based on
the Company's automobile finance receivables acquisition volume levels.
In December 1995, the Company entered into a commitment to sell $175.0
million of sub-prime automobile loans to be resold as asset-backed securities
through an Owner Trust Agreement (the "Agreement"). During the year ended
June 30, 1996, the Company sold approximately $97.8 million automobile
receivables into this facility. The Agreement requires the Company to
directly sell between $8.0 million and $15.0 million per month for a
fifteen-month funding period, subsequent to the initial funding date.
As of June 30, 1996, the Company had a remaining commitment of approximately
$77.2 million, which expires in March 1997.
In connection with securitization transactions, the Company enters into
pooling and servicing agreements. The agreements require rhe Company to
increase its cash contribution and default rates increase to certain levels
defined in the agreements. As delinquencies and/or default rates increase or
decrease, the Company's obligation varies. For the ear ended June 30, 1996,
the Company paid additional contributions to the tursts of approximately $2.3
million and, in August 1996, paid what management believes to be its final
contribution, under this obligation, of $2.4 million.
On April 28, 1996, a complaint was filed against the Company in the
United States District Court for the Southern District of New York alleging
that the complainant was entitled to certain fees under a finder's agreement
entered into with the Company on January 2, 1996. The amounts alleged to be
due were in connection with the Company's private placement of $92.0 million
of asset-backed securities in March 1996. On July 3, 1996, the complaint was
amended to include fees allegedly due under the finder's agreement in
connection with a series of financing arrangements entered into by the
Company and in connection with a potential sale of common stock of the
Company. The complainant seeks damages of $15.8 million plus interest and
punitive damages of at least $545,000, together with costs, attorneys' fees
and such other relief as the court deems appropriate. The Company believes
it has meritorious defenses to the allegations in the complaint and intends
to defend the matter vigorously.
The Company is subject to various other legal proceedings and claims that
arise in the ordinary course of business. In the opinion of management of
the Company, based in part on the advice of counsel, the amount of any
ultimate liability with respect to these actions will not materially affect the
results of operations, cash flows or financial position of the Company.
8. CAPITAL STOCK
On October 18, 1994, the Board of Directors and the Company's
stockholders authorized a 47,654.4578 for 1 split of the common stock,
the reclassification of the common stock from no par value to $.01 par value
per share and an increase in the number of authorized shares of common stock
to 30,000,000. All share and per share amounts presented in these financial
statements have been adjusted to reflect the effect of such stock split and
reclassification.
In July 1993, the Company issued 3,637,477 shares to an existing
stockholder in consideration for extending it credit under a $10,000,000
revolving credit facility. The Company recorded a commitment fee of $150,000
in consideration for this credit facility. This fee was capitalized and
amortized as additional issuance of common shares over the six year life of
the revolving credit facility. In March, 1996 the revolving credit facility
was cancelled, whereby the Company expended the then remaining balance.
F-13
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995, and 1996
7. CAPITAL STOCK (CONTINUED)
The Series B preferred stock provided for the accrual of no dividends
until the first anniversary date of its issuance. Dividends accrued at an
annual rate of 10%, payable quarterly, which commenced October 1, 1994.
The Series B preferred stock was cumulative, nonvoting and non redeemable;
however, ACFG may, upon 30 days notice, redeem all or part of the outstanding
Series B preferred stock at its liquidation value of $10,000 per share.
During the year ended June 30, 1994, the Company recorded a Series B
preferred stock dividend of $225,100. This Series B preferred stock dividend
imputed the periodic cost, using the effective yield method, of the Company's
one year dividend payment holiday. During the year ended June 30, 1995, the
Company paid cash Series B preferred stock dividends of $194,198 and retired
its Series B preferred stock at its redemption value of $2,452,678.
During the year ended June 30, 1995, the Company received $210,000 from
one of its stockholders as the repayment of an outstanding receivable from a
previous year's transaction.
On September 15, 1993, the Company granted a warrant in connection with
consulting services received by the Company. Such warrant is exercisable for
2.68% of the Company's common stock (328,389 shares) outstanding at the time
of grant at an aggregate exercise price equal to $27,000, which was estimated
to be the fair market value on the date of grant. In April 1995, the warrant
was exercised and the Company issued 328,389 shares of common stock at its
exercise price of $27,000.
On April 6, 1995, the Company completed the issuance of 1,875,955 shares
of common stock in an initial public offering (IPO). Net proceeds to the
Company were approximately $9,997,000 after deducting expenses of the
offering. Subsequently, on April 13, 1995, the Company completed the
issuance of 316,250 shares of common stock pursuant to the exercise of the
underwriters' IPO over-allotment option, resulting in additional net proceeds
to the Company of approximately $1,850,000.
In February, 1996 the Company issued $9,200,000 of Series C convertible
preferred stock under Regulation S of the Securities Act of 1933. The Series
C preferred stock is convertible into common stock of the Company at the
lower of $6.425 per share of common stock or 85% of the fair market value of
the common stock at the time of conversion. The Company can redeem the Series
C preferred stock upon conversion at the fair market value of the common stock
into which such Series C preferred stock is convertible. The Series C
preferred stock has an 8% annual dividend payable in common stock at the time
of conversion. The Series C preferred stock is automatically converted into
common stock on the third anniversary of its issuance. For purposes of
computing earnings per share, the Series C preferred stock is deemed to be a
common stock equivalent, and as such is included in the weighted average
common and common equivalent shares outstanding. The Company also issued
warrants to the placement agent to purchase 114,553 shares of common stock of
the Company at a price of $6.425 per share, which expire five years from
their issuance date. None of these warrants were exercised as of June 30,
1996. During the year ended June 30, 1996, the Company redeemed 88 Series C
preferred shares for $1.1 million and converted 307 Series C preferred shares
into 679,114 shares of common stock.
On April 6, 1995, the executive officers of the Company and Patrick and
Michael Bennett placed 1,892,763 shares of common stock in escrow pending the
Company's attainment of certain pre-determined earnings or market price
targets. In the event the Company attains any of the pre-determined earnings
or market price targets, the fair market value of the escrowed shares at the
time they are released will be deemed additional compensation expense to the
extent such shares are released from escrow to officers, directors or other
employees of the Company. For the years ended June 30, 1995 and 1996, the
Company incurred non-cash (non tax deductible) charges in the amount of
$878,739 and $806,886, respectively from the release of 113,386 and 150,118
escrowed shares released to the executive officers of the Company (814,455
and 1,078,308 of the escrowed shares were released, respectively). As of
June 30, 1996, all escrowed shares have been released. There was no impact
on total stockholders equity on the Company's financial statements as a
result of the release of the escrowed shares due to a corresponding increase
in paid-in capital.
F-14
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
8. CAPITAL STOCK (CONTINUED)
In September, 1994, the Company adopted the 1994 stock option plan
(the "1994 Plan") and reserved 1,000,000 shares for such purposes and in
May 1996 the Company adopted the 1996 stock option plan (the "1996 Plan")
and reserved 750,000 shares for such purposes (collectively the "Option
Plan"). The Option Plan is administered by the Board of Directors or a
committee appointed by the Board of Directors and provides for grants of
incentive stock options ("ISOs") and non-incentive stock options ("Non-ISOs")
to employees, directors and consultants of the Company or its subsidiaries
(as defined in the Option Plan).
Consultants and directors who are not also employees of the Company may
only be granted Non-ISOs. The exercise price of each ISO may not be less
than 100% of the fair market value of the common stock at the time of grant,
except that in the case of a grant to an employee who owns 10% or more of the
outstanding common stock of the Company or a subsidiary of the Company (a
"10% Stockholder"), the exercise price shall not be less than 110% of the
fair market value on the date of grant. The exercise price of each Non-ISO
granted under the Option Plan may not be less than 85% of the fair market
value of the common stock at the time of grant or, in the case of a Non-ISO
granted to a 10% Stockholder, 110% of the fair market value of the common
stock at the time of the Grant. ISOs may not be exercised after the tenth
anniversary (fifth anniversary in the case of any option granted to a 10%
Stockholder) of their grant. Options may not be transferred during the
lifetime of an option holder. No stock options may be granted under the
Option Plan after ten years from the adoption of the Option Plan. Each
director who is not also an employee of the Company will automatically
receive each year Non-ISO's to purchase 10,000 shares of Common Stock
pursuant to such terms as are provided in the formula provisions of the
Option Plan. The stock options are immediately vested or are subject to
vesting over a three year period. Activity of the Option Plan is summarized
as follows:
<CAPTION>
Plan
1994 1996 Total
<S> <C> <C> <C>
Granted $945,000 309,163 1,254,163
Terminated (105,000) - (105,000)
------- ------ ---------
Outstanding at June 30, 1996 840,000 309,163 1,149,163
======= ======= =========
Exercisable at June 30, 1996 783,333 - 783,333
======= ======= =========
In connection with the Greenwich Capital facilities, the Company granted
warrants to Greenwich Capital to purchase 1,116,335 shares of common stock at an
exercise price of $6.50 per share (subject to adjustment). The warrants vest
at the occurrence of various events relating to the facilities. As of June
30, 1996, 675,526 warrants are exercisable and 217,542 of the remaining
non-vested warrants vest over the remaining securitization commitment and
223,267 warrants will vest upon the renewal of the related warehouse credit
facility.
9. EARNINGS PER SHARE
Pro forma net income and pro forma earnings per share for the year ended
June 30, 1995 is calculated assuming the Company's April 1995 IPO occurred as of
the beginning of the year and gives effect to (i) the redemption of
approximately $2.5 million of the Company's preferred stock and dividends
paid of $194,198, (ii) the termination of a consulting agreement providing
consulting fees of $139,751, net of taxes, (iii) the repayment of
approximately $5.0 million of indebtedness under the Company's revolving
credit facility and related interest expense of $192,157, net of taxes.
F-15
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
9. EARNINGS PER SHARE (CONTINUED)
The components of the Company's earnings per share of common and common
equivalent share are as follows:
<CAPTION>
1995 1996
Primary earnings per share:
Historical basis:
<S> <C> <C>
Net income available, as adjusted $1,079,423 $9,288,615
========== ==========
Net income per common and common
equivalent share $0.09 $0.65
==== =====
Weighted average common shares 12,641,878 12,969,500
Weighted average common equivalent shares 9,968 1,359,130
---------- ----------
Weighted average common and common
equivalent shares 12,651,846 14,328,630
========== ==========
Pro forma basis:
Net income available, as adjusted $1,605,529 N/A
========== ===
Net income per common and common
equivalent share $0.12 N/A
===== ===
Weighed average common shares 12,886,319 N/A
Weighted average common equivalent shares 32,917 N/A
---------- ---
Weighted average common and common
equivalent shares 12,919,235 N/A
========== ===
Fully diluted earnings per share:
Historical basis:
Net income available, as adjusted $1,079,423 $9,288,615
========== =========
Net income per common and common
equivalent share $0.08 $0.61
===== =====
Weighted average common shares 13,081,631 14,862,263
Weighted average common equivalent shares 10,661 328,430
---------- ----------
Weighted average common and common
equivalent shares 13,092,292 15,190,693
========== ==========
Pro forma basis:
Net income available to common stockholders $1,605,529 N/A
========== ===
Net income per common and common
equivalent share $0.11 N/A
===== ===
Weighted average common shares 14,776,844 N/A
Weighted average common equivalent shares 35,887 N/A
---------- ---
Weighted average common and common
equivalent shares 14,812,731 N/A
========== ===
F-16
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
10. RELATED PARTY TRANSACTIONS
During the year ended June 30, 1994, the Company shared office space,
management and certain officers with an affiliate. The Company charged this
affiliate with its proportionate share of rent, office expenses, salaries and
related employee costs, and other overhead. In addition to charging the
affiliate for its proportionate share of expenses, the Company charged a ten
percent mark-up for services rendered (excluding amounts charged for rent)
and processing charges. Effective October 1, 1993, the agreement was
terminated and the Company no longer shares such expenses. For the year
ended June 30,1994, the Company earned $252,766 in connection with this
agreement and is included in fees and commissions earned-related parties.
For the years ended June 30, 1994 and 1995, the Company provided
consulting, financial and structuring services to an affiliated entity of one
of its significant stockholders. In connection with these engagements, the
Company earned $1,840,839 and $275,000 (including reimbursement of out of
pocket costs of $112,037 and none, respectively) for the years ended June 30,
1994 and 1995, respectively. For the years ended June 30, 1996 none of these
services were provided.
In addition to receiving the above fees, in the year ended June 30, 1994,
the Company also sold one of its retained interests in securitized receivables
that invested in the excess spread from one of its securitizations of HUD
Title I Loans and two of its excess servicing assets derived from previous
automobile loan securitizations. During the year ended June 30, 1994, the
Company received $2,375,363 in cash and a note receivable of $600,000 in
connection with the sales and recorded $336,598 in gains on sale of
investments. The note receivable accrued interest at 8.5% and matures in
August, 2000. During the year ended June 30, 1996, the Company recorded a
valuation allowance of $600,000 for the note receivable.
Prior to becoming a significant stockholder in the Company, the above
significant stockholder was a client of the Company engaged in an ongoing
consulting arrangement involving a specific product line. As the specific
product line developed, the services required of the Company increased and
hence the consulting arrangement was amended to reflect the increased services
provided. This amendment resulted in the Company earning additional fees of
$1,216,234 during the year ended June 30, 1994. For the year ended June 30,
1994, the Company earned total fees of $1,945,535 relating to this product
line.
During the year ended June 30, 1994, the Company acquired for $500,000,
and subsequently expensed, a Dealer list and related support services from a
company in which the above significant stockholder had a significant
beneficial ownership interest.
The Company had a consulting agreement with another significant
stockholder whereby it provided advisory services to the Company for the
development, implementation and marketing of consumer product lines. In
connection with this agreement, the Company paid approximately $542,000 and
$350,000 to such stockholder during the years ended June 30, 1994 and 1995,
respectively. This agreement was canceled effective April 6, 1995.
During the year ended June 30, 1994, the Company purchased a $3,242,724
portfolio of automobile retail installment contracts from an entity in which
it had a 33.33% equity interest. The Company recorded a gain on the portfolio
of $427,280 when these loans were included in the Company's June 1994, $18.5
million automobile loan securitization. In addition, the Company acquired a
retained interest in a separate pool of automobile retail installment contracts
as consideration for securitizing and securing a buyer for such portfolio. The
Company subsequently recorded a gain of $420,056 during the year ended June 30,
1994 in connection with the sale of such retained interest. The results of
such sale are included in gains from securitization transactions.
F-17
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 AND 1996
10. RELATED PARTY TRANSACTIONS (CONTINUED)
In March 1996, the Company entered into a consulting agreement (the
"Consulting Agreement") with Whitehall Financial Group, Inc. ("Whitehall"),
whereby Whitehall was engaged to provide consulting services to the Company
relating to operations, management, financing and marketing. The Consulting
Agreement expires on February 5, 1997, is renewable for a one-year term and
provides an annual fee to Whitehall of $300,000 (subject to adjustment in
certain circumstances) plus reasonable and necessary expenses. For the year
ended June 30, 1996, the Company incurred an expense of $125,000 under the
Consulting Agreement.
11. INCOME TAXES
At June 30, 1996, the Company had a federal net operating loss carryforward
of approximately $34.0 million which will expire no sooner than September 30,
2005. Future utilization of approximately $30.0 million of the total net
operating losses are subject to an annual limitation under Section 382 of the
Internal Revenue Code. The Company has recorded a deferred tax asset and a
valuation allowance relating to the future benefit of the carryforward.
As discussed in the summary of significant accounting policies, the
Company underwent a quasi-reorganization in 1992. Accordingly, any benefit
relating to the use of $1.8 million of the Section 382 loss carryforward
generated prior to the quasi- reorganization will be reflected as an adjustment
to stockholders' equity. A full valuation allowance has been established
against this $1.8 million Section 382 loss carryforward.
The Company's income tax provisions consist of the following:
<CAPTION>
Year Ended June 30,
1994 1995 1996
<S> <C> <C> <C>
Current provision
Federal. . . . . . . . . . . $883,402 $ - $ -
State and local. . . . . . . 624,936 221,484 1,553,988
-------- -------- ---------
Total current. . . . . . . 1,508,338 221,484 1,553,988
--------- ------- ---------
Deferred (benefit) provision
Federal. . . . . . . . . . . (97,000) 1,475,000 5,639,763
State and local. . . . . . . (59,000) 71,540 278,271
-------- --------- ---------
Total deferred . . . . . . (156,000) 1,546,540 5,918,034
--------- --------- ---------
Total provision for income taxes $1,352,338 $1,768,024 $7,472,022
========== ========== ==========
Deferred taxes have been provided for temporary differences in the
recognition of revenues and expenses for tax and financial statement purposes.
The significant components of the Company's deferred tax liability, which is
included in income taxes payable, are as follows:
<CAPTION>
June 30,
1995 1996
<S> <C> <C>
Liabilities:
Securitization transactions $2,686,700 $17,628,762
Leases 1,974,995 2,534,990
--------- -----------
Total deferred tax liability 4,661,695 20,163,752
--------- -----------
Assets:
Net operating loss carryforward 3,081,600 11,956,095
Allowance for credit losses 661,700 1,236,491
State taxes 71,500 193,375
Rent expense 117,355 130,217
--------- ----------
Total deferred tax asset 3,932,155 13,516,178
---------- ----------
Valuation allowance (661,000) (661,000)
--------- --------
Net deferred tax asset 3,271,155 12,855,178
--------- ----------
Net deferred tax liability $1,390,540 $7,308,574
========== ===========
F-18
The Aegis Consumer Funding Group, Inc.
Notes to Consolidated Financial Statements
Years Ended June 30, 1994, 1995 and 1996
11. INCOME TAXES (CONTINUED):
The reconciliation of the federal statutory rate to the effective tax rate is as
follows:
<CAPTION>
Year Ended June 30,
1994 1995 1996
<S> <C> <C> <C>
Statutory federal rate 34% 34% 35%
State taxes, net of federal benefit 15% 12% 7%
Permanent difference resulting from
charge for
release of Escrowed shares - 10% 2%
Other - 2% 1%
49% 58% 45%
==== ==== ====
12. QUARTERLY FINANCIAL DATA (UNAUDITED):
Summarized financial data is as follows (dollars in thousands, except for per
share amounts):
Quarter Ended
Sept. 30, Dec.31, March 31, June 30,
1995 1995 1996 1996
<S> <C> <C> <C> <C>
Revenues $9,158 $9,405 $13,064 $14,700
------ ------ ------- -------
Interest expense 2,124 2,459 2,723 2,784
Other expenses 3,386 3,720 5,824 6,547
------ ----- ----- ------
Total expenses 5,511 6,179 8,547 9,331
------ ------ ----- -----
Net income before income taxes 3,647 3,227 4,517 5,369
Provision for income taxes 1,641 1,384 1,988 2,460
------ ------ ----- -----
Net income $2,006 $1,844 $2,529 $2,909
====== ======= ====== ======
Net income available to
shareholders $2,006 $1,844 $2,529 $2,768
====== ====== ====== ======
Net income per common share:
Primary $0.15 $0.13 $0.17 $0.19
====== ===== ===== =====
Fully Diluted $0.14 $0.12 $0.16 $0.18
====== ====== ====== =====
The quarters ended December 31, 1995, March 31, 1996 and June 30, 1996 included
write-downs on retained interests in securitized receivables of $1.5 million,
$2.5 million and $3.5 million, respectively.
The quarter ended June 30, 1996, included a non-cash charge of $807,000 from
the release of escrowed shares which was offset by an increase in
paid-in-capital. There was no impact on total stockholders' equity as a
result of the escrow share release and the resultant non-cash charge.
13. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest and income taxes paid during the year were as follows:
Year Ended June 30,
1994 1995 1996
Interest . . . . . . . . . . $838,962 $4,098,195 $10,369,296
======== ========== ===========
Income taxes . . . . . . . . $101,204 $1,070,513 $ 141,623
======== ========== ===========
F-19
</TABLE>
EXHIBIT 4.10
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED,
AND NEITHER THIS WARRANT NOR SUCH SHARES MAY BE SOLD,
ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
OR
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT, AND,
IF
AN EXEMPTION SHALL BE APPLICABLE, THE HOLDER SHALL HAVE
DELIVERED AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
Void after 5:00 p.m. Eastern Standard Time, on July 31,
2001.
WARRANT TO PURCHASE COMMON STOCK
OF
THE AEGIS CONSUMER FUNDING GROUP, INC.
FOR VALUE RECEIVED, THE AEGIS CONSUMER
FUNDING
GROUP, INC. (the "Company"), a Delaware corporation,
hereby certifies that
Bjorn Ahlstrom, or its permitted assigns, is entitled
to purchase from the
Company, at any time or from time to time commencing
July 31, 1996, and prior
to 5:00 P.M., Eastern Standard Time, on July 31, 2001,
7,000 shares of Common
Stock, par value $.01 per share, of the Company at
$4.5375 per share with an
aggregate purchase price of $31,762.50 (hereinafter,
(i) said Common Stock,
together with any other equity securities which may be
issued by the Company
with respect thereto or in substitution therefor, is
referred to as the "Common
Stock," (ii) the shares of the Common Stock purchasable
hereunder are referred to
as the "Warrant Shares," (iii) the aggregate purchase
price payable hereunder for
the Warrant Shares is referred to as the "Aggregate
Warrant Price," (iv) the price
payable hereunder for each of the Warrant Shares is
referred to as the "Per Share
Warrant Price," (v) this document or any substitution
for this Warrant are referred
to as the "Warrant" and (vi) the holder of this Warrant
is referred to as the
"Holder.") The number of Warrant Shares for which this
Warrant is exercisable is
subject to adjustment as hereinafter provided. In the
event of any such
adjustment, the Per Share Warrant Price shall be
adjusted by multiplying the Per
Share Warrant Price in effect immediately prior to such
adjustment by a fraction
the numerator of which is the aggregate number of
Warrant Shares for which this
Warrant may be exercised immediately prior to such
adjustment and the
denominator of which is the aggregate number of Warrant
Shares for which this
Warrant may be exercised immediately after such
adjustment.
1. Exercise of Warrant. This Warrant may be
exercised, in whole at any time or
in part from time to time, commencing July 31, 1996,
and prior to 5:00 P.M.,
Eastern Standard Time, on July 31, 2001, by the Holder
of this Warrant by the
surrender of this Warrant (with the subscription form
at the end hereof duly
executed) at the address set forth in Subsection 8(a)
hereof, together with proper
payment of the Aggregate Warrant Price, or the
proportionate part thereof if this
Warrant is exercised in part.
The Aggregate Warrant Price or Per Share
Warrant Price may be paid: (a)
in cash, (b) by surrender to the Company of Warrants or
shares of its Common
Stock with a fair market value, on the date of
exercise, that is equal to the
Aggregate Warrant Price or Per Share Warrant Price, as
the case may be, in
respect of the number of Warrants exercised, or (c) by
a combination of (a) and
(b) hereof. In addition to and without limiting the
rights of the Holder under the
terms of the preceding sentence of this Section 1, the
Holder shall have the right
to convert Warrants or any portion thereof (the
"Conversion Right") into Warrant
Shares as provided in this paragraph, but only if, at
the time of such conversion,
the Per Share Warrant Price shall be less than the
current market price per share of
Common Stock and the Warrants shall otherwise be
exercisable under the
provisions of this Warrant. Upon exercise of the
Conversion Right with respect to
a particular number of Warrants (the "Converted
Warrants"), the Company shall
deliver to the Holder (without payment by the Holder of
any cash or other
consideration) that number of Warrant Shares equal to
the quotient obtained by
dividing (a) the difference between (i) the product of
the fair value per share of
Common Stock as of the date the Conversion Right is
exercised (the "Conversion
Date") and the number of Warrant Shares into which the
Converted Warrants
could have been exercised hereunder and (ii) the
aggregate Per Share Warrant
Price that would have been payable upon such exercise
of the Converted Warrants
as of the Conversion Date, by (b) the fair value per
share of Common Stock as of
the Conversion Date. For purposes of this paragraph,
the fair value per share of
Common Stock shall mean the average Closing Price of
the Common Stock for
the ten Trading Days immediately preceding the
Conversion Date.
As used in this Section 1, Trading Date
means, in the event that the
Common Stock is listed or admitted to trading on the
New York Stock Exchange
(or any successor to such exchange,), a day on which
the New York Stock
Exchange (or such successor) is open for the
transaction of business, or, if the
Common Stock is not listed or admitted to trading on
such exchange, a day on
which the principal national securities exchange on
which the Common Stock is
listed is open for the transaction of business, or, if
the Common Stock is not listed
or admitted to trading on any national securities
exchange, a day on which any
New York Stock Exchange member firm is open for the
transaction of business.
As used in this Section 1, the Closing Price
of the Company's Common
Stock shall be the last reported sale price as shown on
the Composite Tape of the
New York Stock Exchange, or, in case no such reported
sale price is quoted on
such day, the average of the reported closing bid and
asked prices on the New
York Stock Exchange, or, if the Common Stock is not
listed or admitted to trading
on such exchange, the last reported sales price, or in
case no such reported sales
price is quoted on such day, the average of the
reported closing bid and asked
prices, on the principal national securities exchange
(including, for purposes
hereof, the National Association of Securities Dealers,
Inc. National Market
System) on which the Common Stock is listed or admitted
to trading, or, if it is
not listed or admitted to trading on any national
securities exchange, the average
of the high closing bid price and the low closing asked
price as reported on an
inter-dealer quotation system. In the absence of any
available public quotations
for the Common Stock, the Board of Directors of the
Company shall determine in
good faith the fair value of the Common Stock, which
determination shall be set
forth in a certificate by the Secretary of the Company.
Payment for Warrant Shares if made by cash
shall be made by certified or
official bank check payable to the order of the
Company. If this Warrant is
exercised in part, the Holder shall be entitled to
receive a new Warrant covering
the number of Warrant Shares in respect of which this
Warrant has not been
exercised and setting forth the proportionate part of
the Aggregate Warrant Price
applicable to such Warrant Shares. Upon such surrender
of this Warrant, the
Company will (a) issue a certificate or certificates in
the name of the Holder for
the shares of the Common Stock to which the Holder
shall be entitled, and (b)
deliver the proportionate part thereof to and in the
name of the Holder if this
Warrant is exercised in part, pursuant to the
provisions of the Warrant.
No warrant granted herein shall be
exercisable after
5:00 p.m. Eastern Standard Time on the fifth
anniversary of the date of issuance.
2. Reservation of Warrant Shares. The Company agrees
that, prior to the
expiration of this Warrant, the Company will at all
times have authorized and in
reserve, and will keep available, solely for issuance
or delivery upon the exercise
of this Warrant, the shares of the Common Stock as from
time to time shall be
receivable upon the exercise of this Warrant.
3. Anti-Dilution Provisions.
(a) If, at any time or from time to time
after the date of this Warrant, the
Company shall distribute to the holders of the Common
Stock (i) securities, other
than shares of the Common Stock, or (ii) property,
other than cash, without
payment therefor, with respect to the Common Stock,
then, and in each such case,
the Holder, upon the exercise of this Warrant, shall be
entitled to receive the
securities and properties which the Holder would hold
on the date of such exercise
if, on the date of this Warrant, the Holder had been
the holder of record of the
number of shares of the Common Stock subscribed for
upon such exercise and,
during the period from the date of this Warrant to and
including the date of such
exercise, had retained such shares and the securities
and properties receivable by
the Holder during such period. Notice of each such
distribution shall be forthwith
mailed to the Holder.
(b) In case the Company shall hereafter (i)
pay a dividend or make a
distribution on its capital stock in shares of Common
Stock, (ii) subdivide its
outstanding shares of Common Stock into a greater
number of shares, (iii)
combine its outstanding shares of Common Stock into a
smaller number of shares
or (iv) issue by reclassification of its Common Stock
any shares of capital stock of
the Company, the number of Warrant Shares for which
this Warrant may be
exercised shall be adjusted so that if the Holder
surrendered this Warrant for
exercise after such action the Holder would be entitled
to receive the number of
shares of Common Stock or other capital stock of the
Company which he would
have been entitled to receive had such Warrant been
exercised immediately prior
to such action. An adjustment made pursuant to this
subsection (b) shall become
effective immediately after the record date in the case
of a dividend or distribution
and shall become effective immediately after the
effective date in the case of a
subdivision, combination or reclassification. If, as a
result of an adjustment made
pursuant to this subsection (b), the Holder of this
Warrant shall become entitled to
receive shares of two or more classes of capital stock
or shares of Common Stock
and other capital stock of the Company, the Board of
Directors (whose
determination shall be conclusive and shall be
described in a written notice to the
Holder of this Warrant promptly after such adjustment)
shall determine the
allocation of the adjusted Per Share Warrant Price
between or among shares of
such classes of capital stock or shares of Common Stock
and other capital stock.
(c) In case of any consolidation or merger
to which the Company is a party
other than a merger or consolidation in which the
Company is the continuing
corporation, or in case of any sale or conveyance to
another entity of the property
of the Company as an entirety or substantially as an
entirety, or in the case of any
statutory exchange of securities with another
corporation (including any exchange
effected in connection with a merger of a third
corporation into the Company), the
Holder shall have the right thereafter to exercise this
Warrant for the kind and
amount of securities, cash or other property which he
would have owned or have
been entitled to receive immediately after such
consolidation, merger, statutory
exchange, sale or conveyance had such Warrant been
exercised immediately prior
to the effective date of such consolidation, merger,
statutory exchange, sale or
conveyance and in any such case, if necessary,
appropriate adjustment shall be
made in the application of the provisions set forth in
this Section 3 with respect to
the rights and interests thereafter of the Holder to
the end that the provisions set
forth in this Section 3 shall thereafter
correspondingly be made applicable, as
nearly as may reasonably be possible, in relation to
any shares of stock or other
securities or property thereafter deliverable on the
conversion of this Warrant.
The above provisions of this subsection (c) shall
similarly apply to successive
consolidations, mergers, statutory exchanges, sales or
conveyances. Notice of any
such consolidation, merger, statutory exchange, sale or
conveyance and of said
provisions so proposed to be made, shall be mailed to
the Holder not less than 30
days prior to such event. A sale of all or
substantially all of the assets of the
Company for a consideration consisting primarily of
securities shall be deemed a
consolidation or merger for the foregoing purposes.
(d) Whenever the Per Share Warrant Price is
adjusted as provided in this
Warrant and upon any modification of the rights of the
Holder of this Warrant in
accordance with this Section 3, the Company shall
promptly prepare a certificate
of an officer of the Company, setting forth the Per
Share Warrant Price and the
number of Warrant Shares after such adjustment or
modification, a brief statement
of the facts requiring such adjustment or modification
and the manner of
computing the same and cause a copy of such certificate
to be mailed to the
Holder.
(e) If the Board of Directors of the Company
shall declare any dividend or
other distribution in cash with respect to the Common
Stock, other than out of
earned surplus, the Company shall mail notice thereof
to the Holder not less than
15 days prior to the record date fixed for determining
shareholders entitled to
participate in such dividend or other distribution.
4. Fully Paid Stock; Taxes. The Company agrees that
the shares of the Common
Stock represented by each and every certificate for
Warrant Shares delivered on
the proper exercise of this Warrant shall, at the time
of such delivery, be validly
issued and outstanding, fully paid and nonassessable,
and not subject to
preemptive rights, and the Company will take all such
actions as may be
necessary to assure that the par value or stated value,
if any, per share of the
Common Stock is at all times equal to or less than the
then Per Share Warrant
Price. The Company further covenants and agrees that
it will pay, when due and
payable, any and all Federal and state stamp, original
issue or similar taxes that
may be payable in respect of the issue of any Warrant
Shares or certificates
therefor.
5. Transfer.
(a) Securities Law. Neither this Warrant
nor the Warrant Shares issuable
upon the exercise hereof have been registered under the
Securities Act of 1933, as
amended (the "Securities Act"), or under any state
securities laws and unless so
registered may not be transferred, sold, pledged,
hypothecated or otherwise
disposed of unless an exemption from such registration
is available. In the event
the Holder desires to transfer this Warrant or any of
the Warrant Shares issued, the
Holder must give the Company prior written notice of
such proposed transfer
including the name and address of the proposed
transferee. Such transfer may be
made only either (i) upon publication by the Securities
and Exchange Commission
(the "Commission") of a ruling, interpretation, opinion
or "no action letter" based
upon facts presented to said Commission, or (ii) upon
receipt by the Company of
an opinion of counsel to the Company in either case to
the effect that the proposed
transfer will not violate the provisions of the
Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
or the rules and
regulations promulgated under either such act, or in
the case of clause (ii) above,
to the effect that the Warrant or Warrant Shares to be
sold or transferred have
been registered under the Securities Act, and that
there is in effect a current
prospectus meeting the requirements of Subsection 10(a)
of the Securities Act,
which is being or will be delivered to the purchaser or
transferee at or prior to the
time of delivery of the certificates evidencing the
Warrant or Warrant Shares to be
sold or transferred.
(b) Lockup Agreements with Underwriters. In
the event of a public
offering of the Company's securities, the Holder agrees
to enter into an agreement
with the Underwriter or Underwriter's representative
for the public offering of the
Company's securities restricting the sale, transfer or
other disposition of this
Warrant or the Warrant Shares to the extent that such
agreement is required to be
executed by the Underwriter.
(c) Conditions to Transfer. Prior to any
such proposed transfer, and as a
condition thereto, if such transfer is not made
pursuant to an effective registration
statement under the Securities Act, the Holder will, if
requested by the Company,
deliver to the Company (i) an investment covenant
signed by the proposed
transferee, (ii) an agreement by such transferee to the
restrictive investment
legend set forth herein on the certificate or
certificates representing the securities
acquired by such transferee, (iii) an agreement by such
transferee that the
Company may place a "stop transfer order" with its
transfer agent or registrar, and
(iv) an agreement by the transferee to indemnify the
Company to the same extent
as set forth in the next succeeding paragraph.
(d) Indemnity. The Holder acknowledges that
the Holder understands the
meaning and legal consequences of this Section 5, and
the Holder hereby agrees
to indemnify and hold harmless the Company, its
representatives and each officer
and director thereof from and against any and all loss,
damage or liability
(including all attorneys' fees and costs incurred in
enforcing this indemnity
provision) due to or arising out of (a) the inaccuracy
of any representation or the
breach of any warranty of the Holder contained in, or
any other breach by the
Holder of, this Warrant, (b) any transfer of the
Warrant or any of the Warrant
Shares in violation of the Securities Act, the Exchange
Act or the rules and
regulations promulgated under either of such acts, (c)
any transfer of the Warrant
or (d) any untrue statement or omission to state any
material fact in connection
with the investment representations or with respect to
the facts and representations
supplied by the Holder to counsel to the Company upon
which its opinion as to a
proposed transfer shall have been based.
(e) Transfer. Upon surrender of this
Warrant to the Company or at the
office of its stock transfer agent, if any, with
assignment documentation duly
executed and funds sufficient to pay any transfer tax,
and upon compliance with
the foregoing provisions, the Company shall, without
charge, execute and deliver
a new Warrant in the name of the assignee named in such
instrument of
assignment and this Warrant shall promptly be
cancelled. Any assignment,
transfer, pledge, hypothecation or other disposition of
this Warrant attempted
contrary to the provisions of this Warrant, or any levy
of execution, attachment or
other process attempted upon the Warrant, shall be null
and void and without
effect.
(f) Legend and Stop Transfer Orders. Unless
the Warrant Shares have been
registered under the Securities Act, upon exercise of
any part of the Warrant and
the issuance of any of the Warrant Shares, the Company
shall instruct its transfer
agent to enter stop transfer orders with respect to
such shares, and all certificates
representing Warrant Shares shall bear on the face
thereof substantially the
following legend, insofar as is consistent with
Delaware law:
"The shares of common stock represented by this
certificate have not been
registered under the Securities act of 1933, as
amended, and may not be sold,
offered for sale, assigned, transferred or otherwise
disposed of unless registered
pursuant to the provisions of that Act or an opinion of
counsel to the Company is
obtained stating that such disposition is in compliance
with an available
exemption from such registration."
6. Loss, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company
of the loss, theft, destruction or mutilation of this
Warrant, and of indemnity
reasonably satisfactory to the Company, if lost, stolen
or destroyed, and upon
surrender and cancellation of this Warrant if
mutilated, the Company shall execute
and deliver to the Holder a new Warrant of like date,
tenor and denomination.
7. Warrant Holder Not Shareholder. Except as
otherwise provided herein, this
Warrant does not confer upon the Holder any right to
vote or to consent to or
receive notice as a shareholder of the Company, as
such, in respect of any matters
whatsoever, or any other rights or liabilities as a
shareholder, prior to the exercise
hereof.
8. Communication. No notice or other communication
under this Warrant shall
be effective unless the same is in writing and is
mailed by first-class mail, postage
prepaid, addressed to:
(a) the Company at 525 Washington Blvd.,
Jersey City, New Jersey 07310,
or such other address as the Company has designated in
writing to the Holder, or
(b) the Holder at 25 Phillips Parkway,
Montvale, NJ 07645, or such other
address as the Holder has designated in writing to the
Company.
9. Headings. The headings of this Warrant have been
inserted as a matter of
convenience and shall not affect the construction
hereof.
10. Applicable Law. This Warrant shall be governed by
and construed in
accordance with the law of the State of Delaware
without giving effect to the
principles of conflict of laws thereof.
IN WITNESS WHEREOF, THE AEGIS CONSUMER
FUNDING
GROUP, INC. has caused this Warrant to be signed by a
duly authorized officer
as of this 31st day of July 1996.
ATTEST: THE AEGIS CONSUMER
FUNDING GROUP, INC.
_____________________
By:____________________________________
Name: Angelo R. Appierto
Title:Chief Executive
Officer
(I:\LEGAL\JOAN\WARRANT4.KAS)
EXHIBIT 10.6.3
April 22, 1996
Mr. Angelo R. Appierto
23 Ashley Court
Jamesburg, NJ 08831
Dear Angelo:
The purpose of this letter is to set forth certain terms and
conditions which will constitute an amendment to your executive
employment agreement dated as of March 1, 1994, as amended July 1, 1995 and
October 13, 1995 (collectively the "Employment Agreement"). Capitalized term,
not otherwise defined herein, shall have the meaning ascribed to them in the
Employment Agreement.
The parties do hereby acknowledge that Whitehall Financial Group, Inc.
together with certain other affiliated and non-affiliated parties, filed a
Form 13D with the Securities and Exchange Commission on or about February
5, 1996 (such filing together with amendments subsequently filed thereto and
another 13D filed by PCG Management, Inc. and Gary Winnick in connection
therewith referred to as the "Bennett Transfer Filings").Without admitting
or denying that the Bennett Transfer Filings or the transactions reflected
therein (collectively the "Transactions") constitute a "Change in Control"
as contemplated by your Employment Agreement; the parties hereto agree
that a Change in Control shallnot be deemed to have occurred with respect
to the Bennett Transfer Filings or the Transactions and no payment shall
be deemed owed to the Executive by the Company as a result thereof unless
and until:
i. The Executive shall voluntarilyterminate his employment prior to
June 30, 1996 or
ii The Company shall terminate the Executive's employment without
cause on or before June 30, 1997.
In either of the two events described above, the Company shall pay to the
Executive the payment (herein the "Change in control Payment") to which
they would have been entitled had the Transactions been deemed to
constitute a Change in Control under the terms of the Employment
Agreement.
In all other respects, the Employment Agreement shall remain in full force
and effect unmodified, except in accordance with the provisions hereof.
If this letter correctly sets forth the understanding of the Company and the
Executive, please indicate your acceptance of the above stated terms and
conditions by executing a copy of this letter and returning it to the
Company.
Very truly yours,
THE AEGIS CONSUMER
FUNDING GROUP, INC.
By:________________________________
Gary D.
Peiffer
Vice
Chairman
By:__________________________________
Angelo R.
Appierto
Executive
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EXHIBIT 10.8.3
April 22, 1996
Mr. Joseph F. Battiato
125 Johanna Lane
Staten Island, NY 10309
Dear Joe:
The purpose of this letter is to set forth
certain terms and conditions which
will constitute an amendment to your executive
employment agreement dated as
of March 1, 1994, as amended July 1, 1995 and
October 13, 1995 (collectively the
"Employment Agreement"). Capitalized term, not
otherwise defined herein, shall
have the meaning ascribed to them in the
Employment Agreement.
The parties do hereby acknowledge that
Whitehall Financial Group, Inc.
together with certain other affiliated and
non-affiliated parties, filed a Form 13D
with the Securities and Exchange Commission on or
about February 5, 1996
(such filing together with amendments subsequently
filed thereto and another 13D
filed by PCG Management, Inc. and Gary Winnick in
connection therewith
referred to as the "Bennett Transfer Filings").
Without admitting or denying that
the Bennett Transfer Filings or the transactions
reflected therein (collectively the
"Transactions") constitute a "Change in Control"
as contemplated by your
Employment Agreement; the parties hereto agree
that a Change in Control shall
not be deemed to have occurred with respect to the
Bennett Transfer Filings or the
Transactions and no payment shall be deemed owed
to the Executive by the
Company as a result thereof unless and until:
i. The Executive shall voluntarily
terminate his employment prior to
June 30, 1996 or
ii The Company shall terminate the
Executive's employment without
cause on or before June 30, 1997.
In either of the two events described above, the
Company shall pay to the
Executive the payment (herein the "Change in
Control Payment") to which he
would have been entitled had the Transactions been
deemed to constitute a Change
in Control under the terms of the Employment
Agreement.
The Company shall and does hereby agree to
advance to the Executive the
sum of $125,000 (the "Advance"). The Loan shall
be on a limited recourse basis
to the Executive and shall provide that repayment
of the loan shall be made solely
as an offset and deduction by the Company (i) from
the proceeds of any bonus
due to the Executive under his Employment
Agreement with respect to the
Company's fiscal year ending June 30, 1997; or
(ii) if a Change in Control
Payment becomes due in accordance with the
provisions hereof, from the proceeds
due from such Change in Control Payment. However,
anything hereinabove to the
contrary notwithstanding, in the event that the
employment of the Executive is
terminated prior to the date the bonus with
respect to the Company's fiscal year
ending June 30, 1997 is payable by the Company
for Cause or by the Executive
without Good Reason, the Advance shall thereafter
become a full recourse loan
and the Executive shall have an unconditional
obligation to pay in full, the amount
of the Advance together with interest at the
rate of 7% per annum from the date
the Advance was made on or before the earlier to
occur of (i) the date a Change
in Control Payment becomes due, if any, or (ii)
September 1, 1997.
In all other respects, the Employment
Agreement shall remain in full force and effect
unmodified, except in accordance with the
provisions hereof.
If this letter correctly sets forth the
understanding of the Company and the Executive,
please indicate your acceptance of the above
stated terms and conditions by executing a copy of
this letter and returning it to the Company.
Very truly yours,
THE AEGIS CONSUMER
FUNDING GROUP, INC.
By:________________________________
Angelo R.
Appierto
Chairman
By:__________________________________
Joseph F.
Battiato
Executive
EXHIBIT 10.94.5
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of June 1,
1996, by and between Aegis Auto Finance, Inc., a
Delaware corporation, having its principal place of
business at 525 Washington Boulevard, Jersey City, New
Jersey 07310, as seller (the "Seller"), and Aegis Auto
Funding Corp., a Delaware corporation, having its
principal executive office at 525 Washington Boulevard,
Jersey City, New Jersey 07310, as purchaser (the
"Purchaser").
WHEREAS, the Seller has originated or acquired in
the ordinary course of business, certain Receivables
(as defined herein); and
WHEREAS, the Seller and the Purchaser wish to set
forth the terms pursuant to which Receivables owned by
the Seller as of the Closing Date (as defined herein)
and as of each Funding Date (as defined herein) are to
be sold by the Seller to the Purchaser, which
Receivables will be sold by the Purchaser pursuant to
the Pooling and Servicing Agreement (as hereinafter
defined), to the Aegis Auto Receivables Trust 1996-2
(the "Trust") to be created thereunder, which Trust
will issue pass-through certificates representing
undivided interests in such Receivables and the other
property of the Trust (the "Certificates").
NOW, THEREFORE, in consideration of the foregoing,
other good and valuable consideration, and the mutual
terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the
meaning set forth in Article I of the Pooling and
Servicing Agreement dated as of June 1, 1996 (the
"Pooling and Servicing Agreement") among Aegis Auto
Funding Corp. (as seller thereunder), Norwest Bank
Minnesota, National Association, as trustee, and
Norwest Bank Minnesota, National Association, as backup
servicer. As used in this Agreement, the following
terms shall, unless the context otherwise requires,
have the following meanings (such meanings to be
equally applicable to the singular and plural forms of
the terms defined):
"Additional Receivables" means all Receivables
acquired by the Purchaser from the Seller after the
Closing Date and during the Funding Period pursuant to
this Agreement.
"Agreement" means this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" means the document of assignment
substantially in the form attached to this Agreement as
Exhibit A.
"Backup Servicer" means Norwest Bank Minnesota,
National Association, in its capacity as Backup
Servicer under the Pooling and Servicing Agreement, and
its successors in such capacity, who shall be Eligible
Servicers.
"Closing Date" means June 25, 1996.
"Cutoff Date" means June 1, 1996 with respect to
the Initial Receivables and the last Business Day of
the calendar week preceding the calendar week of a
Funding Date with respect to any Additional Receivables
acquired on such Funding Date.
"Funding Account" means the trust account
designated as such, established and maintained pursuant
to Sections 5.01 and 5.08 of the Pooling and Servicing
Agreement.
"Funding Date" means each date occurring no more
than once per calendar week during the Funding Period
on which Additional Receivables are acquired by the
Purchaser pursuant to this Agreement and transferred to
the Trust pursuant to the Pooling and Servicing
Agreement.
"Funding Event" means, with respect to a Funding
Date, the occurrence of the events required to occur in
accordance with Section 3.08 of the Pooling and
Servicing Agreement.
"Funding Period" means the period beginning on the
Closing Date and ending on the earlier to occur of (i)
the date on which the amount in the Funding Account has
been reduced to zero or (ii) July 9, 1996.
"Initial Receivables" means all Receivables
acquired by the Purchaser from the Seller on the
Closing Date pursuant to this Agreement.
"Lock-Box Account" means the account(s) designated
as such, established and maintained pursuant to Section
5.01 of the Pooling and Servicing Agreement.
"Purchaser" means Aegis Auto Funding Corp, a
Delaware corporation, its successors and assigns.
"Rating Agency" means each of Duff & Phelps Credit
Rating Co. and Fitch Investors Service, Inc., and any
successors thereto.
"Receivable" means any retail installment sales
contract and security agreement identified on the
Schedule of Receivables.
"Receivable Review" means a review conducted by
the Review Firm to determine compliance with the
requirements of this Agreement, which review shall
employ the procedures set forth in the letter from the
Review Firm attached to the Pooling and Servicing
Agreement as Exhibit P.
"Receivables Cash Purchase Price" means with
respect to any Receivable an amount equal to 100% of
the Principal Balance of such Receivable.
"Review Firm" means Ernst & Young LLP, its
successors and assigns.
"Schedule of Receivables" means the list of
Receivables annexed hereto as Exhibit B; provided that
Exhibit B shall be deemed to be amended on each Funding
Date to add Additional Receivables acquired by the
Purchaser from the Seller on each such date pursuant to
this Agreement.
"Seller" means Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"Trust" means the Aegis Auto Receivables Trust
1996-2.
"Trustee" means Norwest Bank Minnesota, National
Association, its successors and assigns.
"UCC" means the Uniform Commercial Code, as in
effect from time to time in the relevant jurisdictions.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. Purchase and Sale of Receivables.
On the Closing Date and on each Funding Date, subject
to the terms and conditions of this Agreement, the
Seller agrees to sell to the Purchaser, and the
Purchaser agrees to purchase from the Seller, the
Receivables and the other Trust Property relating
thereto (as defined in Section 2.01(a) below).
(a) Transfer of Receivables and Trust
Property. On the Closing Date (with respect to the
Initial Receivables) and each Funding Date (with
respect to any Additional Receivables), simultaneously
with the transactions pursuant to the Pooling and
Servicing Agreement, the Seller shall sell, transfer,
assign and otherwise convey to the Purchaser, without
recourse, a 100% interest in (i) all right, title and
interest of the Seller in and to the Receivables being
purchased on such dates, all moneys received thereon on
and after the related Cutoff Date allocable to
principal, and all moneys received thereon allocable to
interest accrued thereon from and including the related
Cutoff Date, (ii) the security interests in the
Financed Vehicles granted by the Obligors pursuant to
the Receivables; (iii) the interest of the Seller in
any Risk Default Insurance Proceeds and any proceeds
from claims on any Insurance Policies (including the
VSI Insurance Policy) covering the Receivables, the
Financed Vehicles or the Obligors; (iv) the interest of
the Seller in any Dealer Recourse; and (v) the proceeds
of any and all of the foregoing. (All of the property
identified in this subsection (a) shall constitute
"Trust Property"; provided that (A) the minimum amount
of Receivables sold to the Purchaser on any Funding
Date other than the last Funding Date shall not be less
than $500,000, (B) the Seller and the Purchaser shall
comply with the requirements specified in Section
2.01(c) hereof as a condition to any such purchase and
(C) the Funding Account shall contain available funds
in an amount at least equal to the Receivables Cash
Purchase Price for the Receivables to be acquired by
the Purchaser hereunder on such Funding Date
immediately prior to the Funding Event.)
(b) Receivables Purchase Price. (i) In
consideration for the Initial Receivables and the other
Trust Property relating thereto, the Purchaser shall,
on the Closing Date, pay to the Seller an amount equal
to 100% of the Receivables Cash Purchase Price for the
Initial Receivables in cash (the "Initial Receivables
Purchase Price").
(ii) In consideration for the Additional
Receivables and other Trust Property relating thereto,
upon one Business Day's prior notice given by the
Purchaser to the Trustee, the Purchaser shall cause the
Trustee, on each Funding Date, to pay to the Seller an
amount equal to 100% of the Receivables Cash Purchase
Price in cash by federal wire transfer funds. The
Seller acknowledges that funds to purchase the
Additional Receivables and other Trust Property
relating thereto on each Funding Date shall be
disbursed by the Trustee solely from the Funding
Account pursuant to Section 5.08 of the Pooling and
Servicing Agreement.
(c) Delivery of Documents. Not later than
Wednesday of the week of any proposed Funding Date (or
the next Business Day if Wednesday is not a Business
Day) (each a "Delivery Date"), the Seller shall, with
respect to Additional Receivables, deliver to the
Trustee (1) the original retail installment sale
contracts evidencing such Receivables, (2) original
titles or copies of dealer blanket guarantees of title
or applications for title for each Financed Vehicle
relating to such Receivables sold hereunder, (3) an
executed Assignment substantially in the form of
Exhibit A hereto with a Schedule I attached listing all
Receivables to be acquired on such Funding Date, (4) an
executed Certificate of Delivery substantially in the
form of Exhibit D-2 hereto, (5) a power of attorney
substantially in the form of Exhibit E hereto, (6) a
release and UCC-3 Termination Statement executed by
each warehouse lender terminating such Person's prior
security interests in such Additional Receivables
granted by Aegis Finance and (7) an endorsement to the
Risk Default Insurance Policy confirming insurance
regarding each Additional Receivable. The Purchaser
shall cause the Trustee, upon receipt of such documents
and the other items specified in Section 3.08(b)(ii) of
the Pooling and Servicing Agreement on the Delivery
Dates, to pay from the Funding Account to the Seller
the Receivables Cash Purchase Price therefor on the
Funding Date.
(d) Security Interest. It is the intention
of the Seller and the Purchaser that the transfer and
assignment of the Seller's right, title and interest in
and to the Receivables and the other Trust Property
shall constitute an absolute sale by the Seller to the
Purchaser. In the event a court of competent
jurisdiction were to recharacterize the transfer of the
Trust Property as a secured borrowing rather than a
sale, contrary to the intent of the Seller and the
Purchaser, the Seller does hereby grant, assign and
convey to the Purchaser, a security interest in and
lien upon all of its right, title and interest in and
to the Trust Property, and all proceeds of any thereof,
said security interest to be effective from the date of
execution of this Agreement.
Section 2.02. The Closing. The sale and purchase
of the Initial Receivables shall take place at a
closing (the "Closing") at the offices of Kutak Rock,
767 Third Avenue, 19th Floor, New York, New York 10017
on the Closing Date, simultaneously with: (a) the
closings under the Pooling and Servicing Agreement
pursuant to which (i) the Purchaser will assign and
pledge all of its right, title and interest in and to
the Initial Receivables and other Trust Property
relating thereto to the Trustee for the benefit of the
Certificateholders; and (ii) the Trustee will deposit
the foregoing into the Trust; and (b) the purchase of
the Certificates by the purchasers thereof.
Section 2.03. The Funding Events. The sale and
purchase of the Additional Receivables on each Funding
Date shall take place at the offices of the Trustee or
such other location as the Seller and Purchaser may
reasonably agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of
the Seller.
(a) The Seller hereby represents and
warrants to the Purchaser and its respective successors
and assigns and for the benefit of the Trustee and the
Trust as of the date hereof and as of each Funding
Date:
(i) Organization, Etc. The Seller is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(ii) Due Qualification. The Seller is
in good standing and duly qualified to do business and
has obtained all necessary licenses and approvals in
the States of Delaware and New Jersey and all
jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require
such qualifications unless the failure of the Seller to
obtain such licenses and approvals would have no
material adverse effect on the Seller's ability to
fulfill its obligations hereunder.
(iii) Power and Authority. The Seller
has the power and authority to execute and deliver this
Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the
property to be sold and assigned to the Purchaser and
such sale and assignment is valid and binding against
the Seller, and the Seller has duly authorized such
sale and assignment to the Purchaser by all necessary
action; the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by
all necessary action, and this Agreement is the legal,
valid and binding obligation of the Seller enforceable
in accordance with its terms. The Seller has duly
executed and delivered this Agreement and any other
agreements and documents necessary to effectuate the
transactions contemplated hereby.
(iv) No Violation. The consummation of
the transactions contemplated hereby and the
fulfillment of the terms hereof, neither conflict with,
result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation
or bylaws of the Seller, or any indenture, agreement or
other instrument to which the Seller is a party or by
which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement
or other instrument (other than this Agreement); nor
violate any law or, to the best of Seller's knowledge,
any order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or
its properties.
(v) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Seller or its properties: (A) asserting the
invalidity of this Agreement; (B) seeking to prevent
the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Approvals. No approval,
authorization or other action by, or filing with, any
governmental authority of the United States of America
or any of the States is required or necessary to
consummate the transactions contemplated hereby, except
such as have been duly obtained or made by the Closing
Date. Seller complies in all material respects with
all applicable laws, rules and orders with respect to
itself, its business and properties and the
Receivables; and Seller maintains all applicable
permits, licenses and certifications.
(vii) Taxes. The Seller has filed all
federal, state, county, local and foreign income,
franchise and other tax returns required to be filed by
it through the date hereof, and has paid all taxes
reflected as due thereon. There is no pending dispute
with any taxing authority that, if determined adversely
to the Seller, would result in the assertion by any
taxing authority of any material tax deficiency, and
the Seller has no knowledge of a proposed liability for
any tax to be imposed upon the Seller's properties or
assets for which there is not an adequate reserve
reflected in the Seller's current financial statements.
(viii) Investment Company. The Seller is
not, and is not controlled by, an "investment company"
registered or required to be registered under the
Investment Company Act of 1940, as amended.
(ix) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan and all such plans have
been fully funded as of the date of this Agreement.
(x) Trade Names. "Aegis Auto Finance,
Inc." is the only trade name under which the Seller is
currently operating its business; for the six (6) years
(or such shorter period of time during which the Seller
was in existence) preceding the Closing Date, the only
other trade name under which Seller operated its
business is "The Clearing House Corp."
(xi) Ability to Perform. There is no
material impairment in the ability of the Seller to
perform its obligations under this Agreement.
(xii) Valid Business Reasons; No
Fraudulent Transfers. The Seller has valid business
reasons for transferring the Receivables rather than
obtaining a secured loan with the Receivables as
collateral. At the time of each transfer: (i) the
Seller transferred the Receivables to the Purchaser
without any intent to hinder, delay, or defraud any
current or future creditor of the Seller; (ii) the
Seller was not insolvent and did not become insolvent
as a result of the transfer; (iii) the Seller was not
engaged and was not about to engage in any business or
transaction for which any property remaining with the
Seller was an unreasonably small capital or for which
the remaining assets of the Seller were unreasonably
small in relation to the business of the Seller or the
transaction; (iv) the Seller did not intend to incur,
and did not believe or reasonably should not have
believed that it would incur, debts beyond its ability
to pay as they become due; and (v) the consideration
paid by the Purchaser to the Seller for the Receivables
was equivalent to the fair market value of such
Receivables.
(xiii) Chief Executive Office. The Seller
maintains its chief executive office in the State of
New Jersey, and there have been no other locations of
the Seller's chief executive office since January 1995.
(xiv) Adverse Orders. There is no
injunction, writ, restraining order or other order of
any nature binding upon Seller that adversely affects
Seller's performance of this Agreement and the
transactions contemplated hereby and by the Pooling and
Servicing Agreement.
(b) The Seller makes the following
representations and warranties as to the Receivables
for the benefit of the Purchaser, the
Certificateholders, the Trustee and the Trust and on
which the Purchaser relies in accepting the Receivables
on the Closing Date and each Funding Date. Such
representations and warranties speak as of the Closing
Date and each Funding Date, but shall survive the sale,
transfer and assignment of the Receivables to the
Purchaser and the subsequent assignment to the Trustee
pursuant to the Pooling and Servicing Agreement. The
Seller acknowledges and expressly agrees that any or
all of the Purchaser, the Trustee or the
Certificateholders may enforce the Seller's repurchase
obligations or substitution obligations in the case of
Additional Receivables pursuant to Section 7.02 hereof
for any breach of any of the following representations
and warranties.
(i) Characteristics of Receivables.
Each Receivable (A) has been originated in the United
States of America by Seller or a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of
Seller's or such Dealer's business, has been fully and
properly executed by the parties thereto and, if
originated by a Dealer, has been purchased by Seller
from such Dealer or has been financed for such Dealer
under an existing agreement with Seller, (B) has
created a valid, subsisting and enforceable first
priority security interest in favor of the Seller or
the Dealer in the Financed Vehicle, which security
interest, if in favor of the Dealer, has been assigned
by the Dealer to Seller, and which in either case has
been duly assigned by Seller to the Purchaser, (C) is
covered by the VSI Insurance Policy and by the Risk
Default Insurance Policy, (D) contains customary and
enforceable provisions such that the rights and
remedies of the holder thereof are adequate for
realization against the collateral of the benefits of
the security and (E) provides for level monthly
payments (provided that the payment in the first or
last month in the life of the Receivable may be
different from the level payment) that fully amortize
the Amount Financed over an original term of no greater
than 60 months and yield interest at the Annual
Percentage Rate.
(ii) Schedule of Receivables. The
information set forth on the Schedule of Receivables is
true, complete and correct in all material respects as
of the opening of business on the applicable Cutoff
Dates and no selection procedures adverse to the
Certificateholders have been utilized in selecting the
Receivables.
(iii) Compliance With Law. Each
Receivable and the sale of each Financed Vehicle (A)
complied at the time it was originated or made and at
the Closing Date or the applicable Funding Date
complies in all material respects with all requirements
of applicable federal, State and local laws and
regulations thereunder, including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Magnuson-Moss Warranty Act,
the Federal Reserve Board's Regulations B and Z, State
adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, and other consumer credit
laws and equal credit opportunity and disclosure laws
and (B) does not contravene any applicable contracts to
which Seller is a party and no party to such contract
is in violation of any applicable law, rule or
regulation which is material to the Receivable or the
sale of the Financed Vehicle.
(iv) Binding Obligation. Each
Receivable represents the genuine, legal, valid and
binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with
its terms.
(v) No Government Obligor. None of the
Receivables is due from the United States of America or
any State or local government or from any agency,
department or instrumentality of the United States of
America or any State or local government.
(vi) Security Interest in Financed
Vehicle. Immediately prior to the sale, assignment and
transfer thereof, each Receivable is secured by a
validly perfected first priority security interest in
the Financed Vehicle in favor of the Seller as secured
party or all necessary and appropriate actions have
been commenced that would result in the valid
perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as the secured
party. The Seller has caused each certificate of title
(or copy of an application for title) or such other
document delivered by the state title registration
agency evidencing the security interest in the Financed
Vehicle, to be delivered to the Custodian pursuant to
Section 3.03(a)(ii) of the Pooling and Servicing
Agreement, together with powers of attorney, duly
executed by Seller in favor of the Trustee, which
powers of attorney are sufficient to change the lien
holder on the certificate of title with respect to a
Financed Vehicle.
(vii) Receivables in Force. No
Receivable has been satisfied, subordinated or
rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in
whole or in part.
(viii) No Waiver. No provision of a
Receivable has been waived, impaired, altered or
modified in any respect except in accordance with the
Servicing Agreement, the substance of which is
reflected in the Schedule of Receivables as it relates
to the information included thereon.
(ix) No Amendments. No Receivable has
been amended such that either the original Scheduled
Payment has been decreased or the number of originally
scheduled due dates has been increased except as
permitted under the terms of the Risk Default Policy.
(x) No Defenses. No right of
rescission, setoff, recoupment, counterclaim or defense
has been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal or
coordinate with, the security interest in the Financed
Vehicle granted by the Obligor pursuant to the
Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more than
thirty (30) days as of the applicable Cutoff Date, no
default, breach, violation or event permitting
acceleration under the terms of any Receivable has
occurred; and no continuing condition that with notice
or the lapse of time would constitute a default,
breach, violation or event permitting acceleration
under the terms of any Receivable has arisen; and the
Seller has not waived any of the foregoing. As of the
date hereof and as of each Funding Date, the Seller has
no knowledge of any facts regarding any particular
Receivable transferred on such date indicating that
such Receivable would not be paid in full.
(xiii) Insurance. Each Receivable is
covered, as of the Closing Date or the related Funding
Date when acquired, and throughout the shorter of the
term of the Trust or the term of the Receivable, under
the VSI Insurance Policy and the Risk Default Insurance
Policy, and each such insurance policy is valid and
remains in full force and effect. The Seller, in
accordance with its customary procedures, has required
that each Obligor obtain, and has determined that each
Obligor has obtained, physical damage insurance
covering the Financed Vehicle as of the date of
execution of the Receivable insuring repair or
replacement of such Financed Vehicle subject to a
deductibility not in excess of $500.
(xiv) Title. It is the intention of the
Seller that the transfer and assignment of the
Receivables from the Seller to the Purchaser herein
contemplated be treated as an absolute sale for
financial accounting purposes, and that the beneficial
interest in and title to the Receivables not be part of
the property of the Seller for any purpose under state
or federal law. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any
Person other than the Purchaser, except the pledge to
and liens for the benefit of certain of Seller's
creditors which will be released prior to conveyance to
the Purchaser hereunder. Immediately prior to the
transfer and assignment herein contemplated, the Seller
had good and marketable title to each Receivable free
and clear of all Liens and rights of others; and,
immediately upon the transfer thereof, the Purchaser
will have good and marketable title to each Receivable,
free and clear of all Liens and rights of others; and
the transfer has been validly perfected under the UCC.
(xv) Lawful Assignment. No Receivable
has been originated in, or is subject to the laws of,
any jurisdiction under which the sale, transfer and
assignment of such Receivable under this Agreement or
pursuant to transfers of the Certificates is or shall
be unlawful, void or voidable.
(xvi
) All Filings Made. All filings
(including, without limitation, UCC filings) necessary
in any jurisdiction to give the Purchaser a first
perfected security interest in the Receivables have
been made.
(xvii) One Original. There is only one
original executed copy of each Receivable.
(xviii) Maturity of Receivables. Each
Receivable had an original maturity of not more than 60
months; the weighted average original term to maturity
of the Initial Receivables was 53.75 months as of the
Cutoff Date while the weighted average remaining term
to maturity as of the Cutoff Date for such Initial
Receivables was 53.03 months; the remaining maturity of
each Receivable was 60 months or less as of the Cutoff
Date; the addition of the Additional Receivables on
each Funding Date will not extend the weighted average
remaining term to maturity of all Receivables sold
hereunder by more than 1.00 month as of the applicable
Cutoff Dates.
(xix) Scheduled Payments. Each Initial
Receivable has a next scheduled payment due date on or
prior to August 7, 1996; no Receivables had a payment
that was more than 30 days overdue as of the Cutoff
Date; and each Receivable has a final scheduled payment
due no later than the Final Scheduled Distribution
Date.
(xx) Monthly Payments. Each Receivable
provides for level monthly payments (provided that the
payment in the first or last month in the life of the
Receivable may be minimally different from such level
payment) which fully amortize the amount financed over
the original term; provided, however, that the Risk
Default Policy provides that loan extensions will be
allowed, subject to no more than one extension during
each 12 months in the Receivable's term.
(xxi) Outstanding Principal Balance;
Annual Percentage Rate. Each Initial Receivable had an
outstanding Principal Balance as of the applicable
Cutoff Date of at least $4,609.50; and no Initial
Receivable has an outstanding Principal Balance in
excess of $39,259.14. As of their Cutoff Date, the
weighted average APR of the Initial Receivables was
20.07% per annum. The addition of the Additional
Receivables on each Funding Date will not decrease the
weighted average APR of all Receivables pledged
hereunder by more than 10 basis points.
(xxii) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxiii) Bankruptcy Proceeding. No
Receivable as of the respective Cutoff Date is noted in
the Seller's records as a dischargeable debt under a
bankruptcy proceeding.
(xxiv) Chattel Paper, Valid and Binding.
Each Receivable constitutes "chattel paper" under the
UCC, and is the legal, valid and binding obligation of
the Obligor thereunder in accordance with the terms
thereof.
(xxv) States of Origination. At the time
of origination, each Receivable was originated in one
of the following states, which are the only states in
which the Receivables were originated: Alabama,
Arizona, California, Colorado, Connecticut, Florida,
Georgia, Illinois, Indiana, Kansas, Kentucky,
Louisiana, Maryland, Mississippi, Missouri, Nevada, New
Jersey, New Mexico, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas,
Virginia, Washington and West Virginia. After the
addition of all Additional Receivables, not more than
25% of the Receivables will have been originated in any
one state.
(xxvi) Age of Financed Vehicles.
Approximately 6.41% of the Initial Receivables relate
to new Financed Vehicles and approximately 93.58%
relate to used Financed Vehicles.
(xxvii) No Future Advances. The full
principal amount of each Receivable has been advanced
to each Obligor or advanced in accordance with the
directions of each such Obligor, and there is no
requirement for future advances thereunder. The
Obligor with respect to the Receivable does not have
any options under such Receivable to borrow from any
person additional funds secured by the Financed
Vehicle. Each Receivable as of the Closing Date and
each related Funding Date is fully secured by the
related Financed Vehicle.
(xxviii) Underwriting Guidelines. Each
Receivable has been originated in accordance with the
Underwriting Guidelines and in accordance with the
underwriting guidelines acceptable to the Risk Default
Insurer. Such guidelines include but are not limited
to the following:
(A) the purchase of the Financed
Vehicle by the Obligor, at the time of funding of the
Receivable, was affordable to the Obligor based upon
Seller's existing Underwriting Guidelines with respect
to discretionary income; and
(B) at the time of funding of the
Receivable, the Financed Vehicle was purchased from,
and the Receivable originated by, a Dealer located in
one of the states specified in paragraph (xxv) above.
(xxix) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each Financed
Vehicle is in good repair and working order.
(xxx) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
(xxxi) Servicing. At the applicable
Cutoff Date, each Receivable was being serviced by the
Servicer.
(xxxii) Eligible Loan. Each Receivable
constitutes an "Instrument" and each Financed Vehicle
constitutes "Eligible Collateral" as defined in and for
purposes of the Risk Default Insurance Policy. Neither
the insured under the Risk Default Insurance Policy nor
any Person acting on behalf of such insured has
concealed or misrepresented any material facts or
circumstances regarding any matter that would serve as
a basis for the Risk Default Insurer to void the Risk
Default Insurance Policy.
(xxxiii) Original Principal Amount.
The original principal amount of each Receivable (A)
originated under the original "Zero Down" and the
"Reduced Income" programs, was not more than (1) in the
case of new Financed Vehicles, the lower of (x) 105.49%
of the manufacturer's suggested retail price plus
rebatable premiums on cancelable items and (y) 120.49%
of the manufacturer's suggested retail price or (2) in
the case of used Financed Vehicles, the lower of (x)
105.49% of the retail value of the Financed Vehicle at
the time of origination of the Receivable as set forth
in the Kelley "Blue Book" for the appropriate region
plus rebatable premiums on cancelable items and (y)
120.49% of such Kelley "Blue Book" retail value; (B)
originated under the "First Time Buyer" program, was
not more than (1) in the case of new Financed Vehicles,
95.49% of the manufacturer's suggested retail price
plus rebatable premiums on cancelable items of up to
15% of the manufacturer's suggested retail price or (2)
in the case of used Financed Vehicles, 95.49% of the
retail value of the Financed Vehicle at the time of
origination of the Receivable as set forth in the
Kelley "Blue Book" for the appropriate region plus
rebatable premiums on cancelable items of up to 15% of
the manufacturer's suggested retail price and (C)
originated under the "Military Program" was not more
than 105.49% of the manufacturer's suggested retail
price or, in the case of used Financed Vehicles,
105.49% of the Kelley "Blue Book" retail value. All of
the Additional Receivables will be originated in
accordance with the applicable Underwriting Guidelines.
(xxxiv) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Seller or its respective properties: (A) asserting
the invalidity of any of the Receivables; (B) seeking
to prevent the enforcement of any of the Receivables;
or (C) seeking any determination or ruling that might
materially and adversely affect the payment on or
enforceability of any Receivable.
(xxxv) Licensing. With respect to each Receivable
originated in the State of Pennsylvania, the Seller and
each prior holder of any such Receivable were each
properly licensed under applicable Pennsylvania laws
and regulations during the respective times Aegis
Finance and each prior holder of any such Receivable
held such Receivable, except where the failure to be so
licensed would not have a material adverse effect on
the ability of the Trust to collect principal or
interest payments on such Receivable or to realize upon
the Financed Vehicle underlying any such Receivable in
accordance with the terms thereof.
(xxxvi) Additional Receivables. Each
Additional Receivable shall have been identified and
approved by Aegis Finance on or prior to the Closing
Date, as evidenced by the Seller's dated notation of
approval on the loan application (or other writing).
(c) The Seller makes the following
additional representations, warranties and covenants
for the benefit of the Purchaser, the
Certificateholders and the Trust on which the Purchaser
relies in accepting the Receivables on the Closing Date
and each Funding Date, which representations,
warranties and covenants shall survive the Closing Date
and each Funding Date.
(i) Location of Servicer Files. The
Servicer Files are kept by the Servicer at the location
listed in Exhibit C hereto, with the exception of (A)
the original titles or other documents evidencing the
security interest of the Seller in the Financed Vehicle
and (B) the original Receivables, which documents shall
be kept at an office of the Custodian.
(ii) Evidence of Security Interest. On
the Closing Date (in the case of the Initial
Receivables) and the applicable Funding Date (in the
case of each Additional Receivable), the Seller shall
deliver or cause to be delivered to the Trustee, as
Custodian, (A) an original certificate of title or (B)
if the applicable state title registration agency does
not deliver certificates of title to lienholders, such
other document delivered to the Seller by the state
title registration agency evidencing the security
interest of the Seller in the Financed Vehicle, or (C)
a guarantee of title or a copy of an application for
title if no certificate of title or other evidence of
the security interest in the Financed Vehicle has yet
been issued, for each Financed Vehicle relating to each
Receivable sold, transferred, assigned and conveyed
hereunder; provided, however, that any original
certificate of title or other document evidencing the
security interest of the Seller in the Financed Vehicle
not so delivered on the Closing Date or the Funding
Date, as the case may be, due to the fact that such
title or other document has not yet been issued by a
state title registration agency and delivered to the
Seller as of such date, shall be delivered by the
Seller to the Trustee within one hundred twenty (120)
days after the Closing Date or Funding Date, as the
case may be, or such later date permitted by the Rating
Agencies in accordance with Section 3.03(a) of the
Pooling and Servicing Agreement; provided, further,
that failure to so deliver any original certificate of
title or other document evidencing the security
interest of the Seller in the Financed Vehicle to the
Trustee shall be deemed to be a breach by the Seller of
its representations and warranties contained in this
Section 3.01, and such occurrence shall constitute a
breach pursuant to Section 7.02 herein.
(iii) Insurance Claims. The Seller
shall provide to the Purchaser, within five (5)
Business Days of receipt or distribution thereof, (A)
copies of all documents received from the Risk Default
Insurer contesting the eligibility of any claim made
under a Risk Default Policy and (B) copies of all
documents regarding the resolution of alleged
ineligible claims.
(iv) Business Purpose. The Seller will
sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the
Receivables for a bona fide business purpose.
(v) Financial Accounting Purposes. The
Seller and the Purchaser, as owner of the Receivables,
each intend to treat the transactions contemplated by
this Agreement as an absolute sale of the Receivables
by the Seller for financial accounting purposes. The
Seller and the Trustee intend to cause to be filed all
returns or reports in a manner consistent with such
treatment.
(vi) Valid Transfer. This Agreement
constitutes a valid transfer by the Seller to the
Purchaser of all of the Seller's right, title and
interest in the Receivables and the other Trust
Property.
(vii) Seller's Obligations. The
Seller has submitted all necessary documentation for
payment of the Receivables to the Obligors and has
fulfilled all of its applicable obligations hereunder
required to be fulfilled as of the Closing Date or
Funding Date, as the case may be.
(viii) Insurance Policies. The Seller
will not cancel, nor permit the cancellation of, the
Risk Default Insurance Policy or VSI Insurance Policy,
in each case as it relates to the Receivables.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the
Purchaser. The obligation of the Purchaser to purchase
the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Seller hereunder
shall be true and correct on the Closing Date and each
Funding Date and the Seller shall have performed all
obligations to be performed by each of them hereunder
on or prior to the Closing Date and each Funding Date.
(b) Files Marked; Files and Records owned by
Trust. The Seller shall, at its own expense, on or
prior to the Closing Date and each Funding Date
indicate in its files that the Receivables have been
sold to the Purchaser pursuant to this Agreement and
the Seller shall deliver to the Purchaser a Schedule of
Receivables certified by the Chairman, the President,
the Vice President or the Treasurer of the Seller to be
true, correct and complete. Further, the Seller hereby
agrees that the computer files and other physical
records of the Receivables maintained by the Seller
will bear an indication reflecting that the Receivables
have been sold to the Purchaser and thereafter sold,
transferred and assigned to the Trustee for deposit in
the Trust.
(c) Documents to be Delivered by the Seller
at the Closing and Each Funding Date.
(i) The Assignment. At the
Closing and each Funding Date, the Seller will execute
and deliver an Assignment substantially in the form of
Exhibit A hereto with respect to the Receivables then
being sold.
(ii) Custodian files. At the Closing
and each Funding Date, the Seller shall deliver to the
Trustee, as custodian, for the benefit of the Purchaser
and its assigns the Custodian Files, which delivery
shall be accompanied by a Certificate of Delivery
substantially in the form of Exhibit D-1 (for Initial
Receivables) or D-2 (for Additional Receivables) as
appropriate.
(iii) Evidence of UCC Filings. The
Seller shall record and file, at its own expense, (A)
on or prior to the Closing Date and each Funding Date,
UCC-3 termination statements in each jurisdiction
required by applicable law, to release any prior
security interests in the Receivables granted by the
Seller, and (B) on or prior to the Closing Date and
each Funding Date, UCC financing statements in each
jurisdiction in which required by applicable law,
executed by the Seller as seller or debtor, and naming
the Purchaser as purchaser or secured party, naming the
Trustee as assignee of such purchaser or secured party,
identifying the Receivables and the other Trust
Property as collateral, meeting the requirements of the
laws of each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and
conveyance of such Receivables to the Purchaser and the
sale, transfer, assignment and conveyance thereof to
the Trustee. The Seller shall deliver file-stamped
copies, or other evidence satisfactory to the Purchaser
and the Trustee of such filing, to the Purchaser and
the Trustee on or prior to the Closing Date and each
Funding Date.
(iv) Evidence of Insurance and Payment.
On the Closing Date and each Funding Date the Seller
shall deliver to the Trustee on the Purchaser's behalf
evidence of payment in full of all premiums due under
the Risk Default Insurance Policy and the VSI Insurance
Policy with respect to the Receivables being sold on
such date.
(v) Other Documents. Such other
documents, including without limitation powers of
attorney with respect to the Receivables, as the
Purchaser may reasonably request.
Section 4.02. Conditions to Obligation of the
Seller. The obligation of the Seller to sell the
Receivables to the Purchaser on the Closing Date and
each Funding Date is subject to the condition that at
the Closing Date the Purchaser will deliver to the
Seller the Initial Receivables Purchase Price for the
Initial Receivables, as provided in Section 2.01(b)(i)
and on each Funding Date will deliver or cause the
Trustee to deliver the Receivables Cash Purchase Price
for the Additional Receivables being sold on each such
date as provided in Section 2.01(b)(ii).
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows;
provided, however, that to the extent that any
provision of this Article V conflicts with any
provision of the Pooling and Servicing Agreement, the
Pooling and Servicing Agreement shall govern:
Section 5.01. Protection of Right, Title and
Interest.
(a) Filings. The Seller shall cause all
financing statements and continuation statements and
any other necessary documents covering the right, title
and interest of the Purchaser in and to the Receivables
and the other Trust Property to be promptly filed, and
at all times to be kept recorded, registered and filed,
all in such manner and in such places as may be
required by law fully to preserve and protect the
right, title and interest of the Purchaser hereunder to
the Receivables and the other Trust Property. The
Seller shall deliver to the Purchaser file-stamped
copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as
soon as available following such recordation,
registration or filing. The Purchaser shall cooperate
fully with the Seller in connection with the
obligations set forth above and will execute any and
all documents reasonably required to fulfill the intent
of this Section 5.01(a).
(b) Name Change. At least fifteen days
before the Seller makes any change in its name,
identity or corporate structure which would make any
financing statement or continuation statement filed in
accordance with paragraph (a) above seriously
misleading within the applicable provisions of the UCC
or any title statute, the Seller shall give the
Purchaser and the Trustee notice of any such change and
no later than five (5) days after the effective date
thereof, shall file such financing statements or
amendments as may be necessary to continue the
perfection of the Purchaser's security interest in the
Trust Property.
Section 5.02. Other Liens or Interests. Except
for the conveyances hereunder and pursuant to the
Pooling and Servicing Agreement, the Seller will not
sell, pledge, assign or transfer the Receivables to any
other person, or grant, create, incur, assume or suffer
to exist any Lien on any interest therein, and the
Seller shall defend the right, title, and interest of
the Purchaser in, to and under such Receivables against
all claims of third parties claiming through or under
the Seller; provided, however, that the Seller's
obligations under this Section 5.02 shall terminate
upon the termination of the Trust pursuant to the
Pooling and Servicing Agreement.
Section 5.03. Chief Executive Office. The Seller
shall give written notice to the Purchaser and the
Trustee at least 30 days prior to relocating its chief
executive office and shall make such filings under the
UCC as shall be necessary to maintain the perfection of
the security interest (as defined in the UCC) in the
Receivables granted in favor of the Purchaser
hereunder.
Section 5.04. Trustee as Named Insured; Pledge of
Proceeds. The Seller shall cause the Trustee to be
identified as the named insured or additional insured
under the Risk Default Insurance Policy and as an
additional insured, as its interests may appear, under
the VSI Insurance Policy as of the Closing Date. The
Seller hereby assigns to the Trustee for the benefit of
the Certificateholders, any interest it may have in any
and all proceeds with respect to a Receivable under the
terms of any of the foregoing insurance policies.
Section 5.05. Costs and Expenses. The Seller
agrees to pay all reasonable costs and disbursements in
connection with the perfection, as against all third
parties, of the sale to the Purchaser of the Seller's
right, title and interest in and to the Receivables.
Section 5.06. No Waiver. The Seller shall not
waive any default, breach, violation or event
permitting acceleration under the terms of any
Receivable.
Section 5.07. Location of Servicer Files. The
Servicer Files, exclusive of the original titles to the
Financed Vehicles and exclusive of the originals of the
Receivables, have been delivered to the location listed
in Exhibit C hereto. The Custodian Files, including
the original titles (or other evidence of the security
interest in the Financed Vehicles) and the originals of
the Receivables shall be delivered to the principal
executive office of the Custodian as specified in the
Pooling and Servicing Agreement.
Section 5.08. Sale of Receivables. The Seller
will take no action inconsistent with the Purchaser's
ownership of the Receivables. If a third party,
including a potential purchaser of the Receivables,
should inquire, the Seller will promptly indicate that
ownership of the Receivables has been transferred to
the Purchaser, and by the Purchaser to the Trust.
Section 5.09. The Seller's Records. This
Agreement and all related documents describe the
transfer of the Receivables from the Seller as an
absolute sale by the Seller to the Purchaser and
evidence the clear intention by the Seller to
effectuate an absolute sale and assignment of such
Receivables. The financial statements and tax returns
of the Seller will disclose that, under generally
accepted accounting principles, or for tax purposes,
respectively, the Seller transferred ownership of the
Receivables.
Section 5.10. Financial Statements. The Seller
will furnish to the Purchaser and each
Certificateholder, (A) within 90 days after the end of
its fiscal year, an unaudited balance sheet as at the
end of such fiscal year and the related statements of
income and cash flow for such fiscal year, setting
forth in comparative form the figures as at the end of
and for the previous fiscal year and (B) within 45 days
after the end of each of the first three quarterly
accounting periods in each fiscal year, an unaudited
balance sheet of the Seller as at the end of such
quarterly period setting forth in each case in
comparative form the figures for the corresponding
periods of the previous fiscal year.
Section 5.11. [RESERVED]
Section 5.12. Compliance with Laws, Etc. The
Seller will comply in all material respects with all
applicable laws, rules, regulations, judgments, decrees
and orders (including those relating to the Receivables
and any other agreements related thereto), where the
failure so to comply, individually or in the aggregate
for all such failures, would have a reasonable
likelihood of having a material adverse effect on the
business or properties of the Seller.
Section 5.13. Preservation of Existence. The
Seller will preserve and maintain its existence,
rights, franchises and privileges in the jurisdiction
of its organization, and qualify and remain qualified
in good standing in each jurisdiction where the failure
to preserve and maintain such existence, rights,
franchises, privileges and qualifications would have a
reasonable likelihood of having a material adverse
effect on the business or properties of the Seller.
Section 5.14. Keeping of Records and Books of
Account. The Seller shall maintain and implement
administrative and operating procedures (including, an
ability to recreate records evidencing its Receivables
in the event of the destruction of the originals
thereof), and shall keep and maintain, or cause to be
kept or maintained, all documents, books, records and
other information which, in the reasonable
determination of Purchaser and the Trustee, are
necessary or advisable in accordance with prudent
industry practice and custom for transactions of this
type for the collection of all Receivables. Seller
shall maintain or cause to be maintained at all times
accurate and complete books, records and accounts
relating to the Receivables, which books and records
shall be marked to indicate the sales of all
Receivables hereunder.
Section 5.15. Separate Existence of Purchaser.
The Seller hereby acknowledges that the Trustee, on
behalf of the Trust, is entering into the transactions
contemplated by the Pooling and Servicing Agreement in
reliance upon Purchaser's identity as a legal entity
separate from the Seller and Seller's other affiliates.
Seller will, and will cause each other affiliate to,
take all reasonable steps to continue their respective
identities as separate legal entities and to make it
apparent to third Persons that each is an entity with
assets and liabilities distinct from those of Purchaser
and that Purchaser is not a division of the Seller or
any other Person.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification. The Seller shall
indemnify the Purchaser, the Trustee and each
Certificateholder for any liability as a result of the
failure of a Receivable to be originated in compliance
with all requirements of law and for any breach of any
of its representations and warranties contained herein.
In addition, the Seller shall indemnify the Trustee,
the Trust, the Backup Servicer, the Custodian and each
Certificateholder to the extent of the Purchaser's
indemnity obligations under Section 8.02 of the Pooling
and Servicing Agreement and under the fourth sentence
of Section 11.07 of the Pooling and Servicing
Agreement, which provisions are incorporated herein by
this reference as if such provisions were fully set
forth herein and as if the "Seller" thereunder were the
Seller hereunder. The Seller hereby acknowledges that
any of the Trustee, the Custodian, the Backup Servicer
or the Certificateholders may enforce the obligation of
the Seller under this Section 6.01. These indemnity
obligations shall be in addition to any obligation that
the Seller may otherwise have.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Obligations of the Seller. The
obligations of the Seller under this Agreement shall
not be affected by reason of any invalidity, illegality
or irregularity of any Receivable.
Section 7.02. Repurchase or Substitution Upon
Breach. (a) The Seller hereby covenants and agrees to
deliver to the Purchaser, the Trustee and each
Certificateholder prompt written notice of (i) the
occurrence of a breach of any of the representations
and warranties of the Seller contained or deemed to be
contained in Section 3.01(b) hereof with respect to any
Receivable or (ii) the failure of the Seller to deliver
original certificates of title or other documents
evidencing the security interest of the Seller in the
Financed Vehicle pursuant to Section 4.01(c)(ii). If
(x) such breach shall not have been cured by the
thirtieth day following discovery thereof or (y) the
non-delivery shall not have been cured by the seventh
Business Day following receipt by a responsible officer
of the Seller of notice by certified mail thereof, the
Seller shall be obligated to repurchase such Receivable
hereunder from the Purchaser at the Purchase Amount on
a date which shall be no later than the fifth Business
Day following the applicable cure period. The Seller
shall be obligated to repurchase the Receivable to
which such breach or non-delivery relates even if the
Purchaser shall not have breached its respective
representations and warranties with respect to such
Receivable under the Pooling and Servicing Agreement
and even if the Purchaser fails to comply with any
repurchase obligation it may have under the Pooling and
Servicing Agreement. The Seller shall remit the
Purchase Amount to the Trustee on behalf of the
Purchaser. For purposes of this Section, the Purchase
Amount of a Receivable which is not consistent with the
warranty pursuant to Section 3.01(b)(i)(E) shall
include such additional amount as shall be necessary to
provide the full amount of principal and interest as
contemplated therein.
(b) The foregoing notwithstanding, the Seller
shall also have the option of substituting, within the
five Business Day period following the applicable cure
period, a Receivable conforming to the requirements
hereof (a "Substitute Receivable") for any breach or
failing Receivable instead of repurchasing such
Receivable, provided any such substitution occurs
within ninety (90) days of the Closing Date. It shall
be a condition of any such substitution that (i) the
outstanding Principal Balance of the Substitute
Receivable as of the date of substitution shall be less
than or equal to the outstanding Principal Balance of
the replaced Receivable as of the date of substitution;
provided that an amount equal to the difference, if
any, between the outstanding Principal Balance of the
replaced Receivable and the outstanding Principal
Balance of the Substitute Receivable shall be paid in
cash to Purchaser for deposit into the Collection
Account pursuant to the Pooling and Servicing
Agreement; (ii) the remaining term to maturity of the
Substitute Receivable shall not be greater than that of
the replaced Receivable; (iii) the Cutoff Date with
respect to the Substitute Receivable shall be deemed to
be the first day of the month of the substitution; (iv)
the Substitute Receivable otherwise satisfies the
conditions of Section 3.01(b) hereof (the Seller shall
be deemed to make all representations and warranties
contained in Section 3.01(b) and (c) hereof with
respect to the Substitute Receivable as of the date of
substitution); and (v) the Seller shall have delivered
to the Purchaser and the Trustee all of the documents
specified in Section 4.01(c) hereof with respect to the
Substitute Receivable on or before the date of
substitution.
(c) Except as provided in subsection (b) above,
the repurchase obligation of the Seller shall
constitute the sole remedy of the Certificateholders,
the Trustee or the Purchaser against the Seller for its
breach hereunder; provided, that the Seller hereby
acknowledges that any of the Purchaser, the
Certificateholders or the Trustee may enforce the
Seller's obligation to repurchase or substitute for
nonconforming Receivables pursuant to this Section
7.02.
Section 7.03. Purchaser's Assignment of
Nonconforming Receivables. With respect to all
Receivables repurchased or substituted for by the
Seller pursuant to this Agreement, the Purchaser shall
assign, without recourse, representation or warranty,
to the Seller all the Purchaser's right, title and
interest in and to such Receivables, and all security
and documents relating thereto.
Section 7.04. Trust. The Seller acknowledges
that the Purchaser will assign the Receivables to the
Trust for the benefit of the Certificateholders,
pursuant to the Pooling and Servicing Agreement, and
that the representations and warranties contained in
this Agreement and the rights of the Purchaser under
Section 7.02 hereof are intended to benefit such Trust
and each Certificateholder. The Seller hereby consents
to such transfers and assignments.
Section 7.05. Amendment. This Agreement may be
amended from time to time by a written amendment duly
executed and delivered by the Seller and the Purchaser;
provided however, that for so long as any Certificates
are outstanding no amendment which in any manner (x)
relates to the Seller's obligations under Section 7.02
or (y) would have a materially adverse effect on the
interests of the Certificateholders, shall be effective
without the prior written consent of each
Certificateholder.
Section 7.06. Waivers. No failure or delay on
the part of the Purchaser in exercising any power,
right or remedy under this Agreement or the Assignments
shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
Section 7.07. Notices. All communications and
notices pursuant hereto to any party shall be in
writing or by telegraph or telex and addressed or
delivered to it at its address (or in case of telex, at
its telex number at such address) shown in the preamble
of this Agreement or at such other address as may be
designated by it by notice to the other party and, if
mailed or sent by telegraph or telex, shall be deemed
given when mailed, communicated to the telegraph office
or transmitted by telex.
Section 7.08. Costs and Expenses. The Seller
will pay all expenses, including reasonable fees and
expenses of counsel, incident to the performance of its
obligations under this Agreement and the Seller agrees
to pay all reasonable out-of-pocket costs and expenses
in connection with the enforcement of any obligation of
the Seller hereunder.
Section 7.09 Acknowledgement Concerning
Insurance Proceeds. The Seller hereby acknowledges and
agrees for the benefit of the Purchaser, the Trustee
and the Certificateholders that any checks representing
Risk Default Insurance Proceeds or proceeds from claims
on any Insurance Policies in respect of the Receivables
that at any time may be made payable to the Seller will
be so made payable for reasons of administrative and
claims processing convenience only and that,
notwithstanding that such checks may be made so
payable, the Seller shall have no right, title or
interest in such proceeds.
Section 7.10. Limited Recourse to Purchaser. The
Seller agrees that the obligations of the Purchaser
hereunder are payable solely from the Purchaser's
interests in the Trust Property and that the Seller may
not look to any other property or assets of the
Purchaser in respect of such obligations.
Section 7.11. Headings and Cross-References. The
various headings in this Agreement are included for
convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement.
References in this Agreement to Section names or
numbers are to such Sections of this Agreement.
Section 7.12. Governing Law. This Agreement and
the Assignment shall be governed by and construed in
accordance with the laws of the State of New York
without regard or reference to principles of conflicts
of laws of such state.
Section 7.13. Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have caused
this Purchase Agreement to be executed by their
respective officers thereunto duly authorized as of the
date and year first above written.
AEGIS AUTO FINANCE, INC.,
as Seller
By
Joseph F. Battiato
President
AEGIS AUTO FUNDING CORP.,
a Delaware corporation, as Purchaser
By
Angelo R. Appierto
President
EXHIBIT A
ASSIGNMENT
For value received in accordance with the Purchase
Agreement dated as of June 1, 1996, (the "Purchase
Agreement"), by and between the undersigned ("the
Seller"), and Aegis Auto Funding Corp., a Delaware
corporation (the "Purchaser"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto
the Purchaser, without recourse, (i) all right, title
and interest of the undersigned in and to the
Receivables identified on the Schedule attached hereto,
all moneys received thereon on and after the Cutoff
Date allocable to principal, and all moneys received
thereon allocable to interest accrued thereon from and
including the Cutoff Date therefor; (ii) the security
interests of the Seller in the Financed Vehicles
granted by the Obligors pursuant to the Receivables;
(iii) the interest of the Seller in any Risk Default
Insurance Proceeds and any proceeds from claims on any
Insurance Policies (including the VSI Insurance Policy)
covering the Receivables, the Financed Vehicles or
Obligors from the Cutoff Date; (iv) the interest of the
Seller in any Dealer Recourse; and (v) the proceeds of
any and all of the foregoing. The foregoing sale does
not constitute and is not intended to result in any
assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other
person in connection with the Receivables, Custodian
Files, Servicer Files, any insurance policies or any
agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part
of the undersigned contained in the Purchase Agreement
and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused
this Assignment to be duly executed as of [CLOSING
DATE] [FUNDING DATE].
AEGIS AUTO FINANCE INC.
By
Name:
Title:
EXHIBIT B
SCHEDULE OF RECEIVABLES
EXHIBIT C
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
EXHIBIT D-1
CERTIFICATE OF DELIVERY
(Initial Receivables)
In connection with the transfer of certain auto
loan receivables to the Aegis Auto Receivables Trust
1996-2 (the "Trust") to be formed pursuant to a Pooling
and Servicing Agreement (the "Agreement") to be entered
into among Aegis Auto Funding Corp., a Delaware
corporation, as seller (the "Seller"), Norwest Bank
Minnesota, National Association, as Backup Servicer
(the "Backup Servicer"), and Norwest Bank Minnesota,
National Association, as Trustee (the "Trustee"), the
undersigned hereby certifies that the documents listed
below are included in the Custodian Files delivered to
William Milbauer, Vice President of the Trustee for
each of the Receivables listed on the Schedule hereto.
Unless otherwise defined herein, capitalized terms have
the meanings set forth in the Agreement or the Purchase
Agreement (as defined in the Agreement).
(i) The original of the Receivable
and any amendments thereto.
(ii) The original certificate of
title or other document evidencing the security
interest in the Financed Vehicles, or a guarantee of
title or a copy of an application for title if no
certificate of title or other document evidencing the
security interest in the Financed Vehicle has yet been
issued.
(iii) A copy of the Risk Default
Insurance Policy and the VSI Insurance Policy and
endorsements to the Risk Default Insurance Policy and
the VSI Insurance Policy confirming insurance (as
reflected on a master list of insured Receivables)
regarding each Receivable.
AEGIS AUTO FINANCE, INC.
Dated: , 1996 By
Name:
Title:
EXHIBIT D-2
CERTIFICATE OF DELIVERY
(Additional Receivables)
In connection with the transfer of certain auto
loan receivables to the Aegis Auto Receivables Trust
1996-2 (the "Trust") to be formed pursuant to a Pooling
and Servicing Agreement (the "Agreement") to be entered
into among Aegis Auto Funding Corp., a Delaware
corporation, as seller (the "Seller"), Norwest Bank
Minnesota, National Association, as Backup Servicer
(the "Backup Servicer"), and Norwest Bank Minnesota,
National Association, as Trustee (the "Trustee"), the
undersigned hereby certifies that the documents listed
below are included in the Custodian Files delivered to
William Milbauer, Vice President of the Trustee for
each of the Additional Receivables listed on the
Schedule hereto. Unless otherwise defined herein,
capitalized terms have the meanings set forth in the
Agreement or the Purchase Agreement (as defined in the
Agreement).
(i) The original of each
Additional Receivable and any amendments thereto.
(ii) The original certificate of
title or other document evidencing the security
interest in the Financed Vehicle, or a guarantee of
title or a copy of an application for title if no
certificate of title or other document evidencing the
security interest in the Financed Vehicle has yet been
issued.
(iii) A copy of an endorsement to
the Risk Default Insurance Policy and the VSI Insurance
Policy confirming insurance (as reflected on a master
list of insured Receivables) regarding each Receivable.
AEGIS AUTO FINANCE,
INC.
Dated: , 1996 By
Name:
Title:
EXHIBIT E
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that Aegis
Auto Finance, Inc., a Delaware corporation ("Aegis
Finance"), having its principal place of business at
525 Washington Boulevard, Jersey City, New Jersey
07310, in connection with the transfer of its interests
in certain automobile receivables and certain security
interests and liens created in the Collateral (as
defined below) has and hereby affirms that it has made,
constituted and appointed, and by these presents does
make, constitute and appoint Norwest Bank Minnesota,
National Association, a national banking association,
as trustee of the Aegis Auto Receivables Trust 1996-2
("Trustee"), having its principal place of business at
Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0069, and its successors or assigns in
such capacity, Aegis Finance's true and lawful
attorney-in-fact for and in Aegis Finance's name, place
and stead to act:
FIRST: 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 Aegis
Finance itself could do (to the fullest extent that the
Aegis Finance 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 Aegis Finance in and
to or affecting any of the motor vehicles described in
Schedule "A" (the "Collateral") annexed hereto and by
this reference made a part hereof, or (ii) any
indebtedness secured by any such lien or security
interest or any right or obligation of the obligor of
such indebtedness or Aegis Finance, 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.
SECOND: 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 Collateral; to
perform, rescind, reform, release or modify any such
agreement or contract or any similar agreement or
contract made by or on behalf of the principal; 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 as 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.
THIRD: 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.
FOURTH: This power of attorney shall not be
affected by the subsequent disability or incompetence
of the principal.
FIFTH: This power of attorney shall be
irrevocable and coupled with an interest.
SIXTH: To induce any third party to act
hereunder, Aegis Finance 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, Aegis Finance has executed
this Power of Attorney as of this [Funding Date].
AEGIS AUTO FINANCE, INC.
By
Name:
Title:
The foregoing instrument was acknowledged before
me this [Funding Date], by
, the of Aegis Auto
Finance, Inc.
WITNESS my hand and official seal.
________________________________
Notary Public
[NOTARIAL SEAL]
My commission expires:
SCHEDULE A
DESCRIPTION OF COLLATERAL
EXHIBIT 10.91.6
PURCHASE AGREEMENT
(Funding Corp. III)
This PURCHASE AGREEMENT is made this 1st day of
June, 1996, by and between Aegis Auto Funding Corp.
III, a Delaware corporation, having its principal place
of business at 525 Washington Boulevard, Jersey City,
New Jersey 07310, as seller (the "Seller") and Aegis
Auto Finance, Inc. a Delaware Corporation, having its
principal place of business at 525 Boulevard, Jersey
City, New Jersey 07310 as purchaser ("Aegis Finance" or
"Purchaser").
WHEREAS, the Seller has acquired certain
Receivables (as defined herein) from Aegis Finance
pursuant to a purchase agreement dated as of June ,
1996 (the "Loan Purchase Agreement"); and
WHEREAS, the Seller and the Purchaser wish to set
forth the terms pursuant to which Receivables owned by
the Seller as of the Closing Date (as defined herein)
are to be repurchased by the Purchaser.
NOW, THEREFORE, in consideration of the foregoing,
other good and valuable consideration, and the mutual
terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms not otherwise defined herein are
used with the meanings set forth in the Loan Purchase
Agreement. As used in this Agreement, the following
terms shall, unless the context otherwise requires,
have the following meanings (such meanings to be
equally applicable to the singular and plural forms of
the terms defined):
"Agreement" means this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" means the document of assignment
substantially in the form attached to this Agreement as
Exhibit A.
"Closing Date" means June 25, 1996.
"Cutoff Date" means June 1, 1996.
"Loan Purchase Agreement" means the purchase
agreement dated as of June , 1996 between Aegis
Finance, as seller, and the Seller, as purchaser, of
the Receivables.
"Lock-Box Account" means the account(s) designated
as such, established and maintained pursuant to Section
5.01 of the Pooling and Servicing Agreement.
"Purchaser" means Aegis Auto Finance, Inc. a
Delaware corporation, its successors and assigns.
"Rating Agency" means each of Duff & Phelps Credit
Rating Co. and Fitch Investors Service, Inc., and any
successors thereto.
"Receivable" means any retail installment sales
contract and security agreement identified on the
Schedule of Receivables.
"Receivables Cash Purchase Price" means with
respect to any Receivable an amount equal to 100% of
the Principal Balance of such Receivable.
"Schedule of Receivables" means the list of
Receivables annexed hereto as Exhibit B.
"Seller" means Aegis Auto Funding Corp. III, a
Delaware corporation, its successors and assigns.
"UCC" means the Uniform Commercial Code, as in
effect from time to time in the relevant jurisdictions.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. Purchase and Sale of Receivables.
On the Closing Date, subject to the terms and
conditions of this Agreement, the Seller agrees to sell
to the Purchaser, and the Purchaser agrees to purchase
from the Seller, the Receivables and the other Trust
Property relating thereto (as defined in Section
2.01(a) below).
(a) Transfer of Receivables and Related
Property. On the Closing Date, the Seller shall sell,
transfer, assign and otherwise convey to the Purchaser,
without recourse, a 100% interest in (i) all right,
title and interest of the Seller in and to the
Receivables being purchased on such dates, all moneys
received thereon on and after the Cutoff Date allocable
to principal, and all moneys received thereon allocable
to interest accrued thereon from and including the
related Cutoff Date, (ii) the security interests in the
Financed Vehicles granted by the Obligors pursuant to
the Receivables; (iii) the interest of the Seller in
any Risk Default Insurance Proceeds and any proceeds
from claims on any Insurance Policies (including the
VSI Insurance Policy) covering the Receivables, the
Financed Vehicles or the Obligors; (iv) the interest of
the Seller in any Dealer Recourse; (v) the proceeds of
any and all of the foregoing. (All of the property
identified in this subsection (a) shall constitute
"Transferred Property".)
(b) Receivables Purchase Price. In
consideration for the Receivables and the other Trust
Property relating thereto, the Purchaser shall, on the
Closing Date, pay to the Seller an amount equal to 100%
of the Receivables Cash Purchase Price for the
Receivables in cash (the "Purchase Price").
Section 2.02. The Closing. The sale and purchase
of the Receivables shall take place at a closing (the
"Closing") at the offices of Kutak Rock, 767 Third
Avenue, 19th Floor, New York, New York 10017 on the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of
the Seller.
(a) The Seller hereby represents and
warrants to the Purchaser and its respective successors
and assigns as of the date hereof:
(i) Organization, Etc. The Seller is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(ii) Due Qualification. The Seller is
in good standing and duly qualified to do business in
the States of Delaware and New Jersey and all
jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require
such qualifications.
(iii) Power and Authority. The Seller
has the power and authority to execute and deliver this
Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the
property to be sold and assigned to the Purchaser and
such sale and assignment is valid and binding against
the Seller, and the Seller has duly authorized such
sale and assignment to the Purchaser by all necessary
action; the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by
all necessary action, and this Agreement is the legal,
valid and binding obligation of the Seller enforceable
in accordance with its terms. The Seller has duly
executed and delivered this Agreement and any other
agreements and documents necessary to effectuate the
transactions contemplated hereby.
(iv) No Violation. The consummation of
the transactions contemplated hereby and the
fulfillment of the terms hereof, neither conflict with,
result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation
or bylaws of the Seller, or any indenture, agreement or
other instrument to which the Seller is a party or by
which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement
or other instrument (other than this Agreement); nor
violate any law or, to the best of Seller's knowledge,
any order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or
its properties.
(v) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Seller or its properties: (A) asserting the
invalidity of this Agreement; (B) seeking to prevent
the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Approvals. No approval,
authorization or other action by, or filing with, any
governmental authority of the United States of America
or any of the States is required or necessary to
consummate the transactions contemplated hereby, except
such as have been duly obtained or made by the Closing
Date. Seller complies in all material respects with
all applicable laws, rules and orders with respect to
itself, its business and properties and the
Receivables; and Seller maintains all applicable
permits, licenses and certifications.
(vii) Taxes. The Seller has filed all
federal, state, county, local and foreign income,
franchise and other tax returns required to be filed by
it through the date hereof, and has paid all taxes
reflected as due thereon. There is no pending dispute
with any taxing authority that, if determined adversely
to the Seller, would result in the assertion by any
taxing authority of any material tax deficiency, and
the Seller has no knowledge of a proposed liability for
any tax to be imposed upon the Seller's properties or
assets for which there is not an adequate reserve
reflected in the Seller's current financial statements.
(viii) Investment Company. The Seller is
not, and is not controlled by, an "investment company"
registered or required to be registered under the
Investment Company Act of 1940, as amended.
(ix) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan and all such plans have
been fully funded as of the date of this Agreement.
(x) Trade Names. "Aegis Auto Funding
Corp. III" is the only trade name under which the
Seller is currently operating its business; for the six
(6) years (or such shorter period of time during which
the Seller was in existence) preceding the Closing
Date, the Seller has operated its business under no
other trade name.
(xi) Ability to Perform. There is no
material impairment in the ability of the Seller to
perform its obligations under this Agreement.
(xii) Valid Business Reasons; No
Fraudulent Transfers. The Seller has valid business
reasons for transferring the Receivables rather than
obtaining a secured loan with the Receivables as
collateral. At the time of each transfer: (i) the
Seller transferred the Receivables to the Purchaser
without any intent to hinder, delay, or defraud any
current or future creditor of the Seller; (ii) the
Seller was not insolvent and did not become insolvent
as a result of the transfer; (iii) the Seller was not
engaged and was not about to engage in any business or
transaction for which any property remaining with the
Seller was an unreasonably small capital or for which
the remaining assets of the Seller were unreasonably
small in relation to the business of the Seller or the
transaction; (iv) the Seller did not intend to incur,
and did not believe or reasonably should not have
believed that it would incur, debts beyond its ability
to pay as they become due; and (v) the consideration
paid by the Purchaser to the Seller for the Receivables
was equivalent to the fair market value of such
Receivables.
(xiii) Chief Executive Office. The Seller
maintains its chief executive office in the State of
New Jersey, and there have been no other locations of
the Seller's chief executive office.
(xiv) Adverse Orders. There is no
injunction, writ, restraining order or other order of
any nature binding upon Seller that adversely affects
Seller's performance of this Agreement.
(b) The Seller makes the following
representations and warranties as to the Receivables
and on which the Purchaser relies in accepting the
Receivables on the Closing Date.
(i) Title. It is the intention of the
Seller that the transfer and assignment of the
Receivables from the Seller to the Purchaser herein
contemplated be treated as an absolute sale for
financial accounting purposes, and that the beneficial
interest in and title to the Receivables not be part of
the property of the Seller for any purpose under state
or federal law. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any
Person other than the Purchaser, except the pledge to
and liens for the benefit of certain of Seller's
creditors which will be released prior to conveyance to
the Purchaser hereunder. Immediately prior to the
transfer and assignment herein contemplated, the Seller
had good and marketable title to each Receivable free
and clear of all Liens and rights of others; and,
immediately upon the transfer thereof, the Purchaser
will have good and marketable title to each Receivable,
free and clear of all Liens and rights of others; and
the transfer has been validly perfected under the UCC.
(ii) Evidence of Security Interest. On
the Closing Date, the Seller shall deliver or cause to
be delivered to or upon the order of the Purchaser (A)
an original certificate of title or (B) if the
applicable state title registration agency does not
deliver certificates of title to lienholders, such
other document delivered to the Seller by the state
title registration agency evidencing the security
interest of the Seller in the Financed Vehicle, or (C)
a guarantee of title or a copy of an application for
title if no certificate of title or other evidence of
the security interest in the Financed Vehicle has yet
been issued, for each Financed Vehicle relating to each
Receivable sold, transferred, assigned and conveyed
hereunder; provided, however, that any original
certificate of title or other document evidencing the
security interest of the Seller in the Financed Vehicle
not so delivered on the Closing Date due to the fact
that such title or other document has not yet been
issued by a state title registration agency and
delivered to the Seller as of such date, shall be
delivered by the Seller to the Purchaser within one
hundred twenty (120) days after the Closing Date
(iv) Business Purpose. The Seller will
sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the
Receivables for a bona fide business purpose.
(v) Financial Accounting Purposes. The
Seller and the Purchaser, as owner of the Receivables,
each intend to treat the transactions contemplated by
this Agreement as an absolute sale of the Receivables
by the Seller for financial accounting purposes.
(vi) Valid Transfer. This Agreement
constitutes a valid transfer by the Seller to the
Purchaser of all of the Seller's right, title and
interest in the Receivables and the other Transferred
Property.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the
Purchaser. The obligation of the Purchaser to purchase
the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Seller hereunder
shall be true and correct on the Closing Date and the
Seller shall have performed all obligations to be
performed by each of them hereunder on or prior to the
Closing Date.
(b) Files Marked; Files and Records owned by
Purchaser. The Seller shall, at its own expense, on or
prior to the Closing Date indicate in its files that
the Receivables have been sold to the Purchaser
pursuant to this Agreement and the Seller shall deliver
to the Purchaser a Schedule of Receivables certified by
the Chairman, the President, the Vice President or the
Treasurer of the Seller to be true, correct and
complete. Further, the Seller hereby agrees that the
computer files and other physical records of the
Receivables maintained by the Seller will bear an
indication reflecting that the Receivables have been
sold to the Purchaser.
(c) Documents to be Delivered by the Seller
at the Closing.
(i) The Assignment. On the
Closing Date, the Seller will execute and deliver an
Assignment substantially in the form of Exhibit A
hereto with respect to the Receivables then being sold.
(ii) Custodian files. On the Closing
Date, the Seller shall deliver to or upon the order of
the Purchaser the documents described in Section
3.01(b)(iii).
(iii) Evidence of UCC Filings. The
Seller shall record and file, at its own expense, (A)
on or prior to the Closing Date, UCC-3 termination
statements in each jurisdiction required by applicable
law, to release any prior security interests in the
Receivables granted by the Seller, and (B) on or prior
to the Closing Date, UCC financing statements in each
jurisdiction in which required by applicable law,
executed by the Seller as seller or debtor, and naming
the Purchaser as purchaser or secured party,
identifying the Receivables and the other Transferred
Property as collateral, meeting the requirements of the
laws of each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and
conveyance of such Receivables to the Purchaser and the
sale, transfer, assignment and conveyance thereof to
the Trustee. The Seller shall deliver file-stamped
copies, or other evidence satisfactory to the Purchaser
to the Purchaser on or prior to the Closing Date.
(iv) Other Documents. Such other
documents, including without limitation powers of
attorney with respect to the Receivables, as the
Purchaser may reasonably request.
Section 4.02. Conditions to Obligation of the
Seller. The obligation of the Seller to sell the
Receivables to the Purchaser on the Closing Date is
subject to the condition that at the Closing Date the
Purchaser will deliver to the Seller the Purchase Price
for the Receivables, as provided in Section 2.01(b).
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows;
provided, however, that to the extent that any
provision of this Article V conflicts with any
provision of the Pooling and Servicing Agreement, the
Pooling and Servicing Agreement shall govern:
Section 5.01. Protection of Right, Title and
Interest.
(a) Filings. The Seller shall cause all
financing statements and continuation statements and
any other necessary documents covering the right, title
and interest of the Purchaser in and to the Receivables
and the other Transferred Property to be promptly
filed, and at all times to be kept recorded, registered
and filed, all in such manner and in such places as may
be required by law fully to preserve and protect the
right, title and interest of the Purchaser hereunder to
the Receivables and the other Transferred Property.
The Seller shall deliver to the Purchaser file-stamped
copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as
soon as available following such recordation,
registration or filing. The Purchaser shall cooperate
fully with the Seller in connection with the
obligations set forth above and will execute any and
all documents reasonably required to fulfill the intent
of this Section 5.01(a).
(b) Name Change. At least fifteen days
before the Seller makes any change in its name,
identity or corporate structure which would make any
financing statement or continuation statement filed in
accordance with paragraph (a) above seriously
misleading within the applicable provisions of the UCC
or any title statute, the Seller shall give the
Purchaser notice of any such change and no later than
five (5) days after the effective date thereof, shall
file such financing statements or amendments as may be
necessary to continue the perfection of the Purchaser's
security interest in the Trust Property.
Section 5.02. Other Liens or Interests. Except
for the conveyances hereunder, the Seller will not
sell, pledge, assign or transfer the Receivables to any
other person, or grant, create, incur, assume or suffer
to exist any Lien on any interest therein, and the
Seller shall defend the right, title, and interest of
the Purchaser in, to and under such Receivables against
all claims of third parties claiming through or under
the Seller.
Section 5.03. Chief Executive Office. The Seller
shall give written notice to the Purchaser at least 30
days prior to relocating its chief executive office and
shall make such filings under the UCC as shall be
necessary to maintain the perfection of the security
interest (as defined in the UCC) in the Receivables
granted in favor of the Purchaser hereunder.
Section 5.04. Costs and Expenses. The Seller
agrees to pay all reasonable costs and disbursements in
connection with the perfection, as against all third
parties, of the sale to the Purchaser of the Seller's
right, title and interest in and to the Receivables.
Section 5.05. No Waiver. The Seller shall not
waive any default, breach, violation or event
permitting acceleration under the terms of any
Receivable.
Section 5.06. Sale of Receivables. The Seller
will take no action inconsistent with the Purchaser's
ownership of the Receivables. If a third party,
including a potential purchaser of the Receivables,
should inquire, the Seller will promptly indicate that
ownership of the Receivables has been transferred to
the Purchaser.
Section 5.07. The Seller's Records. This
Agreement and all related documents describe the
transfer of the Receivables from the Seller as an
absolute sale by the Seller to the Purchaser and
evidence the clear intention by the Seller to
effectuate an absolute sale and assignment of such
Receivables. The financial statements and tax returns
of the Seller will disclose that, under generally
accepted accounting principles, or for tax purposes,
respectively, the Seller transferred ownership of the
Receivables.
ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 6.01. Amendment. This Agreement may be
amended from time to time by a written amendment duly
executed and delivered by the Seller, the Purchaser.
Section 6.02. Waivers. No failure or delay on
the part of the Purchaser in exercising any power,
right or remedy under this Agreement or the Assignments
shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
Section 6.03. Notices. All communications and
notices pursuant hereto to any party shall be in
writing or by telegraph or telex and addressed or
delivered to it at its address (or in case of telex, at
its telex number at such address) shown in the preamble
of this Agreement or at such other address as may be
designated by it by notice to the other party and, if
mailed or sent by telegraph or telex, shall be deemed
given when mailed, communicated to the telegraph office
or transmitted by telex.
Section 6.04. Costs and Expenses. The Seller
will pay all expenses, including reasonable fees and
expenses of counsel, incident to the performance of its
obligations under this Agreement and the Seller agrees
to pay all reasonable out-of-pocket costs and expenses
in connection with the enforcement of any obligation of
the Seller hereunder.
Section 6.05. Headings and Cross-References. The
various headings in this Agreement are included for
convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement.
References in this Agreement to Section names or
numbers are to such Sections of this Agreement.
Section 6.06. Governing Law. This Agreement and
the Assignment shall be governed by and construed in
accordance with the laws of the State of New York
without regard or reference to principles of conflicts
of laws of such state.
Section 6.07. Counterparts. This Agreement may be
executed in two or more counterparts, each of which
shall be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have caused
this Purchase Agreement to be executed by their
respective officers thereunto duly authorized as of the
date and year first above written.
AEGIS AUTO FUNDING CORP.
III, as Seller
By
Joseph F. Battiato
President
AEGIS AUTO FINANCE, INC.,
a Delaware corporation, as Purchaser
By
Angelo R. Appierto
President
EXHIBIT A
ASSIGNMENT
For value received in accordance with the Purchase
Agreement dated as of June 1, 1996, (the "Purchase
Agreement"), by and among the undersigned ("the
Seller") and Aegis Auto Finance, Inc., a Delaware
corporation (the "Purchaser"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto
the Purchaser, without recourse, (i) all right, title
and interest of the undersigned in and to the
Receivables identified on the Schedule attached hereto,
all moneys received thereon on and after the Cutoff
Date allocable to principal, and all moneys received
thereon allocable to interest accrued thereon from and
including the Cutoff Date therefor; (ii) the security
interests of the Seller in the Financed Vehicles
granted by the Obligors pursuant to the Receivables;
(iii) the interest of the Seller in any Risk Default
Insurance Proceeds and any proceeds from claims on any
Insurance Policies (including the VSI Insurance Policy)
covering the Receivables, the Financed Vehicles or
Obligors from the Cutoff Date; (iv) the proceeds of any
and all of the foregoing.
This Assignment is made pursuant to and upon the
agreements on the part of the undersigned contained in
the Purchase Agreement and is to be governed by the
Purchase Agreement.
Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused
this Assignment to be duly executed as of June 25,
1996.
AEGIS AUTO FUNDING CORP.
III
By
Name:
Title:
EXHIBIT B
SCHEDULE OF RECEIVABLES
EXHIBIT 10.91.7
_________________________________________
SERVICING AGREEMENT
Dated as of June 1, 1996
Among
AEGIS AUTO FINANCE, INC.,
Servicer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
in its capacity as Backup Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
in its capacity as Trustee
Relating to
Aegis Auto Receivables Trust 1996-2
_________________________________________
TABLE OF CONTENTS
Page
I.
RECITALS . . . . . . . . . . . . . . . . . . . . . . .
. . . . 1
II.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .
. . . . 1
III.
SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP. . . . . . . . .
. . . . 2
B. GENERAL CONDITIONS. . . . . . . . . . . . . . . .
. . . . 3
IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER. . . . . . . . . . . . . . . .
. . . . 6
B. MAINTENANCE OF RECORDS. . . . . . . . . . . . . .
. . . . 7
C. MAINTENANCE OF SECURITY INTEREST . . . . . .
. . . . 8
D. COLLECTION OF RECEIVABLE PAYMENTS. . . . . .
. . . . 8
E. PHYSICAL DAMAGE INSURANCE . . . . . . . . . . . .
. . . . 8
F. COVENANTS OF THE TRUSTEE AND SERVICER; NOTICES. .
. . . . 9
G. PURCHASE OF RECEIVABLES UPON BREACH . . . . . . .
. . . 10
H. SERVICING FEE . . . . . . . . . . . . . . . . . .
. . . 10
I. MONTHLY SERVICING CERTIFICATES. . . . . . . . . .
. . . 11
J. ANNUAL STATEMENT AS TO COMPLIANCE; ACCOUNTANTS'
SERVICING REPORT. . . . . . . . . . . . . . . . .
. . . . 11
K. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES . . . . . . . . . . . . . .
. . . 12
L. RESPONSIBILITY FOR INSURANCE POLICIES; PROCESSING
OF
CLAIMS UNDER INSURANCE POLICIES; DAILY RECORDS AND
REPORTS . . . . . . . . . . . . . . . . . . . . .
. . . 12
M. ENFORCEMENT . . . . . . . . . . . . . . . . . . .
. . . . 13
N. PAYMENT IN FULL ON RECEIVABLE . . . . . . . . . .
. . . 14
O. SUBSTITUTION OF COLLATERAL. . . . . . . . . . . .
. . . 15
P. FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE.
. . . 15
V.
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF SERVICER. . . .
. . . 16
B. REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . 17
C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . .
. . . . 18
VI.
EVENTS OF SERVICING DEFAULT. . . . . . . . . . . . . .
. . . 18
VII.
REMEDIES . . . . . . . . . . . . . . . . . . . . . . .
. . . 20
VIII.
RESPONSIBILITY AND AUTHORITY OF SERVICER . . . . . . .
. . . 20
IX.
COLLECTIONS; LOCK-BOX ACCOUNT AND RELATED BANK
ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . .
. . . 20
X.
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS . . . . . . . . .
. . . 21
B. REPORTS AND CREDIT AGENCIES. . . . . . . . .
. . . 22
XI.
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . .
. . . 22
XII.
TERM AND TERMINATION . . . . . . . . . . . . . . . . .
. . . 23
XIII.
ARBITRATION AND ATTORNEYS' FEES. . . . . . . . . . . .
. . . 23
XIV.
WAIVERS. . . . . . . . . . . . . . . . . . . . . . . .
. . . 24
XV.
NOTICES. . . . . . . . . . . . . . . . . . . . . . . .
. . . 24
XVI.
ASSIGNABILITY. . . . . . . . . . . . . . . . . . . . .
. . . 25
XVII.
FURTHER ASSURANCES . . . . . . . . . . . . . . . . . .
. . . 25
XVIII.
COUNTERPARTS . . . . . . . . . . . . . . . . . . . . .
. . . 25
XIX.
ENTIRE AGREEMENT; AMENDMENTS . . . . . . . . . . . . .
. . . 26
XX.
INSPECTION . . . . . . . . . . . . . . . . . . . . . .
. . . 26
XXI.
LIMIT ON TRUSTEE'S PAYMENT OBLIGATIONS . . . . . . . .
. . . 26
XXII.
SERVICER NOT TO RESIGN . . . . . . . . . . . . . . . .
. . . 26
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, OR RESIGNATION OF SERVICER . . . . . .
. . . 27
XXIV.
GOVERNING LAW. . . . . . . . . . . . . . . . . . . . .
. . . 28
SCHEDULE A - SUMMARY OF SERVICES
A-1
I. SERVICES
A-1
A. CONTRACT SERVICES - COLLECTIONS
A-1
B. CONTRACT SERVICES - CUSTOMER SERVICE
A-2
II. A. SPECIAL COLLECTION ACTIVITIES
A-4
1. Repossession and Sale
A-4
2. Credit Enhancement Claims Filing
A-4
3. Deficiency
A-5
4. Bankruptcies
A-6
5. Disability
A-6
6. Allotments
A-7
7. Skips
A-7
III. FEE SCHEDULE
A-7
A. GENERAL SERVICING
A-7
B. EXPENSE REIMBURSEMENT
A-8
C. DEFICIENCY SERVICING
A-8
SCHEDULE B - SERVICER MONTHLY ACTIVITY REPORT
B-1
SCHEDULE C - REQUEST FOR RELEASE OF DOCUMENTS
C-1
SCHEDULE D - RELEASE AND ASSIGNMENT
D-1
SERVICING AGREEMENT
This Servicing Agreement is entered into as of the
first day of June, 1996
(this "Servicing Agreement") among AEGIS AUTO FINANCE,
INC., a
Delaware corporation, as servicer (hereinafter referred
to as "Servicer" and, in
its separate capacity as the originator of the
Receivables described herein, the
"Originator"), NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
a national banking association, in its capacity as
backup servicer (hereinafter
referred to as "Backup Servicer") and NORWEST BANK
MINNESOTA,
NATIONAL ASSOCIATION, in its capacity as trustee
(hereinafter referred to
as "Trustee") in both cases under that certain Pooling
and Servicing Agreement
dated as of June 1, 1996 by and among Aegis Auto
Funding Corp., a Delaware
corporation, as Seller, Norwest Bank Minnesota,
National Association in its
capacity as Backup Servicer, and Norwest Bank
Minnesota, National Association
in its capacity as Trustee (such agreement, the
"Pooling and Servicing
Agreement").
I. RECITALS
WHEREAS, Servicer provides portfolio
management services,
including collection assistance, loan administration
and financial reporting to
financial institutions in connection with motor vehicle
retail installment sales
contracts, and
WHEREAS, Norwest Bank Minnesota, National
Association, in its
capacity as Trustee, is or will become the holder of
those motor vehicle retail
installment sales contracts referred to in Exhibit D to
the Pooling and Servicing
Agreement (as such Exhibit is amended or deemed amended
pursuant to the
Pooling and Servicing Agreement on any Funding Date,
hereinafter referred to
as "Receivables") which were originated by the
Originator, subsequently sold to
Aegis Auto Funding Corp. pursuant to a Purchase
Agreement dated as of June 1,
1996 (the "Purchase Agreement") between the Originator
and Aegis Auto Funding
Corp., and subsequently deposited by Aegis Auto Funding
Corp. with the Trustee
pursuant to the terms of the Pooling and Servicing
Agreement, and
WHEREAS, pursuant to the Pooling and
Servicing Agreement, the
Backup Servicer and the Trustee, on behalf of the Trust
created under the Pooling
and Servicing Agreement, desire to avail themselves of
the services provided by
Servicer, then
Let this be the terms and conditions of this
Servicing Agreement:
II. DEFINITIONS
Capitalized terms not otherwise defined herein
shall have the meanings
ascribed thereto in the Pooling and Servicing
Agreement. Whenever used
in this Servicing Agreement, the following terms
shall have the following
meanings.
Credit Agency. A recognized agency to which
Servicer reports
delinquencies, repossessions and redemptions.
Independent Public Accountants. Means any of (a)
Arthur Andersen &
Co., (b) Deloitte & Touche, LLP, (c) Coopers &
Lybrand, (d) Ernst &
Young LLP, (e) KPMG Peat Marwick and (f) Price
Waterhouse, or such
other nationally recognized firm of independent
accountants as shall be
acceptable to the parties hereto and the Rating
Agencies; provided, that
such firm is independent with respect to the
Servicer within the meaning
of the Securities Act of 1933, as amended.
Loan Documents. Has the meaning set forth in
paragraph III.B.9.
III. SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP
The Servicer hereby agrees to service and
administer the
Receivables for the Trust and render those services
described in this Servicing
Agreement and in the attached Schedule A. In performing
its duties under this
Servicing Agreement, the Servicer shall have full power
and authority to do or
cause to be done any and all things in connection with
such servicing and
administration which it may deem necessary or
desirable, within the terms of the
Pooling and Servicing Agreement and this Servicing
Agreement. Servicer
acknowledges receiving a copy of the Pooling and
Servicing Agreement. Servicer
shall report in writing solely to such officers or
other employees of Backup
Servicer and Trustee as Backup Servicer and Trustee may
designate from time to
time in writing.
Nothing in this Servicing Agreement shall be
construed as
establishing an agency, an employment or a partnership
or joint venture between
Backup Servicer, Trustee, any third party contract
purchaser and Servicer.
Furthermore, Backup Servicer shall not use or
permit the use of
Servicer's name or the names of any of Servicer's
affiliates in any advertising or
promotional materials prepared by Backup Servicer or on
Backup Servicer's
behalf without the prior written consent of Servicer.
Compensation payable to the Servicer under
this Servicing
Agreement shall be payable by the Trustee solely from
the Trust Property in
accordance with the terms of the Pooling and Servicing
Agreement, and except
as provided in the Pooling and Servicing Agreement,
none of the Trust, the
Trustee or the Certificateholders will have any
liability to the Servicer with
respect thereto. In accordance with Section 4.04 of
the Pooling and Servicing
Agreement, such compensation shall be paid to the
Servicer and/or one or more
subservicers as the Servicer may from time to time
direct in writing to the
Trustee.
In the event the Backup Servicer shall for
any reason no longer be
acting as such (including by reason of resignation or
an Event of Master Servicing
Default as specified in Section 4.02 or 10.01,
respectively, of the Pooling and
Servicing Agreement), the successor Backup Servicer
shall thereupon assume all
of the rights and obligations of the outgoing Backup
Servicer under this Servicing
Agreement; provided, however that the successor Backup
Servicer shall not be
liable for any acts, omissions or obligations of the
outgoing Backup Servicer prior
to such succession or for any breach by the outgoing
Backup Servicer of any of
its representations and warranties contained in this
Servicing Agreement or in any
related document or agreement and the outgoing Backup
Servicer shall not be
relieved of any liability or obligation hereunder to
the extent such obligation or
liability arose prior to the assumption by the
successor Backup Servicer of the
obligations of the Backup Servicer hereunder.
B. GENERAL CONDITIONS
1. Servicer agrees to provide the services
hereunder during the
term hereof.
Servicer, Backup Servicer and Trustee each represent
and warrant that it is duly
authorized to enter into the arrangements contemplated
hereby with respect to the
Receivables.
2. Servicer may make such communications
with third parties
and the ultimate Obligor as are necessary and proper to
perform the services
provided for hereunder.
3. The Servicer hereby agrees to act for
the Trust as custodian
of all the documents or instruments delivered to the
Servicer with respect to each
Receivable, and any and all other documents that
Servicer receives, creates,
generates, or otherwise possesses which relate to a
Receivable, an Obligor or a
Financed Vehicle, provided, however, that the Custodian
Files, including the
original of the motor vehicle installment sale contract
and the original certificate
of title or such documents evidencing the security
interest of the Trust in the
Financed Vehicle or efforts made by the Trustee or its
assignor to perfect such
security interest shall be held by the Custodian, which
shall be the Trustee. The
Servicer shall maintain in its files copies, computer
records or originals of each
of the following documents with respect to each
Receivable and the Financed
Vehicle related thereto:
(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the
retail installment sale
contract and any amendments thereto; provided,
however, that the
Servicer shall deliver any original amendments
to the retail
installment sale contract to the Trustee
immediately following
execution thereof;
(iii) a copy (but not the original) of a
certificate of title with
a lien notation or an application therefor;
(iv) copies of the Risk Default Insurance
Policy and the VSI
Insurance Policy; and
(v) such other documents as the Servicer
may reasonably
request in order to accomplish its duties
under this Servicing
Agreement.
Items (i), (ii), (iii), (iv) and (v) shall be
referred to collectively as the
"Servicer Files."
4. Upon receipt of the documentation
indicated in Paragraph
III.B.3, Servicer shall establish a physical file for
each Receivable, which shall
contain the Servicer Files, as well as copies of all
reports developed by or
information received by Servicer with respect to the
Receivable, including
insurance certificates and reports of collection
activities.
In its capacity as custodian of such files,
Servicer shall hold the
Servicer Files and all related files and documents on
behalf of the Trust, and
maintain such accurate and complete accounts, records,
and computer systems
pertaining to the Receivables using reasonable care and
that degree of skill and
attention with respect to the Receivables and the files
and documents as is
customary with other companies in the industry that
service motor vehicle
installment sales contracts for themselves as well as
for others.
The Servicer shall keep satisfactory books and
records pertaining
to each Receivable and shall make periodic reports in
accordance with this
Servicing Agreement. Such records may not be destroyed
or otherwise disposed
of except as provided herein and as allowed by
applicable laws, regulations or
decrees; provided, that, such records may be released
to the Seller if the related
Receivable is paid in full, the related Financed
Vehicle is repossessed, the
Receivable has been either repurchased or replaced
pursuant to the Purchase
Agreement with a Substitute Receivable (as defined
therein) or the Receivable
otherwise is no longer being serviced by the Servicer
pursuant to this Servicing
Agreement. All documents, whether developed or
originated by the Servicer or
not, reasonably required to document or to properly
administer any Receivable
shall remain at all times the property of the Trust.
The Servicer shall not acquire
any property rights with respect to such records, and
shall not have the right to
possession of them except as subject to the conditions
stated in this Servicing
Agreement. The Servicer shall bear the entire cost of
restoration in the event any
Loan Documents (as defined below) shall become damaged,
lost or destroyed.
5. Servicer shall make available to the
Backup Servicer, the
Trustee and the Certificateholders, or their duly
authorized representatives,
attorneys, or auditors, the Servicer Files and any
related accounts, records, and
computer systems maintained by the Servicer, at such
times as the Backup
Servicer, the Trustee or any Certificateholder shall
reasonably instruct, but
without disrupting Servicer's operations. Without
otherwise limiting the scope
of the examination, the Backup Servicer, the Trustee or
any Certificateholder
may, upon at least two (2) Business Days' prior notice
and at its own expense,
using generally accepted audit procedures, verify the
status of each Receivable
and review the Loan Documents and records relating
thereto for conformity to
monthly reports prepared pursuant to paragraph IV.I.
and compliance with the
standards represented to exist as to each Receivable in
this Servicing Agreement.
Nothing herein shall require the Backup Servicer, the
Trustee or any
Certificateholder to conduct any inspection pursuant to
this Section.
6. Within five (5) Business Days following
the last day of each
Collection Period, the Servicer shall forward to the
Backup Servicer, via
electronic transfer in a format mutually acceptable to
the Servicer and the Backup
Servicer, its computerized records reflecting (i) all
collections received during
such Collection Period with respect to the Receivables
and (ii) information as of
the last day of each Collection Period regarding
repossessed Financed Vehicles
and sales of repossessed Financed Vehicles. Within
three (3) Business Days of
receipt of the foregoing information, the Backup
Servicer shall input such
information onto its computer system such that such
information is immediately
available to the Backup Servicer. The Backup Servicer
shall then review such
information within five (5) Business Days of its input
onto the Backup Servicer's
computer system and compare it to the information
reported by the Servicer in
its Monthly Servicing Certificate delivered to the
Backup Servicer, Trustee and
each Rating Agency in the form of Schedule B (the
"Monthly Servicing
Certificate"). Any discrepancies shall then be
immediately reported to the
Servicer, who shall have ten (10) Business Days from
receipt of notice of
discrepancies to correct all such discrepancies. Any
discrepancies which cannot
be corrected in such time period shall be reported by
the Servicer to the Trustee,
each Rating Agency and the Certificateholders.
7. On Monday of each week beginning July 1,
1996, the
Servicer shall forward to the Backup Servicer, via
electronic transfer in form
mutually acceptable to the Servicer and the Backup
Servicer, its computerized
records reflecting (i) all collections received during
the preceding calendar week
with respect to the Receivables and (ii) a listing of
all Receivables with the date
through which payments have been made by the Obligor.
8. Other than the duties specifically set
forth in this Servicing
Agreement, the Backup Servicer shall have no obligation
hereunder. The Backup
Servicer shall have no liability for any action taken
or omitted by the Servicer.
The duties and obligations of the Backup Servicer shall
be determined solely by
the express provisions of this Servicing Agreement and
the Pooling and Servicing
Agreement and no implied covenants or obligations shall
be read into this
Agreement against the Backup Servicer.
9. Unless otherwise specified herein, the
Servicer shall
maintain physical possession, or computerized records,
of good and legible copies
of the Servicer Files received by it; such other
instruments or documents that
modify or supplement the terms or conditions of any of
the foregoing; and, all
other instruments, documents, correspondence and
memoranda generated by or
coming into the possession of the Servicer (including,
but not limited to,
insurance premium receipts, ledger sheets, payment
records, insurance claim
files, correspondence and current and historical
computerized data files) that are
required to document or service any Receivable.
Collectively, all of the
documents described in this paragraph III.B.9 with
respect to a Receivable are
referred to as "Loan Documents." The Servicer shall
hold all Loan Documents
in trust for the benefit of the Certificateholders and
the Trust; all Loan
Documents shall remain the property of the Trust. The
Servicer shall respond to
all third party inquiries concerning ownership of the
Receivables by indicating
that the Receivables have been assigned to the Trust.
10. The Servicer may employ or otherwise
utilize subservicers
and enter into subservicing agreements in carrying out
its duties and obligations
under this Servicing Agreement. An affiliate of the
Servicer, Aegis Consumer
Finance, Inc. ("ACF"), has heretofore entered into a
Master Servicing Agreement
dated as of April 6, 1996 (the "Subservicing
Agreement") with American Lenders
Facilities, Inc. ("ALFI") pursuant to which ALFI has
agreed to perform certain
subservicing duties as therein described. The Servicer
shall cause ALFI to act
as subservicer of the Receivables with respect to the
receipt of collections on the
Receivables, custody and application of payments from
Obligors and for the
maintenance of individual records for each Receivable
in accordance with the
terms of such Subservicing Agreement or the terms of
any new subservicing
agreement subsequently entered into with ALFI for the
performance of such
duties. The Subservicing Agreement and any such other
subservicing agreement
hereafter entered into by the Servicer and/or ACF shall
provide that the Backup
Servicer, at the direction of the Majority
Certificateholders and each Rating
Agency, shall have the right to direct the Servicer to
terminate such subservicing
arrangement if (a) the Majority Certificateholders and
each Rating Agency
reasonably determine that the subservicer is failing to
perform its obligations
thereunder and (b) such failure materially reduces the
amount recovered on
defaulted loans. The Servicer agrees to promptly
terminate a subcontracting
arrangement if directed to do so by the Backup
Servicer. In addition, should
ALFI's employment as subservicer of the Receivables as
described above be
terminated at any time, ALFI shall be entitled to a fee
of $5.00 per Receivable.
IV. ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER
The Servicer shall service and administer the
Receivables in
compliance with all applicable Federal and State laws
and regulations governing
the Servicer and the Receivables, and shall act
prudently and in accordance with
customary and usual servicing procedures for other
institutional servicers and
applicable law, and, to the extent not inconsistent
with the foregoing, shall
exercise that degree of skill and care it uses for
servicing assets held for its own
account.
The Servicer's duties shall include collection
and posting of all
payments, responding to inquiries by Obligors or by
Federal, State, or local
governmental authorities on the Receivables,
investigating delinquencies, sending
payment books or monthly statements to Obligors,
responding to inquiries by
Obligors with respect to the Receivables and furnishing
Monthly Servicing
Certificates to the Trustee with respect to
distributions and any additional
information reasonably requested by the Trustee to
enable the Trustee to make
distributions and produce reports required under the
Pooling and Servicing
Agreement.
Without limiting the generality of the
foregoing, the Servicer shall
be authorized and empowered to execute and deliver any
and all instruments of
satisfaction or cancellation, and all other comparable
instruments, with respect to
the Receivables or the Financed Vehicles.
If the Servicer shall commence a legal
proceeding to enforce a
Receivable, the Trustee, acting on behalf of the Trust,
shall thereupon be deemed
to have automatically assigned such Receivable to the
Servicer which assignment
shall be solely for the purpose of collection. The
Trustee, acting on behalf of the
Trust, shall furnish the Servicer with any powers of
attorney and other documents
necessary or appropriate to enable the Servicer to
carry out its servicing and
administrative duties hereunder.
B. MAINTENANCE OF RECORDS
The Servicer shall maintain accounts and
records as to each
Receivable accurately and in sufficient detail to
permit: (i) the reader thereof to
know at any time the status of such Receivable,
including payments and
recoveries made and payments owing (and the nature of
each); (ii) reconciliation
between payments or recoveries on (or with respect to)
each Receivable and the
amounts from time to time owing in respect of such
Receivable.
To the extent that such records are maintained
on a computer
system, the Servicer shall also maintain such computer
system so that the
Servicer's master computer records (including archives)
that shall refer to each
Receivable indicate that such Receivable is owned by
the Trust.
Such accounts and records shall be kept only
for as long as Servicer
is servicing the Receivables for the Trust.
At all times during the term hereof, for so
long as Aegis Auto
Finance, Inc. is acting as Servicer, the Servicer shall
keep available at its office
located at 525 Washington Boulevard, Jersey City, New
Jersey 07310 (or such
other location as to which it shall give written notice
to the Trustee and each
Certificateholder), for inspection by
Certificateholders a copy of the list of
Receivables, and shall mail a copy of such list to a
Certificateholder upon written
request.
C. MAINTENANCE OF SECURITY INTEREST
The Servicer shall cooperate with the Seller
in taking such steps as
are necessary to maintain perfection of the security
interest created by each
Receivable in the respective Financed Vehicle. The
Trustee, on behalf of the
Trust, hereby authorizes and the Servicer hereby agrees
to take such steps (and
at the Trust's expense) as are necessary to re-perfect
such security interest on
behalf of the Trust in the event such re-perfection is
necessary or advisable for
any reason. The title to each Financed Vehicle
relating to a Receivable included
in the Trust initially shall bear a notation of a lien
in the name of the Originator.
D. COLLECTION OF RECEIVABLE PAYMENTS
The Servicer shall use its best efforts to
collect all payments called
for under the terms and provisions of the Receivables
as and when the same shall
become due.
In addition, the Servicer, on behalf of the
Trust, shall use its best
efforts to repossess or otherwise recover the Financed
Vehicle securing any
Receivable as to which the Servicer shall have
determined, after consultation with
Seller if Servicer so requests, that eventual payment
in full is unlikely and such
repossession or recovery is permitted under the terms
of the Receivable and any
applicable law. The Servicer shall be entitled to
recover all reasonable expenses
incurred by it in the course of repossessing and
liquidating the Financed Vehicle
into cash proceeds.
Subject to the provisions of paragraph IV.A.
above, the Servicer
shall follow such customary and usual practices and
procedures as it shall deem
necessary or advisable in its servicing of automotive
receivables, which may
include selling the Financed Vehicle at public or
private sale in accordance with
applicable state law. The foregoing shall be subject
to the provision that, in any
case in which the Financed Vehicle shall have suffered
damage, the Servicer shall
not expend funds in connection with the repair or the
repossession of such
Financed Vehicle unless the Servicer shall determine in
its discretion that such
repair and/or repossession will increase the
Liquidation Proceeds or Insurance
Proceeds by an amount greater than the amount of such
expenses.
E. PHYSICAL DAMAGE INSURANCE
1. The Servicer, in accordance with its
customary servicing
procedures, shall use its best efforts to ensure that
each Obligor maintains
physical damage insurance covering the Financed Vehicle
throughout the lesser
of the term of the Trust or the Receivable.
2. In the event of any physical loss or
damage to a Financed
Vehicle from any cause, whether through accidental
means or otherwise, the
Servicer shall have no obligation to cause the affected
Financed Vehicle to be
restored or repaired. However, the Servicer shall
comply with the provisions of
any insurance policy or policies directly or indirectly
related to any physical loss
or damage to a Financed Vehicle.
3. The Servicer will administer the filings
of claims under the
VSI Insurance Policy and the Risk Default Insurance
Policy as provided under
paragraph IV.L. hereof.
F. COVENANTS OF THE TRUSTEE AND SERVICER; NOTICES
1. The Servicer shall (1) prior to a
default with respect to a
Receivable, not release any Financed Vehicle securing
any Receivable from the
security interest granted by such Receivable in whole
or in part except in the
event of payment in full by the Obligor thereunder or
upon transfer of the
Financed Vehicle to a successor purchaser following
repossession by the Servicer,
(2) not impair the rights of the Certificateholders or
the Trustee in the
Receivables, (3) not increase the number of Scheduled
Payments due under a
Receivable except as permitted in paragraph A.3.e of
Schedule A, (4) prior to the
termination of the Trust, not sell, pledge, assign, or
transfer to any other Person,
or grant, create, incur, assume, or suffer to exist any
Lien on any Receivable
transferred to the Trust or any interest therein,
except for assignment to the Risk
Default Insurer upon its request after the Risk Default
Insurer has paid a claim
in full, (5) immediately notify the Trustee of the
existence of any material Lien
on any Receivable, (6) defend the right, title, and
interest of the Trust in, to and
under the Receivables transferred to the Trust, against
all claims of third parties
claiming through or under the Servicer, (7) deposit
into the Lock-Box Account
all payments received by the Servicer with respect to
the Receivables in
accordance with this Servicing Agreement, (8) comply in
all respects with the
terms and conditions of this Servicing Agreement
relating to the obligation of
Seller to repurchase Receivables from the Trust
pursuant to the Pooling and
Servicing Agreement, or the obligation of the
Originator to repurchase
Receivables from the Seller pursuant to the Purchase
Agreement, (9) promptly
notify the Trustee of the occurrence of any Event of
Servicing Default and any
breach by the Backup Servicer of any of its covenants
or representations and
warranties contained herein, (10) with the cooperation
of the Seller, make any
filings, reports, notices, or applications and seek any
consents or authorizations
from any and all government agencies, tribunals, or
authorities in accordance
with the UCC and any state vehicle license or
registration authority on behalf of
the Trust as may be necessary or advisable or
reasonably requested by the Trustee
to create, maintain, and protect a first-priority
security interest of the Trustee in,
to, and on the Financed Vehicles and a first-priority
security interest of the Trust
in, to, and on the Receivables transferred to it and
(11) take all reasonable action
necessary to maximize the returns pursuant to the Risk
Default Insurance Policy
and the VSI Insurance Policy.
2. The Trustee shall promptly notify the
Servicer of any actual
knowledge on its part (i) of any abandonment of any
Financed Vehicle by an
Obligor, (ii) of any material change in the condition
or value of any Financed
Vehicle, (iii) of any waste committed with respect to
any Financed Vehicle; (iv)
of any failure on the part of an Obligor to keep the
Financed Vehicle insured or
in good condition and repair, (v) of any permanent or
substantial injury to a
Financed Vehicle caused by unreasonable use, abuse or
neglect or (vi) of any
other matter which would adversely affect or result in
diminution of the value of
any Financed Vehicle.
3. The Servicer will promptly advise the
Trustee of any
inquiry received from an Obligor which contemplates the
consent of the Trustee.
Inquiries contemplating consent of the Trustee shall
include, but not be limited
to, inquiries about settlement of any unasserted claim
or defense, or compromise
of any amount an Obligor owes or any other matters the
Servicer should
reasonably understand are not within the Servicer's
authority under this Servicing
Agreement.
4. Notwithstanding any other provision of
this Servicing
Agreement, the Trustee and the Backup Servicer (except
if and when the Backup
Servicer is acting as the Servicer hereunder) shall be
under no duty or obligation
to investigate or inquire into the status of any
Obligor or Financed Vehicle and
"actual knowledge" referred to in subparagraphs 2 and 3
of this paragraph IV.F.
shall be limited to actual knowledge of a Trustee
Officer.
G. PURCHASE OF RECEIVABLES UPON BREACH
The Servicer shall inform each Rating Agency,
the Trustee, the
Backup Servicer and each Certificateholder promptly, in
writing, upon the
discovery of any breach pursuant to Section 3.01 of the
Pooling and Servicing
Agreement. The Servicer has no duty to investigate or
determine the existence
of any breach except as specified herein. Unless the
breach shall have been cured
within the time periods specified in Section 3.02 of
the Pooling and Servicing
Agreement, the Trustee shall use all reasonable efforts
to cause the Seller to
repurchase or replace the affected Receivables in
accordance with Section 3.02
of the Pooling and Servicing Agreement, and enforce the
repurchase or
substitution obligations of the Originator under
Section 7.02 of the Purchase
Agreement. In consideration of the purchase of such
Receivable, the Trustee
shall use all reasonable efforts to cause the Seller or
the Originator to remit the
Purchase Amount or the substitute Receivable to the
Trustee. The Trustee's
rights with respect to this paragraph IV.G. shall not
subject the Trustee to any
duty or obligation upon a breach by the Seller or the
Originator of its
representations, warranties or covenants as set forth
above, other than to take
action as described herein and as may be directed by
the Certificateholders in
accordance with and subject to the condition and
limitation set forth in the
Pooling and Servicing Agreement.
H. SERVICING FEE
The Servicer shall be paid a monthly servicing
fee ("Servicing Fee")
with respect to each Receivable serviced under this
Servicing Agreement during
a Collection Period in accordance with paragraph III of
Schedule A hereto. The
Servicing Fee shall be due on the succeeding
Distribution Date. In the event this
Servicing Agreement is terminated on a date other than
the last day of a
Collection Period, then the Servicing Fee for such
period shall be determined on
a pro rata basis. In the event that the Backup
Servicer assumes the
responsibilities and obligations of the Servicer under
this Servicing Agreement,
the Backup Servicer shall be entitled to receive its
normal and customary fee for
such services with respect to comparable quality
Receivables, not to exceed those
set forth in the Fee Schedule set forth in paragraph
III of Schedule A attached
hereto.
I. MONTHLY SERVICING CERTIFICATES
The Servicer shall deliver to the Backup
Servicer, the Trustee
(which shall deliver a copy to each Certificateholder),
each Rating Agency and
the Seller, on each Determination Date, a Monthly
Servicing Certificate
substantially in the form of Schedule B hereto
containing all information
necessary for the Trustee to calculate and make the
distributions pursuant to
Section 5.06 of the Pooling and Servicing Agreement.
J. ANNUAL STATEMENT AS TO COMPLIANCE;
ACCOUNTANTS' SERVICING REPORT
1. The Servicer shall deliver to the Backup
Servicer, the
Trustee, each Certificateholder, and each Rating
Agency, on or before March 31
of each year, an Officer's Certificate, dated effective
as of December 31 of the
preceding year beginning with the calendar year ended
December 31, 1996,
stating that (i) a review of the activities of the
Servicer during the preceding
12-month period and of its performance under this
Servicing Agreement has been
made under such officer's supervision and (ii) based on
such review, the Servicer
has materially fulfilled all its obligations under this
Servicing Agreement
throughout such year, or, if there has been a default
in the fulfillment of any such
obligation, specifying each such default known to such
officer and the nature and
status thereof. A copy of such certificate may be
obtained by any
Certificateholder by a request in writing to the
Servicer from any such
Certificateholder.
2. Unless required more frequently by each
Rating Agency,
on each yearly anniversary of the Closing Date, the
Servicer at the expense of the
Trust, shall cause a firm of Independent Public
Accountants to furnish a statement
to the Trustee, each Rating Agency and each
Certificateholder to the effect that
such firm has examined certain documents and records
relating to the servicing
of the Receivables and the reporting requirements with
respect thereto as set forth
in this Agreement, and that, on the basis of such
examination, such servicing and
reporting requirements have been conducted in
compliance with this Agreement,
except for (i) such exceptions as such firm shall
believe to be immaterial and (ii)
such other exceptions as shall be set forth in such
statement.
3. If (a) the Reserve Requirement shall be
increased because
either (i) the "60 Day + Delinquency Rate" (as defined
in the definition of
Reserve Requirement) exceeds 4.75% of the Pool Balance
(as set forth in clause
(2) of the definition of Reserve Requirement) or (ii)
the cumulative Net Losses
with respect to the Receivables exceed the applicable
percentages of the Original
Pool Balance (as set forth in clause (4) of the
definition of Reserve Requirement)
or (b) an Event of Servicing Default shall have
occurred and be continuing, then,
at the request of the Majority Certificateholders not
more frequently than once
every six months, the Trustee, within 30 days of such
request, shall cause a firm
of Independent Public Accountants to review certain
documents and records of the
Servicer relating to the servicing of the Receivables
and the reporting
requirements with respect thereto as set forth in this
Agreement, and furnish a
statement to the effect specified in paragraph IV.J.2
above.
4. The Servicer shall deliver to each
Rating Agency, the
Trustee, the Backup Servicer and each
Certificateholder, promptly after having
obtained actual knowledge thereof, but in no event
later than five (5) Business
Days thereafter, written notice in an Officer's
Certificate of the Servicer of any
event which with the giving of notice or lapse of time,
or both, would become an
Event of Master Servicing Default under Section 10.01
of the Pooling and
Servicing Agreement or an Event of Servicing Default
under paragraph VI hereof.
K. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES
The Trustee and the Servicer shall, upon
written request, each
provide to or cause the Certificateholders to have
access to its Custodian Files or
Servicer Files, as the case may be, relating to the
Receivables. Access shall be
afforded without charge, but only upon reasonable
request and during the normal
business hours at the offices of the Trustee or the
Servicer, as the case may be.
Nothing in this Section shall affect the obligation of
the Trustee or the Servicer
to observe any applicable law prohibiting disclosure of
information regarding the
Obligors, and the failure of the Trustee or the
Servicer to provide access to
information as a result of such obligation shall not
constitute a breach of this
paragraph IV.K.
L. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING
OF CLAIMS UNDER INSURANCE POLICIES; DAILY
RECORDS AND REPORTS
1. The Servicer, on behalf of the Trust,
will administer and
enforce all rights and responsibilities of the holder
of the Receivables provided
for in the Insurance Policies relating to the
Receivables. The Servicer, on behalf
of the Trust, shall verify that an endorsement listing
each Receivable has been
issued with respect to each Receivable under the Risk
Default Insurance Policy,
that each Receivable is listed by the VSI Insurer as
covered under the VSI
Insurance Policy, and that the Risk Default Insurance
Policy names the Trustee
as the insured and the VSI Insurance Policy names the
Trustee as an additional
insured.
2. The Servicer will administer the filings
of claims under the
VSI Insurance Policy and Risk Default Insurance Policy
by filing the appropriate
notices related to claims as well as claims with the
respective carriers or their
authorized agents, all in accordance with the terms of
the VSI Insurance Policy
and Risk Default Insurance Policy. The Servicer shall
file all such claims
regardless of whether a Receivable may have become a
Purchased Receivable or
a Liquidated Receivable. The Servicer shall file such
claims on a timely basis
after obtaining knowledge of the events giving rise to
such claims, subject to the
servicing standard set forth in paragraph IV.A. hereof.
The Servicer will utilize
such notices, claim forms and claim procedures as are
required by the respective
insurance carriers. The Servicer shall notify the
Trustee and Seller of (i) any
such claims actually denied under the applicable Risk
Default Insurance Policy
or VSI Insurance Policy and (ii) those claims which
would have been denied
under such Risk Default Insurance Policy or VSI
Insurance Policy had the
Receivable(s) not been repurchased from the Trust, and
in both cases, the reasons
for such denials. The Servicer shall cause all
Insurance Proceeds to be deposited
to the Lock-Box Account within two (2) Business Days of
receipt thereof.
The Servicer shall not be required to pay any
premiums or, other
than administering the filing of claims and performing
reporting requirements
specified in the VSI Insurance Policy and Risk Default
Insurance Policy in
connection with filing such claims, perform any
obligations of any named insured
under the foregoing VSI Insurance Policy and Risk
Default Insurance Policy, and
shall not be required to institute any litigation or
proceeding or otherwise enforce
the obligations of any insurer thereunder.
Notwithstanding any provision to the
contrary in the Pooling and Servicing Agreement, the
Servicer shall not be
responsible to any Certificateholder or the Seller (i)
for any act or omission to act
done in order to comply with the requirements or
satisfy any provisions of the
VSI Insurance Policy or Risk Default Insurance Policy
or (ii) for any act or
omission to act, absent willful misconduct or gross
negligence, done or omitted
in compliance with this Servicing Agreement. In the
case of any inconsistency
between this Servicing Agreement and the terms of any
VSI Insurance Policy or
Risk Default Insurance Policy, the Servicer shall
comply with the latter.
3. Notwithstanding any other provision in
this Servicing
Agreement to the contrary, the Trustee and the Backup
Servicer, unless it is
acting as Servicer, shall not be under any obligation
to administer the Receivables
as required by the VSI Insurance Policy and/or Risk
Default Insurance Policy.
M. ENFORCEMENT
1. The Servicer will, consistent with the
standard of care required
by paragraph IV.A. hereof, act with respect to the
Receivables and the Insurance
Policies in such manner as will, in the reasonable
judgment of the Servicer,
maximize the amount to be received by the Trust with
respect thereto.
2. The Servicer may and shall, at the
direction of the Trustee, sue
to enforce or collect upon the Receivables and the
Insurance Policies (including
unpaid claims), with the prior approval of the Trustee,
in the name of and as
agent for the Trust. If the Servicer commences a legal
proceeding to enforce a
Receivable or an Insurance Policy, the act of
commencement shall be deemed to
be an automatic assignment of the Receivable and the
related rights under the
Insurance Policies by the Trustee to the Servicer for
purposes of collection only.
If, however, in any enforcement suit or legal
proceeding it is held that the
Servicer may not enforce a Receivable or an Insurance
Policy on the grounds that
it is not a real party in interest or a holder entitled
to enforce the Receivable or
the Insurance Policy, the Trustee, on behalf of the
Trust, shall, at the Servicer's
request, take such steps as the Servicer deems
reasonably necessary to enforce the
Receivable or the Insurance Policy, including bringing
suit in its name or the
names of the Certificateholders. The Servicer shall be
entitled to reimbursement
for expenses incurred in connection with enforcement or
collection activities with
respect to the Receivables pursuant to this paragraph
IV.M.2.
3. The Servicer shall exercise any rights of
recourse against third
persons that exist with respect to any Receivable in
accordance with the Servicer's
usual practice and the standard of care required by
paragraph IV.A hereof. In
exercising such recourse rights, the Servicer is hereby
authorized on the Trustee's
behalf to reassign the Receivable and to deliver the
certificate of title to the
Financed Vehicle to the person against whom recourse
exists at the price set forth
in the document creating the recourse.
4. The Servicer may not permit any
rescission or cancellation
of any Receivable nor may it take any action with
respect to any Receivable or
Insurance Policy which would materially impair the
rights or interest of the Trust
or the Certificateholders therein or in the proceeds
thereof.
5. Except as otherwise provided in paragraph
I.A.3 of Schedule A
hereto, neither the Backup Servicer nor the Servicer
may increase or reduce the
amount of any Scheduled Payments, change any
Receivable, APR, extend the
maturity date of or rework any Receivable, modify or
change any Obligor with
respect to any Receivable or modify any other material
term of a Receivable.
N. PAYMENT IN FULL ON RECEIVABLE
Upon payment in full on any Receivable, the
Servicer shall notify
the Custodian pursuant to Section 3.03 of the Pooling
and Servicing Agreement,
prior to the next succeeding Distribution Date, by a
certificate of a Servicing
Officer substantially in the form of Schedule C hereto
and request for release of
the related Custodian File (which certificate shall
include a statement to the effect
that all amounts received in connection with such
payment in full which are
required to be deposited in the Collection Account or
the Lock-Box Account
pursuant to Section 5.02 of the Pooling and Servicing
Agreement have been so
deposited). Upon receipt of such request, the
Custodian shall promptly release
or cause to be released such Receivable and the related
Custodian File by
executing a release and assignment in the form of
Schedule D hereto, which shall
be without recourse to the Trustee. The Custodian
shall be authorized, upon
receipt of a request for release from the Servicer in
the form of Schedule C
hereto, to execute an instrument in satisfaction of
such Receivable and to take
such other actions and execute such other documents as
the Servicer deems
necessary to discharge the Obligor thereunder and
eliminate the security interest
in the Financed Vehicle related thereto. Upon request
of a Servicing Officer, the
Trustee shall perform such other acts as reasonably
requested by the Servicer and
otherwise cooperate with the Servicer in enforcement of
the Certificateholders'
rights and remedies with respect to the Receivables.
O. SUBSTITUTION OF COLLATERAL
In the event a Financed Vehicle sustains
significant physical damage
such that the insurance company carrying the physical
damage insurance covering
such Financed Vehicle determines that the Financed
Vehicle is not repairable, the
Servicer, the Trustee or the Seller may permit the
Obligor to pledge a vehicle of
equal or greater market value than that of the Financed
Vehicle immediately prior
to sustaining the physical damage, provided, that any
such substitution shall not
be made if to do so would void coverage of the related
Receivable under the VSI
Insurance Policy or the Risk Default Insurance Policy,
and provided further that
the value of Financed Vehicles (prior to sustaining the
physical damage) for
which substitutions may be made shall not exceed in the
aggregate ten percent
(10%) of the Original Pool Balance. The second vehicle
shall be substituted as
the collateral ("Substituted Financed Vehicle") for the
Receivable and the terms
of the Receivable shall not be amended or modified
except to reflect the
substituted collateral. The Servicer shall, within 90
days of the purchase of the
Substituted Financed Vehicle, cause the certificate of
title for the Substituted
Financed Vehicle to be delivered to the Trustee as
Custodian pursuant to Section
3.03 of the Pooling and Servicing Agreement; provided,
however, that if the
certificate of title is not delivered to the Trustee
within such 90-day period, the
Seller shall be deemed to be in breach of its
representations and warranties in the
Pooling and Servicing Agreement. In accordance with
Section 3.03 of the
Pooling and Servicing Agreement, the Servicer shall
make appropriate notation
in its records of the substitution of the collateral.
P. FIDELITY BOND AND ERRORS AND OMISSIONS
INSURANCE
The Servicer shall maintain, at its own
expense, (i) an errors and
omissions insurance policy and (ii) a blanket fidelity
bond (but only to the extent
ALFI or any other subservicer appointed by the Servicer
to perform the collection
activities and related services specified to be
performed by ALFI in paragraph III.
B. 10 hereof does not maintain a blanket fidelity bond
with respect to such
servicing functions to be performed hereunder; provided
if the Servicer does
participate in performing any such functions, it shall
maintain a blanket fidelity
bond), in each case with broad coverage with
responsible companies on all
officers, employees or other persons acting on behalf
of the Servicer in any
capacity with regard to the Receivables to handle
funds, money, documents and
papers relating to the Receivables. Any such fidelity
bond and errors and
omissions insurance shall protect and insure the
Servicer against losses, including
forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of
such persons and shall be maintained in a form and
amount that would meet the
requirements of prudent institutional motor vehicle
installment sales contract
servicers. No provision of this paragraph IV.P.
requiring such fidelity bond and
errors and omissions insurance shall diminish or
relieve the Servicer from its
duties and obligations as set forth in this Agreement.
The Servicer shall be
deemed to have complied with this provision if one of
its respective Affiliates has
such fidelity bond and errors and omissions policy
coverage and, by the terms of
such fidelity bond and errors and omission policy, the
coverage afforded
thereunder extends to the Servicer. The Servicer shall
cause each and every
subservicer for it to maintain a policy of insurance
covering errors and omissions
and a fidelity bond which would meet such requirements.
Upon request of the
Trustee, the Servicer shall cause to be delivered to
the Trustee a certification
evidencing coverage under such fidelity bond and
insurance policy. Any such
fidelity bond or insurance policy shall not be
cancelled or modified in a materially
adverse manner without ten days' prior written notice
to the Trustee, each Rating
Agency and the Certificateholders.
V. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF SERVICER
1. Servicer is a corporation duly
organized, validly existing
and in good standing under the laws of the jurisdiction
of its incorporation, and
has full corporate power and authority to enter into
this Agreement and to carry
out the provisions of this Agreement.
2. This Agreement and all other instruments
or documents to
be delivered hereunder or pursuant hereto, and the
transactions contemplated
hereby, have been duly authorized by all necessary
corporate proceedings of
Servicer; this Agreement has been duly and validly
executed and delivered by
Servicer; and, assuming due authorization, execution
and delivery by Backup
Servicer and the Trustee, this Agreement is a valid and
legally binding agreement
of Servicer enforceable in accordance with its terms.
3. The execution and delivery of this
Agreement by Servicer
hereunder and the compliance by Servicer with all
provisions of this Agreement
do not conflict with or violate any applicable law,
regulation or order and do not
conflict with or result in a breach of or default under
any of the terms or
provisions of any contract or agreement to which
Servicer is subject or by which
it or its property is bound, nor does such execution,
delivery or compliance
violate the certificate of incorporation or bylaws of
Servicer.
4. During the term of this Agreement,
Servicer will maintain
fire and theft, general liability, business
interruption and employee fidelity
insurance coverage in such amounts and upon such terms
as shall be customary
given the nature and extent of Servicer's business
activities.
5. The Servicer is not in violation of, and
the execution,
delivery and performance of this Servicing Agreement by
the Servicer will not
constitute a violation with respect to, any order or
decree of any court or any
order, regulation or demand of any federal, state,
municipal or governmental
agency, which violation might have consequences that
would materially and
adversely affect the condition (financial or other) or
operations of the Servicer or
its properties or might have consequences that would
affect the performance of
its duties hereunder;
6. No proceeding of any kind, including but
not limited to
litigation, arbitration, judicial or administrative, is
contemplated by or, to the
Servicer's knowledge, pending or threatened against the
Servicer which would
under any circumstance have a material adverse effect
on the execution, delivery,
performance or enforceability of this Servicing
Agreement;
7. To the best of Servicer's knowledge all
electronic data
provided by the Servicer will be at the time of
delivery thereof true and correct;
8. No information, certificate of an
officer, statement furnished
in writing or report delivered to the Backup Servicer
by the Servicer will, to the
knowledge of the Servicer, contain any untrue statement
of a material fact or omit
a material fact necessary to make the information,
certificate, statement or report
not misleading; and
9. The Servicer is an Eligible Servicer as
of the Closing Date
and shall remain an Eligible Servicer throughout the
term of this Servicing
Agreement.
B. REPRESENTATIONS AND WARRANTIES OF BACKUP
SERVICER
1. Backup Servicer is a national banking
association in good
standing under the laws of the United States, and has
full corporate power and
authority to enter into this Agreement and to carry out
the provisions of this
Agreement. Backup Servicer has all licenses, approvals
and consents to conduct
its business as contemplated by this Agreement, except
to the extent that the
failure to possess such licenses, approvals and
consents does not have a material
adverse effect on the ability of the Backup Servicer to
perform its duties under
this Agreement.
2. This Agreement and all other instruments
or documents to
be delivered hereunder or pursuant hereto, and the
transactions contemplated
hereby, have been duly authorized by all necessary
corporate proceedings of
Backup Servicer; this Agreement has been duly and
validly executed and
delivered by Backup Servicer; and, assuming due
authorization, execution and
delivery by Servicer, this Agreement is a valid and
legally binding agreement of
Backup Servicer enforceable in accordance with its
terms.
3. The execution and delivery of this
Agreement by Backup
Servicer hereunder and the compliance by Backup
Servicer with all provisions of
this Agreement do not conflict with or violate any
applicable law, regulation or
order and do not conflict with or result in a breach of
or default under any of the
terms or provisions of any contract or agreement to
which Backup Servicer is
subject or by which it or its property is bound, nor
does such execution, delivery
or compliance violate the Certificate of Incorporation
or Bylaws of Backup
Servicer.
C. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties set forth in
this paragraph V are made
as of the date of this Servicing Agreement and shall
survive the date of this
Servicing Agreement. Upon discovery by the Backup
Servicer, the Trustee or the
Servicer of a breach of any of the foregoing
representations and warranties, the
party discovering such breach shall give prompt written
notice to the other
parties.
VI. EVENTS OF SERVICING DEFAULT
If any one of the following events ("Events of
Servicing Default") shall
occur and be continuing:
(i) Any failure by the Servicer to deliver
to the Trustee any
proceeds or payment required to be so
delivered under the
terms of this Servicing Agreement that
shall continue
unremedied for a period of two (2)
Business Days after the
earlier to occur of (a) the date on
which written notice of
such failure shall have been received by
the Servicer or (b)
a Servicing Officer shall have actual
knowledge thereof or,
with reasonable diligence, should have
had knowledge
thereof; or
(ii) Failure on the part of the Servicer to
observe or to perform
in any material respect any other
covenants or agreements
set forth in this Servicing Agreement
which continue
unremedied for a period of thirty (30)
days after the earlier
to occur of (a) the date on which
written notice of such
failure shall have been received by the
Servicer or (b) a
Servicing Officer shall have actual
knowledge thereof or,
with reasonable diligence, should have
had knowledge
thereof; or
(iii) The entry of a decree or order by a
court or agency or
supervisory authority having
jurisdiction in the premises for
the appointment of a conservator,
receiver, trustee, or
liquidator for the Servicer in any
bankruptcy, insolvency,
readjustment of debt, marshalling of
assets and liabilities,
or similar proceedings, or for the
winding-up or liquidation
of its affairs, and the continuance of
any such decree or
order unstayed and in effect for a
period of thirty (30)
consecutive days; or
(iv) The consent by the Servicer to the
appointment of a
trustee, conservator, receiver, or
liquidator in any
bankruptcy, insolvency, readjustment of
debt, marshalling
of assets and liabilities, or similar
proceedings of or
relating to the Servicer and involving
substantially all of its
property; or
(v) The Servicer shall admit in writing its
inability to pay its
debts generally as they become due,file
a petition of any
applicable bankruptcy, insolvency, or
reorganization
statute, make an assignment for the
benefit of its creditors,
or voluntarily suspend payment of its
obligations; or
(vi) The failure by the Servicer to provide
true and correct
electronic data, in violation of
representations and
warranties made by the Servicer in
paragraph V.A. hereof,
which violation shall be material and
shall continue
unremedied for a period of 30 days after
the date on which
written notice of such failure requiring
the same to be
remedied, shall have been sent (1) to
the Servicer by the
Trustee, or (2) to the Servicer and to
the Trustee by the
Holders of Certificates evidencing not
less than 20% of the
Voting Interests thereof; or
(vii) The assignment by the Servicer to a
delegate of its duties
or rights hereunder, except as
specifically permitted
hereunder, or any attempt to make such
an assignment; or
(viii) The failure to provide the Trustee
at least thirty (30) days
prior written notice of a merger or
consolidation involving
the Servicer or assumption of
obligations of the Servicer,
or the failure to receive the
approval by each Rating
Agency (such approval not to be
unreasonably withheld) of
such merger or consolidation
involving the Servicer or
assumption of obligations of the
Servicer pursuant to
paragraph XXIII of this Servicing
Agreement; or
(ix) Any fraud, gross negligence or willful
misconduct on the
part of the Servicer with respect to the
Receivables or its
duties hereunder.
Then, and in each and every case and so long
as an Event of
Servicing Default described above shall not have been
remedied in the period, if
any, provided for in the applicable subsection, the
Trustee may, either at the
direction of the Majority Certificateholders or, in the
case of an Event of
Servicing Default described in subsections (iii), (iv)
or (v) above, at the direction
of the Risk Default Insurer, terminate all of the
rights and obligations of the
Servicer under this Servicing Agreement.
On or after the receipt by the Servicer of
such written notice, all
authority and power of the Servicer under this
Servicing Agreement, with respect
to the Receivables or otherwise, shall pass to and be
vested in the Backup
Servicer or in any successor Servicer to be appointed
by the Trustee at the
direction of the Majority Certificateholders or at the
direction of the Risk Default
Insurer, provided that the direction of the Risk
Default Insurer shall be subject
to the consent of the Majority Certificateholders and
each Rating Agency. The
Backup Servicer is hereby authorized and empowered to
execute and deliver on
behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and
other instruments, and to do or accomplish all other
acts with things necessary to
effect the purposes of such notice of termination,
whether to complete the transfer
and endorsement of the Receivable files, or otherwise.
Anything to the contrary
herein notwithstanding, the Backup Servicer may appoint
agents to perform its
duties as successor Servicer hereunder.
The Servicer shall cooperate with the Backup
Servicer in effecting
the termination of the responsibilities and rights of
the Servicer under this
Servicing Agreement, including the transfer to the
Backup Servicer or any
successor Servicer for administration by it of all cash
amounts that shall at the
time be held by the Servicer or shall have been
deposited by the Servicer in any
account or that shall thereafter be received by the
Servicer with respect to a
Receivable.
The Backup Servicer or the successor Servicer
appointed by the
Trustee (including by reason of an Event of Servicing
Default under this Section
or resignation pursuant to Section XXII) shall be
successor in all respects to the
Servicer in its capacity as Servicer and custodian
under this Servicing Agreement;
provided, however that the Backup Servicer or successor
Servicer shall not be
liable for any acts, omissions or obligations of the
Servicer that arose prior to
such succession or for any breach by the outgoing
Servicer of any of its
representations and warranties contained in this
Servicing Agreement or in any
related document or agreement, and the outgoing
Servicer shall not be relieved
of any liability or obligations hereunder to the extent
such obligation or liability
arose prior to such succession. The Servicer shall be
entitled to receive all
Servicing Fees and recovery of all costs up to the date
of the transfer to the
successor Servicer of all functions referenced under
this Servicing Agreement.
VII. REMEDIES
In addition to the right to terminate
contained in Section VI, the
Servicer agrees that upon the happening of any Event of
Servicing Default (as
defined herein), the Backup Servicer or the successor
Servicer may avail itself of
any other relief to which the Backup Servicer or the
successor Servicer may be
legally or equitably entitled, subject only to the
provision of Section XIII of this
Servicing Agreement.
VIII. RESPONSIBILITY AND AUTHORITY OF SERVICER
Subject to the limitations set forth herein
or in the Pooling and
Servicing Agreement, the Servicer shall have the full
power and authority, acting
alone and without the consent of the Trustee or the
Backup Servicer, to do any
and all things in connection with such servicing and
administration that it may
deem reasonably necessary or desirable, to collect the
Receivables, to disburse
the proceeds and to protect the interests of the
Trustee and the Certificateholders
in the Receivables.
IX. COLLECTIONS; LOCK-BOX ACCOUNT AND RELATED
BANK ACCOUNTS
Any amounts received by the Servicer,
including all payments by
or on behalf of the Obligors (other than Purchased
Receivables), all Liquidation
Proceeds, Insurance Proceeds and other Recoveries, all
as collected during the
Collection Period in respect of a Receivable being
serviced by the Servicer, shall
be remitted to the Lock-Box Account as soon as
practicable, but in no event later
than the close of business on the Business Day after
receipt thereof by the
Servicer.
The Servicer shall maintain the Lock-Box
Account and shall collect
and hold in trust (for the benefit of the Trust) in
such account all funds received
on account of the Obligors until such funds are
transferred to the Trustee or in
accordance with its instructions. On a daily basis the
posted balance (in excess
of $2,000) related to the Receivables in the Lock-Box
Account shall be
transferred by wire transfer to the Trustee.
Such funds shall not be commingled with the
funds of any other
person; provided that there may be deposited in the
Lock-Box Account moneys
collected on other motor vehicle installment sales
contracts originated by Aegis
Finance and its affiliates. The Servicer shall be
responsible for all charges with
respect to the Lock-Box Account and, insofar as such
charges relate to the
Receivables, shall be reimbursed in accordance with the
instructions set forth in
the Monthly Servicer Certificate. The Servicer shall
provide written notice to the
Trustee of the location and account number of the
Lock-Box Accounts promptly
after establishing or changing the same.
First Interstate Bank of California, N.A.
will serve as the initial
Lock-Box Account Depository with respect to the
Receivables. The Servicer
shall provide thirty (30) days' prior notice to the
Trustee of its appointment of a
successor Lock-Box Account Depository, which such
successor Lock-Box
Account Depository shall be an Eligible Institution.
The Servicer shall deposit into the Lock-Box
Account all amounts
(including late payments) remitted by Obligors to the
Servicer under the terms of
the Receivables within one (1) Business Day after
receipt thereof. The Servicer
shall provide the Lock-Box Account Depository with a
report providing
instructions related to distributions of funds from the
Lock-Box Account to the
Collection Account.
The Servicer shall deposit in the Collection
Account the aggregate
Purchase Amount with respect to Purchased Receivables.
All such deposits shall
be made in Automated Clearinghouse Corporation next-day
funds or immediately
available funds, on the Business Day following receipt
thereof.
X. DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS
1. All documents with respect to an Obligor
account and
delivered to Servicer hereunder will be held in trust
and kept safely by Servicer
as delivered.
2. The Servicer shall hold in trust and
keep safely for the
benefit of the Trust the computer records relating to
the Obligor accounts and the
proceeds thereof.
3. The Servicer will furnish copies of any
audit reports
prepared for the Servicer (either internal or
otherwise) with respect to the
Receivables to the Trustee promptly upon the receipt
thereof by Servicer.
4. All data, documents and information held
by the Servicer
on behalf of the Trust shall be held in confidence and
not used or disclosed for
any purpose other than as contemplated by this
Servicing Agreement or as
required by law or as may be necessary to enforce their
respective rights under
this Servicing Agreement.
B. REPORTS AND CREDIT AGENCIES
1. In addition to its normal reporting, the
Servicer shall also
furnish Backup Servicer upon request with such reports
as are required by this
Servicing Agreement and such additional information
underlying the data in the
aforesaid reports as may be reasonably pertinent to
Backup Servicer's needs and
that can be generated by the Servicer's existing data
processing system without
undue effort or expense. The reports required by this
Servicing Agreement shall
be substantially in the form of Schedule B hereto.
2. Backup Servicer and Trustee understand
that all transactions
with respect to an Obligor account will be reported by
Servicer to one or more
Credit Agencies in the name of the Seller or its
applicable affiliate as required by
contract and by law. Servicer will comply with all
Credit Agency agreements.
XI. INDEMNIFICATION
The Servicer agrees to indemnify the Backup
Servicer and the
Trustee and hold the Backup Servicer and the Trustee,
their respective officers,
employees and agents harmless against any and all
claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments,
and any other costs, fees and
expenses that the Backup Servicer or the Trustee, as
the case may be, may sustain
in any way related to failure of the Servicer to
perform its duties and service the
Receivables in compliance with the terms of this
Servicing Agreement. The
Servicer shall immediately notify the Backup Servicer
and the Trustee if a claim
is made by a third party with respect to this Servicing
Agreement or the
Receivables, assume (with the consent of the Backup
Servicer and the Trustee)
the defense of any such claim and pay all expenses in
connection therewith,
including counsel fees, and promptly pay, discharge and
satisfy any judgment or
decree which may be entered against it or the Backup
Servicer or the Trustee in
respect of such claim. This right to indemnification
shall survive the termination
of this Servicing Agreement.
<PAGE>
XII. TERM AND TERMINATION
1. The Servicer agrees to service all
Receivables for their full
term and until their expiration or earlier termination.
2. In the event the Trustee, on behalf of
the Trust, transfers
any Receivable(s), the transferee shall have the option
to terminate the servicing
of the respective Obligor account(s) by providing
thirty (30) days written notice
to Servicer.
3. The holder of the Residual Interest may
at any time replace
the Servicer with a substitute Eligible Servicer upon
the delivery of written notice
of such substitution stating the name and address of
such substitute Servicer to
the Master Trustee, the Trustee, each Rating Agency and
the predecessor Servicer
at least 90 days prior to the change in Servicer,
provided (1) the holder of the
Residual Interest delivers to the Trustee in connection
with such substitution
evidence of the consent of at least the Majority
Certificateholders to the change
and (2) provided further that such substitute Servicer
shall have executed an
agreement of assumption, acceptable to the Trustee and
each Rating Agency,
under which it assumes every obligation and duty of the
Servicer under this
Servicing Agreement. Upon the occurrence of the
foregoing, such substitute
Servicer shall be deemed the Servicer for all purposes
under this Servicing
Agreement.
Should the transferee or holder of the
Residual Interest elect to
terminate the servicing as indicated above, the
Servicer shall be entitled to a five
($5.00) dollars per Receivable transfer fee, such fee
to be paid by the transferee
or holder of the Residual Interest on the date of
transfer.
XIII. ARBITRATION AND ATTORNEYS' FEES
1. It is understood that this Servicing
Agreement is made in
good faith and should there arise, from any unforeseen
cause, a difference of
opinion or of interpretation of this Servicing
Agreement which cannot be settled
amicably between the Trustee, the Backup Servicer and
the Servicer, such
difference or interpretations shall be submitted to a
decision of a board of
arbitration.
2. The aforementioned board of arbitration
shall be composed
of two (2) arbitrators and an umpire meeting in the
State of Minnesota, unless
otherwise agreed to by the Trustee, the Backup Servicer
and the Servicer.
3. The members of the board of arbitration
shall be active or
retired disinterested officials of insurance companies
or financial institutions.
Each party shall appoint its arbitrator, and the two
arbitrators shall choose an
umpire before instituting the hearing. If the
respondent fails to appoint its
arbitrator within thirty (30) days after being
requested to do so by the claimant,
the latter shall also appoint the second arbitrator.
If the two arbitrators fail to agree
upon the appointment of
an umpire within two (2) weeks after their nominations,
each of them shall name
three (3), of whom the other shall decline two (2) and
the decision shall be made
by drawing lots. The claimant shall submit its initial
brief within twenty (20) days
from appointment of the umpire. The respondent shall
submit its brief within
twenty (20) days thereafter, and the claimant may
submit a reply brief within ten
(10) days after filing of the respondent's brief.
4. The board shall make an award with
regard to the custom
and usage of the business contemplated by this
Servicing Agreement. The board
shall issue its award in writing based upon a hearing
at which evidence may be
introduced without following strict rules of evidence
but in which cross-
examination and rebuttal shall be allowed.
The board shall make its award within
thirty (30) days
following the termination of the hearing unless the
parties consent to an
extension. A decision by the majority of the members of
the board shall become
the award of the board and shall be final and binding
upon all parties to the
proceeding. Either party may apply to the United States
District Court, sitting in
the State of Minnesota, for an order confirming the
award. If such an order is
issued, the attorneys' fees of the party so applying
and the court cost will be paid
by the party against whom confirmation is sought.
5. Each party shall bear the expense of its
arbitrator and shall
jointly and equally bear with the other party the
expense of the umpire. The
remaining costs of the arbitration proceeding
(including attorneys' fees of the
parties) shall be allocated by the board in its award.
Notwithstanding any other
provision hereof, any expenses (including attorney's
fees) incurred by the Trustee
or the Backup Servicer shall be reimbursed from the
Trust.
XIV. WAIVERS
No failure or delay on the part of the
Servicer, the Trustee or the
Backup Servicer in exercising any power, right or
remedy under this Servicing
Agreement shall operate as a waiver thereof, nor shall
any single or partial
exercise of any such power, right or remedy, preclude
any other or further
exercise thereof or the exercise of any other power,
right or remedy, except by
a written instrument signed by the party to be charged
or as otherwise expressly
provided herein.
XV. NOTICES
Except as otherwise provided herein, all
notices, requests,
consents, demands and other communications given
hereunder shall be in writing.
All notices of whatever kind shall be either personally
delivered or sent by
telecopy or other form of rapid transmission and
confirmed by United States mail,
properly addressed and with full postage prepaid,
addressed as follows:
To Servicer: Aegis Auto Finance,
Inc.
525 Washington Boulevard
Jersey City, NJ 07310
Attn: Joseph F. Battiato,
President
Telecopy No. (201)
418-7339
To Backup Servicer: Norwest Bank
Minnesota,
National Association
Corporate Trust
Department
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0069
Telecopy No. (612)
667-9825
To Trustee: Norwest Bank
Minnesota,
National Association
Corporate Trust
Department
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0069
Telecopy No. (612)
667-9825
or to such other address as such party shall
have specified in
writing in the manner set forth above. All
notices to the
Certificateholders shall be sent in the
manner specified in the
Pooling and Servicing Agreement.
XVI. ASSIGNABILITY
No party may assign any of its rights or
obligations hereunder
without the prior written consent of the other parties.
Nothing in this Servicing
Agreement is intended to confer, expressly or by
implication, upon any Person
other than the Trustee, the Backup Servicer and the
Servicer any rights or
remedies under or by reason of this Servicing
Agreement.
XVII. FURTHER ASSURANCES
Each party agrees, if reasonably requested by
another party, to
execute and deliver such additional documents or
instruments and take such
further actions as may be reasonably necessary to
effect the transactions
contemplated by this Agreement.
XVIII. COUNTERPARTS
This Servicing Agreement may be executed in
counterparts, each
of which shall be deemed an original but all of which
taken together shall
constitute but one and the same document.
<PAGE>
XIX. ENTIRE AGREEMENT; AMENDMENTS
This Servicing Agreement, including the
Schedules attached hereto
and the documents referred to herein, contains the
entire agreement between the
parties hereto with respect to the transactions
contemplated hereby and supersedes
all prior understandings, negotiations, commitments and
writings with respect
thereto. This Servicing Agreement may not be modified,
changed or
supplemented except upon the express written consent of
each of the parties
hereto. The Trustee shall not agree to any amendment
of this Servicing
Agreement without the prior written consent of the
Majority Certificateholders.
In the event of any conflict between this Servicing
Agreement and a Schedule
hereto, the Schedule shall govern.
XX. INSPECTION
Any party hereto or its designated agents,
and any
Certificateholder, may, during ordinary business hours
and after reasonable
notice, inspect, audit, check and make abstracts from
any party's books,
accounts, records and other papers directly pertaining
to the subject matter of this
Servicing Agreement or the Schedules hereto. All costs
and expenses of such
activities shall be borne by the inspecting party.
Each party shall use reasonable
efforts to facilitate any such inspection.
XXI. LIMIT ON TRUSTEE'S PAYMENT OBLIGATIONS
Neither the Trustee, nor Norwest Bank
Minnesota, National
Association, nor any of its affiliates, shall have any
obligation to make any
payment to the Servicer in respect of any payment
obligation of the Trustee to the
Servicer under this Servicing Agreement, any Schedules,
riders or amendments
hereto otherwise than from funds held by the Trustee
pursuant to the Pooling and
Servicing Agreement. The Servicer hereby specifically
consents to the same and
agrees that under no circumstances will it offset or
otherwise withhold amounts
owing to it from remittances made by it to the Trustee
pursuant to this Servicing
Agreement, or any Schedules hereto or any riders or
amendments hereto.
XXII. SERVICER NOT TO RESIGN
1. The Servicer shall not resign from the
obligations and duties
imposed on it as Servicer under this Servicing
Agreement except (i) in the event
that the performance of its duties under this Servicing
Agreement shall no longer
be permissible under applicable law or it shall no
longer be an Eligible Servicer
or (ii) if the Backup Servicer has taken over the
duties of the Servicer in
accordance with the terms hereof or upon the
appointment of a successor or
substitute Servicer (other than the Backup Servicer) to
take over the duties and
obligations of the Servicer hereunder. Notice of any
such determination
permitting the resignation of the Servicer shall be
communicated in writing to the
Trustee, the Backup Servicer and each Rating Agency at
the earliest practicable
time and any such determination shall be evidenced by
an Opinion of Counsel to
such effect delivered to the Trustee concurrently with
or promptly after such
notice. No such resignation shall become effective
until an Eligible Servicer shall
have assumed the responsibilities and obligations of
the Servicer; provided,
however, in the event that the Backup Servicer is
unable to act as Servicer
hereunder and a successor Eligible Servicer has not
been appointed within thirty
(30) days, the Trustee may petition a court of
competent jurisdiction for the
appointment of a successor Eligible Servicer acceptable
to the Majority
Certificateholders.
2. Upon the Servicer's receipt of notice of
termination
pursuant to paragraph VI. or upon the Servicer's
resignation pursuant to this
paragraph, the Backup Servicer shall perform as
Servicer until such time, if ever,
as a successor Servicer who is an Eligible Servicer
reasonably acceptable to each
Rating Agency and the Majority Certificateholders shall
have been appointed by
the Trustee and shall have assumed the duties and
responsibilities of the Servicer.
3. Upon appointment, the successor Servicer
shall be the
successor in all respects to the predecessor Servicer
and shall be subject to all the
responsibilities, duties and liabilities arising
thereafter relating thereto placed on
the predecessor Servicer, and shall be entitled to the
applicable portion of the
Servicing Fee and all of the rights granted to the
predecessor Servicer, by the
terms and provisions of the Pooling and Servicing
Agreement.
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, OR RESIGNATION OF SERVICER.
Any Person (a) into which the Servicer may be
merged or
consolidated, (b) which may result from any merger or
consolidation to which the
Servicer shall be a party, (c) which may succeed to the
properties and assets of
the Servicer substantially as a whole, or (d) which may
succeed to the duties and
obligations of the Servicer under this Servicing
Agreement which Person executes
an agreement of assumption to perform every obligation
of the Servicer
hereunder, shall be the successor to the Servicer under
this Servicing Agreement
without further act on the part of any of the parties
to this Servicing Agreement;
provided, however, prior to any merger or consolidation
of, or assumption of the
obligations of, the Servicer, each Rating Agency shall
have delivered to the
Servicer, the Backup Servicer, the Trustee and each
Certificateholder a statement
that such transaction shall not have an adverse effect
on the ratings assigned to
the Rated Certificates; further provided, however, that
(i) immediately after
giving effect to such transaction, no Event of
Servicing Default (as defined in
paragraph VI.), and no event which, after notice or
lapse of time, or both, would
become an Event of Servicing Default shall have
happened and be continuing,
(ii) the Servicer shall have delivered to the Trustee
an Officer's Certificate stating
that such consolidation, merger or succession and such
agreement of assumption
comply with this paragraph XXIII. and that all
conditions precedent provided for
in this Servicing Agreement relating to such
transaction have been complied with,
and (iii) the Servicer shall have delivered to the
Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such
counsel, all financing statements,
continuation statements and amendments and notations on
certificates of title
thereto have been executed and filed that are necessary
fully to preserve and
protect the interest of the Trustee in the Receivables
and the Financed Vehicles,
and reciting the details of such filings, or (B)
stating that, in the opinion of such
counsel, no such action shall be necessary to preserve
and protect such interest.
Without receipt by the Trustee of written notice from
the Servicer of such
merger, consolidation or succession at least thirty
days prior to such action by the
Servicer and approval by each Rating Agency and the
Majority Certificateholders,
which approval shall not be unreasonably withheld, such
merger, consolidation
or succession shall constitute an Event of Servicing
Default with respect to the
Servicer.
XXIV. GOVERNING LAW.
This Servicing Agreement shall be governed by
and construed in
accordance with the laws of the State of New York
without regard or reference
to principles of conflicts of laws of such State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this
Servicing Agreement to be executed as of the date first
written above.
SERVICER:
AEGIS AUTO FINANCE,
INC.
By:
Joseph F.
Battiato
President
[Signatures continue on following page]
BACKUP SERVICER: NORWEST BANK
MINNESOTA, NATIONAL
ASSOCIATION, in its
capacity as Backup Servicer
under the Pooling and
Servicing Agreement
By:
Name: Michael G. Luger
Title: Corporate Trust Officer
TRUSTEE:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
in its capacity as Trustee under the
Pooling and Servicing Agreement
By:
Name: Michael G. Luger
Title: Corporate Trust Officer
[Counterpart signature page to Servicing
Agreement]
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT OF SELLER
The undersigned hereby acknowledges this Servicing
Agreement and
agrees, in its capacity as Seller, to be bound by the
applicable provisions hereof.
AEGIS AUTO FUNDING CORP.,
In its capacity as Seller under the
Pooling and Servicing Agreement
By:
Brendan Meyer
Vice President
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES - COLLECTIONS
1. Prior to the execution of this Agreement
Servicer has
established a Lock-Box Account at The
First Interstate
Bank of California, N.A.
2. Servicer shall be responsible for the
mailing of payment
coupon books or monthly statements.
Payment books shall
contain coupons in sufficient quantity
to allow Obligor to
enclose a coupon with each scheduled
payment per the
terms of the related contract. Each
payment coupon book
may contain up to 36 coupons.
For those Obligor accounts whose
contract term exceeds 36
months a new coupon book for the
remaining term will be
sent in the 35th month.
3. Servicer shall process Obligor accounts
for which the
Obligor fails to make a payment on the
applicable payment
due date (a "Delinquency") on the
following basis:
a. Commencing on the first business
day on which an
Obligor is delinquent by more than
ten (10) days,
Servicer shall, at the Servicer's
discretion, either
(1) phone the Obligor, (2) if no
contact is made
after phoning, the Servicer may
send a letter to the
Obligor asking the Obligor to
immediately contact
the Servicer, or (3) order a field
call by an outside
agency to the Obligor.
b. Servicer may request the Seller's
authorization to
repossess an Obligor's vehicle at
any time after an
Obligor is delinquent and Servicer
has satisfactory
reason to believe that Obligor will
not pay.
However, such authorization will be
deemed given
if Servicer cannot obtain timely
authorization,
provided Servicer has determined
that any delay
would impede the Servicer's ability
to service the
Obligor's vehicle. Servicer shall
create and
maintain a report of any Obligor's
vehicle it
repossesses and all events leading
to such action.
c. If an Obligor requests a change to
his normal
monthly due date (a "Due Date
Change") and if the
Obligor has defaulted on his
obligations under a
Receivable or if the Servicer
reasonably believes
such default is imminent, Servicer
may grant such
Due Date Change to the extent the
Servicer deems
in the best interest of the
Certificateholders;
however, no Due Date Change shall
be granted
beyond the currently due month.
d. Except as otherwise provided in
this agreement, if
an Obligor has been delinquent for
more than thirty-
five (35) days, Servicer shall
request Seller's
authorization to repossess pursuant
to Section
IA3.b. of this Schedule A.
e. If an Obligor requests an extension
of the currently
required monthly payment to extend
the end of the
loan term (a "Loan Extension") and
if the Obligor
has defaulted on his obligations
under a Receivable
or if the Servicer reasonably
believes such default
is imminent, Servicer may to the
extent the Servicer
deems in the best interest of the
Certificateholders
grant such Loan Extension once each
year.
Servicer shall grant a Loan
Extension only to those
Obligors who have made at least six
(6) regularly
scheduled payments; and in no case
shall the
number of Loan Extensions per loan
exceed the
number of years in the loan term.
In no event may
any modification cause the final
payment date to
extend beyond the Final Scheduled
Distribution
Date for the Receivables.
B. CONTRACT SERVICES - CUSTOMER SERVICE
1. If Servicer receives written or oral
notice from an Obligor
of such Obligor's refusal to make
payments on the
Obligor's account, Servicer shall enter
such notice into its
computer records.
2. The Seller shall have the responsibility
to apply for title to
the motor vehicle covered by the
contract. Servicer shall
send, or cause to be sent, to Trustee
all titles to such motor
vehicles. With respect to titles
received, Servicer shall
verify that Aegis Finance is noted as
lien holder.
3. Servicer shall notify Originator and/or
Custodian of any
discrepancies with respect to the lien
holder indicated on
received titles. Servicer shall further
notify Originator
and/or Custodian of missing titles.
Originator shall be
responsible for correcting title
discrepancies and obtaining
missing titles.
4. Servicer shall not release any title to
a vehicle except upon
the full payment of the remaining
obligor principal balance
by the Obligor or others, or the
repossession and sale of
the related vehicle, or the release of
the title to Originator
for the correcting of title problems, or
as required by law,
or as directed by Custodian. Custodian
will release title to
Servicer on a timely basis, pursuant to
Section 3.04(c) of
the Pooling and Servicing Agreement.
5. Servicer shall perform the following
insurance tracking
functions with respect to a contract
until the earlier of the
repossession and sale of the vehicle or
the remaining
obligor principal balance is paid in
full by the Obligor or
others:
a. Seller shall provide initial
physical damage
insurance information at the time
of portfolio
boarding.
b. Servicer shall notify Seller and/or
Custodian if
Servicer has not received a copy of
a physical
damage insurance policy for an
Obligor's vehicle
within twenty (20) days of the
receipt of a Notice of
Cancellation/Non-Renewal.
c. Servicer shall produce a monthly
Insurance
Expiration report showing those
Obligor accounts
for whom a Notice of
Cancellation/Non-Renewal
has been received or the expiration
date for an
Obligor's insurance policy in
Servicer's computer
records has elapsed.
d. Servicer shall not be liable for
any loss or liability
resulting from the lack of
insurance coverage on
any Obligor vehicles if it has
complied with the
foregoing.
6. Servicer shall negotiate and settle any
claims relating to
physical damage to a vehicle and endorse
any insurance
company drafts for such claim subject to
the following
conditions:
a. Servicer shall endorse a draft for
payment of a
claim to body shop or other auto
repair service.
b. If the Obligor's account is more
than thirty (30)
days delinquent, Servicer shall
attempt to collect all
currently due amounts. If unable to
make such
collection, Servicer shall request
Seller's
authorization to repossess vehicle
from the repair
facility pursuant to Section
I-A-3.b. of this Schedule
A. To effect such repossession,
Servicer may
negotiate for the release of the
vehicle from the
repair facility in exchange for the
endorsed draft in
the amount of the repairs and an
agreement to hold
the repair facility harmless for
the release of the
vehicle.
7. Servicer shall calculate early payoffs
of remaining obligor
principal balance per the terms of the
related sales contract.
Seller authorization is required for any
payoff amount other
than the full calculated amount.
Notwithstanding any
condition in this Agreement, Servicer,
however, shall have
the right (in the event of early payoff)
to waive any
remaining obligor principal balance of
twenty-five dollars
($25.00) or less.
8. Upon receipt by Servicer of the full
payment of the
remaining Obligor principal balance by
the Obligor, the
Custodian shall release to the Servicer
which in turn shall
release and forward to the Obligor the
original of the
installment sales contract.
II.
A. SPECIAL COLLECTION ACTIVITIES
1. Repossession and Sale
The following terms shall govern the
repossession and sale
of the vehicle:
a. Servicer shall order repossession
services from
licensed, bonded agents.
b. Within five (5) business days after
repossession or
sooner if required by law, Servicer
shall prepare
and mail a Notice of Intent (the
"NOI") to the
Obligor and send a copy of the NOI
once per month
together with their monthly reports
to the Seller.
c. Servicer shall cause the
repossessed vehicle to be
delivered to a location as
designated by Seller for
the amount of time required by
applicable State law
for Obligor redemption (the
"Obligor Redemption
Period").
d. After the expiration of the Obligor
Redemption
Period, Seller may authorize
Servicer to arrange for
the sale and disposition of the
vehicle.
2. Credit Enhancement Claims Filing
Within the provisions of the Fee
Schedule set forth in
paragraph III of this Schedule, Servicer
shall perform the
following insurance functions with
respect to a Receivable
and will comply with all necessary
operating and claims
filing procedures (which may be modified
by the insurance
company from time to time and by mutual
consent of the
Seller and the Servicer) pursuant to
each Credit
Enhancement:
a. With respect to the Risk Default
Insurance Policy,
Servicer shall: (1) file notice of
loss within the
earlier of (a) 60 days from the
date of expiration of
the Obligor Redemption Period or
(b) 30 days from
the date the Financed Vehicle was
sold at auction,
(2) maintain claim data components,
(3) calculate
the claim amount and (4) submit to
the Insurer all
supporting documents for each claim
required by
the Risk Default Insurance Policy.
b. With respect to the VSI Insurance
Policy, Servicer
shall:
(1) if appropriate, prior to
liquidation and within
ninety (90) days of date of loss,
file an initial notice
of loss which shall mean the
following for purposes
of this Section only:
(A) For physical damage, the
date of
repossession;
(B) For instrument non-filing
insurance,
the date of filing of a
superior lien;
(C) For a skip, the date of
the first
delinquency plus 150 days; and
(D) For a repossession, the
date the
damage occurred.
(2) maintain physical and
electronic information,
(3) calculate the claim amount, (4)
prepare physical
and electronic information and
complete claim form
and (5) in the case of a claim
dispute, select an
independent appraiser and file an
appraisal report
within thirty (30) days of initial
claim filing
rejection.
3. Deficiency
a. After the repossession and sale of
a vehicle, in
order to calculate a deficiency, if
any, Servicer
shall request the cancellation of
any financed
product related to the vehicle
(e.g., credit life,
disability insurance, etc.), file
for any refunds
associated therewith and furnish a
cancellation
report to Custodian.
b. After taking into account any
cancellation refunds,
Servicer shall compute any
deficiency resulting
from the repossession and sale of a
vehicle and
notify Obligor of any such
deficiency.
c. At the discretion and instruction
of the Seller,
Servicer shall commence collection
activities on
any such established Obligor
deficiency accounts.
4. Bankruptcies
If Servicer receives written notice that
an Obligor has
become subject to bankruptcy proceedings
under Federal or
State law, Servicer or its designee
(attorney if required)
shall provide the following services as
necessary:
a. Servicer shall immediately cease
all collection
activity and otherwise comply with
the Bankruptcy
Code and all related laws and
regulations.
b. Servicer shall file a claim with
the applicable court.
c. Servicer shall obtain legal
services for the
prosecution of the claim when
necessary.
d. Servicer shall monitor the receipts
of funds being
paid through the applicable
bankruptcy plan.
e. Upon dismissal of an action under
bankruptcy,
Servicer shall service the
Obligor's account
pursuant to the standard collection
procedures of
Section I of this Schedule A.
f. Should the Obligor account be the
subject of a
reaffirmation or court ordered
modified payment
schedule, Servicer shall administer
and collect the
account in the same fashion as that
prior to the
bankruptcy proceedings.
5. Disability
If Servicer is notified in writing of an
Obligor's disability
claim and evidence of the Obligor's
disability insurance
policy is on file, Servicer shall
suspend all collection
activity on such Obligor's account until
such time as
Obligor resumes his normal payment
schedule, however:
a. Servicer shall continue to monitor
such Obligor's
account until the earlier of the
date on which:
1) A claim approval or denial has
been
received; or
2) The Obligor resumes payment,
at which
time Servicer will resume
collection activity
pursuant to Section III of
this agreement.
b. If Obligor's disability claim is
denied, Servicer shall
resume collection activity pursuant
to Section I of
this Agreement and the terms and
conditions of the
related sales contract.
c. Servicer's collection procedures
for a disability
account shall comply with the terms
stipulated on
the related sales contract.
6. Allotments
Servicer shall have been notified at the
time of loan
boarding if an Obligor will be subject
to military allotment
processing. If Servicer has not
received an allotment
verification on a designated allotment
account within 60
days of any subsequent allotment
establishment and the
designated Obligor's account is greater
than 45 days
delinquent, Servicer shall request
Seller's authorization to
repossess pursuant to Section I.A.3.b of
this Schedule A.
7. Skips
If Servicer determines that Obligor has
become a skip,
Servicer shall conduct skip-tracing
efforts for a period of
30 days. If such skip-tracing efforts
prove unsuccessful,
Servicer will file (if applicable) the
necessary claim forms
with Seller's insurance carriers as
described in II A(2) of
Schedule B of this document.
III. FEE SCHEDULE
Servicer shall be entitled to receive the
following fees and costs no later
than the Distribution Date immediately following
each related Collection
Period:
A. GENERAL SERVICING
1. For all Receivables with an outstanding
balance greater
than zero dollars ($0.00) as of the
first day of the related
Collection Period, a monthly serving fee
equal to one-
twelfth of 1.85% of the outstanding
balance or $10.00,
whichever is greater.
2. All extension fees that are received
during the related
Collection Period.
<PAGE>
3. All late charges that are received
during the related
Collection Period.
4. A charge of $25.00 per filing of Credit
Enhancement
claims forms with the designated
Insurers during the related
Collection Period.
B. EXPENSE REIMBURSEMENT
1. All out-of-pocket expenses incurred by
Servicer in the
pursuit of its job functions as
described in this Schedule
(including but not limited to filing
fees, investigation fees,
repossession fees, transportation and
storage fees, legal
fees, DMV fees, etc.) shall be
reimbursed to the Servicer
at Servicer's actual cost. In addition
Servicer shall be
entitled to an administrative fee equal
to 8% of all out-of-
pocket expenses. Servicer shall provide
the Trustee with
documentation for all such out-of-pocket
expenses as a
condition to payment.
2. All postage costs associated with the
mailing of insurance
follow-up letters, payment statements,
including Notice of
Intent and Deficiency Statement, during
the related
Remittance Period.
3. All expenses relating to establishing,
maintaining and
transferring funds from the Lock-Box
account to the
relevant Collection Account maintained
by the Trustee.
Such expenses shall be reimbursed at
actual cost provided
the Servicer include copies of related
invoices.
C. DEFICIENCY SERVICING
For those Obligor accounts that have been the
subject of a short
insurance payoff, within the related
Collection Period, Servicer
shall cause the account to be moved to a
"non-performing" loan
pool and marked inactive.
All collection activity by Servicer will be
suspended until such
time as the Seller directs Servicer to resume
collection efforts.
Upon such reactivation, a one time set-up fee
of fifty ($50.00)
dollars will be charged and payable on the
next Distribution Date.
For each Collection Period that an Obligor
account remains in the
above described deficiency condition, a
servicing fee will be
charged and payable on the related
Distribution Date based on the
following schedule:
1. $1.00 per month for months 1-4 that a
subject Receivable
remains in the nonperforming loan pool.
2. $0.50 per month for months 5-8 that a
Receivable remains
in the nonperforming loan pool.
3. $0.10 per month for each month
thereafter that a Receivable
remains in the nonperforming loan pool.<PAGE>
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust 1996-2
Automobile Receivable Pass-Through
Certificates
Series 1996-2
I. COLLECTION ACTIVITY INTEREST PRINCIPAL
TOTALS
Beginning of Period Pool Principal Balance
0
Additional Receivables Purchased 0
Scheduled Payments 0 0
0
Full & Partial Prepayments 0 0
0
Risk Default Insurance Cash Proceeds 0
0 0
Receivables Repurchased by Seller
Recoveries (on Liquidated and Defaulted
Receivables)
Miscellaneous Servicer Collections
Available Distribution Amount 0 0
0
Net Losses 0
End of Period Pool Balance 0
II. SERVICING COMPENSATION
Amount
(ATTACH BREAKOUT OF FEES)
Servicer Compensation
III. POOL BALANCE INFORMATION
Original Pool Balance: Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM)
Remaining Number of Contracts
IV. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Additional Receivables Substituted
Principal Amount
V. EXTENSIONS
Number of Extensions granted
Principal Amount
VI. DELINQUENCY INFORMATION*
% of
# of
Principal Outstanding
Contracts
Balance Pool Balance
30-59 Days Delinquent
60-90 Days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VII. REPOSSESSION INFORMATION
Current
Period Inventory
Number of Receivables as to which Vehicles have been
Repossessed (and NOI expired)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and NOI expired)
VIII. LIQUIDATED AND DEFAULTED RECEIVABLES
Current
Period Cumulative
Number of Liquidated Receivables*
Principal Balance of Liquidated Receivables**
(Prior to Liquidation)
Number of Defaulted Receivables***
Principal Balance of Defaulted Receivables
Total Principal Balance of Liquidated Defaulted
Receivables
*Includes Receivables transferred to Risk Default
Insurer for liquidation
**Excludes Receivables previously characterized as
Defaulted Receivables
***180 days delinquent
IX. RECOVERIES
Current
Period Cumulative
Liquidation Proceeds
VSI Physical Damage/Loss Insurance Proceeds
Rebates of Servicer Cancelled Warranty Contracts
Consumer Insurance
Other
Total Recoveries
X. RISK DEFAULT POLICY INSURED RETENTION AMOUNT
Beginning Balance
Add: Prefunded Receivables
Add: Quarterly Reserve Loss Deficiency
Less: Approved Claims
Less: Surplus in Quarterly Loss Reserve
Ending Balance
<PAGE>
XI. NET LOSSES
Current
Period Cumulative
Principal Balance of Liquidated and Defaulted
Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XII. INSURANCE CLAIMS
Current
Period Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Retention Amount
Number of VSI Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Defaulted Insurance Claims Rejected
Principal Balance of Receivables relating to Risk
Default
Insurance Claims Rejected
SERVICER COMPENSATION BREAKDOWN Amount
Servicing Fees
Collection Expenses Incurred
Claim Filing Fees
Bank Charges
Late fees, extension fees collected
Postage
Total Servicer Compensation
<PAGE>
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0069
Re: Aegis Auto Receivables Trust 1996-2;
Servicing Agreement dated as of
June 1, 1996 by and among Aegis Auto
Finance, Inc., Norwest Bank
Minneapolis, National Association, as
Trustee, and Norwest Bank
Minneapolis, National Association, as
Backup Servicer.
In connection with the administration of the
pool of Receivables held by you as
Custodian for the Trustee, we request the release and
acknowledge receipt of the (Custodian's
Receivable Files/[specify documents]) for the
Receivable described below, for the reason
indicated.
Borrower's Name, Address & Zip Code:
Receivable Number: [list here or on attached schedule]
Reason for Requesting Documents (check one or put code
on attached schedule)
_____ 1. Receivable Paid in Full (Servicer hereby
certifies that all amounts received in
connection therewith have been credited to
the Collection Account as provided in
the Pooling and Servicing Agreement.)
_____ 2. Receivable Repurchased Pursuant to Section
3.02 of the Pooling and Servicing
Agreement (Servicer hereby certifies that any
applicable repurchase price has
been credited to the Collection Account as
provided in the Pooling and Servicing
Agreement.)
_____ 3. Receivable [to be] Liquidated (Servicer
hereby certifies that all proceeds of
foreclosure, insurance or other liquidation
[have been finally received and
credited] [when received shall be credited]
to the Collection Account pursuant to
the Pooling and Servicing Agreement.)
<PAGE>
_____ 4. Receivable to be transferred to Risk Default
Insurer for liquidation (servicer
hereby certifies that all proceeds of
insurance when received shall be credited to
the Collection Account pursuant to the
Pooling and Servicing Agreement).
_____ 5. Receivable in Foreclosure
_____ 6. Other (explain)
If box 1, 2, 3 or 4 above is checked, and if
all or part of the Custodian's
Receivable File was previously released to us, please
deliver to us a copy of our previous
request for release on file with you, as well as any
additional documents in your possession
relating to the above specified Receivable.
If box 5 or 6 above is checked, upon our
return of all of the above documents to
you as Custodian, please acknowledge your receipt by
signing in the space indicated below, and
returning this form.
AEGIS AUTO FINANCE, INC.
Servicer
By:________________________________
Name:
Title:
Date:______________________________
Documents returned to Custodian:
NORWEST BANK MINNEAPOLIS, NATIONAL ASSOCIATION,
as Custodian
By: _______________________________
Name:
Title:
Date:
______________________________<PAGE>
SCHEDULE D
RELEASE AND ASSIGNMENT
PURSUANT TO SECTION IV.N.
OF THE SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as
custodian (the "Custodian") for the
Trustee of the Aegis Auto Receivables Trust Series
1996-2 created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of June 1, 1996 among
Aegis Auto Funding Corp. (the "Seller"), Norwest Bank
Minnesota, National Association, as
master servicer (the "Backup Servicer") and as trustee
(the "Trustee"), does hereby transfer,
assign and release to the Seller, without recourse,
representation or warranty of the Trustee, all
of the Trustee's right, title and interest in and to
the Receivable and related Custodian File (as
defined in the Pooling and Servicing Agreement)
identified as paid in full in the attached
Servicer's Request For Release of Documents, and all
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand
this day of 199 .
Norwest Bank Minnesota,
National Association,
as Custodian
By
_____________________________________
[Name]
[Title]
Version 1
Exhibit 10.91.85
September 9, 1996
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of May __,
1996, by and between Aegis Auto Finance, Inc., a
Delaware corporation, having its principal executive
office at 525 Washington Boulevard, Jersey City, New
Jersey 07310, as seller (the "Seller"), and Aegis Auto
Funding Corp III., a Delaware corporation, having its
principal place of business at 525 Washington
Boulevard, Jersey City, New Jersey 07310, as purchaser
(the "Purchaser").
WHEREAS, the Seller has originated or acquired in
the ordinary course of business, certain Receivables
(as defined herein); and
WHEREAS, the Seller and the Purchaser wish to set
forth the terms pursuant to which Receivables owned by
the Seller as of the Closing Date (as defined herein)
are to be sold by the Seller to the Purchaser;
NOW, THEREFORE, in consideration of the foregoing,
other good and valuable consideration, and the mutual
terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the
following meanings (such meanings to be equally
applicable to the singular and plural forms of the
terms defined):
"Agreement" means this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" means the document of assignment
substantially in the form attached to this Agreement as
Exhibit A.
"Closing Date" means May __, 1996.
"Cutoff Date" means May __, 1996
"Financed Vehicle" means an automobile or
light-duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under the respective
Receivable.
"Obligor" means, with respect to a Receivable, the
purchaser or co-purchasers of the Financed Vehicle
and/or any other Person who owes payments under such
Receivable.
"Purchaser" means Aegis Auto Funding Corp., III, a
Delaware corporation, its successors and assigns.
"Receivable" means any retail installment sales
contract and security agreement identified on the
Schedule of Receivables.
"Receivables Cash Purchase Price" means with
respect to any Receivable an amount equal to 100% of
the Principal Balance of such Receivable.
"Schedule of Receivables" means the list of
Receivables annexed hereto as Exhibit B or as amended.
"Seller" means Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"UCC" means the Uniform Commercial Code, as in
effect from time to time in the relevant jurisdictions.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. Purchase and Sale of Receivables.
On the Closing Date, subject to the terms and
conditions of this Agreement, the Seller agrees to sell
to the Purchaser, and the Purchaser agrees to purchase
from the Seller, the Receivables and the Property
relating thereto (as defined in Section 2.01(a) below).
(a) Transfer of Receivables and Property.
On the Closing Date the Seller shall sell, transfer,
assign and otherwise convey to the Purchaser, without
recourse, a 100% interest in (i) all right, title and
interest of the Seller in and to the Receivables being
purchased on such date, all moneys received thereon on
and after the Cutoff Date allocable to principal, and
all moneys received thereon allocable to interest
accrued thereon from and including the Cutoff Date,
(ii) the security interests in the Financed Vehicles
granted by the Obligors pursuant to the Receivables;
(iii) the interest of the Seller in any Risk Default
Insurance Proceeds and any proceeds from claims on any
Insurance Policies (including the VSI Insurance Policy)
covering the Receivables, the Financed Vehicles or the
Obligors; and (iv) the proceeds of any and all of the
foregoing. (All of the property identified in this
subsection (a) shall constitute "Property").
(b) Receivables Purchase Price. In
consideration for the Receivables and the other
Property relating thereto, the Purchaser shall, on the
Closing Date, pay to the Seller an amount equal to 100%
of the Receivables Cash Purchase Price for the
Receivables in cash (the "Receivables Purchase Price").
(c) Security Interest. It is the intention
of the Seller and the Purchaser that the transfer and
assignment of the Seller's right, title and interest in
and to the Receivables and the other Property shall
constitute an absolute sale by the Seller to the
Purchaser. In the event a court of competent
jurisdiction were to recharacterize the transfer of the
Property as a secured borrowing rather than a sale,
contrary to the intent of the Seller and the Purchaser,
the Seller does hereby grant, assign and convey to the
Purchaser, a security interest in and lien upon all of
its right, title and interest in and to the Property,
and all proceeds of any thereof, said security interest
to be effective from the date of execution of this
Agreement.
Section 2.02. The Closing. The sale and purchase
of the Receivables shall take place at a closing (the
"Closing") at the offices of the Purchaser on the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of
the Seller.
(a) The Seller hereby represents and
warrants to the Purchaser and its respective
successors:
(i) Organization, Etc. The Seller is a
corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(ii) Due Qualification. The Seller is
in good standing and duly qualified to do business in
the States of Delaware and New Jersey and all
jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require
such qualifications.
(iii) Power and Authority. The Seller
has the power and authority to execute and deliver this
Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the
property to be sold and assigned to the Purchaser and
such sale and assignment is valid and binding against
the Seller, and the Seller has duly authorized such
sale and assignment to the Purchaser by all necessary
action; the execution, delivery and performance of this
Agreement have been duly authorized by the Seller by
all necessary action, and this Agreement is the legal,
valid and binding obligation of the Seller enforceable
in accordance with its terms. The Seller has duly
executed and delivered this Agreement and any other
agreements and documents necessary to effectuate the
transactions contemplated hereby.
(iv) No Violation. The consummation of
the transactions contemplated hereby and the
fulfillment of the terms hereof, neither conflict with,
result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of
time) a default under, the certificate of incorporation
or bylaws of the Seller, or any indenture, agreement or
other instrument to which the Seller is a party or by
which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement
or other instrument (other than this Agreement); nor
violate any law or, to the best of Seller's knowledge,
any order, rule or regulation applicable to the Seller
of any court or of any federal or state regulatory
body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or
its properties.
(v) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Seller or its properties: (A) asserting the
invalidity of this Agreement; (B) seeking to prevent
the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Approvals. No approval,
authorization or other action by, or filing with, any
governmental authority of the United States of America
or any of the States is required or necessary to
consummate the transactions contemplated hereby, except
such as have been duly obtained or made by the Closing
Date. Seller complies in all material respects with
all applicable laws, rules and orders with respect to
itself, its business and properties and the
Receivables; and Seller maintains all applicable
permits, licenses and certifications.
(vii) Taxes. The Seller has filed all
federal, state, county, local and foreign income,
franchise and other tax returns required to be filed by
it through the date hereof, and has paid all taxes
reflected as due thereon. There is no pending dispute
with any taxing authority that, if determined adversely
to the Seller, would result in the assertion by any
taxing authority of any material tax deficiency, and
the Seller has no knowledge of a proposed liability for
any tax to be imposed upon the Seller's properties or
assets for which there is not an adequate reserve
reflected in the Seller's current financial statements.
(viii) Investment Company. The Seller is
not, and is not controlled by, an "investment company"
registered or required to be registered under the
Investment Company Act of 1940, as amended.
(ix) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan and all such plans have
been fully funded as of the date of this Agreement.
(x) Trade Names. "Aegis Auto Finance,
Inc." is the only trade name under which the Seller is
currently operating its business; for the six (6) years
(or such shorter period of time during which the Seller
was in existence) preceding the Closing Date, the only
other trade name under which Seller operated its
business is "The Clearing House Corp."
(xi) Ability to Perform. There is no
material impairment in the ability of the Seller to
perform its obligations under this Agreement.
(xii) Valid Business Reasons; No
Fraudulent Transfers. The Seller has valid business
reasons for transferring the Receivables rather than
obtaining a secured loan with the Receivables as
collateral. At the time of the transfer: (i) the
Seller transferred the Receivables to the Purchaser
without any intent to hinder, delay, or defraud any
current or future creditor of the Seller; (ii) the
Seller was not insolvent and did not become insolvent
as a result of the transfer; (iii) the Seller was not
engaged and was not about to engage in any business or
transaction for which any property remaining with the
Seller was an unreasonably small capital or for which
the remaining assets of the Seller were unreasonably
small in relation to the business of the Seller or the
transaction; (iv) the Seller did not intend to incur,
and did not believe or reasonably should not have
believed that it would incur, debts beyond its ability
to pay as they become due; and (v) the consideration
paid by the Purchaser to the Seller for the Receivables
was equivalent to the fair market value of such
Receivables.
(xiii) Chief Executive Office. The Seller
maintains its chief executive office in the State of
New Jersey, and there have been no other locations of
the Seller's chief executive office since January 1995.
(xiv) Adverse Orders. There is no
injunction, writ, restraining order or other order of
any nature binding upon Seller that adversely affects
Seller's performance of this Agreement and the
transactions contemplated hereby.
(b) The Seller makes the following
representations and warranties as to the Receivables
for the benefit of the Purchaser, on which the
Purchaser relies in accepting the Receivables on the
Closing Date. Such representations and warranties
speak as of the Closing Date but shall survive the
sale, transfer and assignment of the Receivables to the
Purchaser.
(i) Characteristics of Receivables.
Each Receivable (A) has been originated in the United
States of America by Seller or a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of
Seller's or such Dealer's business, has been fully and
properly executed by the parties thereto and, if
originated by a Dealer, has been purchased by Seller
from such Dealer or has been financed for such Dealer
under an existing agreement with Seller, (B) has
created a valid, subsisting and enforceable first
priority security interest in favor of the Seller or
the Dealer in the Financed Vehicle, which security
interest, if in favor of the Dealer, has been assigned
by the Dealer to Seller, and which in either case has
been duly assigned by Seller to the Purchaser, (C) is
covered by the VSI Insurance Policy and by the Risk
Default Insurance Policy, (D) contains customary and
enforceable provisions such that the rights and
remedies of the holder thereof are adequate for
realization against the collateral for the benefit of
the security and (E) provides for level monthly
payments (provided that the payment in the first or
last month in the life of the Receivable may be
different from the level payment) that fully amortize
the Amount Financed over an original term of no greater
than 60 months and yield interest at the Annual
Percentage Rate.
(ii) Schedule of Receivables. The
information set forth on the Schedule of Receivables is
true, complete and correct in all material respects as
of the opening of business on the Cutoff Date.
(iii) Compliance With Law. Each
Receivable and the sale of each Financed Vehicle (A)
complied at the time it was originated or made and at
the Closing Date complies in all material respects with
all requirements of applicable federal, State and local
laws and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act,
the Federal Trade Commission Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B
and Z, State adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code, and other
consumer credit laws and equal credit opportunity and
disclosure laws and (B) does not contravene any
applicable contracts to which Seller is a party and no
party to such contract is in violation of any
applicable law, rule or regulation which is material to
the Receivable or the sale of the Financed Vehicle.
(iv) Binding Obligation. Each
Receivable represents the genuine, legal, valid and
binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with
its terms.
(v) No Government Obligor. None of the
Receivables is due from the United States of America or
any State or local government or from any agency,
department or instrumentality of the United States of
America or any State or local government.
(vi) Security Interest in Financed
Vehicle. Immediately prior to the sale, assignment and
transfer thereof, each Receivable is secured by a
validly perfected first priority security interest in
the Financed Vehicle in favor of the Seller as secured
party or all necessary and appropriate actions have
been commenced that would result in the valid
perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as the secured
party.
(vii) Receivables in Force. No
Receivable has been satisfied, subordinated or
rescinded, nor has any Financed Vehicle been released
from the lien granted by the related Receivable in
whole or in part.
(viii) No Waiver. No provision of a
Receivable has been waived, impaired, altered or
modified in any respect except in accordance with the
Servicing Agreement, the substance of which is
reflected in the Schedule of Receivables as it relates
to the information included thereon.
(ix) No Amendments. No Receivable has
been amended such that either the original Scheduled
Payment has been decreased or the number of originally
scheduled due dates has been increased except as
permitted under the terms of the Risk Default Policy.
(x) No Defenses. No right of
rescission, setoff, recoupment, counterclaim or defense
has been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal or
coordinate with, the security interest in the Financed
Vehicle granted by the Obligor pursuant to the
Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more than
thirty (30) days as of the applicable Cutoff Date, no
default, breach, violation or event permitting
acceleration under the terms of any Receivable has
occurred; and no continuing condition that with notice
or the lapse of time would constitute a default,
breach, violation or event permitting acceleration
under the terms of any Receivable has arisen; and the
Seller has not waived any of the foregoing. As of the
date hereof the Seller has no knowledge of any facts
regarding any particular Receivable transferred on such
date indicating that such Receivable would not be paid
in full.
(xiii) Insurance. Each Receivable is
covered, as of the Closing Date and throughout the term
of the Receivable, under the VSI Insurance Policy and
the Risk Default Insurance Policy, and each such
insurance policy is valid and remains in full force and
effect. The Seller, in accordance with its customary
procedures, has required that each Obligor obtain, and
has determined that each Obligor has obtained, physical
damage insurance covering the Financed Vehicle as of
the date of execution of the Receivable insuring repair
or replacement of such Financed Vehicle subject to a
deductibility not in excess of $500.
(xiv) Title. It is the intention of the
Seller that the transfer and assignment of the
Receivables from the Seller to the Purchaser herein
contemplated be treated as an absolute sale for
financial accounting purposes, and that the beneficial
interest in and title to the Receivables not be part of
the property of the Seller for any purpose under state
or federal law. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any
Person other than the Purchaser, except the pledge to
and liens for the benefit of certain of Seller's
creditors which will be released prior to conveyance to
the Purchaser hereunder. Immediately prior to the
transfer and assignment herein contemplated, the Seller
had good and marketable title to each Receivable free
and clear of all Liens and rights of others; and,
immediately upon the transfer thereof, the Purchaser
will have good and marketable title to each Receivable,
free and clear of all Liens and rights of others; and
the transfer has been validly perfected under the UCC.
(xv) Lawful Assignment. No Receivable
has been originated in, or is subject to the laws of,
any jurisdiction under which the sale, transfer and
assignment of such Receivable under this Agreement or
pursuant to transfers of the Certificates is or shall
be unlawful, void or voidable.
(xvi) All Filings Made. All filings
(including, without limitation, UCC filings) necessary
in any jurisdiction to give the Purchaser a first
perfected security interest in the Receivables have
been made.
(
xvii) One Original. There is only one
original executed copy of each Receivable.
(xviii) Maturity of Receivables. Each
Receivable had an original maturity of not more than 60
months.
(xix) Monthly Payments. Each Receivable
provides for level monthly payments (provided that the
payment in the first or last month in the life of the
Receivable may be minimally different from such level
payment) which fully amortize the amount financed over
the original term; provided, however, that the Risk
Default Policy provides that loan extensions will be
allowed, subject to no more than one extension during
each 12 months in the Receivable's term.
(xx) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxi) Bankruptcy Proceeding. No
Receivable as of the Cutoff Date is noted in the
Seller's records as a dischargeable debt under a
bankruptcy proceeding.
(xxii) Chattel Paper, Valid and Binding.
Each Receivable constitutes "chattel paper" under the
UCC, and is the legal, valid and binding obligation of
the Obligor thereunder in accordance with the terms
thereof.
(xxiii) No Future Advances. The full
principal amount of each Receivable has been advanced
to each Obligor or advanced in accordance with the
directions of each such Obligor, and there is no
requirement for future advances thereunder. The
Obligor with respect to the Receivable does not have
any options under such Receivable to borrow from any
person additional funds secured by the Financed
Vehicle. Each Receivable as of the Closing Date is
fully secured by the related Financed Vehicle.
(xxiv) Underwriting Guidelines. Each
Receivable has been originated in accordance with the
Underwriting Guidelines and in accordance with the
underwriting guidelines acceptable to the Risk Default
Insurer.
(xxv) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
(xxvi) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each Financed
Vehicle is in good repair and working order.
(xxvii) Servicing. At the Cutoff Date,
each Receivable was being serviced by the Servicer.
(xxviii) Eligible Loan. Each
Receivable constitutes an "Instrument" and each
Financed Vehicle constitutes "Eligible Collateral" as
defined in and for purposes of the Risk Default
Insurance Policy. Neither the insured under the Risk
Default Insurance Policy nor any Person acting on
behalf of such insured has concealed or misrepresented
any material facts or circumstances regarding any
matter that would serve as a basis for the Risk Default
Insurer to void the Risk Default Insurance Policy.
(xxix) Original Principal Amount. The
original principal amount of each Receivable (A)
originated under the original "Zero Down" and the
"Reduced Income" programs, was not more than (1) in the
case of new Financed Vehicles, the lower of (x) 105.49%
of the manufacturer's suggested retail price plus
rebatable premiums on cancelable items and (y) 120% of
the manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, the lower of (x)
105.49% of the retail value of the Financed Vehicle at
the time of origination of the Receivable as set forth
in the Kelley "Blue Book" for the appropriate region
plus rebatable premiums on cancelable items and (y)
120% of such Kelley "Blue Book" retail value; (B)
originated under the "First Time Buyer" program, was
not more than (1) in the case of new Financed Vehicles,
95% of the manufacturer's suggested retail price plus
rebatable premiums on cancelable items of up to 15% of
the manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, 95% of the retail value
of the Financed Vehicle at the time of origination of
the Receivable as set forth in the Kelley "Blue Book"
for the appropriate region plus rebatable premiums on
cancelable items of up to 15% of the manufacturer's
suggested retail price and (C) originated under the
"Military Program" was not more than 105% of the
manufacturer's suggested retail price or, in the case
of used Financed Vehicles, 105% of the Kelley "Blue
Book" retail value. All of the Additional Receivables
will be originated in accordance with the applicable
Underwriting Guidelines.
(xxx) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Seller or its respective properties: (A) asserting
the invalidity of any of the Receivables; (B) seeking
to prevent the enforcement of any of the Receivables;
or (C) seeking any determination or ruling that might
materially and adversely affect the payment on or
enforceability of any Receivable.
(c) The Seller makes the following
additional representations, warranties and covenants
for the benefit of the Purchaser on which the Purchaser
relies in accepting the Receivables on the Closing
Date, which representations, warranties and covenants
shall survive the Closing Date.
(i) Location of Servicer Files. The
Servicer Files are kept by the Servicer at the location
listed in Exhibit C hereto.
(ii) Evidence of Security Interest. On
the Closing Date the Seller shall deliver or cause to
be delivered to the Purchaser, (A) an original
certificate of title or (B) if the applicable state
title registration agency does not deliver certificates
of title to lienholders, such other document delivered
to the Seller by the state title registration agency
evidencing the security interest of the Seller in the
Financed Vehicle, or (C) a guarantee of title or a
copy of an application for title if no certificate of
title or other evidence of the security interest in the
Financed Vehicle has yet been issued, for each Financed
Vehicle relating to each Receivable sold, transferred,
assigned and conveyed hereunder; provided, however,
that any original certificate of title or other
document evidencing the security interest of the Seller
in the Financed Vehicle not so delivered on the Closing
Date due to the fact that such title or other document
has not yet been issued by a state title registration
agency and delivered to the Purchaser as of such date,
shall be delivered by the Seller to the Purchaser
within one hundred twenty (120) days after the Closing
Date or such later date as permitted by the Purchaser;
provided, further, that failure to so deliver any
original certificate of title or other document
evidencing the security interest of the Seller in the
Financed Vehicle shall be deemed to be a breach by the
Seller of its representations and warranties contained
in this Section 3.01.
(iii) Insurance Claims. The Seller
shall provide to the Purchaser, within five (5)
Business Days of receipt or distribution thereof, (A)
copies of all documents received from the Risk Default
Insurer contesting the eligibility of any claim made
under a Risk Default Policy and (B) copies of all
documents regarding the resolution of alleged
ineligible claims.
(iv) Business Purpose. The Seller will
sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the
Receivables for a bona fide business purpose.
(v) Financial Accounting Purposes. The
Seller and the Purchaser, as owner of the Receivables,
each intend to treat the transactions contemplated by
this Agreement as an absolute sale of the Receivables
by the Seller for financial accounting purposes.
(vi) Valid Transfer. This Agreement
constitutes a valid transfer by the Seller to the
Purchaser of all of the Seller's right, title and
interest in the Receivables and the other Property.
(vii) Seller's Obligations. The
Seller has submitted all necessary documentation for
payment of the Receivables to the Obligors and has
fulfilled all of its applicable obligations hereunder
required to be fulfilled as of the Closing Date.
(viii) Insurance Policies. The Seller
will not cancel, nor permit the cancellation of, the
Risk Default Insurance Policy or VSI Insurance Policy,
in each case as it relates to the Receivables.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the
Purchaser. The obligation of the Purchaser to purchase
the Receivables is subject to the satisfaction of the
following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Seller hereunder
shall be true and correct on the Closing Date and the
Seller shall have performed all obligations to be
performed by each of them hereunder on or prior to the
Closing Date.
(b) Files Marked; Files and Records owned by
Purchaser. The Seller shall, at its own expense, on or
prior to the Closing Date indicate in its files that
the Receivables have been sold to the Purchaser
pursuant to this Agreement and the Seller shall deliver
to the Purchaser a Schedule of Receivables certified by
the Chairman, the President, the Vice President or the
Treasurer of the Seller to be true, correct and
complete. Further, the Seller hereby agrees that the
computer files and other physical records of the
Receivables maintained by the Seller will bear an
indication reflecting that the Receivables have been
sold to the Purchaser.
(c) Documents to be Delivered by the Seller
at the Closing.
(i) The Assignment. At the Closing,
the Seller will execute and deliver an Assignment
substantially in the form of Exhibit A hereto with
respect to the Receivables then being sold.
(ii) Evidence of UCC Filings. The
Seller shall record and file, at its own expense, UCC-3
termination statements in each jurisdiction required by
applicable law, to release any prior security interests
in the Receivables granted by the Seller, and (B) on or
prior to the Closing Date, UCC financing statements in
each jurisdiction in which required by applicable law,
executed by the Seller as seller or debtor, and naming
the Purchaser as purchaser or secured party,
identifying the Receivables and the other Property as
collateral, meeting the requirements of the laws of
each such jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and
conveyance of such Receivables to the Purchaser. The
Seller shall deliver file-stamped copies, or other
evidence satisfactory to the Purchaser of such filing,
to the Purchaser on or prior to the Closing Date.
(iii) Evidence of Insurance and Payment.
On the Closing Date the Seller shall deliver to
Purchaser evidence of payment in full of all premiums
due under the Risk Default Insurance Policy and the VSI
Insurance Policy with respect to the Receivables being
sold on such date.
(iv) Other Documents. Such other
documents, including without limitation powers of
attorney with respect to the Receivables, as the
Purchaser may reasonably request.
Section 4.02. Conditions to Obligation of the
Seller. The obligation of the Seller to sell the
Receivables to the Purchaser on the Closing Date is
subject to the condition that at the Closing Date the
Purchaser will deliver to the Seller the Receivables
Purchase Price for the Receivables, as provided in
Section 2.01(b).
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows:
Section 5.01. Protection of Right, Title and
Interest.
(a) Filings. The Seller shall cause all
financing statements and continuation statements and
any other necessary documents covering the right, title
and interest of the Purchaser in and to the Receivables
and Property to be promptly filed, and at all times to
be kept recorded, registered and filed, all in such
manner and in such places as may be required by law
fully to preserve and protect the right, title and
interest of the Purchaser hereunder to the Receivables
and Property. The Seller shall deliver to the
Purchaser file-stamped copies of, or filing receipts
for, any document recorded, registered or filed as
provided above, as soon as available following such
recordation, registration or filing. The Purchaser
shall cooperate fully with the Seller in connection
with the obligations set forth above and will execute
any and all documents reasonably required to fulfill
the intent of this Section 5.01(a).
(b) Name Change. At least fifteen days
before the Seller makes any change in its name,
identity or corporate structure which would make any
financing statement or continuation statement filed in
accordance with paragraph (a) above seriously
misleading within the applicable provisions of the UCC
or any title statute, the Seller shall give the
Purchaser notice of any such change and no later than
five (5) days after the effective date thereof, shall
file such financing statements or amendments as may be
necessary to continue the perfection of the Purchaser's
security interest in the Property.
Section 5.02. Other Liens or Interests. Except
for the conveyances hereunder, the Seller will not
sell, pledge, assign or transfer the Receivables to any
other person, or grant, create, incur, assume or suffer
to exist any Lien on any interest therein, and the
Seller shall defend the right, title, and interest of
the Purchaser in, to and under such Receivables against
all claims of third parties claiming through or under
the Seller.
Section 5.03. Chief Executive Office. The Seller
shall give written notice to the Purchaser at least 30
days prior to relocating its chief executive office and
shall make such filings under the UCC as shall be
necessary to maintain the perfection of the security
interest (as defined in the UCC) in the Receivables
granted in favor of the Purchaser hereunder.
Section 5.04. Purchaser as Named Insured; Pledge
of Proceeds. The Seller shall cause the Purchaser to
be identified as the named insured or additional
insured under the Risk Default Insurance Policy and as
an additional insured, as its interests may appear,
under the VSI Insurance Policy as of the Closing Date.
The Seller hereby assigns to the Purchaser any interest
it may have in any and all proceeds with respect to a
Receivable under the terms of any of the foregoing
insurance policies.
Section 5.05. Costs and Expenses. The Seller
agrees to pay all reasonable costs and disbursements in
connection with the perfection, as against all third
parties, of the sale to the Purchaser of the Seller's
right, title and interest in and to the Receivables.
Section 5.06. No Waiver. The Seller shall not
waive any default, breach, violation or event
permitting acceleration under the terms of any
Receivable.
Section 5.07. Location of Servicer Files. The
Servicer Files have been delivered to the location
listed in Exhibit C hereto.
Section 5.08. Sale of Receivables. The Seller
will take no action inconsistent with the Purchaser's
ownership of the Receivables. If a third party,
including a potential purchaser of the Receivables,
should inquire, the Seller will promptly indicate that
ownership of the Receivables has been transferred to
the Purchaser.
Section 5.09. The Seller's Records. This
Agreement and all related documents describe the
transfer of the Receivables from the Seller as an
absolute sale by the Seller to the Purchaser and
evidence the clear intention by the Seller to
effectuate an absolute sale and assignment of such
Receivables. The financial statements and tax returns
of the Seller will disclose that, under generally
accepted accounting principles, or for tax purposes,
respectively, the Seller transferred ownership of the
Receivables.
Section 5.10. Financial Statements. The Seller
will furnish to the Purchaser and each
Certificateholder, (A) within 90 days after the end of
its fiscal year, an unaudited balance sheet as at the
end of such fiscal year and the related statements of
income and cash flow for such fiscal year, setting
forth in comparative form the figures as at the end of
and for the previous fiscal year and (B) within 45 days
after the end of each of the first three quarterly
accounting periods in each fiscal year, an unaudited
balance sheet of the Seller as at the end of such
quarterly period setting forth in each case in
comparative form the figures for the corresponding
periods of the previous fiscal year.
Section 5.11. Compliance with Laws, Etc. The
Seller will comply in all material respects with all
applicable laws, rules, regulations, judgments, decrees
and orders (including those relating to the Receivables
and any other agreements related thereto), where the
failure so to comply, individually or in the aggregate
for all such failures, would have a reasonable
likelihood of having a material adverse effect on the
business or properties of the Seller.
Section 5.12. Preservation of Existence. The
Seller will preserve and maintain its existence,
rights, franchises and privileges in the jurisdiction
of its organization, and qualify and remain qualified
in good standing in each jurisdiction where the failure
to preserve and maintain such existence, rights,
franchises, privileges and qualifications would have a
reasonable likelihood of having a material adverse
effect on the business or properties of the Seller.
Section 5.13. Keeping of Records and Books of
Account. The Seller shall maintain and implement
administrative and operating procedures (including, an
ability to recreate records evidencing its Receivables
in the event of the destruction of the originals
thereof), and shall keep and maintain, or cause to be
kept or maintained, all documents, books, records and
other information which, in the reasonable
determination of Purchaser are necessary or advisable
in accordance with prudent industry practice and custom
for transactions of this type for the collection of all
Receivables. Seller shall maintain or cause to be
maintained at all times accurate and complete books,
records and accounts relating to the Receivables, which
books and records shall be marked to indicate the sales
of all Receivables hereunder.
Section 5.14. Separate Existence of Purchaser.
Seller will, and will cause each other affiliate to,
take all reasonable steps to continue their respective
identities as separate legal entities and to make it
apparent to third Persons that each is an entity with
assets and liabilities distinct from those of Purchaser
and that Purchaser is not a division of the Seller or
any other Person.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification. The Seller shall
indemnify the Purchaser for any liability as a result
of the failure of a Receivable to be originated in
compliance with all requirements of law and for any
breach of any of its representations and warranties
contained herein. These indemnity obligations shall be
in addition to any obligation that the Seller may
otherwise have.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Obligations of the Seller. The
obligations of the Seller under this Agreement shall
not be affected by reason of any invalidity, illegality
or irregularity of any Receivable.
Section 7.02. Repurchase or Substitution Upon
Breach. (a) The Seller hereby covenants and agrees to
deliver to the Purchaser, prompt written notice of the
occurrence of a breach of any of the representations
and warranties of the Seller contained or deemed to be
contained in Section 3.01(b) hereof with respect to any
Receivable. If such breach shall not have been cured
by the thirtieth day following discovery thereof, the
Seller shall be obligated to repurchase such Receivable
hereunder from the Purchaser at the Purchase Amount on
a date which shall be no later than the fifth Business
Day following the applicable cure period. For purposes
of this Section, the Purchase Amount of a Receivable
which is not consistent with the warranty pursuant to
Section 3.01(b)(i)(E) shall include such additional
amount as shall be necessary to provide the full amount
of principal and interest as contemplated therein.
(b) The foregoing notwithstanding, the Seller
shall also have the option of substituting, within the
five Business Day period following the applicable cure
period, a Receivable conforming to the requirements
hereof (a "Substitute Receivable") for any breach or
failing Receivable instead of repurchasing such
Receivable, provided any such substitution occurs
within ninety (90) days of the Closing Date. It shall
be a condition of any such substitution that (i) the
outstanding Principal Balance of the Substitute
Receivable as of the date of substitution shall be less
than or equal to the outstanding Principal Balance of
the replaced Receivable as of the date of substitution;
provided that an amount equal to the difference, if
any, between the outstanding Principal Balance of the
replaced Receivable and the outstanding Principal
Balance of the Substitute Receivable shall be paid in
cash to Purchaser; (ii) the remaining term to maturity
of the Substitute Receivable shall not be greater than
that of the replaced Receivable; (iii) the Cutoff Date
with respect to the Substitute Receivable shall be
deemed to be the first day of the month of the
substitution; (iv) the Substitute Receivable otherwise
satisfies the conditions of Section 3.01(b) hereof (the
Seller shall be deemed to make all representations and
warranties contained in Section 3.01(b) and (c) hereof
with respect to the Substitute Receivable as of the
date of substitution); and (v) the Seller shall have
delivered to the Purchaser all of the documents
specified in Section 4.01(c) hereof with respect to the
Substitute Receivable on or before the date of
substitution.
Section 7.03. Purchaser's Assignment of
Nonconforming Receivables. With respect to all
Receivables repurchased or substituted for by the
Seller pursuant to this Agreement, the Purchaser shall
assign, without recourse, representation or warranty,
to the Seller all the Purchaser's right, title and
interest in and to such Receivables, and all security
and documents relating thereto.
Section 7.04. Amendment. This Agreement may be
amended from time to time by a written amendment duly
executed and delivered by the Seller and the Purchaser.
Section 7.05. Waivers. No failure or delay on
the part of the Purchaser in exercising any power,
right or remedy under this Agreement or the Assignments
shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power, right or remedy
preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
Section 7.06. Notices. All communications and
notices pursuant hereto to any party shall be in
writing or by telegraph or telex and addressed or
delivered to it at its address (or in case of telex, at
its telex number at such address) shown in the preamble
of this Agreement or at such other address as may be
designated by it by notice to the other party and, if
mailed or sent by telegraph or telex, shall be deemed
given when mailed, communicated to the telegraph office
or transmitted by telex.
Section 7.07. Costs and Expenses. The Seller
will pay all expenses, including reasonable fees and
expenses of counsel, incident to the performance of its
obligations under this Agreement and the Seller agrees
to pay all reasonable out-of-pocket costs and expenses
in connection with the enforcement of any obligation of
the Seller hereunder.
Section 7.08 Acknowledgement Concerning
Insurance Proceeds. The Seller hereby acknowledges and
agrees for the benefit of the Purchaser, that any
checks representing Risk Default Insurance Proceeds or
proceeds from claims on any Insurance Policies in
respect of the Receivables that at any time may be made
payable to the Seller will be so made payable for
reasons of administrative and claims processing
convenience only and that, notwithstanding that such
checks may be made so payable, the Seller shall have no
right, title or interest in such proceeds.
Section 7.09. Limited Recourse to Purchaser. The
Seller agrees that the obligations of the Purchaser
hereunder are payable solely from the Purchaser's
interests in the Property and that the Seller may not
look to any other property or assets of the Purchaser
in respect of such obligations.
Section 7.10. Headings and Cross-References. The
various headings in this Agreement are included for
convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement.
References in this Agreement to Section names or
numbers are to such Sections of this Agreement.
Section 7.11. Governing Law. This Agreement and
the Assignment shall be governed by and construed in
accordance with the laws of the State of New Jersey
without regard or reference to principles of conflicts
of laws of such state.
Section 7.12. Counterparts. This Agreement may
be executed in two or more counterparts, each of which
shall be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereby have caused
this Purchase Agreement to be executed by their
respective officers thereunto duly authorized as of the
date and year first above written.
AEGIS AUTO FINANCE, INC.,
as Seller
By
Joseph F. Battiato
President
AEGIS AUTO FUNDING CORP.,
a Delaware corporation, as Purchaser
By
Angelo R. Appierto
President
EXHIBIT A
ASSIGNMENT
For value received in accordance with the Purchase
Agreement dated as of May ___, 1996, (the "Purchase
Agreement"), by and between the undersigned ("the
Seller"), and Aegis Auto Funding Corp., a Delaware
corporation (the "Purchaser"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto
the Purchaser, without recourse, (i) all right, title
and interest of the undersigned in and to the
Receivables identified on the Schedule attached hereto,
all moneys received thereon on and after the Cutoff
Date allocable to principal, and all moneys received
thereon allocable to interest accrued thereon from and
including the Cutoff Date therefor; (ii) the security
interests of the Seller in the Financed Vehicles
granted by the Obligors pursuant to the Receivables;
(iii) the interest of the Seller in any Risk Default
Insurance Proceeds and any proceeds from claims on any
Insurance Policies (including the VSI Insurance Policy)
covering the Receivables, the Financed Vehicles or
Obligors from the Cutoff Date; and (iv) the proceeds of
any and all of the foregoing. The foregoing sale does
not constitute and is not intended to result in any
assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other
person in connection with the Receivables, Servicer
Files, any insurance policies or any agreement or
instrument relating to any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part
of the undersigned contained in the Purchase Agreement
and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them in the
Purchase Agreement.
IN WITNESS WHEREOF, the undersigned has caused
this Assignment to be duly executed as of [CLOSING
DATE].
AEGIS AUTO FINANCE INC.,
III
By
Name:
Title:
EXHIBIT B
SCHEDULE OF RECEIVABLES
EXHIBIT C
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
SCHEDULE A
DESCRIPTION OF COLLATERAL
EXHIBIT 10.92
June 25, 1996
Rothschild, Inc.
1251 Avenue of the Americas
New York, New York 10020
Attn: Ms. Jewelle W. Bickford
Managing Director
Re: Placement Agency Agreement dated December
13, 1995
Gentlemen:
Reference is made to that certain Placement
Agency Agreement,
dated December 13, 1995 by and among Aegis Auto Trust
1995, Aegis Auto
Finance, Inc., Aegis Auto Funding Corp. II and
Rothschild, Inc. (the
"Placement Agreement"). Capitalized terms used and not
otherwise defined
herein shall have the meanings ascribed to them in the
Placement Agreement.
Section 2(c) of the Placement Agreement
provides, among other
things, that the Placement Agent shall under certain
circumstances be entitled to
act as exclusive Placement Agent with respect to the
acquisition of Additional
Securities by certain purchasers, including, as set
forth in Section 2(c)(ii)
thereof, Greenwich Capital Markets, Inc. and its
affiliates (collectively referred
to herein as "Greenwich").
Rothschild, Inc. acknowledges that The Aegis
Consumer Funding
Group, Inc. and/or certain of its affiliates
(collectively referred to herein as
"Aegis") has entered into, and intends to continue to
enter into, certain
transactions with Greenwich.
In lieu of any rights that Rothschild may
have under Section 2(c)
of the Placement Agreement in respect of acquisition of
non-MBIA-insured
Additional Securities (hereinafter "Excluded
Securities") by Greenwich, Aegis
hereby agrees to cause Greenwich to permit Rothschild
to participate as a
Placement Agent in the placement of Excluded Securities
with Greenwich upon
the following terms and conditions:
(a) Rothschild shall be entitled to
participate with Greenwich in
the placement of up to $75,000,000 in aggregate face
amount of certain
Excluded Securities including the "Class A
Certificates" in Aegis' next two
asset-backed securities transactions (the
"Transactions"), with up to $45,000,000
in face amount of Excluded Securities made available to
Rothschild in the first
such transaction and up to the balance, not to exceed
$45,000,000, in face
amount of Excluded Securities made available to
Rothschild in the second such
transaction. Rothschild shall be named as a placement
agent in such
Transactions.
(b) Rothschild shall have the right, but not
the obligation, to
place Excluded Securities made available to Rothschild
in the Transactions.
Rothschild may decline to place Excluded Securities
made available to it
hereunder for any reason.
(c) The total compensation payable to
Rothschild with respect to
the Transactions shall be the greater of (i) 3/8 of one
percent of the aggregate
face amount of the Excluded Securities placed by
Rothschild based on
confirmed orders at the pricing level which has been
designated to Rothschild
as of the pricing of the Class A Certificates by
Greenwich (the "Pricing") or (ii)
the Minimum Fee (as hereinafter defined); provided
that, other than with
respect to compensation payable to Rothschild and to
Greenwich, the interest
rate and other economic terms and conditions of sale of
such securities by
Rothschild shall be no less favorable to Aegis than the
interest rate and other
economic terms and conditions of sale of the same issue
of securities by
Greenwich. The compensation payable to Rothschild
hereunder shall be paid
(i) in respect of the first Transaction, not later than
the closing of the first
Transaction, in an amount not less than $75,000 and not
more than $168,750
and (ii) in respect of the second Transaction, not
later than the closing of the
second Transaction or December 20, 1996, whichever
first occurs, in an amount
not less than an additional $75,000 and not more than
$168,750. The aggregate
minimum amount of $150,000 payable under subclauses (i)
and (ii) of the
preceding sentence is referred to herein as the
"Minimum Fee". The Minimum
Fee shall be payable by Aegis to Rothschild whether or
not any Excluded
Securities are made available to, placed by, priced,
offered or sold comparably
to Greenwich by, or declined by, Rothschild in either
or both of the
Transactions and whether or not the second Transaction
shall occur. In no
event shall the fees payable to Rothschild in both
transactions exceed $281,250
in the aggregate. Each party shall pay its own
expenses with respect to the
Transactions.
(d) The Class A Certificates will be jointly
marketed by
Rothschild and Greenwich. If an investor in the Class
A Certificates is
approached by both entities, the investor shall
designate the allocation of an
order between them. An investor who is approached by
only one entity will
designate the order to the entity who approached him.
(e) Aegis will determine when the
Certificates will be priced,
based in part upon Greenwich's recommendation.
(f) In the event all of the Class A
Certificates have not been
sold as of the Pricing, Greenwich has agreed to
purchase any Certificates not
sold as of the Pricing. Notwithstanding the limitation
set forth in Section (c)
above, in the event Greenwich purchases any such
unsold Class A Certificates
at the Pricing, Rothschild will have the opportunity to
place additional Class A
Certificates at the same 3/8 of one percent fee after
the Pricing provided that
the amount of such additional certificates placed and
economic terms of the
placement must be acceptable to Greenwich.
Upon payment to Rothschild of the fees to which it
is entitled as set
forth above in connection with the Transactions,
Rothschild shall have no
further rights to participate in or receive fees of any
kind with respect to any
business that Aegis may transact with Greenwich
involving Excluded
Securities and which, but for this agreement, would
have been covered by
Section 2(c) of the Placement Agreement. In the event
that Rothschild shall
either (i) fail to receive aggregate compensation of
not less than $150,000
under subparagraph (c) above or (ii) shall not be given
the opportunity to sell
up to $75,000,000 in face amount of Excluded Securities
in accordance with
procedures outlined in subparagraphs (d) through (f)
yielding a fee to
Rothschild of not less than 3/8 of one percent of the
aggregate face amount of
such Excluded Securities as set forth above,
Rothschild's rights under Section
2(c) of the Placement Agreement with regard to Excluded
Securities to be
acquired by Greenwich shall continue in full force and
effect, provided that, in
such event, the compensation actually received by
Rothschild with respect to
the Transactions shall be credited against the
compensation to which Rothschild
may thereafter be entitled under Section 2(c) of the
Placement Agreement with
respect to business Aegis may transact with Greenwich
in respect of Excluded
Securities that may be covered thereby.
This agreement is without prejudice to the
rights of Rothschild
or Aegis under or in respect of the Placement Agreement
other than as
expressly set forth herein. Nothing herein contained
shall be deemed an
admission or agreement by either party regarding the
interpretation of Section
2(c) of the Placement Agreement or the rights of
Rothschild or Aegis under
such Section apart from this Agreement. Except to the
extent modified herein
with respect to rights under Section 2(c) in respect of
Excluded Securities to be
acquired by Greenwich, the Placement Agreement shall
continue in full force
and effect. Without limiting the foregoing, nothing
herein shall be deemed to
amend or modify the rights of Rothschild under Section
2(c) of the Placement
Agreement in respect of acting as exclusive placement
agent for MBIA-insured
Additional Securities of Aegis to be acquired by any
person as set forth therein.
Except for any placement agency agreement
that may be entered
into among the parties with respect to a particular
Transaction, this agreement
constitutes the entire agreement and understanding of
the parties hereto with
respect to the matters and transactions contemplated
hereby and shall supersede
any prior agreements or understandings regarding the
sale of Excluded
Securities to Greenwich, including specifically, the
letter agreement between the
parties hereto dated May 28, 1996 and the provisions of
Section 2(c) of the
Placement Agreement in respect of Greenwich relating to
non-MBIA-insured
Additional Securities, except as set forth herein.
Neither this Agreement nor
any term hereof may be changed, waived, discharged or
terminated orally but
only by an instrument in writing signed by the party
against whom enforcement
of the change, waiver, discharge or termination is
sought. This agreement may
be executed in counterparts, each of which shall
constitute an original but all of
which together shall constitute one instrument. This
agreement shall be
governed by and construed in accordance with the laws
of the State of New
York without regard to the laws thereof concerning
conflicts of laws.
If the foregoing is in accordance with your
understanding, kindly
sign and return to us the enclosed duplicate hereof,
whereupon it will become a
binding agreement between the undersigned and you in
accordance with its
terms.
Very truly yours,
AEGIS AUTO TRUST
1995
AEGIS AUTO FINANCE,
INC.
AEGIS AUTO FUNDING
CORP. II
By:___________________________
Joseph F.
Battiato
President
The foregoing agreement is hereby
confirmed and accepted as of the date
first above written.
ROTHSCHILD, INC.
By:_____________________________
Jewelle W. Bickford
Managing Director
EXHIBIT 10.93
February 28, 1996
Proprietary and Confidential, not to be Distributed
Outside of The Aegis Consumer Funding Group, Inc. and
its Affiliates
Mr. Angelo R. Appierto
Chairman of the Board
The Aegis Consumer Funding Group, Inc.
525 Washington Blvd.
Jersey City, NJ 07310
Dear Angelo:
Greenwich Capital Markets, Inc. together with its
affiliates ( Greenwich ) is pleased to submit to The
Aegis Consumer Funding Group, Inc. ( Aegis ) its
commitment, subject to the conditions set forth in the
attached Summaries of Terms and in Annex A hereto, to
provide Aegis with the following financing facilities
(the Facilities ):
(i) $100,000,000 Senior Warehouse Facility;
(ii)$414,875,000 1, 2
Senior Term Securitization Facility;
(iii)$63,750,000 1
Subordinated Term Securitization Facility; and
(iv) $5,000,000 Junior Subordinated Notes
1 Subject to variation as described in the related
Summary of Terms enclosed herewith
2 After provision for initial reserve deposits, as
illustrated in Annex B hereto
At your request, the pricing of the Facilities, rather
than being determined discretely for each Facility, has
been determined on the basis of Greenwich performing
all of the services described herein.
It is contemplated that the Senior Warehouse Facility
could be converted into a loan purchase facility, which
would likely permit Aegis to book partial gains-on-sale
earlier than under the Senior Warehouse Facility and
would potentially provide greater flexibility to Aegis
in the timing of securitizations. However, since the
purchase facility generally would expose Greenwich to
greater risk than the Senior Warehouse Facility, Aegis
agrees that such purchase facility would be structured
to permit Greenwich in its discretion to dispose of
purchased loans through securitizations or otherwise as
necessary to protect its investment in the loans.
Aegis further agrees
that it will be obligated to deliver to Greenwich the
Warrants together with a Warrant Agreement containing
the terms, and on the schedule, described in Annex C
hereto, upon completion of documentation.
It is expected that Greenwich will have performed
sufficient due diligence with respect to the Facilities
to present the Senior and Subordinated Term
Securitization Facilities and the Junior Subordinated
Note for approval by the Greenwich Credit and
Investment Banking Committees by March 15, 1996, and
the Senior Warehouse Facility for similar approval by
March 15, 1996. Aegis agrees to cooperate in good
faith with Greenwich to enable Greenwich to conclude
its due diligence, and to negotiate in good faith
commercially reasonable documentation of the
Facilities.
This letter and the attachments hereto set forth the
entire agreement of Greenwich and Aegis with respect to
the subject matter hereof and supersede all prior
discussions and correspondence. This letter will be
governed by and construed in accordance with New York
law without regard to its conflicts of laws. In
addition, please note that Greenwich s commitment
pursuant to this letter is subject to withdrawal after
the close of business on Thursday, March 1, 1996.
If the foregoing is acceptable to Aegis, please
indicate its agreement to be bound by the provisions of
this letter, including the attachments hereto, by
executing this letter in the space provided below.
Very truly yours,
Konrad R. Kruger
Co-President
Accepted and agreed
Aegis Consumer Funding Group, Inc.
By:
Title:
A duly authorized officer
cc: Barry Sloane, Sloane Advisors
SENIOR WAREHOUSE FACILITY
Summary of Terms
Greenwich will provide, as soon as practicable
(expected to be on or about March 29, 1996), a
revolving credit facility (the Facility ) providing,
subject to the conditions described below, a guaranteed
advance rate.
Borrower: Aegis Special Purpose Corporation (
Aegis SPC ), a wholly-owned subsidiary of Aegis.
Guarantor: Aegis and Aegis Consumer Finance, Inc.
will each guarantee the performance of Aegis SPC under
the terms of the Facility.
The Facility: Up to $150 million new and used
automobile and light duty truck loan Variable Funding
Notes, of which $100 million will be committed by
Greenwich (the Greenwich Notes ), which Variable
Funding Notes may be issued in one or more classes. At
issuance, the Greenwich Notes will be purchased by
Greenwich and may be sold in whole or in part at
Greenwich s discretion. At the request of Aegis, the
balance of the Variable Funding Notes will be placed by
Greenwich on a best efforts basis (it being understood
that the issuance of Variable Funding Notes other than
the Greenwich Notes is contingent upon their
placement).
In addition, Greenwich will use its
reasonable best efforts to implement a wet funding
component of the Facility within 60 days.
Purpose: To finance the origination of loans
secured by new and used automobiles and light duty
trucks (the Contracts ) qualified under Aegis lending
programs until securitized as described below.
Advance Rate: With respect to Contracts which are
delinquent 30 days or less, the lesser of:
(i) The most recently applicable
Committed Underwriting Proceeds Percentage (as such
term is defined in the Senior and Subordinated Term
Securitization Facility Summary of Terms) of the face
amount of the Contracts less 1% (initially, 94.725% for
uninsured Contracts and 96.725% for Contracts insured,
on the basis of an 8% deductible, by The Connecticut
Indemnity Company); and
(ii) 95% of the market value of the
Contracts, as determined by Greenwich based upon
commercially reasonable parameters and concepts
reflected in the Loan documentation acceptable to the
parties.
With respect to Contracts which are
31-60 days delinquent at the time of pledging under the
Facility (which category of Contracts may not, after
giving effect to any Facility advance with respect to
any such Contract, constitute more than 5% (by dollar
amount) of all Contracts pledged under the Facility),
90% of the lesser of:
(i) the face amount of the Contracts;
and
(ii) the market value of the Contracts,
as determined by Greenwich based upon commercially
reasonable parameters and concepts reflected in the
Loan documentation acceptable to the parties.
Security: The unpaid principal balance of each
Contract, any dealer holdbacks and a perfected first
lien on all Contracts and all rights, take-out
commitments and proceeds related thereto, together with
amounts on deposit from time to time in the Reserve
Fund, as described below.
Eligible Collateral: Contracts conforming to Aegis
credit guidelines (as verified by Greenwich by
underwriting sample or otherwise) and having criteria
of eligibility which include, but are not limited to:
(i) The respective document file shall
have been delivered to and verified by a third party
custodian acceptable to Greenwich;
(ii) The Contract shall not be greater
than 60 days past due;
(iii) With respect to any Contract
which is 31-60 days delinquent at the time of funding,
the aggregate dollar amount of all such Contracts,
including the Contract to be funded, shall not exceed
5% of the aggregate dollar amount of all Contracts
pledged under the Facility; and
(iv) other, customary criteria of
eligibility.
Term of Facility: 364 days from the date of closing,
provided that upon the agreement of both parties, the
Facility may be extended through 1997.
Interest Rate: One month LIBOR, as set on the first
business day of each week for all fundings to be
effected during such week, plus 3.00%; provided
however, that if one month LIBOR changes by greater
than 0.25% after having been set, then one month LIBOR,
for purposes of subsequent fundings during the week,
will be reset daily. Interest is payable monthly in
arrears.
Facility Fee: 0.25% per annum non-utilization fee,
payable quarterly in arrears.
Mandatory
Prepayments: Mandatory prepayments or the pledge of
additional Eligible Collateral will be required in the
amounts by which outstanding borrowings under the
Facility exceed the permitted borrowing base as
described under Advance Rate above.
Mandatory
Repurchase: Any Contract (i) which is defaulted and
has been charged off, (ii) as to which the related
vehicle has been repossessed, (iii) which becomes
greater than 90 days past due, (iv) as to which no
payment has been made and which is 45 days or more
delinquent or (v) which has been pledged under the
Facility for 120 or more days will be required to be
repurchased by Aegis. In addition, Aegis will be
required to repurchase 61-90 day delinquent Contracts
in a dollar amount sufficient to maintain the dollar
proportion of such 61-90 day delinquent Contracts at or
below 5% of all Contracts pledged under the Facility.
Conditions
Precedent to
Initial Borrowing: Usual for facilities and
transactions of this nature, including, but not limited
to:
(i) Execution and delivery of all
documentation satisfactory to Greenwich and its
counsel;
(ii) Absence of default under any
existing credit agreements;
(iii) Accuracy of Representations
and Warranties;
(iv) Receipt of valid security interest;
and
(v) Legal opinions from counsel for the
Borrower satisfactory to Greenwich and its counsel
addressing lien perfection, bankruptcy and other
matters.
Conditions
Precedent to
All Borrowings: Customary, including, but not
limited to:
(i) All Representations and Warranties
are true on and as of the date of the borrowing as
though made on and as of such date;
(ii) No Event of Default, or event which
with the giving of notice or lapse of time or both
would be an Event of Default, has occurred or is
continuing, or would result from such borrowing;
(iii) No change shall have occurred
in the management of Aegis or any of its material
operating subsidiaries which, in the reasonable
judgment of Greenwich, would result in a material
adverse change in the business of Aegis;
(iv) No material adverse change shall
have occurred in the financial or operating condition,
business or prospects of Aegis or any of its material
operating subsidiaries;
(v) An applicable borrowing base
certificate has been completed, certifying that after
giving effect to the requested borrowing, no Mandatory
Prepayment will be required; and
(vi) The borrowing will not contravene
any applicable law.
In addition, Greenwich reserves the
right to conduct continuing due diligence of Aegis and
its material operating subsidiaries.
Representations
And Warranties: Corporate - Aegis will make
customary Representations and Warranties, including
with respect to its financial statements and other
information furnished, no material adverse changes,
litigation, compliance with laws (including ERISA and
government agencies), insurance, taxes, properties and
licenses.
Asset-Related - Representations and
Warranties reasonably required by Greenwich for planned
or actual secondary market execution.
Covenants: Those negative, affirmative and
financial covenants customarily found in credit
agreements appropriate in the context of the proposed
transaction containing customary cure provisions.
Requirements will include, but not be
limited to, the following:
(i) Minimum net worth equal to the
greater of (a) $15,000,000 or (b) 85% of prior fiscal
year-end equity;
(ii) Maximum leverage ratio of 13 to 1
(the leverage ratio being defined as the ratio of
consolidated indebtedness to consolidated net worth).
For this purpose indebtedness will not include
consolidated corporate indebtedness related to
structured receivables transactions;
(iii) Maximum three-month rolling
average 30+ day delinquency (including Contracts as to
which the related vehicle is in repossession inventory)
for Aegis portfolio of automobile and light duty truck
receivables of 12%;
(iv) Maximum three-month rolling average
annualized repossessions of 15%;
(v) Maximum annualized portfolio losses
of 7.5% and static pool losses on seasoned pools of
15%;
(vi) Neither Aegis nor the Aegis SPC
will use the proceeds of the Facility to acquire or
finance Margin Stock as defined in Federal Reserve
Regulations G, T, U or X;
(vii) Standard loan covenants (e.g.,
prohibition on debt, negative pledges, etc.); and
(viii) Without Greenwich s consent,
Aegis will not make cash dividends or distributions to
shareholders in any fiscal year in an amount greater
than the lesser of $1 million or 50% of prior fiscal
year net income.
Events of Default
and Remedies: Customary for transactions of this type.
Exclusive Right To
Securitize: Greenwich shall have the exclusive
right, but not any obligation, to underwrite, at
market, any securities collateralized by Contracts
financed under the Facility which are issued by Aegis
within one year of the initial advance under the
Facility, subject to the terms and conditions of the
Senior and Subordinated Term Securitization Facility.
Expenses: Reasonable legal and other costs and
expenses incurred in connection with the preparation
and negotiation of warehouse-related documentation, and
upfront and ongoing custodial fees and expenses will be
paid by Aegis as incurred. Wherever possible,
Greenwich will negotiate fee caps on behalf of Aegis.
Greenwich will pay its own costs and expenses,
including the costs relating to structuring the
Variable Funding Notes.
SENIOR AND SUBORDINATED
TERM SECURITIZATION FACILITY
Summary of Terms
Greenwich commits, on a forward basis, to underwrite
Aegis automobile and light duty truck receivable
securitization transactions, and in connection
therewith to provide, subject to the terms and
conditions described below, guaranteed underwriting
proceeds to Aegis.
Underwriting
Commitment: Greenwich will commit to underwrite
Aegis auto receivable-backed securities as and when
issued, in an amount (the Committed Underwriting
Proceeds Amount ) equal, with respect to each
securitization occurring during the term of the
Underwriting Commitment, to the product of 95.725%
(97.725% for insured receivables) (the Committed
Underwriting Proceeds Percentage ) and the aggregate
principal amount of receivables securitized. Greenwich
will purchase each class of securities (or portion
thereof), in order of class designation (from
senior-most in credit priority to junior-most) and in
each case at a market price as reasonably determined by
Greenwich, until the aggregate proceeds to Aegis equals
the Committed Underwriting Proceeds Amount.
In connection with its Underwriting
Commitment, Greenwich will propose to Aegis, and Aegis
may select, structures which will maximize Aegis cash
proceeds and GAAP gain-on-sale; provided, that any
structure selected by Aegis shall result in the
realization of net cash proceeds at least equal to the
Committed Underwriting Proceeds Amount. To the extent
it is deemed desirable by Aegis to conduct public
offerings of Aegis securities, Greenwich will make
available, when effective, its SEC shelf registration
to facilitate such offerings. In connection with any
securitization, it will be Greenwich s intention to
maximize the initial distribution of Aegis securities.
In addition to the foregoing, Greenwich
will, upon the request of Aegis, undertake to place, on
a best efforts basis, any securities not required to be
purchased by Greenwich pursuant to its Underwriting
Commitment.
Finally at the request of Aegis,
Greenwich will immediately undertake to sell or arrange
for a third party to finance on behalf of Aegis, or to
securitize and place, in either case on a ninety-day
exclusive, best efforts basis, Aegis retained residual
interests in its seven outstanding grantor trusts. In
connection with any securitization, Greenwich will
propose alternative structures to Aegis, and Aegis will
select that structure which produces the most
favorable GAAP treatment and cash gains. In connection
with any direct placement, Greenwich will seek bids to
purchase or finance all or a portion of the residual
interests, present any and all bids to Aegis and assist
Aegis in effecting settlement with any party whose bid
is accepted by Aegis. In any securitization or
placement as described in this paragraph, it will be
Greenwich s objective to produce cash proceeds to Aegis
sufficient to retire all debt (including the Junior
Subordinated Notes) secured in whole or in part by the
residual interests.
Term of the
Underwriting
Commitment: Until the date on which the aggregate
principal amount of receivables securitized by Aegis in
Greenwich-underwritten transactions hereunder equals or
exceeds $500,000,000.
Underwriting
Mandate: Aegis will commit its next $250 million
of securitization business, inclusive of the
securitization reflected in the letter agreement
between Greenwich and Aegis dated February 16, 1996,
subject only to the existing Rothschild commitment of
approximately $140 million, to Greenwich on an
exclusive basis. Aegis will use its best efforts to
fulfill its commitment within two years. As
compensation to Greenwich for its Underwriting
Commitment, Aegis will pay to Greenwich, at the closing
of each successive securitization transaction, the
applicable underwriting fees, as set forth below:
Security Underwriting Fee
Rating (As % of Par
Amount)
Senior Investment Grade 0.625%1/0.565%2
Mezzanine Investment Grade 1.500%
Speculative Grade 3.500%
Non-Rated Negotiated
1 Applicable to securities priced at
101% of par or higher
2 Applicable to securities priced at
less than 101% of par
In addition, as compensation for any
private placement of Aegis securities by Greenwich as
described in the third paragraph under Underwriting
Commitment above (other than in connection with Aegis
retained residual interests in its seven outstanding
grantor trusts), Aegis will pay to Greenwich, at the
time of settlement of the applicable securities, a
placement fee to be negotiated.
In the event Aegis retains Greenwich in
connection with any securitization, financing or direct
placement of Aegis retained residual interests in its
seven outstanding grantor trusts, Aegis will pay to
Greenwich, at the closing of the transaction, a fee
equal to 3.50% of the gross proceeds realized by Aegis
from the securitization, financing or direct placement
of its retained residual interests.
Notwithstanding the foregoing, Aegis may
withdraw the Underwriting Mandate if the Committed
Underwriting Proceeds Percentage is reduced below the
level specified under Adjustment of Committed
Underwriting Proceeds Percentage below. In addition,
subject to its commitment to deliver a minimum of $250
million in securitization business to Greenwich, Aegis
shall have the right to effect a sale, securitization
or other disposition of its Contracts through a party
other than Greenwich if such sale, securitization or
other disposition would produce, for identical or
greater net committed underwriting proceeds to Aegis,
an all-in cost of funds at least 0.15% lower than would
be provided by Greenwich under its final securitization
proposal for such Contracts, which may be presented as
a counter-proposal to any such third party proposal.
It is expressly understood and agreed by Aegis that any
proprietary structure proposed by Greenwich to Aegis,
including any structure proposed to Aegis prior to the
execution of this Commitment Letter, is proprietary and
may not be disclosed to any other party at any time
during which any contractual agreement relating to the
Contracts is in force between Aegis and Greenwich.
Aegis will commit to do an additional
$250 million of securitization business (the Secondary
Commitment ) on an exclusive basis with Greenwich under
the identical terms applicable to the first $250
million in securitization business, but may effect a
securitization through a party other than Greenwich for
any reason; provided however, that if in connection
with any such third party securitization transaction
the all-in cost of funds is not at least 0.15% lower
than would be provided by Greenwich under its final
securitization proposal for such transaction (any third
party securitization conducted under such
circumstances, a Discretionary Out ), Aegis will pay
the following break-up fees to Greenwich:
*0.35% of the first $125,000,000 in
Contracts securitized by Aegis with a third party
pursuant to a Discretionary Out
*0.50% of the second $125,000,000
in Contracts securitized by Aegis with a third
party pursuant to a Discretionary Out.
Discretionary Outs will be applied in
reduction of the Secondary Commitment.
Purpose: To provide a guaranteed advance rate to
Aegis with respect to its originations which will
obviate the need for the majority of the residual
financing upon which Aegis currently relies.
Substituting a committed securitization take-out for
single-source secured financing, which by its nature is
subject to variability, will increase the certainty of
Aegis all-in execution.
Conditions
Precedent: Each purchase by Greenwich of Aegis
securities will be conditioned upon the following:
(i) Execution of definitive
documentation relating to the issuance of the
securities in form and substance reasonably
satisfactory to Greenwich;
(ii) Receipt of legal opinions customary
in rated asset-backed securities transactions which are
reasonably satisfactory to Greenwich;
(iii) The execution by Aegis of a
standard purchase agreement relating to Greenwich s
purchase of securities pursuant to the Underwriting
Commitment, which purchase agreement will provide,
among other things, for the indemnification by Aegis of
Greenwich, its affiliates, directors, officers,
employees, agents, consultants and counsel for material
misstatements or omissions or alleged misstatements or
omissions contained in any offering document prepared
by Aegis in connection with the offering of securities,
other than any such misstatements or omissions in
information provided by Greenwich in writing expressly
for inclusion in such offering document;
(iv) No change shall have occurred in
the management of Aegis or any of its material
operating subsidiaries which, in the reasonable
judgment of Greenwich, would result in a material
adverse change in the business of Aegis; and
(v)No material adverse change shall have occurred in
the financial or operating condition, business or
prospects of Aegis or any of its material operating
subsidiaries.
In addition, Greenwich reserves the
right to conduct continuing due diligence of Aegis and
its material operating subsidiaries.
Adjustment of
Committed
Underwriting
Proceeds Percentage: In the event that either or
both of the following conditions cannot be met with
respect to any securitization:
(i) The performance of Aegis past
originations shall not have worsened, or the credit
quality of the receivables underlying the subject
securitization changed adversely, so as to result in an
increase in the levels of credit support required for
applicable rating categories by any rating agency
(other than Duff & Phelps Credit Rating Co.) rating a
current issue over those required for any previous
securitization as to which Greenwich was the
underwriter, or, in the case of Duff & Phelps Credit
Rating Co., as evidenced by an increase in the levels
of credit support required for applicable rating
categories over those required in the Aegis Auto
Receivables Trust 1995-4 transaction;
(ii) The level of prevailing interest
rates shall not have increased relative to the APRs of
the receivables so as to result, by virtue of a
reduction in available net excess spread, in an
increase in the levels of credit support required for
each applicable rating category by any rating agency
(other than Duff & Phelps Credit Rating Co.) rating a
current issue over those required for any previous
securitization as to which Greenwich was the
underwriter, or, in the case of Duff & Phelps Credit
Rating Co., so as to result in an increase in the
levels of credit support required for applicable rating
categories over those required in the Aegis Auto
Receivables Trust 1995-4 transaction,
the Committed Underwriting Proceeds
Percentage will be reduced such that Greenwich s
underwriting risk, as measured by credit rating and
other factors, is consistent with previous
securitizations (or, in the case of the first
securitization structure as to which Greenwich is the
underwriter, consistent with the pro forma
securitization structure summarized in Annex B hereto).
Before giving effect to any reduction in the Committed
Underwriting Proceeds Percentage, Greenwich will
demonstrate in good faith the appropriateness of such
reduction to the reasonable satisfaction of Aegis.
Representations
And Warranties: Aegis will make, as of the cut-off
date for each securitization, Representations and
Warranties in form and content comparable to those made
in the Aegis Auto Receivables Trust 1995-4 transaction,
except as from time to time may be required by a rating
agency or credit enhancement provider and except as may
be reasonably requested by Greenwich.
Servicing: The receivables underlying each
securitization over the Term of Greenwich s
Underwriting Commitment will be serviced, except as may
be required by one or more rating agencies involved in
such securitization or by a participating third-party
credit enhancement provider, in the same manner, to the
same standard and for the same level of compensation as
provided in the Aegis Auto Receivables Trust 1995-4
transaction (except, to the extent Aegis assumes the
entirety of servicing responsibility for its
receivables in the future, as may be agreed by
Greenwich and Aegis).
Expenses: Legal and rating agency costs and
expenses incurred in connection with the preparation
and negotiation of securitization-related
documentation, registration fees (if applicable),
upfront and ongoing custodial and trustee fees and
expenses, bond insurer premiums, fees and expenses (if
applicable) and accountants comfort letters shall be
paid by Aegis as incurred. Where possible, Greenwich
will negotiate fee and/or expense caps on behalf of
Aegis. Greenwich will pay its own costs and expenses,
including the costs relating to its due diligence of
the receivables underlying each securitization.
JUNIOR SUBORDINATED NOTES
Summary of Terms
Greenwich will provide a stand-by facility structured
as a secured, full recourse loan (the Loan ),
evidenced by a junior subordinated note (the
Subordinated Note ), to Aegis, the proceeds of which
will be disbursed, following the completion of
documentation, subject to the conditions described
below.
Borrower: Aegis.
Loan Amount: $5 million.
Purpose: At the discretion of Aegis, to provide
funds for take-down by Aegis, in minimum $500,000
draws, for the purpose of funding anticipated expenses
relating to the transfer of certain loan servicing
responsibilities to Aegis from American Lenders
Facilities, Inc. (ALFI), effecting certain upgrades to
its systems, funding reserve funds required in
connection with securitization transactions and renting
additional space to accommodate increased staff, as
well as for general corporate purposes.
Security: At the time of, and as a condition to
any take-down under the Loan, Aegis shall deliver to
Greenwich as security for Aegis obligations a valid
security interest in assets reasonably satisfactory to
Greenwich.
The collateral provided hereunder shall
be marked to market on a quarterly basis by Greenwich.
In the event that Greenwich shall conclude in the
exercise of its reasonable judgment as a market
professional that the value of the collateral shall be
insufficient given the outstanding principal balance on
the Loan, Aegis shall either pay down the outstanding
principal balance under the Loan or deliver to
Greenwich within five business days of notification of
the deficiency, a valid security interest in assets
reasonably satisfactory to Greenwich, sufficient to
restore the value of the collateral pledged hereunder
to an amount reasonable to secure the outstanding
principal balance of the Loan.
Term of Loan: One year. At maturity, accrued and
unpaid interest and the entire remaining unpaid
principal balance of the Loan will be due; provided,
however, that the maturity date may be extended up to
six months with the permission of Greenwich (such
extended maturity date, the Final Maturity ), which
permission will not be unreasonably withheld, if each
of the following are applicable as of the original
maturity date:
(i) No Event of Default, or event which
with the giving of notice or lapse of time or both
would be an Event of Default, has occurred or is
continuing;
(ii) No Covenant, as set forth below,
has been breached during the term of the Loan;
(iii) Aegis has originated at least
$400 million in aggregate original principal amount of
automobile and light duty truck receivables during the
term of the Loan; and
(iv) Greenwich shall have the reasonable
expectation that a secondary public equity offering or
other cash infusion or revenue event will provide a
source for repayment of the Loan prior to Final
Maturity.
Interest Rate: One month LIBOR, reset monthly, plus
9.00%, or at the initial and irrevocable option of
Aegis, a fixed rate of 15%. Interest is payable
monthly in arrears.
Conditions
Precedent to
Borrowing: Usual for transactions of this nature,
including, but not limited to, the following:
(i) Execution and delivery of all
documentation satisfactory to Greenwich and its
counsel;
(ii) Absence of default under any
existing credit agreements;
(iii) Accuracy of Representations
and Warranties;
(iv) Receipt of valid security interest;
(v) Legal opinions from counsel for
Borrower satisfactory to Greenwich and its counsel
addressing lien perfection, enforceability and other
matters; and
(vi) The borrowing will not contravene
any applicable law.
Representations
And Warranties: Aegis will make customary
Representations and Warranties, including with respect
to its financial statements and other information
furnished, no material adverse changes, litigation,
compliance with laws (including ERISA and government
agencies), insurance, taxes, properties and licenses.
Covenants: Those negative, affirmative and
financial covenants customarily found in credit
agreements appropriate in the context of the proposed
transaction.
Requirements will include, but not be
limited to, the following:
(i) Minimum net worth equal to the
greater of (a) $15,000,000 or (b) 85% of prior fiscal
year-end equity;
(ii) Maximum leverage ratio of 13 to 1
(the leverage ratio being defined as the ratio of
consolidated indebtedness to consolidated net worth).
For this purpose indebtedness will not include
consolidated corporate indebtedness related to
structured receivables transactions;
(iii) Maximum three-month rolling
average 30+ day delinquency (including Contracts as to
which the related vehicle is in repossession inventory)
for Aegis portfolio of automobile and light duty truck
receivables of 12%;
(iv) Maximum three-month rolling average
annualized repossessions of 15%;
(v) Maximum annualized portfolio losses
of 7.5% and static pool losses on seasoned pools of
15%;
(vi) Aegis will not use the proceeds of
the Loan to acquire or finance Margin Stock as
defined in Federal Reserve Regulations G, T, U or X;
(vii) Standard loan covenants (e.g.,
prohibition on debt, negative pledges, etc.); and
(viii) Without Greenwich s consent,
Aegis will not make dividends or distributions to
shareholders in any fiscal year in an amount greater
than the lesser of $1 million or 50% of prior fiscal
year net income.
Events of Default
and Remedies: Customary for transactions of this type
(material adverse change, etc.).
Expenses: Reasonable expenses incurred by
Greenwich in connection with its extension of the Loan,
including, but not limited to, the fees and expenses of
its counsel, will be paid by Aegis as incurred;
provided, however, that Greenwich will pay those costs
and expenses associated with its due diligence of those
assets constituting security for the Loan. Wherever
possible, Greenwich will negotiate fee caps on behalf
of Aegis.
ANNEX A
CONDITIONS TO THE FACILITIES
The following are
each a condition precedent to the execution by
Greenwich of definitive documentation relating to each
Facility:
(i) Greenwich has completed to its satisfaction its
due diligence of Aegis, its management and controlling
stockholders, its systems, underwriting, servicing and
collections operations, its review of Aegis static
pool performance and its sample review of Aegis loan
files;
(ii) Each Facility has been approved by Greenwich s
Credit and Investment Banking Committees;
(iii) No change shall have occurred in the
management of Aegis or any of its material operating
subsidiaries which, in the reasonable judgment of
Greenwich, would result in a material change in the
business of Aegis;
(iv) No material adverse change has occurred in the
financial or operating condition, business or prospects
of Aegis or any of its subsidiaries or affiliates;
(v) Aegis has demonstrated to Greenwich s satisfaction
that it would have adequate cash or capital resources,
after giving effect to the Facilities, to fund its
operations and capital expenditures over the next
twelve months; and
The execution by Greenwich of definitive documentation
relating to the Facilities described hereabove will be
accomplished concurrently.
ANNEX C
Description of Warrants
Warrants to purchase 7.5% of the outstanding common
stock of Aegis (the Warrants ), calculated at the time
of issuance thereof, at an exercise price (payable in
cash or in additional warrants) of $7 per share,
subject to the anti-dilution adjustments, as described
below.
The Warrants will remain exercisable for three years
from the date of issuance of the first warrant.
Warrants shall be exercisable in whole or in part at
any time or from time to time; provided, however, that
the exercise of warrants which, when taken together
with all other shares of common stock of Aegis owned by
Greenwich, would increase Greenwich s ownership to
greater than 4.9% of the outstanding Aegis common
stock, may be effected only:
(i) for the purpose of the sale of the underlying
common stock in a broad based public offering;
(ii) for the purpose of the sale in connection
with a private placement, including 144A sale, of the
underlying common stock in which no one purchaser
acquires more than 2% of the outstanding common stock;
(iii) for the purpose of the sale of the
underlying common stock to a purchaser who is already a
controlling shareholder of Aegis; and
(iv) for the purpose of the sale of the underlying
common stock back to Aegis.
The Warrants will be granted and delivered to Greenwich
concurrent with or prior to execution of definitive
documentation for all of the facilities herebove
described. However, the ability of Greenwich to
exercise such Warrants shall vest pursuant to the
following schedule:
(i) 2.5% upon execution of definitive
documentation relating to the Facilities;
(ii) 1.5% upon the purchase by Greenwich (expected
on or before March 31, 1996) of the portion of Aegis
Auto Loan Receivables Trust 1996- 1 Pass-Through
Certificates rated BB and higher by Duff & Phelps
Credit Rating Co.; (iii) for each calendar
quarter commencing April 1, 1996, warrants to purchase
a percentage of the outstanding shares of Aegis equal
to the product of (a) the ratio of (1) the sum of the
aggregate dollar volume of Contracts originated by
Aegis and securitized by Greenwich during such quarter
plus the aggregate dollar volume of any Contracts sold,
securitized or otherwise disposed of during such
quarter with a third party (other than contracts placed
through the existing Rothschild facility) where the
all-in cost of funds are not at least 0.30% less than,
and the net committed proceeds generated are not
identical or greater than, that offered by Greenwich
under its final securitization proposal for such
Contracts, to (2) $390,000,000 and (b) 2.0%, until
warrants to purchase a total of 2.0% of the shares of
Aegis have been issued to Greenwich pursuant to this
clause (iii); provided, however, that if during any
such quarter Greenwich shall have exercised its right
to terminate the Senior Warehouse Facility or the
Senior and Subordinated Term Securitization Facility,
then for purposes of clause (iii)(a)(l) effect will be
given only to Contract originations occurring up to
such date of termination; and
(iv) 1.5% upon renewal by Greenwich, upon
substantially similar terms, of the Senior Warehouse
Facility to provide for at least $100 million of
continued funding thereunder through December 1997.
In addition, the Warrants will be freely transferable
subject only to compliance with Federal securities
laws. Holders of the Warrants will have two demand
registration rights (to be exercised no more often than
once in any calendar year) covering the underlying
common stock, unlimited piggyback registration rights
and customary anti-dilution provisions protecting the
holders against stock splits, stock dividends and
additional issuance of common stock; provided, however,
that such registration shall not require interim audit
of the Company s financial statements under SEC
regulations. It is understood and agreed that
piggyback registration rights, if exercised by
Greenwich, will be subject to the consent of the
underwriter of the related equity offering, and that
Greenwich s rights will be subordinate to those of
Aegis but pari passu with those of participating
shareholders (other than shares offered for sale by the
underwriters in the Company s IPO pursuant to Warrants
issued to said underwriters).
The demand and piggyback registration rights granted
hereunder will expire 2 years from expiration of the
last Warrant granted hereunder. The Warrant agreement
and registration rights agreement will contain such
other provisions including those relating to
indemnification, and fees and expenses as are customary
for transactions of this kind.
In the event of the sale or merger of Aegis or the sale
of substantially all of its assets, the holders of the
Warrants will have the right to acquire upon exercise
of the Warrants the same kind and amount of securities
as they had been entitled to prior to the merger or
sale.
EXHIBIT 10.93.1
June 25, 1996
VIA FACSIMILE AND FEDERAL EXPRESS
Mr. Thomas E. Capasse
Senior Vice President
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Dear Tom:
Enclosed is a letter agreement dated June 25, 1996
between The Aegis Consumer Funding Group, Inc.
("Aegis") and Rothschild, Inc. ("Rothschild") with
respect to certain rights that Rothschild is being
given to participate in the next two successive
securitization transactions effected by Greenwich (the
"Rothschild Letter"). By signing a copy of this
letter, you agree to undertake your best efforts to
effect the next two successive transactions on behalf
of Aegis in a manner that will allow Rothschild to
participate in those transactions as set forth in the
Rothschild Letter and to earn the fees therein
contemplated.
In consideration for your efforts in this regard,
Aegis does agree to increase the amount of securities
to be delivered to you for securitization in accordance
with the terms of its Commitment Letter dated February
28, 1996 by $55 million in face amount which will be
added to the first phase of the commitment resulting in
a total of $305 million.
In the event Rothschild participates in either of
the Transactions, Aegis shall indemnify and hold
Greenwich harmless from and against any claims,
liabilities or demands arising with respect to any fees
or other compensation claimed by Rothschild arising by
virtue of any transaction with Aegis other than (i) any
fees due and payable to Rothschild for placing
Certificates as contemplated by the Rothschild Letter
and (ii) payment of the Minimum Fee as defined and
contemplated by the Rothschild Letter. Any fees or
other payments due to Rothschild under the Rothschild
Letter shall be paid by Aegis provided that Aegis is
hereby permitted to deduct such fees from the fees and
compensation that is otherwise due to Greenwich under
the particular Transaction with respect to which fees
are also due to Rothschild.
Aegis shall also indemnify and hold harmless
Greenwich with respect to any losses incurred by
Greenwich as a result of the failure of any investor
identified by Rothschild in a Transaction having failed
to purchase the certificates placed by Rothschild
provided, however, that such indemnification shall not
exceed the amount of money paid as an indemnification
of Aegis by Rothschild under the Rothschild Letter for
such loss.
If the terms of this letter are acceptable, kindly
execute a copy and return it to the undersigned.
Very truly yours,
Joseph F. Battiato
President
The terms of the within letter are specifically
agreed to:
GREENWICH CAPITAL MARKETS, INC.
By:__________________________________
Thomas E. Capasse
EXHIBIT 10.94
$100,000,000
WAREHOUSE LENDING AGREEMENT
Dated as of May 17, 1996
AMONG
THE AEGIS CONSUMER FUNDING GROUP,
INC.,
as Guarantor,
AEGIS CONSUMER FINANCE, INC.,
as Guarantor,
AEGIS AUTO FUNDING CORP. III,
as Borrower,
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.,
as Lender
TABLE OF
CONTENTS
ARTICLE I. DEFINITIONS; CONSTRUCTION . . . . . . . . .
. . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . .
. . . . . . . . . 1
Section 1.02. Accounting Terms and
Determinations . . . . . . . . . . . . . . .
. . . . . . . . . 15
Section 1.03. Other Definitional
Terms. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 15
ARTICLE II. AMOUNT AND TERMS OF THE LOANS
. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 15
Section 2.01. The Loans. . . . . . . . . . . . .
. . . . . . . . . 15
Section 2.02. The Note . . . . . . . . . . . . .
. . . . . . . . . 16
Section 2.03. Making the Loans . . . . . . . . .
. . . . . . . . . 16
Section 2.04. Use of Proceeds. . . . . . . . . .
. . . . . . . . . 16
ARTICLE III. FEES, INTEREST, PAYMENTS,
ETC.. . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 17
Section 3.01. Non-Utilization Fee. . . . . . . .
. . . . . . . . . 17
Section 3.02. Interest on the
Loans. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 17
Section 3.03. No Optional
Prepayments. . . . . . . . . . . . . . . . .
. . . . . . . . . 17
Section 3.04. Mandatory Repayments
and Prepayments. . . . . . . . . . . . . . .
. . . . . . . . . 17
Section 3.05. Funds; Manner of
Payment. . . . . . . . . . . . . . . . . . .
. . . . . . . . . 18
Section 3.06. Default Interest . . . . . . . . .
. . . . . . . . . 19
Section 3.07. Requirements of Law. . . . . . . .
. . . . . . . . . 19
Section 3.08. Indemnity. . . . . . . . . . . . .
. . . . . . . . . 20
Section 3.09. Illegality;
Substituted Interest Rate, etc.
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 20
Section 3.10. Application of
Payments, etc. . . . . . . . . . . . . . . .
. . . . . . . . . 21
Section 3.11. Collection Account,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 22
Section 3.12. Extension of
Termination Date . . . . . . . . . . . . . .
. . . . . . . . . 22
ARTICLE IV. CONDITIONS TO CLOSING AND THE
LOANS . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 22
Section 4.01. Conditions Precedent
to the Closing . . . . . . . . . . . . . . .
. . . . . . . . . 22
Section 4.02. Conditions Precedent
to All Loans . . . . . . . . . . . . . . . .
. . . . . . . . . 25
ARTICLE V. REPRESENTATIONS AND WARRANTIES
. . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 27
Section 5.01. Existence; Conduct of
Business . . . . . . . . . . . . . . . . . .
. . . . . . . . . 27
Section 5.02. Corporate Power and
Authority. . . . . . . . . . . . . . . . . .
. . . . . . . . . 27
Section 5.03. No Violation . . . . . . . . . . .
. . . . . . . . . 27
Section 5.04. Approvals,
Authorizations, Consents, etc.
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 28
Section 5.05. No Litigation. . . . . . . . . . .
. . . . . . . . . 28
Section 5.06. Tax Liability. . . . . . . . . . .
. . . . . . . . . 28
Section 5.07. Regulation G . . . . . . . . . . .
. . . . . . . . . 28
Section 5.08. Permits, Licenses,
Approvals, Consents,
Compliance with Requirements of
Law, etc.. . . . . . . . . . . . .
. . . . . . . . . 28
Section 5.09. Financial Statements;
Material Adverse Change
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 29
Section 5.10. The Investment
Company Act, Etc.. . . . . . . . . . . . . .
. . . . . . . . . 29
Section 5.11. The Security
Agreement. . . . . . . . . . . . . . . . . .
. . . . . . . . . 29
Section 5.12. Eligible Contracts . . . . . . . .
. . . . . . . . . 29
Section 5.13. Ownership of
Properties; Insurance. . . . . . . . . . . .
. . . . . . . . . 29
Section 5.14. Ownership of the
Borrower . . . . . . . . . . . . . . . . . .
. . . . . . . . . 29
Section 5.15. Full Disclosure. . . . . . . . . .
. . . . . . . . . 29
Section 5.16. Intellectual
Property.. . . . . . . . . . . . . . . . . .
. . . . . . . . . 30
Section 5.17. ERISA. . . . . . . . . . . . . . .
. . . . . . . . . 30
Section 5.18. Subsidiaries.. . . . . . . . . . .
. . . . . . . . . 30
Section 5.19. Related Documents. . . . . . . . .
. . . . . . . . . 30
ARTICLE VI. AFFIRMATIVE COVENANTS . . . . . . . . . .
. . . . . . . . . 31
Section 6.01. Financial Statements
and Other Information
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 31
Section 6.02. Compliance with Laws,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 32
Section 6.03. Preservation of
Corporate Existence;
Conduct of Business. . . . . . . . . . . . .
. . . . . . . . . 32
Section 6.04. Payment of Taxes and
Claims, etc. . . . . . . . . . . . . . . . .
. . . . . . . . . 32
Section 6.05. Keeping of Books,
Visitation, Inspection, etc. . . . . .
. . . . . . . . . 33
Section 6.06. Pay Obligations. . . . . . . . . .
. . . . . . . . . 33
Section 6.07. Notice of Default,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 33
Section 6.08. Notice of Material
Adverse Change . . . . . . . . . . . . . . .
. . . . . . . . . 34
Section 6.09. Further Assurances . . . . . . . .
. . . . . . . . . 34
Section 6.10. Enforceability of
Obligations. . . . . . . . . . . . . . . . .
. . . . . . . . . 34
Section 6.11. Fulfillment of
Obligations. . . . . . . . . . . . . . . . .
. . . . . . . . . 34
Section 6.12. Dealer Recourse. . . . . . . . . .
. . . . . . . . . 35
Section 6.13. Borrowing Base
Certificates . . . . . . . . . . . . . . . .
. . . . . . . . . 35
Section 6.14. Monthly Reporting
Requirements . . . . . . . . . . . . . . . .
. . . . . . . . . 35
Section 6.15. Corporate
Separateness of the Borrower . . . . . . . .
. . . . . . . . . 35
Section 6.16. Insurance. . . . . . . . . . . . .
. . . . . . . . . 36
Section 6.17. Post-Closing
Deliveries . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
ARTICLE VII. NEGATIVE COVENANTS . . . . . . . . . . .
. . . . . . . . . 36
Section 7.01. Liens and Other
Interests. . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
Section 7.02. Sale and Purchase
Agreement, etc.. . . . . . . . . . . . . . .
. . . . . . . . . 36
Section 7.03. Special Purpose. . . . . . . . . .
. . . . . . . . . 37
Section 7.04. Indebtedness . . . . . . . . . . .
. . . . . . . . . 37
Section 7.05. Merger or
Consolidation. . . . . . . . . . . . . . . .
. . . . . . . . . 37
Section 7.06. Net Worth of Aegis . . . . . . . .
. . . . . . . . . 37
Section 7.07. Total Indebtedness to
Net Worth of Aegis. . . . . . . . . .
. . . . . . . . . 37
Section 7.08. Dividends, etc.. . . . . . . . . .
. . . . . . . . . 37
Section 7.09. Transactions with
Affiliates . . . . . . . . . . . . . . . . .
. . . . . . . . . 37
ARTICLE VIII. EVENTS OF DEFAULT . . . . . . . . . . .
. . . . . . . . . 38
Section 8.01. Events of Default. . . . . . . . .
. . . . . . . . . 38
ARTICLE IX. GUARANTEE . . . . . . . . . . . . . . . .
. . . . . . . . . 41
Section 9.01. Guarantee. . . . . . . . . . . . .
. . . . . . . . . 41
Section 9.02. No Subrogation . . . . . . . . . .
. . . . . . . . . 41
Section 9.03. Amendments, etc. with
respect to the
Obligations; Waiver of Rights. . . . . . . .
. . . . . . . . . 41
Section 9.04. Guarantee Absolute
and Unconditional. . . . . . . . . . . . . .
. . . . . . . . . 42
Section 9.05. Reinstatement. . . . . . . . . . .
. . . . . . . . . 43
Section 9.06. Payments . . . . . . . . . . . . .
. . . . . . . . . 43
ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . .
. . . . . . . . . 44
Section 10.01. Notices. . . . . . . . . . . . . .
. . . . . . . . . 44
Section 10.02. Amendments, Waivers,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 45
Section 10.03. No Waiver; Remedies
Cumulative . . . . . . . . . . . . . . . . .
. . . . . . . . . 45
Section 10.04. Payment of Expenses,
Indemnity, etc.. . . . . . . . . . . . . . .
. . . . . . . . . 45
Section 10.05. Benefits of Agreement
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 46
Section 10.06. Right of Setoff. . . . . . . . . .
. . . . . . . . . 47
Section 10.07. Survival of Agreement
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 47
SECTION 10.08. GOVERNING LAW. . . . . . . . . . .
. . . . . . . . . 47
Section 10.09. Counterparts . . . . . . . . . . .
. . . . . . . . . 47
Section 10.10. Headings Descriptive
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 48
Section 10.11. Severability . . . . . . . . . . .
. . . . . . . . . 48
Section 10.12. Entire Agreement. . . . . . . . .
. . . . . . . . . 48
Section 10.13. Submission to
Jurisdiction; Venue. . . . . . . . . . . . .
. . . . . . . . . 48
Section 10.14. Post-Closing
Syndication Amendments . . . . . . . . . . .
. . . . . . . . . 49
SECTION 10.15. WAIVER OF JURY TRIAL
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 50
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C-1 FORM OF BORROWING BASE
CERTIFICATE
EXHIBIT C-2 FORM OF REMITTANCE
CERTIFICATE
EXHIBIT C-3 FORM OF PORTFOLIO CONTRACTS
CERTIFICATE
EXHIBIT C-4 FORM OF PERMITTED SALE NOTICE
EXHIBIT D FORM OF SECURITY AGREEMENT
EXHIBIT E-1 FORM OF OPINION OF SPECIAL
COUNSEL
TO THE GUARANTORS AND THE
BORROWER
EXHIBIT E-2 FORM OF OPINION OF COUNSEL TO
THE GUARANTORS AND THE
BORROWER
SCHEDULES
SCHEDULE I REPRESENTATIONS, WARRANTIES
AND COVENANTS
WITH RESPECT TO CONTRACTS
SCHEDULE II UNDERWRITING CRITERIA
SCHEDULE III DEALER AGREEMENT
SCHEDULE IV INSURANCE
SCHEDULE V PLANS
SCHEDULE VI SUBSIDIARIES
WAREHOUSE LENDING AGREEMENT, dated as of
May 17, 1996, among THE AEGIS CONSUMER FUNDING
GROUP, INC., a Delaware corporation ("Aegis"),
AEGIS CONSUMER FINANCE, INC., a Delaware
corporation ("Aegis Consumer Finance"), AEGIS
AUTO FUNDING CORP. III, a Delaware corporation
(the "Borrower"), and GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC., a Delaware
corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower is a wholly-owned
special purpose subsidiary of Aegis Auto
Finance, Inc., a Delaware corporation ("Aegis
Auto Finance");
WHEREAS, the Borrower and Aegis Auto
Finance are parties to that certain Purchase
Agreement, dated as of May 17, 1996 (the
"Purchase Agreement") pursuant to which Aegis
Auto Finance originates or purchases Contracts
(as defined below) and sells Contracts to the
Borrower; and
WHEREAS, the Borrower wishes to borrow
certain sums from the Lender hereunder in
order to purchase Contracts from Aegis Auto
Finance under the Purchase Agreement and the
Lender is willing, upon the terms and
conditions set forth below, to lend such sums
to the Borrower;
NOW THEREFORE, in consideration of the
premises and for other good and valuable
consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as
follows:
ARTICLE I. DEFINITIONS; CONSTRUCTION
Section 1.01. Definitions. As used
herein and in the Schedules (other than
Schedules II and III) and the Exhibits hereto,
the following terms shall have the meanings
herein specified (to be equally applicable to
both the singular and plural forms of the
terms defined):
"Advance Rate" shall mean, with respect
to each Borrowing, (i) for all Contracts
purchased by the Borrower from Aegis Auto
Finance on the applicable Borrowing Date which
are delinquent less than thirty (30) days as
of the last day of the immediately preceding
calendar month, the lesser of (x) the then
applicable Committed Underwriting Proceeds
Percentage, less one percent (1%), of the
unpaid principal amount of such Contracts and
(y) ninety-five percent (95%) of the Market
Value of such Contracts; and (ii) for all
Contracts purchased by the Borrower from Aegis
Auto Finance on the applicable Borrowing Date
which are delinquent thirty (30) to fifty-nine
(59) days as of the last day of the
immediately preceding calendar month, ninety
percent (90%) of the lesser of (x) the unpaid
principal amount of such Contracts; and (y)
the Market Value of such Contracts; provided
however, that if the sum of (x) the unpaid
principal amount of Contracts which are
delinquent thirty (30) to fifty-nine (59) days
to be purchased by the Borrower from Aegis
Auto Finance on a Borrowing Date and (y) the
unpaid principal amount of all Contracts which
are delinquent thirty (30) to fifty-nine (59)
days included in the Borrowing Base (before
giving effect to the applicable Borrowing)
exceeds $5,000,000 in the aggregate, the
Advance Rate with respect to Contracts to be
purchased as provided in clause (x) above
which would cause the unpaid principal amount
of all Contracts which are delinquent thirty
(30) to fifty-nine (59) days delinquent
included in the Borrowing Base (after giving
effect to the applicable Borrowing) to exceed
$5,000,000 in the aggregate, shall be zero.
"Aegis" shall have the meaning set forth
in the preamble hereof.
"Aegis Auto Finance" shall have the
meaning set forth in the first recital hereof.
"Aegis Consumer Finance" shall have the
meaning set forth in the preamble hereof.
"Affiliate" shall mean, with respect to
any Person, any other Person which, directly
or indirectly, is in control of, is controlled
by, or is under common control with, such
Person. For purposes of this definition,
control of a Person shall mean the power,
direct or indirect, (i) to vote 5% or more of
the securities having ordinary voting power
for the election of directors of such Person
or (ii) to direct or cause the direction of
the management and policies of such Person
whether by contract or otherwise.
"Agreement" shall mean this Warehouse
Lending Agreement, as amended, supplemented or
otherwise modified from time to time in
accordance with the terms hereof.
"Amount Financed" shall mean the amount
advanced under a Contract toward the purchase
price of the related Financed Vehicle and any
related costs of the Obligor in acquiring such
Financed Vehicle.
"Applicable Initial LIBOR Rate" shall
mean, as of the date of determination, the
Initial LIBOR Rate in effect on the Initial
Interest Rate Determination Date immediately
preceding such date of determination; provided
that if such date of determination is also an
Initial Interest Rate Determination Date, the
Applicable Initial LIBOR Rate for such date
shall be the Initial LIBOR Rate as determined
on such date.
"Applicable LIBOR Rate" shall mean, as of
the date of determination, for each Loan for
the period from and including the Borrowing
Date applicable to such Loan, to but excluding
the first Interest Rate Determination Date to
occur after such Borrowing Date, the
Applicable Initial LIBOR Rate in effect on
such date, and thereafter, the LIBOR Rate in
effect on the Interest Rate Determination Date
immediately preceding such date of
determination; provided that if such date of
determination is also an Interest Rate
Determination Date, the Applicable LIBOR Rate
for such date shall be the LIBOR Rate as
determined on such date.
"Available Commitment" shall mean, as of
the date of determination thereof, the amount
by which the Commitment exceeds the Total
Outstandings.
"Available Principal Distribution Amount"
shall mean, with respect to any Remittance
Date, the sum of: (i) the aggregate of
collections and other recoveries of principal
in respect of each Contract received by the
Servicer during the related Collection Period
(other than Pay Ahead Amounts) and (ii)
Released Pay Ahead Amounts for such Collection
Period.
"Board" shall mean the Board of Governors
of the Federal Reserve System.
"Borrower" shall have the meaning set
forth in the preamble hereof.
"Borrowing" shall mean a borrowing of a
Loan on a Borrowing Date in a minimum amount
of $5,000,000.
"Borrowing Base" shall mean, as of the
date of determination, the sum of (i) with
respect to Eligible Contracts which are
delinquent less than thirty (30) days as of
the last day of the immediately preceding
calendar month, the lesser of (x) the
applicable Committed Underwriting Percentage,
less one percent (1%), of the unpaid principal
amount of such Contracts and (y) ninety-five
percent (95%) of the Market Value of such
Contracts; (ii) with respect to Eligible
Contracts which are delinquent thirty (30) to
fifty-nine (59) days as of the last day of the
immediately preceding calendar month, ninety
percent (90%) of the lesser of (x) the unpaid
principal amount of such Contracts and (y) the
Market Value thereof; and (iii) with respect
to Eligible Contracts which are delinquent
sixty (60) to eighty-nine (89) days as of the
last day of the immediately preceding calendar
month, sixty-five percent (65%) of the lesser
of (x) the unpaid principal amount of such
Contracts and (y) the Market Value thereof;
provided that at no time shall the unpaid
principal amount of Eligible Contracts which
are delinquent sixty (60) to eighty nine (89)
days included in the Borrowing Base exceed
$5,000,000 in the aggregate.
"Borrowing Base Calculation Date" shall
have the meaning set forth in Section 6.13
hereof.
"Borrowing Base Certificate" shall mean a
borrowing base certificate substantially in
the form of Exhibit C-1 hereto.
"Borrowing Base Deficiency" shall mean,
as of the date of determination, the amount by
which Total Outstandings exceeds the Borrowing
Base for such day.
"Borrowing Date" shall mean the date a
Borrowing occurs hereunder.
"Business Day" shall mean any day of the
year other than a Saturday, Sunday or other
day on which the New York Stock Exchange is
closed or commercial banks in The City of New
York are authorized or required by law or
executive order to close.
"Capital Stock" shall mean any and all
shares, interests, participations or other
equivalents (however designated) of capital
stock of a corporation, any and all equivalent
ownership interests in a Person (other than a
corporation) and any and all warrants or
options to purchase any of the foregoing.
"Closing Date" shall mean the date that
all of the conditions precedent set forth in
Section 4.01 hereof have been fulfilled.
"Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
"Collateral" shall have the meaning set
forth in the Security Agreement.
"Collection Account" shall mean the trust
or other account or accounts approved by and
for the benefit of the Lender established by
the Servicer at the Lender's direction with
First Interstate Bank of California, N.A.
and/or such other financial institution or
institutions as determined by the Lender upon
written notice to the Borrower and the
Servicer.
"Collection Period" shall mean, in
respect of a Remittance Date, the calendar
month preceding the month in which such
Remittance Date occurs (or, in the case of the
first Collection Period for each Contract, the
period from and including the related Cut-off
Date through the end of the month in which the
Cut-off Date occurs).
"Collections" shall mean all amounts
received with respect to any Contract.
"Commitment" shall have the meaning set
forth in Section 2.01(a) hereof.
"Commitment Period" shall mean the period
commencing with the Closing Date and ending on
the Business Day immediately preceding the
Termination Date.
"Committed Underwriting Proceeds
Percentage" shall mean, initially, 97.725% for
Contracts insured under the Risk Default
Policy and 95.725% for Contracts not insured
under the Risk Default Policy, and thereafter
such percentages as the Lender shall notify
the Borrower from time to time in writing.
"Commonly Controlled Entity" shall mean,
as to any Person, an entity, whether or not
incorporated, which is under common control
with such Person within the meaning of Section
4001 of ERISA or is part of a group which
includes such Person and which is treated as a
single employer under Section 414 of the Code.
"Computer Tape" shall mean the electronic
transmission generated by the Servicer which
provides information relating to the Contracts
as more particularly described in the
Servicing Agreement.
"Contracts" shall mean retail installment
sales contracts and security agreements and
all addenda thereto, as amended or
supplemented from time to time, secured by
Financed Vehicles and purchased by the
Borrower in the ordinary course of its
business from Aegis Auto Finance and pledged
by the Borrower to the Lender under the
Security Agreement.
"Custodian Agreement" shall mean the Tri-
Party Custodian Agreement, dated as of May 17,
1996, by and among the Borrower, the Lender
and the Custodian, providing for the custody
of the "Collateral Documents" as defined
therein.
"Custodian" shall mean Norwest Bank
Minnesota, National Association, in its
capacity as custodian under the Custodian
Agreement and its successors and assigns
consented to by the Lender.
"Cut-off Date" shall mean, in respect of
any Contract, May 10, 1996 with respect to the
Contracts to be purchased by the Borrower on
the initial Borrowing Date and thereafter the
last Business Day of the calendar week
preceding the applicable Borrowing Date with
respect to the Contracts to be purchased by
the Borrower on such Borrowing Date.
"Dealer" shall mean the dealer who sold a
Financed Vehicle to an Obligor and who
originated and assigned the Contract relating
to such Financed Vehicle to Aegis Auto Finance
under a Dealer Agreement, and any successor to
such Dealer.
"Dealer Agreement" shall mean any
agreement between Aegis Auto Finance and a
Dealer with respect to the origination of
Contracts, substantially in the form attached
hereto as Schedule III.
"Dealer Recourse" shall mean, with
respect to any Contract, all rights arising
under the related Dealer Agreement or
otherwise against the Dealer which originated
such Contract.
"Default" shall mean any condition, act
or event which, with notice or lapse of time
or both, would constitute an Event of Default.
"Dollar" and the sign "$" shall mean
lawful money of the United States of America.
"Eligible Contracts" shall mean all
Contracts other than Ineligible Contracts.
"ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning
set forth in Section 8.01 hereof.
"Financed Vehicle" shall mean a Vehicle
securing an Obligor's indebtedness under a
Contract.
"First Payment Default" shall mean, with
respect to any Contract, the first Scheduled
Payment under such Contract was or is forty-
five (45) days or more past due.
"GAAP" shall mean generally accepted
accounting principles as in effect in the
United States, as may be in place from time to
time, on a consistent basis.
"Governmental Authority" shall mean any
nation, government, or State, or any political
subdivision thereof, or any court, stock
exchange, entity or agency exercising
executive, legislative, judicial, regulatory
or administrative functions of or pertaining
to government.
"Guarantee" shall mean, as to any Person
(the "guaranteeing person"), any obligation of
the guaranteeing person guaranteeing or in
effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary
obligations") of any other third Person (the
"primary obligor") in any manner, whether
directly or indirectly, including, without
limitation, any obligation of the guaranteeing
person, whether or not contingent, (i) to
purchase any such primary obligation or any
property constituting direct or indirect
security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain
working capital or equity capital of the
primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor,
(iii) to purchase property, securities or
services primarily for the purpose of assuring
the owner of any such primary obligation of
the ability of the primary obligor to make
payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner
of any such primary obligation against loss in
respect thereof; provided, however, that the
term Guarantee shall not include the
endorsements of instruments for deposit or
collection in the ordinary course of business.
The amount of any Guarantee of any
guaranteeing person shall be deemed to be the
lower of (a) an amount equal to the stated or
determinable amount of the primary obligation
in respect of which such Guarantee is made and
(b) the maximum amount for which such
guaranteeing person may be liable pursuant to
the terms of the instrument embodying such
Guarantee, unless such primary obligation and
the maximum amount for which such guaranteeing
person may be liable are not stated or
determinable, in which case the amount of such
Guarantee shall be such guaranteeing person's
maximum reasonably anticipated liability in
respect thereof as determined by the
guaranteeing person in good faith.
"Guarantors" shall mean the collective
reference to Aegis and Aegis Consumer Finance.
"Ineligible Contract" shall mean any
Contract (i) as to which there is a breach of
any representation, warranty or covenant set
forth in Schedule I hereto; (ii) as to which
the related Financed Vehicle has been
repossessed; (iii) which is delinquent ninety
(90) days or more; (iv) which had a First
Payment Default; provided, however, for the
purposes of calculating the Borrowing Base, a
Contract which had a First Payment Default may
be included in the Borrowing Base provided
that such Contract is otherwise an Eligible
Contract and as of the date of the last day of
the immediately preceding calendar month and,
if applicable, as of the applicable Borrowing
Date, such Contract is delinquent less than
thirty (30) days; and (v) which has
constituted Collateral for one hundred twenty
(120) days or more; provided, however that for
the purposes of determining the Borrowing
Base, a Contract which have constituted
Collateral for one hundred twenty (120) days
to one hundred seventy-nine (179) days, may be
included in the Borrowing Base provided that
such Contract is otherwise an Eligible
Contract and the unpaid principal amount of
all such Contracts does not exceed $10,000,000
in the aggregate.
"Indebtedness" shall mean with respect to
any Person, without duplication, (a) all
obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced
by bonds, debentures, notes or similar
instruments, (c) all indebtedness of others
secured by (or for which the holder of such
Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on
property owned or acquired by such Person,
whether or not the obligations secured thereby
have been assumed (only to the extent of the
fair market value of such asset if such
Indebtedness has not been assumed by such
Person), (d) all Guarantees of such Person,
(e) all capitalized lease obligations of such
Person, and (f) all obligations of such Person
as an account party in respect of letters of
credit and similar instruments issued for the
account of such Person.
"Initial Interest Rate Determination
Date" shall mean with respect to each
Borrowing, initially, the Borrowing Date
applicable to such Borrowing, and thereafter,
to but excluding the first Interest Rate
Determination Date to occur after such
Borrowing Date, the Friday of each calendar
week.
"Initial LIBOR Rate" shall mean, with
respect to each Initial Interest Rate
Determination Date, the rate of interest per
annum (rounded upwards, if necessary, to the
nearest 1/100th of 1%) for Dollar deposits
with a duration of one (1) week on the
Telerate Page 3750 at or about 11:00 a.m.
(London Time) on the second (2nd) LIBOR
Business Day prior to such Initial Interest
Rate Determination Date, or, if such page
ceases to display such information, then such
other page as may replace it on that service
for the purpose of display of such information
(the "Telerate Rate"). If the Telerate Rate
cannot be determined, then the Initial LIBOR
Rate shall mean, with respect to such Initial
Interest Rate Determination Date, the
arithmetic mean of the rates of interest
(rounded upwards, if necessary, to the nearest
1/100th of 1%) offered to two prime banks in
the London interbank market (selected by the
Lender) of Dollar deposits with a duration of
one (1) week at or about 11:00 a.m. (London
time) on the second (2nd) LIBOR Business Day
prior to such Initial Interest Rate
Determination Date.
"Insurance Policies" shall mean any
comprehensive and collision, fire and theft
and physical damage insurance policies
maintained by Obligors (including, without
limitation, the Obligor's comprehensive
insurance policy), any credit policy
(including without limitation credit life and
credit disability), any Risk Default Policy
and/or any VSI Policy covering the Contracts,
Obligors and/or Financed Vehicles.
"Intellectual Property" shall have the
meaning set forth in Section 5.16 hereof.
"Interest Rate Determination Date" shall
mean each Remittance Date.
"Lender" shall have the meaning set forth
in the preamble hereof.
"LIBOR Business Day" shall mean a
Business Day on which trading in Dollars is
conducted by and between banks in the London
interbank market.
"LIBOR Rate" shall mean, with respect to
each Interest Rate Determination Date, the
rate of interest per annum (rounded upwards,
if necessary, to the nearest 1/100th of 1%)
for Dollar deposits with a duration of one (1)
month at or about 11:00 a.m. (London time) on
the second (2nd )LIBOR Business Day prior to
such Interest Rate Determination Date on the
Bloomberg Money Markets Page 28 on such date,
or, if such page ceases to display such
information, then on the Telerate Page 3750 on
such date, or if such page ceases to display
such information, then such other page as may
replace it on that service for the purpose of
display of such information (the "Telerate
Rate"). If the Telerate Rate cannot be
determined, then the LIBOR Rate shall mean,
with respect to such Interest Rate
Determination Date, the arithmetic mean of the
rates of interest (rounded upwards, if
necessary, to the nearest 1/100th of 1%)
offered to two prime banks in the London
interbank market (selected by the Lender) of
Dollar deposits with a duration of one (1)
month at or about 11:00 a.m. (London time) on
the second (2nd) LIBOR Business Day prior to
such Interest Rate Determination Date.
"LIBOR Rate Margin" shall mean three
percent (3%).
"Lien" shall mean any interest in
property securing an obligation owed to, or a
claim by, a Person other than the owner of
such property, whether such interest is based
on the common law, statute or contract, and
including, but not limited to, the security
interest, security title or lien arising from
a security agreement, mortgage, deed of trust,
deed to secure debt, encumbrance or pledge for
security purposes.
"List of Contracts" shall have the
meaning set forth in Section 4.02(g)(ii)
hereof.
"Loan" shall have the meaning set forth
in Section 2.01(a) hereof.
"Loan Documents" shall mean and include
this Agreement, the Note, the Security
Agreement and all other documents and
instruments executed and delivered in
connection herewith or therewith.
"Loan Parties" shall mean the collective
reference to the Borrower and the Guarantors.
"Market Value" shall mean the value of
the Contracts (as determined by the Lender in
good faith in accordance with market standards
and practice) of the estimate of such
Contracts taking into account, among other
things, such factors as default rates,
recovery rates, risk default recovery rates,
the yield on the on-the-run 2-year U.S.
Treasury note, prepayments, weighted average
coupon, size of contract pool, weighted
average term to maturity discounted at a rate
of return, which rate of return will take into
account, among other things, the yield on the
on-the-run 2-year U.S. Treasury note, which
value is provided by the Lender to the
Borrower for each Borrowing Date and each
Borrowing Base Calculation Date, as the case
may be.
"Margin Stock" shall have the meaning set
forth in Regulation G of the Board.
"Material Adverse Change" shall mean a
material adverse change in, or the disclosure
or discovery of any information not previously
disclosed to the Lender which the Lender
reasonably deems material and adverse relating
to, the business, operations, properties,
condition (financial or otherwise) or
prospects of any Loan Party, in each case,
individually, or with its respective operating
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a
material adverse effect on (a) the business,
operations, properties, condition (financial
or otherwise) or prospects of any Loan Party,
in each case, individually, or with its
respective operating Subsidiaries, taken as a
whole, or (b) the validity or enforceability
of this or any of the other Loan Documents or
the rights or remedies of the Lender hereunder
or thereunder, or (c) the enforceability or
collectibility of any Contract, or (d) the
ability of any Loan Party to perform its
obligations under any Loan Document or Related
Document to which it is a party.
"Minimum Borrowing Amount" shall mean
$5,000,000.
"Multiemployer Plan" shall mean a Plan
which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Worth" shall mean the excess of
total assets of Aegis over total liabilities
of Aegis determined in accordance with GAAP.
"Non-Utilization Fee" shall have the
meaning set forth in Section 3.01(a) hereof.
"Note" shall have the meaning set forth
in Section 2.02(a) hereof.
"Notice of Borrowing" shall have the
meaning set forth in Section 2.03 hereof.
"Obligations" shall mean (i) the unpaid
principal of and premiums, if any, and
interest (including interest accruing at the
then applicable rate provided in this
Agreement after the maturity of the Loans and
interest accruing at the then applicable rate
provided in this Agreement after the filing of
any petition in bankruptcy, or the
commencement of any insolvency, reorganization
or like proceedings, relating to any Loan
Party whether or not a claim for post-filing
or post-petition interest is allowed in such
proceeding) on the Loans, when and as due,
whether at maturity, by acceleration, upon one
or more dates set for prepayment or otherwise
and (ii) all other obligations and liabilities
of every nature of each Loan Party from time
to time owing to the Lender, in each case
whether direct or indirect, absolute or
contingent, due or to become due, or now
existing or hereafter incurred (including
monetary obligations incurred during the
pendency of any bankruptcy, insolvency,
receivership or other similar proceeding,
regardless of whether allowed or allowable in
such proceeding), which may arise under, out
of, or in connection with, this Agreement or
any other Loan Document or under any other
document made, delivered or given in
connection with any of the foregoing, in each
case whether on account of principal, premium,
if any, interest, fees, indemnities, costs,
expenses or otherwise (including all fees and
disbursements of counsel to the Lender) that
are required to be paid by the Loan Parties
pursuant to the terms of this Agreement or any
other Loan Document.
"Obligor" shall mean, with respect to a
Contract, the purchaser or co-purchasers of
the Financed Vehicle and/or any other person
who owes payments under such Contract.
"Pay Ahead Amount" shall mean with
respect to any Contract, amounts paid by the
Obligor in excess of a Scheduled Payment
thereunder (which amounts have not been
applied by the Servicer to reduce the
scheduled balance of such Contract), other
than amounts constituting prepayment in full
of such Contract.
"Permitted Borrowing Date" shall mean the
Friday of each calendar week during the
Commitment Period; provided that if such day
is not a Business Day, the Permitted Borrowing
Date shall be the immediately succeeding day
that is a Business Day.
"Permitted Liens" shall mean with respect
to the Guarantors in the aggregate, mortgage
Liens in an amount not to exceed $3,000,000 in
the aggregate at any one time outstanding,
other Liens not to exceed $500,000 in the
aggregate at any one time outstanding and
Liens securing equipment in connection with
"true" leases of such equipment, and with
respect to Aegis Consumer Finance, Liens in
favor of III Finance Ltd.
"Permitted Sale" shall mean a sale of
Contracts either through (a) a securitization
of such Contracts or (b) a "whole loan" sale
of such Contracts, in each case as approved by
the Lender.
"Permitted Sale Notice" shall mean a
permitted sale notice substantially in the
form of Exhibit C-4 hereto.
"Person" shall mean any individual,
partnership, firm, corporation, association,
joint venture, trust, limited liability
company or other entity.
"PBGC" shall mean the Pension Benefit
Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.
"Plan" shall mean, at a particular time,
any employee benefit plan which is covered by
ERISA and in respect of which any Loan Party
or a Commonly Controlled Entity is (or, if
such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be)
an "employer" as defined in Section 3(5) of
ERISA.
"Portfolio Contract" shall mean any motor
vehicle retail installment sales contract and
installment loan agreement secured by Vehicles
originated or purchased by Aegis Auto Finance
or any Affiliate thereof, including without
limitation, all Contracts.
"Portfolio Contracts Certificate" shall
mean a portfolio contracts certificate
substantially in the form of Exhibit C-2
hereof.
"Portfolio Event" shall mean the
occurrence of one or more of the following
events:
(i) as of the last day of any
calendar month and as of the last day of
the two (2) immediately preceding
calendar months, the average aggregate
percentage of the unpaid principal
balance of Portfolio Contracts (including
Portfolio Contracts which are delinquent
thirty (30) days or more, as to which the
Obligor is bankrupt or as to which the
related Vehicle is authorized for
repossession and the related vehicle has
been repossessed and has not been
liquidated) that are delinquent thirty
(30) days or more equals or exceeds
sixteen percent (16%) (on a three (3)
month rolling basis) of the unpaid
principal balance of all Portfolio
Contracts; or
(ii) the product of (x) the
aggregate percentage as of the last day
of any calendar month and as of the last
day of the two (2) immediately preceding
calendar months of the unpaid principal
balance of Portfolio Contracts as to
which a notice of intention to liquidate
the related Vehicle has expired and (y)
four (4), equals or exceeds fifteen
percent (15%) of the unpaid principal
balance of all Portfolio Contracts; or
(iii) as of the last day of any
calendar month and as of the last day of
the three (3) immediately preceding
calendar months, the average annualized
gross losses on Portfolio Contracts
equals or exceeds seven and one-half
percent (7.5%) (on a four (4) month
rolling basis) of the unpaid principal
balance of all Portfolio Contracts.
"Prime Rate" shall mean the prime rate
(or if a range is given, the highest prime
rate) listed under "Money Rates" in The Wall
Street Journal for such date or, if The Wall
Street Journal is not published on such date,
then in The Wall Street Journal most recently
published.
"Purchase Agreement" shall have the
meaning set forth in the second recital
hereof.
"Records" shall mean, with respect to any
Contract, all documents, books, records and
other information (including, without
limitation, computer programs, tapes, discs,
punch cards, data processing software and
related property and rights) relating to such
Contract.
"Regulation G" shall mean Regulation G
promulgated by the Board.
"Related Assets" shall mean (i) the
Borrower's security interest in Financed
Vehicles, (ii) the Borrower's rights,
remedies, powers and privileges under the
Contracts, including any personal guaranty
thereof, (iii) the Borrower's rights,
remedies, powers and privileges under the
Related Documents, (iv) the Borrower's rights,
remedies, powers and privileges under the
Dealer Agreements, including but not limited
to Dealer Recourse and any holdback amounts,
(v) insurance proceeds under Insurance
Policies, (vi) such other financial interests
and assets as shall be acceptable to Lender in
its sole discretion and (vii) all proceeds of
the foregoing.
"Related Documents" shall mean the
Custodian Agreement, the Purchase Agreement,
the Servicing Agreement and the Sub Servicing
Agreement.
"Released Pay Ahead Amount" shall mean
for any Contract and Collection Period, that
portion of Pay Ahead Amounts previously
received thereunder representing the Scheduled
Payment or portion thereof for such Collection
Period.
"Remittance Certificate" shall mean a
remittance certificate substantially in the
form of Exhibit C-3 hereto.
"Remittance Date" shall mean the twenty-
second (22nd) calendar day of each month, or
if such day is not a Business Day, the
Business Day immediately succeeding such
twenty-second (22nd) calendar day commencing
with the first such date to occur in June
1996.
"Reportable Event" shall mean any of the
events set forth in Section 4043(b) of ERISA.
"Requirement of Law" shall mean, as to
any Person, any law, statute, rule, treaty,
regulation, or determination of an arbitrator,
court or other Governmental Authority, in each
case applicable to or binding upon such Person
or any of its properties or to which any such
Person or any of its properties may be bound
or affected.
"Responsible Officer" shall mean any of
the president, chief executive officer and
chief financial officer of any Loan Party, as
the case may be.
"Risk Default Policy" shall mean the risk
default insurance policy providing default
insurance with respect to Contracts issued by
The Connecticut Indemnity Company or any other
insurance company approved by the Lender in
writing in favor of Aegis Auto Finance and
naming the Borrower as an additional insured.
"Scheduled Payment" shall mean with
respect to any Contract, the monthly payment
required thereunder.
"Security Agreement" shall mean the
security agreement between the Borrower and
the Lender substantially in the form of
Exhibit D hereto, as the same may be amended,
supplemented or otherwise modified from time
to time.
"Series C Preferred Stock Redemption"
shall mean the Certificate of Designation,
Number, Powers, Preferences and Relative,
Participating, Optional, and Other Special
Rights and the Qualifications, Limitations,
Restrictions, and Other Distinguishing
characteristics of Series C Preferred Stock of
Aegis dated January 30, 1996.
"Servicer" shall mean Aegis Auto Finance.
"Servicing Agreement" shall mean the
Servicing Agreement, dated as of May 17, 1996,
between the Borrower and the Servicer.
"Sub-Servicer" shall mean American
Lenders Facilities, Inc. or any other Sub-
Servicer approved by the Lender in writing.
"Sub-Servicing Agreement" shall mean the
Master Servicing Agreement dated as of April
6, 1996 between Aegis Consumer Finance, and
the Sub-Servicer.
"Simple Interest Contract" shall mean a
Contract pursuant to which the portion of a
payment thereon allocable to interest is equal
to the product of the interest rate for such
Contract times the unpaid principal balance
times the period of time elapsed since the
date on which the preceding payment of
interest was made divided by 365 (or 366 in
the case of a leap year) and the remainder of
such payment is allocated to principal.
"Subsidiary" shall mean, as to any
Person, a corporation, partnership or other
entity of which shares of stock or other
ownership interests having ordinary voting
power (other than stock or such other
ownership interests having such power only by
reason of the happening of a contingency) to
elect a majority of the board of directors or
other managers of such corporation,
partnership or other entity are at the time
owned, or the management of which is otherwise
controlled, directly or indirectly through one
or more intermediaries, or both, by such
Person.
"Termination Date" shall mean May 16,
1997, or such later date if such date is
otherwise extended by the Lender in writing in
accordance with the terms of Section 3.12
hereof, or such earlier date if the Commitment
is sooner terminated in accordance with the
terms hereof.
"Title" shall have the meaning set forth
in the Security Agreement.
"Total Outstandings" shall mean, as of
the date of determination, the unpaid
principal amount of all Loans outstanding
hereunder.
"Vehicle" shall mean a new or used
automobile or light duty truck and all
accessions thereto.
"VSI Policy" shall mean any vendor's
single interest physical damage insurance
policy with respect to Contracts providing
insurance coverage for open peril physical
loss or damage, instrument non-filing,
conversion and confiscation losses and
physical loss or damage to repossessed
vehicles.
Section 1.02. Accounting Terms and
Determinations. Unless otherwise defined or
specified herein, all accounting terms shall
be construed herein, all accounting
determinations hereunder shall be made, all
financial statements required to be delivered
hereunder shall be prepared and all financial
records shall be maintained in accordance with
GAAP.
Section 1.03. Other Definitional Terms.
The words "hereof", "herein" and "hereunder"
and words of similar import when used in this
Agreement shall refer to this Agreement as a
whole and not to any particular provision of
this Agreement, and article, section,
schedule, exhibit and like references are to
this Agreement unless otherwise specified.
Any defined term which relates to a
document shall include within its definition
any amendments, modifications, renewals,
restatements, extensions, supplements or
substitutions which may have been heretofore
or may be hereafter executed in accordance
with the terms thereof.
ARTICLE II. AMOUNT AND TERMS OF THE
LOANS
Section 2.01. The Loans. (a) The
Lender agrees, upon the terms and subject to
the conditions and relying upon the
representations and warranties hereinafter set
forth, to make one or more loans (each, a
"Loan", and together, the "Loans") to the
Borrower up to a maximum principal amount at
any one time outstanding of ONE HUNDRED
MILLION DOLLARS ($100,000,000) (the
"Commitment") during the Commitment Period;
provided, that no Loan shall be made (i) on a
day other than a Permitted Borrowing Date;
(ii) in an amount less than the Minimum
Borrowing Amount; (iii) in an amount which
would exceed the Advance Rate applicable to
such Borrowing; (iv) in an amount which would
exceed the Available Commitment on such day;
or (v) in an amount which, when added to the
Total Outstandings on such day (before giving
effect to the amount of such Borrowing), would
result in a Borrowing Base Deficiency as of
the last day of the immediately preceding
calendar month. All Loans may be borrowed,
repaid and reborrowed in accordance with the
terms of this Agreement.
(b) So long as no Default or Event of
Default has occurred, upon the written request
of the Borrower, the Lender agrees to seek one
or more additional lenders on a best efforts
basis to provide the Borrower with an increase
in the Commitment of at least $25,000,000 and
no greater than $50,000,000 in the aggregate
within ninety (90) days of the Borrower's
written request therefor in accordance with
the provisions of the next sentence. Any such
request by the Borrower may be made at any
time within one hundred eighty (180) days
after the Closing Date. Each Loan Party
agrees to cooperate with the Lender and use
its best efforts to enter into such amendments
and modifications to the Loan Documents as the
Lender may request to give effect to any such
increase in the Commitment.
Section 2.02. The Note. (a) The Loans
shall be evidenced by a promissory note
substantially in the form of Exhibit A hereto,
duly executed by the Borrower, dated the
Closing Date, payable to the order of the
Lender in the maximum principal amount equal
to $100,000,000 (the "Note"). The Lender is
hereby authorized to record the dates and
amounts of all Loans made by the Lender to the
Borrower under this Agreement and the dates
and amounts of all payments and prepayments of
the principal of the Loans on the Schedule
(and each continuation thereof) attached to
and constituting part of the Note. Such
recordation shall be conclusive in the absence
of manifest error; provided that the failure
of the Lender to make any such recordation or
any error in such recordation shall not affect
the obligations of the Borrower hereunder and
under the Note.
(b) The outstanding principal amount of
the Loans shall be payable as set forth in
Article III hereof. The Borrower shall pay
interest on the outstanding principal amount
of the Loans from the date each such Loan is
made until the principal amount thereof is
paid in full at the rates and pursuant to the
terms set forth in Article III hereof.
Section 2.03. Making the Loans. Each
Borrowing shall be made on notice, given not
later than 10:00 A.M. (New York City time) on
the second (2nd) Business Day prior to the
proposed Borrowing Date by the Borrower to the
Lender. Each such notice of borrowing (a
"Notice of Borrowing") shall be irrevocable
and shall be substantially in the form of
Exhibit B hereto. Upon fulfillment of the
applicable conditions set forth in Article IV
hereof, the Lender shall make the proceeds of
the Borrowing available to the Borrower in
immediately available funds to such account(s)
as the Borrower shall designate to the Lender
in writing.
Section 2.04. Use of Proceeds. The
proceeds of each Borrowing shall only be used
by the Borrower to finance the purchase of
Contracts from Aegis Auto Finance pursuant to
the Purchase Agreement.
ARTICLE III. FEES, INTEREST, PAYMENTS,
ETC.
Section 3.01. Non-Utilization Fee. The
Borrower agrees to pay to the Lender a non-
utilization fee for the period from and
including the Closing Date to but excluding
the Termination Date at the rate of one-
quarter of one percent (0.25%) per annum (the
"Non-Utilization Fee") on the average daily
amount of the Available Commitment from the
Closing Date to the Termination Date. All
accrued and unpaid Non-Utilization Fees shall
be payable quarterly in arrears on the
Remittance Date occurring in each July,
October, January and April during the term
hereof commencing with the first such
Remittance Date to occur after the Closing
Date. All accrued and unpaid Non-Utilization
Fees shall be due and payable on the
Termination Date. The Non-Utilization Fee
shall be calculated on the basis of the actual
number of days elapsed in a year of 360 days).
Section 3.02. Interest on the Loans.
(a) Except as otherwise provided herein, each
Loan shall bear interest on the outstanding
principal amount thereof, for each day from
the date of the making of such Loan until the
principal amount thereof shall be paid in
full, at a rate per annum equal to the
Applicable LIBOR Rate for such day, plus the
LIBOR Rate Margin (computed on the basis of
the actual number of days elapsed in a year of
360 days).
(b) Except as otherwise provided herein,
all accrued and unpaid interest on the Loans
shall be payable in arrears on each Remittance
Date during the term hereof commencing on the
first Remittance Date to occur after the
Closing Date. All accrued and unpaid interest
shall be due and payable on the Termination
Date.
(c) If, by the terms of this Agreement or
the Note, the Borrower at any time is required
or obligated to pay interest at a rate in
excess of the maximum rate permitted by
applicable law, the rate of interest shall be
deemed to be immediately reduced to such
maximum rate and the portion of all prior
interest payments in excess of such maximum
rate shall be applied and shall be deemed to
have been payments made in reduction of the
principal amount due hereunder and under the
Note and shall be applied to Total
Outstandings.
Section 3.03. No Optional Prepayments.
The Borrower may not prepay the Loans on any
day, in whole or in part, other than as
provided in Section 3.04 hereof, without the
prior written consent of the Lender.
Section 3.04. Mandatory Repayments and
Prepayments. (a) On the Termination Date the
Borrower promises to pay to the Lender the
Total Outstandings in full.
(b) On each Remittance Date, the
Borrower shall prepay the Total Outstandings
by an amount equal to the Borrowing Base
Deficiency, if any, which occurred as of the
last day of the immediately preceding calendar
month.
(c) On each Remittance Date, the
Borrower shall prepay the Total Outstandings
by an amount equal to the Available Principal
Distribution Amount.
(d) On each Remittance Date, the
Borrower shall prepay the Total Outstandings
by an amount equal to the outstanding
principal amount of all Ineligible Contracts,
if any, as of the end of the immediately
preceding calendar month.
(e) On each Remittance Date, the
Borrower shall prepay the Total Outstandings
by an amount equal to the unpaid principal
balance of all Contracts which are delinquent
sixty (60) to eighty-nine (89) days which
exceed $5,000,000 in the aggregate, if any, as
of the end of the immediately preceding
calendar month.
(f) On the date of any Permitted Sale,
the Borrower shall prepay the Total
Outstandings by the amount necessary in order
that, after giving effect to such Permitted
Sale, no Borrowing Base Deficiency will result
on such day. The Borrower hereby agrees to
provide to the Lender a Permitted Sale Notice
at least five (5) Business Days prior to any
Permitted Sale.
(g) If the Lender determines that a
Borrowing Base Deficiency has occurred on any
day (other than the last day of the
immediately preceding calendar month), the
Borrower shall prepay the Total Outstandings
by an amount equal to such Borrowing Base
Deficiency within three (3) Business Days
after the Lender has notified the Borrower in
writing of the occurrence of such Borrowing
Base Deficiency.
(h) All payments and prepayments made
pursuant to paragraphs (b), (d), (e), (f) and
(g) above, shall be accompanied by payment of
all accrued and unpaid interest due and owing
on the amount of Total Outstandings so
prepaid, and all payments made pursuant to
paragraph (a) above, shall be accompanied by
payment of all accrued and unpaid interest and
Non-Utilization Fees due and owing hereunder
and all payments made pursuant to paragraph
(c) above shall be accompanied by payment of
all accrued and unpaid interest due and owing
hereunder.
Section 3.05. Funds; Manner of Payment.
Each payment and each prepayment of principal
of and interest on any Loan, and each payment
on account of all other Obligations shall be
paid by the Borrower without set-off or
counterclaim to the Lender at its office
located at 600 Steamboat Road, Greenwich,
Connecticut 06830 or to such other location or
account as the Lender may specify to the
Borrower from time to time, in Federal or
other immediately available funds in lawful
money of the United States of America, not
later than 1:00 p.m. (or 4:30 p.m. in the case
of any prepayment required to be made pursuant
to Section 3.04(f) hereof from a
securitization of Contracts through the Lender
or any Affiliate of the Lender) (New York City
time) on the date on which any such payment or
prepayment is payable. If any payment
hereunder or under the Note becomes due and
payable on a day other than a Business Day,
the maturity thereof shall be extended to the
next succeeding Business Day. If the date for
any payments or prepayments of principal is
extended by operation of law or otherwise,
interest thereon shall be payable at the then
applicable rate during such extension.
Section 3.06. Default Interest. If the
Borrower shall default in the payment of the
principal of or interest on the Loans or any
other Obligation, the Borrower shall on demand
pay interest on such overdue principal amount
and, to the extent permitted by applicable
law, on such overdue interest and any other
overdue amount, for each day at a rate per
annum equal to the Applicable LIBOR Rate for
such day plus five percent (5%) (calculated on
the basis of the actual number of days elapsed
in a year of 360 days), accruing from the date
such payment was due until such amount is paid
in full (after as well as before judgment).
Section 3.07. Requirements of Law. (a)
If any Requirement of Law or any change in the
interpretation or application thereof or
compliance by the Lender with any request or
directive (whether or not having the force of
law) from any central bank or other
Governmental Authority made subsequent to the
date hereof:
(i) shall subject the Lender
to any tax of any kind whatsoever with
respect to this Agreement, the Note or
any Loan made by it (excluding net income
taxes) or change the basis of taxation of
payments to the Lender in respect
thereof;
(ii) shall impose, modify or
hold applicable any reserve, special
deposit, compulsory loan or similar
requirement against assets held by,
deposits or other liabilities in or for
the account of, advances, loans or other
extensions of credit by, or any other
acquisition of funds by, any office of
the Lender which is not otherwise
included in the determination of the
Applicable LIBOR Rate hereunder;
(iii) shall impose on the Lender
any other condition;
and the result of any of the foregoing is to
increase the cost to the Lender, by an amount
which the Lender deems to be material, of
making, continuing or maintaining any Loan or
to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the
Borrower shall promptly pay the Lender such
additional amount or amounts as will
compensate the Lender for such increased cost
or reduced amount receivable.
(b) If the Lender shall have determined
that the adoption of or any change in any
Requirement of Law regarding capital adequacy
or in the interpretation or application
thereof or compliance by the Lender or any
corporation controlling the Lender with any
request or directive regarding capital
adequacy (whether or not having the force of
law) from any Governmental Authority made
subsequent to the date hereof shall have the
effect of reducing the rate of return on the
Lender's or such corporation's capital as a
consequence of its obligations hereunder to a
level below that which the Lender or such
corporation (taking into consideration the
Lender's or such corporation's policies with
respect to capital adequacy) by an amount
deemed by the Lender to be material, then from
time to time, the Borrower shall promptly pay
to the Lender such additional amount or
amounts as will compensate the Lender for such
reduction.
(c) If the Lender becomes entitled to
claim any additional amounts pursuant to this
subsection, it shall promptly notify the
Borrower of the event by reason of which it
has become so entitled. A certificate as to
any additional amounts payable pursuant to
this subsection submitted by the Lender to the
Borrower shall be conclusive in the absence of
manifest error.
Section 3.08. Indemnity. The Borrower
agrees to indemnify the Lender and to hold it
harmless from any cost, loss or expense which
the Lender may sustain or incur as a
consequence of (a) the Borrower making any
payment or prepayment (other than pursuant to
Section 3.04 hereof) of principal of any Loan
on a day which is not an Interest Rate
Determination Date, (b) any failure by the
Borrower to make a Borrowing hereunder after
notice of such Borrowing has been given
pursuant to this Agreement, (c) any default by
the Borrower in making any prepayment of the
Total Outstandings on the due date therefor,
and (d) any acceleration of the maturity of
any Loans by the Lender in accordance with the
terms of this Agreement, including, but not
limited to, any cost, loss or expense arising
in liquidating the Loans and from interest or
fees payable by the Lender to lenders of funds
obtained by it in order to maintain the Loans
hereunder. In the event the Borrower is
required to make any payment pursuant to this
Section 3.08, the Lender shall provide to the
Borrower in writing the basis upon which such
charges were calculated in reasonable detail.
Section 3.09. Illegality; Substituted
Interest Rate, etc. Notwithstanding any other
provisions herein, (a) if any Requirement of
Law or any change therein or in the
interpretation or application thereof shall
make it unlawful for the Lender to make or
maintain any Loans at the Initial LIBOR Rate
or the LIBOR Rate as contemplated by this
Agreement, or (b) in the event that the Lender
shall have determined (which determination
shall be conclusive and binding upon the
Borrower) that by reason of circumstances
affecting the LIBOR interbank market either
adequate and reasonable means do not exist for
ascertaining the Initial LIBOR Rate or the
LIBOR Rate, or (c) the Lender shall have
determined (which determination shall be
conclusive and binding on the Borrower) that
the Applicable LIBOR Rate will not adequately
and fairly reflect the cost to the Lender of
maintaining or funding the Loans based on such
Applicable LIBOR Rate, (x) the obligation of
the Lender to make or maintain Loans at the
Initial LIBOR Rate or the LIBOR Rate shall
forthwith be suspended and the Lender shall
promptly notify the Borrower thereof (by
telephone confirmed in writing) and (y) each
Loan then outstanding, if any, shall, from and
including the next Initial Interest Rate
Determination Date or Interest Rate
Determination Date, as applicable, or at such
earlier date as may be required by law, until
payment in full thereof, bear interest at the
rate per annum equal to the greater of the
Prime Rate and the rate of interest (including
the LIBOR Rate Margin) in effect on the date
immediately preceding the date any event
described in clause (a), (b) or (c) occurred
(calculated on the basis of the actual number
of days elapsed in a year of 360 days). If
any such conversion of the LIBOR Rate to the
Prime Rate is made on a day which is not an
Initial Interest Rate Determination Date or an
Interest Rate Determination Date, as
applicable, the Borrower shall pay to the
Lender such amounts, if any, as may be
required pursuant to Section 3.08 hereof. If
subsequent to such suspension of the
obligation of the Lender to make or maintain
the Loans at the Initial LIBOR Rate or the
LIBOR Rate it becomes lawful for the Lender to
make or maintain the Loans at the Initial
LIBOR Rate or the LIBOR Rate, or the
circumstances described in clause (b) or (c)
above no longer exist, the Lender shall so
notify the Borrower and its obligation to do
so shall be reinstated effective as of the
date it becomes lawful for the Lender to make
or maintain the Loans at the Initial LIBOR
Rate or the LIBOR Rate, as the case may be, or
the circumstances described in clause (b) or
(c) above no longer exist.
Section 3.10. Application of Payments,
etc. Upon the occurrence and during the
continuance of an Event of Default, except as
otherwise provided hereunder or under the
other Loan Documents, all payments made
hereunder and under the other Loan Documents
(including from the proceeds of any
Collateral) shall, at the election of the
Lender, be applied as follows:
(i First, to all costs and
expenses incurred by the Lender in
connection with any Default or Event of
Default including without limitation
those described in Section 10.04 hereof;
(ii Second, to accrued and unpaid
Non-Utilization Fees due and payable
hereunder;
(iii Third, to accrued and unpaid
interest on the Loans due and payable
hereunder;
(iv Fourth, to the Total
Outstandings;
(v Fifth, to any other
Obligation not otherwise paid pursuant to
clause (i) through (iv) above; and
(vi) Sixth, any excess to the
Borrower or to any Person who shall be
lawfully entitled to such excess.
Section 3.11. Collection Account, etc.
(a) The Borrower shall cause all Collections
in respect of the Contracts, to be deposited
by the Servicer or the Sub-Servicer into the
Collection Account within one (1) Business Day
after receipt thereof by the Servicer or the
Sub-Servicer, except that so long as no
Default or Event of Default has occurred or is
continuing under Sections 8.01(a), (f) or (g)
hereof, the Sub-Servicer shall be permitted to
retain not more than $2,500.00 in the
aggregate on any given day in the Lock-Box
Account (as defined in the Sub-Servicing
Agreement).
(b) All payments which are received by
either Guarantor or the Borrower in connection
with the Collateral contrary to any provision
of the Loan Documents or the Related Documents
shall be held by such Guarantor or the
Borrower, as the case may be, in trust for the
Lender, segregated from all other funds of
such Guarantor or the Borrower, as the case
may be, and shall forthwith upon receipt by
such Guarantor or the Borrower, as the case
may be, be turned over to the Lender in the
exact form received by such Guarantor or
Borrower, respectively, (duly endorsed by such
Guarantor or the Borrower to the Lender, if
required) to be applied to the Obligations.
Section 3.12. Extension of Termination
Date. The Termination Date may in the sole
discretion of the Lender be extended to
December 31, 1997, and the Lender may offer
such extension to the Borrower at any time.
No such extension shall be effective unless
requested in writing by the Borrower and
approved in writing by the Lender. The Lender
shall notify the Borrower at least thirty (30)
days prior to the Termination Date if the
Lender has determined not to extend the
Termination Date hereunder; provided that the
failure to give such notice shall not obligate
the Lender to so extend the Termination Date.
ARTICLE IV. CONDITIONS TO CLOSING AND
THE
LOANS
Section 4.01. Conditions Precedent to
the Closing. The obligation of the Lender to
enter into this Agreement is subject to
fulfillment of the following conditions
precedent, on or before the Closing Date:
(a) Receipt of Documents. Receipt by
the Lender of the following documents, each
dated as of the Closing Date, as applicable,
in form and substance satisfactory to the
Lender and its counsel:
(i) This Agreement, executed and
delivered on behalf of each Guarantor and
the Borrower;
(ii) The Note, executed and
delivered on behalf of the Borrower;
(iii) The Security Agreement,
executed and delivered on behalf of the
Borrower, together with:
(x UCC-1 financing
statements executed and delivered by
the Borrower naming the Borrower as
"debtor" and the Lender as "secured
party" in form appropriate for
filing in all jurisdictions as may
be necessary in the reasonable
opinion of the Lender, to perfect
the security interest contemplated
under the Security Agreement; and
(y evidence that all other
actions necessary to perfect the
security interest contemplated under
the Security Agreement have been
taken;
(iv) A copy of the resolutions of
the Borrower authorizing (A) the
execution, delivery and performance of
the Loan Documents and the Related
Documents by the Borrower, (B) the
borrowings contemplated hereunder and
(C) the granting of the security interest
contemplated under the Security
Agreement, certified by the Secretary or
an Assistant Secretary of the Borrower as
of the Closing Date, which certificate
shall state that the resolutions thereby
certified have not been amended,
modified, revoked or rescinded as of the
date of such certificate;
(v) A certificate of the Secretary
or an Assistant Secretary of the Borrower
certifying the names and the signatures
of the officers of the Borrower
authorized to sign the Loan Documents and
the Related Documents to be delivered
hereunder;
(vi) Copies of (A) the Certificate
of Incorporation of the Borrower and each
amendment thereto and (B) the By-Laws of
the Borrower and each amendment thereto,
certified by the Secretary or an
Assistant Secretary of the Borrower as
being true, complete and correct as of
the Closing Date;
(vii) Original certificates or other
evidence from the Secretary of State or
other appropriate authority of the State
of Delaware and of each jurisdiction
where the Borrower is qualified to do
business, evidencing the good standing of
the Borrower in the State of Delaware and
such other jurisdictions;
(viii) A copy of the resolutions of
each Guarantor authorizing the execution,
delivery and performance of the Loan
Documents and the Related Documents to
which it is a party, certified by the
Secretary or an Assistant Secretary of
such Guarantor as of the Closing Date,
which certificate shall state that the
resolutions thereby certified have not
been amended, modified, revoked or
rescinded as of the date of such
certificate;
(ix) A certificate of the Secretary
or an Assistant Secretary of each
Guarantor certifying the names and the
signatures of the officers of such
Guarantor authorized to sign the Loan
Documents and the Related Documents to
which it is a party to be delivered
hereunder;
(x) Copies of (A) the Certificate
of Incorporation of each Guarantor and
each amendment thereto and (B) the
By-Laws of each Guarantor and each
amendment thereto, certified by the
Secretary or an Assistant Secretary of
such Guarantor as being true, complete
and correct as of the Closing Date;
(xi) Original certificates or other
evidence from the Secretary of State or
other appropriate authority of the State
of Delaware and of each jurisdiction
where each Guarantor is qualified to do
business, evidencing the good standing of
such Guarantor in the State of Delaware
and such other jurisdictions;
(xii) The Lender shall have received
copies of the Related Documents (all in
form and substance satisfactory to the
Lender and its counsel) certified by the
Secretary or an Assistant Secretary of
each Guarantor and the Borrower,
respectively, as being true, complete and
correct as of the Closing Date and that
all conditions precedent to the
effectiveness of such Related Documents
shall have occurred;
(xiii) A certificate of a Responsible
Officer of the Guarantors certifying that
there is no default under any credit
agreement to which such Loan Party is a
party;
(xiv) UCC, judgment and tax lien
search reports for the Guarantors in form
and substance satisfactory to the Lender
and its counsel;
(xv) Opinion of counsel to the
Guarantors and the Borrower substantially
in the form of Exhibits E-1 and E-2
hereto; and
(xvi) Such other documents and
instruments as the Lender or its counsel
shall reasonably request.
(b) Representation and Warranties. Each
of the representations and warranties made by
or on behalf of each Loan Party herein or in
any other Loan Document to which it is a party
shall be true and correct in all respects on
and as of the Closing Date.
(c) No Default or Event of Default. No
Default or Event of Default shall have
occurred and be continuing on and as of the
Closing Date.
(d) Fees. On the Closing Date, the
Borrower shall have paid all fees and expenses
incurred by the Lender in connection herewith
including, without limitation, fees and
expenses of counsel to the Lender, fees of the
Custodian and such other categories of fees
and expenses as Lender shall advise the
Borrower at least two (2) Business Days prior
to the Closing Date.
(e) Due Diligence. The Lender shall
have completed to its satisfaction its due
diligence review of each Loan Party and its
respective management, controlling
stockholders, systems, underwriting, servicing
and collection operations, static pool
performance and its loan files.
(f) Change in Management. No change
shall have occurred in the management of any
Loan Party or of any of its material operating
Subsidiaries which, in the reasonable judgment
of the Lender, would result in a Material
Adverse Change.
(g) No Material Adverse Change. No
Material Adverse Change shall have occurred.
(h) Servicing Audit Report. The Lender
shall have received a copy of the most recent
servicing audit report prepared by Deloitte &
Touche LLP with respect to the servicing of
the Portfolio Contracts.
Section 4.02. Conditions Precedent to
All Loans. The Lender's obligation to make
any Loan hereunder is subject to the following
conditions precedent and the giving of a
Notice of Borrowing by the Borrower pursuant
to Section 2.03 and the acceptance of the
proceeds of any Borrowing by the Borrower
shall be deemed certification by the Borrower
that the following conditions shall have been
met:
(a) Representation and Warranties. Each
of the representations and warranties made by
or on behalf of each Loan Party herein or in
any other Loan Document to which it is a party
shall be true and correct in all respects on
and as of the Borrowing Date, before and after
giving effect to the Borrowing to be made on
such date and the application of the proceeds
therefrom, as though made on and as of such
date.
(b) No Default or Event of Default.
After giving effect to such Borrowing and the
application of proceeds therefrom, no Default
or Event of Default shall have occurred and be
continuing on and as of such Borrowing Date.
(c) No Violation. The making of the
Loans on such Borrowing Date will not violate
any Requirement of Law applicable to the
Lender.
(d) Contract Eligibility Criteria. On
and as of the Borrowing Date, each of the
representations and warranties set forth in
Schedule I hereto is true and correct for all
Contracts to be purchased by the Borrower from
Aegis Auto Finance on such date and pledged to
the Lender under the Security Agreement on
such date and no such Contract is or had been
an Ineligible Contract; provided that if any
Contract was an Ineligible Contract because it
had a First Payment Default, such Contract may
be included in the Collateral provided that as
of the last date of the immediately preceding
calendar month and as of such Borrowing Date
such Contract is delinquent less than thirty
(30) days. No Contract was originated in any
jurisdiction in which the Borrower is required
to be licensed in order to own such Contract
and such license has not been obtained prior
to the Borrower owning such Contract.
(e) Change in Management. No change
shall have occurred in the management of any
Loan Party or of any of its material operating
Subsidiaries which, in the reasonable judgment
of the Lender, would result in a Material
Adverse Change.
(f) Purchase Agreement, Etc.. Each of
the conditions precedent to the Borrower's
obligation to purchase any Contract from Aegis
Auto Finance under the Purchase Agreement
shall have been fulfilled in all respects and
not waived and the Borrower shall have
delivered to the Lender the opinions set forth
in Section 6.17(b) hereof.
(g) Deliveries. The Lender shall have
received the following:
(i The Borrower shall have
delivered to the Lender a Notice of
Borrowing in compliance with Section
2.03 hereof.
(ii The Borrower shall have
delivered to the Lender and the
Custodian at least four (4) Business
Days prior to the proposed Borrowing
Date in computer readable form, a
detailed listing of all Contracts to
be purchased with the proceeds of
the Borrowing (the "List of
Contracts") and such other data
relating to the Contracts and the
Related Assets as the Lender may
reasonably request.
(iii The Lender shall have
received from the Custodian a
certification from the Custodian
that all items required to be
delivered to the Custodian pursuant
to Section 2(b) of the Custodian
Agreement with respect to the
Contracts to be purchased by the
Borrower from Aegis Auto Finance on
such Borrowing Date have been
delivered.
(iv The Lender shall have
received UCC-3 Partial Release
Statements (or other appropriate
forms) in appropriate form for
filing duly executed by III Finance
Ltd. releasing the Contracts to be
purchased by the Borrower from Aegis
Auto Finance on such Borrowing Date
from the security interest of III
Finance Ltd.
(v The Lender shall have
received the most recent Borrowing
Base Certificate required to be
delivered in accordance with Section
6.13 hereof.
ARTICLE V. REPRESENTATIONS AND
WARRANTIES
In order to induce the Lender to enter
into this Agreement and to make the Loans
hereunder, each Loan Party hereby represents
and warrants to the Lender as follows:
Section 5.01. Existence; Conduct of
Business. Each Loan Party, and each of its
respective Subsidiaries, is a duly organized
and valid existing corporation in good
standing under the laws of the State of its
incorporation and is duly qualified to do
business and in good standing in each
jurisdiction where the conduct of its business
or the ownership, lease or operation of its
property requires such qualification, except
where the failure to be so qualified could not
have a Material Adverse Effect. Each Loan
Party and each of its respective Subsidiaries
has all requisite power and authority to own
and operate its property, to lease its
property it operates as lessee and to conduct
and transact the business in which it is
engaged.
Section 5.02. Corporate Power and
Authority. Each Loan Party has all requisite
corporate power and authority to execute and
deliver the Loan Documents and the Related
Documents to which it is a party and to carry
out the terms and provisions thereof on its
part to be performed and each Loan Party has
taken or caused to be taken all necessary
corporate action to authorize the execution,
delivery and performance by such Loan Party of
the Loan Documents and the Related Documents
to which it is a party and in the case of the
Borrower, the Borrowings contemplated
hereunder, and the granting of the security
interest contemplated by the Security
Documents to which it is a party. Each Loan
Document and each Related Document to which it
is a party constitutes a legal, valid and
binding obligation of each Loan Party, and is
enforceable against such Loan Party in
accordance with its respective terms, except
as the enforceability thereof may be limited
by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar
laws affecting the enforcement of creditors'
rights generally, and by general equitable
principles regardless of whether enforcement
is sought in a proceeding in equity or at law.
Section 5.03. No Violation. Neither the
execution and delivery of the Loan Documents
or the Related Documents to which it is a
party nor the consummation of the transactions
contemplated thereby, nor compliance with the
provisions thereof will violate any provision
of the Certificate of Incorporation or By-Laws
of any Loan Party or will violate any
Requirement of Law or conflict with, or result
in the breach of, or constitute a default
under, any indenture, mortgage, deed of trust,
agreement or other instrument or contractual
obligation to which any Loan Party is a party
or by which it or any of its property may be
bound or affected or result in the creation or
imposition of any Lien upon any property of
any Loan Party thereunder, except, in the case
of the Borrower, as contemplated by the
Security Agreement.
Section 5.04. Approvals, Authorizations,
Consents, etc. All approvals, authorizations,
consents, orders or other actions or
registrations with or notices to any Person or
Governmental Authority required to be
obtained, made or given by any Loan Party in
connection with the execution, delivery and
performance of the Loan Documents and the
Related Documents to which it is a party and
the consummation of the transactions
contemplated thereby have been duly and
properly obtained, made or given by such Loan
Party and are in full force and effect.
Section 5.05. No Litigation. Except as
otherwise disclosed to the Lender in writing
on or before the Closing Date, there are no
pending or, to such Loan Party's knowledge,
threatened actions, suits or other proceedings
by or against any Loan Party or any of its
respective Subsidiaries before any court,
arbitrator or other Governmental Authority
which challenge or affect the legality,
validity or enforceability of any Loan
Document or any Related Document or the
transactions contemplated thereby or which
individually or in the aggregate could have a
Material Adverse Effect.
Section 5.06. Tax Liability. Each Loan
Party and each of its respective Subsidiaries
has filed or caused to be filed all tax
returns (Federal, State and local) (or
requests for extension which are routinely
granted) which are required to be filed and,
except as otherwise permitted by Section 6.04
hereof, has paid all taxes including those
which have become due pursuant to such returns
or pursuant to any assessments made against it
or any of its properties, as the case may be,
and all other material taxes or other charges
imposed on it or any of its properties by any
Governmental Authority; and no tax Liens have
been filed.
Section 5.07. Regulation G. No proceeds
of any Loan will be used, directly or
indirectly, by the Borrower for the purpose of
purchasing or carrying any Margin Stock or for
the purpose of reducing or retiring any
Indebtedness which was originally incurred to
purchase or carry Margin Stock or for any
other purpose which might cause any Loan to be
a "purpose credit" within the meaning of
Regulation G of the Board.
Section 5.08. Permits, Licenses,
Approvals, Consents, Compliance with
Requirements of Law, etc. Each Loan Party and
each of its respective Subsidiaries has
obtained any and all permits, licenses,
approvals and consents of any Governmental
Authority as may be required to sell or
purchase the Contracts, as the case may be,
and to conduct or transact its business or
own, lease or operate its properties and is in
material compliance with all applicable
Requirements of Law.
Section 5.09. Financial Statements;
Material Adverse Change. (a) All financial
statements of each Loan Party delivered to the
Lender fully and accurately present the
financial position of such Loan Party, as of
the respective dates thereof in accordance
with GAAP.
(b) Since June 30, 1995, there has been
no Material Adverse Change.
(c) Since its date of incorporation, the
Borrower has conducted no business other as is
necessary in connection with the execution,
delivery and performance of the Loan Documents
and the Related Documents and the consummation
of the transactions contemplated thereby.
Section 5.10. The Investment Company
Act, Etc.. No Loan Party is, or is directly
or indirectly, controlled by any Person which
is, an "investment company" within the meaning
of the Investment Company Act of 1940, as
amended. No Loan Party is subject to
regulation under any Requirement of Law (other
than Regulation X of the Board) which limits
its ability to incur Indebtedness.
Section 5.11. The Security Agreement.
Each of the representations and warranties of
the Borrower contained in the Security
Agreement is true and correct.
Section 5.12. Eligible Contracts. All
Contracts included in the Borrowing Base are
Eligible Contracts.
Section 5.13. Ownership of Properties;
Insurance. (a) Each Loan Party has good and
marketable title to any and all of its
respective properties and assets free and
clear of Liens, except, in the case of the
Borrower, as contemplated by the Security
Agreement, and except for Permitted Liens.
(b) Set forth on Schedule IV hereto is a
true and accurate list of all insurance
maintained by each Loan Party. Each such
policy is in full force and effect and all
premiums due and owing thereon are current.
Section 5.14. Ownership of the Borrower.
Aegis owns beneficially and of record all of
the issued and outstanding Capital Stock of
Aegis Consumer Finance and Aegis Consumer
Finance owns beneficially and of record all of
the issued and outstanding shares of the
Capital Stock of the Borrower in each case
free and clear of all Liens.
Section 5.15. Full Disclosure. No
representation or warranty made by or on
behalf of any Loan Party contained in any Loan
Document or Related Document and no
information (written or oral), certificate,
financial statement or report furnished or to
be furnished by or on behalf of any Loan Party
thereunder or in connection with the
transactions contemplated thereby, contains or
will contain an untrue statement of a material
fact, or, omits or will omit to state any
material fact (including without limitation,
whether any Loan Party or any of its
respective Subsidiaries or any of their
respective officers or directors (past or
present) is (or during the last five (5) years
has been) under civil or criminal
investigation by any Governmental Authority or
is under indictment by any Governmental
Authority) necessary to make the statements
herein or therein contained, in light of the
circumstances in which made, not misleading.
Section 5.16. Intellectual Property.
Each Loan Party and each of its respective
Subsidiaries owns, or is licensed to use, all
trademarks, trade names, copyrights,
technology, know-how and processes necessary
for the conduct of its business as currently
conducted (the "Intellectual Property") except
for those the failure to own or license which
could not have a Material Adverse Effect. No
claim has been asserted and is pending by any
Person challenging or questioning the use of
any such Intellectual Property or the validity
or effectiveness of any such Intellectual
Property, nor does any Loan Party know of any
valid basis for any such claim. The use of
such Intellectual Property by each Loan Party
and its respective Subsidiaries does not
infringe on the rights of any Person, except
for such claims and infringements that, in the
aggregate, could not have a Material Adverse
Effect.
Section 5.17. ERISA. Except as set
forth on Schedule V hereto, no Loan Party nor
any of its respective Subsidiaries maintains
any Plans, and each Loan Party agrees to
notify the Lender in advance of forming any
Plans. No Loan Party nor any Commonly
Controlled Entity has any obligations or
liabilities with respect to any employee
pension benefit plans or Multiemployer Plans,
nor have any such Persons had any obligations
or liabilities with respect to any such Plans
during the five-year period prior to the date
this representation is made or deemed made.
Each Loan Party will give notice if at any
time it or any Commonly Controlled Entity has
any obligations or liabilities with respect to
any employee pension benefit plan or
Multiemployer Plan. All Plans maintained by
any Loan Party or any Commonly Controlled
Entity are in substantial compliance with all
applicable laws (including ERISA). No Loan
Party is an employer under any Multiemployer
Plan.
Section 5.18. Subsidiaries. The Persons
listed on Schedule VI constitute all the
principal operating Subsidiaries of each Loan
Party at the date hereof. Schedule VI sets
forth the name, type of entity and
jurisdiction of organization of each such
Subsidiary, the amount of authorized, and
issued and outstanding Capital Stock of each
such Subsidiary, and the holder or holders of
such issued and outstanding Capital Stock of
each such Subsidiary, in each case as of the
date hereof.
Section 5.19. Related Documents. Each
of the representations and warranties made by
any Loan Party or Aegis Auto Finance in any
Related Document to which it is a party are
true and correct in all respects. No party to
any Related Document is in default under any
of its obligations thereunder.
ARTICLE VI. AFFIRMATIVE COVENANTS
Until all of the Obligations have been
paid in full, the Commitment has been
terminated and this Agreement has been
terminated:
Section 6.01. Financial Statements and
Other Information. Each Loan Party shall
furnish to the Lender:
(a) as soon as available, but in any
event within ninety (90) days after the end of
each fiscal year, sixty (60) days after the
end of each fiscal quarter and forty-five (45)
days after the end of each fiscal month of
such Loan Party, occurring during the term of
this Agreement, a copy of the balance sheet of
such Loan Party, as at the end of such fiscal
year, fiscal quarter or fiscal month, as
applicable, and the related statements of
income, cash flow and changes in stockholders
equity (for the year-end statements only) for
such Loan Party, for such fiscal period, in
each case setting forth in comparative form
the corresponding figures for the previous
year, accompanied by all relevant notes and,
in the case of its fiscal year-end balance
sheet, an opinion, without a going concern or
like qualification or qualification arising
out of the scope of the audit, by independent
certified public accountants of nationally
recognized standing as fairly presenting the
financial condition and results of operation
of such Loan Party;
(b) concurrently with the delivery of
the financial statements referred to in
Section 6.01(a) above a certificate of a
Responsible Officer of such Loan Party that
such financial statements were prepared in
accordance with GAAP (except that with respect
to monthly and quarterly financial statements,
pursuant to interim accounting and disclosure
rules and regulations, certain information and
footnote disclosures normally included in
financial statements prepared in accordance
with GAAP will be condensed or omitted) and
that, to the best of such officer's knowledge
after due inquiry, such Loan Party, during
such period has observed or performed all of
its covenants and other agreements, and
satisfied every condition, contained in the
Loan Documents to be observed, performed or
satisfied by it, and that such officer has
obtained no knowledge of any Default or Event
of Default, except as specified in such
certificate, which certificate shall also
demonstrate in reasonable detail the
calculations used in determining compliance
with Sections 7.06, 7.07 and 7.08 hereof;
(c) promptly upon receipt thereof,
copies of all reports (including, without
limitation management letters), if any,
submitted to any Loan Party by its auditors,
in connection with each audit or review of its
books by such auditors;
(d) promptly, and in any event no later
than three (3) Business Days, after the
commencement thereof or any adverse
development with respect thereto, written
notice of any actions, suits or proceedings
(including arbitrations) threatened or pending
by or against any Loan Party or any of its
respective Subsidiaries before any court,
arbitrator or other Governmental Authority
which, individually or in the aggregate, could
have a Material Adverse Effect;
(e) promptly, upon the issuance thereof,
copies of all notices, reports and
registration statements, if any, which any
Loan Party or any of its respective
Subsidiaries files with or receives from, as
applicable, the Securities and Exchange
Commission or other Governmental Authority;
(f) promptly upon completion thereof, a
copy of each servicing audit report prepared
by independent certified public accountants of
nationally recognized standing with respect to
the servicing of the Portfolio Contracts; and
(g) with reasonable promptness, such
other information respecting the business,
operations, properties or condition (financial
or otherwise) or prospects of each Loan Party
and its respective Subsidiaries or the
Collateral as the Lender may reasonably
request from time to time.
Section 6.02. Compliance with Laws, etc.
Each Loan Party shall, and shall cause each of
its respective Subsidiaries to, comply (i) in
all material respects with all Requirements of
Law and any change therein or in the
application, administration or interpretation
thereof (including, without limitation any
request, directive, guideline or policy,
whether or not having the force of law) by any
Governmental Authority charged with the
administration or interpretation thereof; and
(ii) with all indentures, mortgages, deeds of
trust, agreements, or other instruments or
contractual obligations to which it is a
party, including without limitation, each
Related Document, or by which it or any of its
properties may be bound or affected,
individually or in the aggregate, the failure
to comply therewith could have a Material
Adverse Effect.
Section 6.03. Preservation of Corporate
Existence; Conduct of Business. Each Loan
Party shall, and shall cause each of its
respective Subsidiaries to, preserve and
maintain its corporate existence, rights,
franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain
qualified in good standing as a foreign
corporation in each jurisdiction where the
failure to preserve and maintain such
qualification could have a Material Adverse
Effect and continue to engage in the same type
of business in which it is engaged on the
Closing Date.
Section 6.04. Payment of Taxes and
Claims, etc. Each Loan Party shall, and shall
cause each of its respective Subsidiaries to,
pay, when due (after giving effect to any
extensions), (i) all taxes, assessments and
governmental charges imposed upon it or upon
any of its properties and (ii) all claims
(including without limitation claims for
labor, materials, supplies or services) which
could, if unpaid, individually or in the
aggregate, have a Material Adverse Effect or
become a Lien upon its respective properties.
Section 6.05. Keeping of Books,
Visitation, Inspection, etc. (a) Each Loan
Party shall, and shall cause each of its
respective Subsidiaries to, keep proper books
of record and account, containing complete and
accurate entries of all financial and business
transactions relating to the business,
operations, properties or condition (financial
or otherwise) of such Loan Party in conformity
with GAAP and all Requirements of Law.
(b) Each Loan Party shall maintain and
implement administrative and operating proce-
dures (including, without limitation, the
ability to recreate records regarding the
Contracts in the event of the destruction of
any original records thereof), and keep and
maintain all documents, books, records and
other information reasonably necessary or
advisable for the collection of all Contracts
(including, without limitation, records
adequate to permit the identification of all
Collections and adjustments to each existing
Contract).
(c) Each Loan Party shall, and shall
cause each of its respective Subsidiaries to,
permit any representative of the Lender to
visit and inspect any of the properties of
such Loan Party and each such Subsidiary to
examine the books and records of such Loan
Party and each of its Subsidiaries and to make
copies and take extracts therefrom, and to
discuss the business, operations, properties,
condition (financial or otherwise) or
prospects of such Loan Party and each such
Subsidiary or any of the Collateral with the
officers and independent public accountants
thereof and as often as the Lender may
reasonably request, and so long as no Default
or Event of Default shall have occurred and be
continuing, all at such reasonable times
during normal business hours upon reasonable
notice.
Section 6.06. Pay Obligations. Each
Loan Party shall, and shall cause each of its
respective Subsidiaries to, pay, discharge or
otherwise satisfy at or before maturity or
before they become delinquent, as the case may
be, all obligations under or pursuant to all
its material obligations, except when the
amount or validity thereof is currently being
contested in good faith by appropriate
proceedings and such Loan Party or such
Subsidiary has established adequate reserves
in accordance with GAAP with respect thereto
and no Liens in respect thereof have been
filed.
Section 6.07. Notice of Default, etc.
Each Loan Party shall promptly, and in any
event within two (2) Business Days, after such
Loan Party has knowledge thereof, notify the
Lender in writing of (i) the occurrence of any
Default or Event of Default, or (ii) any
default, or event, condition or occurrence
which with notice or lapse of time, or both,
would constitute a default by any party
thereto under any indenture, mortgage, deed of
trust, agreement or other instrument or
contractual obligation to which it is a party
or by which any of its properties may be bound
or affected, or any other event or occurrence
which in any such case individually or in the
aggregate could have a Material Adverse
Effect.
Section 6.08. Notice of Material Adverse
Change; Material Adverse Effect. Each Loan
Party shall promptly, and in any event within
two (2) Business Days, after such Loan Party
becomes, or reasonably should have become,
aware thereof, give the Lender notice in
writing of the occurrence of any Material
Adverse Change, and of the occurrence of any
event or condition that may have a Material
Adverse Effect.
Section 6.09. Further Assurances. At
its sole cost and without expense to the
Lender, on demand, each Loan party shall do,
execute, acknowledge and deliver all and every
such further acts, deeds, conveyances,
assignments, notices of assignment, transfers
and assurances as the Lender shall from time
to time reasonably require for better
assuring, conveying, assigning, transferring
and confirming unto the Lender the property
and rights pledged or assigned or intended now
or hereafter so to be, or which the Borrower
may be or may hereafter become bound to
convey, pledge or assign to the Lender, or for
carrying out the intention or facilitating the
performance of the terms of this Agreement or
any of the other Loan Documents, or for
filing, registering or recording of the
Security Documents.
Section 6.10. Enforceability of
Obligations. Each Loan Party shall take, or
cause to be taken, such actions as are
reasonably within its power to ensure that,
with respect to each Contract, the obligation
of any related Obligor to pay the unpaid
balance of such Contract in accordance with
the terms thereof remain legal, valid, binding
and enforceable against such Obligor.
Section 6.11. Fulfillment of
Obligations. Each Loan Party shall observe
and perform or cause to be observed or
performed, all material obligations and
undertakings on its part to be observed and
performed under or in connection with the
Contracts and Related Assets, and will duly
observe and perform all material provisions,
covenants and other promises required to be
observed by it under the Contracts and all
other agreements related thereto, will do
nothing to impair the Borrower's right, title
and interest or the security interest of the
Lender in and to the Contracts, the Related
Assets and the other Collateral and will pay
when due, or cause to be paid when due, any
taxes, including without limitation any sales
tax, excise tax or other similar tax or
charge, payable by such Loan Party or Aegis
Auto Finance in connection with the Contracts,
the Related Assets and the other Collateral
and their creation and satisfaction.
Section 6.12. Dealer Recourse. Each
Loan Party shall, or shall cause Aegis Auto
Finance to, diligently exercise all its rights
and remedies against Dealers arising under
Dealer Agreements with respect to the Con-
tracts from time to time and to the extent of
any cash or other recoveries thereunder. Each
Loan Party shall, and cause Aegis Auto Finance
to, hold such amounts in trust for the benefit
of the Lender, segregated from all other funds
of such Loan Party or Aegis Auto Finance, as
the case may be, and each Loan Party shall,
and shall cause Aegis Auto Finance to,
forthwith upon receipt by such Loan Party or
Aegis Auto Finance, as the case may be, turn
over to the Lender in the exact form received
(duly indorsed to the Lender, if required) to
be applied to the Obligations.
Section 6.13. Borrowing Base
Certificates. The Borrower shall deliver to
the Lender no later than 10:00 a.m. (New York
City time) two (2) Business Days prior to each
Remittance Date during the term hereof, a
Borrowing Base Certificate as of the close of
business on the last day of the immediately
preceding calendar month.
Section 6.14. Monthly Reporting
Requirements. Each Loan Party, as applicable,
shall deliver, or cause to be delivered, to
the Lender no later than 10:00 a.m. (New York
City time) two (2) Business Days prior to each
Remittance Date during the term hereof, the
following:
(a) A Remittance Certificate signed by a
Responsible Officer of the Borrower.
(b) A Portfolio Contracts Certificate
signed by a Responsible Officer of the
Borrower stating that as of the last day of
the immediately preceding calendar month, no
Portfolio Event has occurred or if a Portfolio
Event occurred, a statement to that effect and
a description of the nature thereof, which
certificate shall demonstrate in reasonable
detail the calculations used in determining
whether any Portfolio Event has occurred and
attaching thereto true, complete and correct
copies of its "Repossession, Inventory, Claims
Pending, Gross and Net Loss Experience" and
"Non-Performing Receivables" and "Historical
Bucket" management reports, in each case in
the form attached to Exhibit C-3 hereto.
Section 6.15. Corporate Separateness of
the Borrower. The Borrower shall at all times
hold itself out to the public, including its
parent, under the Borrower's own name and as a
separate and distinct entity from its parent.
At all times at least one director and one
executive officer of the Borrower (or one
individual serving in both capacities) shall
be a Person who is not a director, officer or
employee of any Person owning of record more
than 10% of the outstanding shares of common
stock of the Borrower or any Person which owns
beneficially more than 10% of the outstanding
common stock of the Borrower. The Borrower
shall maintain separate corporate records and
books of account from those of its parent,
shall not commingle its assets with any other
Person and shall take appropriate Board of
Directors action to authorize its corporate
actions. The Borrower shall take all actions
necessary to maintain its distinct corporate
separate identity from all other Persons.
Section 6.16. Insurance. Each Loan
Party shall, and shall cause each of its
respective Subsidiaries to, maintain the
insurance set forth in Schedule V hereto and
shall maintain, and shall cause each of its
Subsidiaries to maintain, such other insurance
as is customary for a Person engaged in a
similar business and each Loan Party shall,
and shall cause each of its respective
Subsidiaries to, pay all insurance premiums
payable for such insurance coverage on or
before the due date therefor. Each Loan Party
shall upon request of the Lender deliver a
copy of the policies of such insurance to the
Lender, together with evidence of payment of
all premiums therefor.
Section 6.17. Post-Closing Deliveries.
(a) The Loan Parties shall deliver to
the Lender each item set forth in the letter
agreement dated as of May 17, 1996 among the
Loan Parties and the Lender within the time
frame set forth therein.
(b) On or before each Borrowing Date
following the consummation of any
securitization by any Loan Party or any
Affiliate thereof, the Loan Parties shall
cause to be delivered to the Lender an opinion
of counsel for each state in which the
concentration of retail installment sales
contracts so securitized equaled or exceeded
ten percent (10%) of the pool of retail
installment sales contracts so securitized to
the extent an opinion for such state has not
been rendered previously to the Lender
hereunder.
ARTICLE VII. NEGATIVE COVENANTS
Until all of the Obligations have been
paid in full, the Commitment has been
terminated and this Agreement has been
terminated:
Section 7.01. Liens and Other Interests.
The Borrower will not sell, pledge, assign or
transfer to any other Person, or grant,
create, incur, assume or suffer to exist any
Lien or any other interest in, any of its
properties or assets including, without
limitation, any option to buy or right to
receive income with respect to the Collateral,
except as contemplated by the Security
Agreement.
Section 7.02. Sale and Purchase
Agreement, etc. No Loan Party will amend,
modify, waive any condition precedent or
default under or otherwise supplement, or
sell, pledge, assign or transfer any of its
rights or obligations under, any Related
Document to which it is a party without the
prior written consent of the Lender.
Section 7.03. Special Purpose. The
Borrower will not amend its Certificate of
Incorporation as in effect on the date hereof.
Section 7.04. Indebtedness. The
Borrower will not incur any Indebtedness or
contract to incur any Indebtedness other than
the Loans.
Section 7.05. Merger or Consolidation.
No Loan Party will, sell, pledge, assign or
transfer to any other Person, all or
substantially all of its properties or assets,
or merge or consolidate with or acquire all or
substantially all of the assets or properties
of, any other Person; provided that so long as
no Default or Event of Default has occurred
and is continuing or will result therefrom,
either Guarantor may merge or consolidate with
or acquire all or substantially all of the
assets of another Person, provided that in the
case of any merger or consolidation, such
Guarantor is the surviving corporation and
such merger or consolidation does not have an
adverse effect on the condition (financial or
otherwise) of such Guarantor.
Section 7.06. Net Worth of Aegis. Aegis
shall not permit its Net Worth at any time to
be less than the greater of (i) $15,000,000;
and (ii) eighty-five percent (85%) of its Net
Worth as at the end of the prior fiscal year.
Section 7.07. Total Indebtedness to Net
Worth of Aegis. Aegis shall not permit the
ratio of its total Indebtedness (excluding
Indebtedness related to structured receivables
transactions) to Net Worth to exceed 13:1.
Aegis shall advise the Lender of the
incurrence or assumption of any Indebtedness,
except any Indebtedness incurred in the
ordinary course of business.
Section 7.08. Dividends, etc. No Loan
Party shall pay any dividends, whether in cash
or property (other than through the issuance
of the shares of its Capital Stock), on or
redeem, repurchase or otherwise acquire any
shares of its Capital Stock (other than with
respect to Aegis, redemptions of the Series C
Preferred Stock Redemption); provided that so
long as no Default or Event of Default shall
have occurred and be continuing or would
result therefrom, Aegis Consumer Finance may
pay cash dividends to Aegis and Aegis may pay
cash dividends on its Capital Stock from funds
legally available therefor in an aggregate
amount not to exceed the lesser of (x)
$1,000,000 and (y) fifty percent (50%) of its
net income as determined in accordance with
GAAP for the prior fiscal year.
Section 7.09. Transactions with
Affiliates. No Loan Party will, or will
permit any of its respective Subsidiaries to,
enter into, or be a party to, any transaction
with any Affiliate thereof, except, in the
ordinary course of business, and upon fair and
reasonable terms which are no less favorable
to such Loan Party or such Subsidiary than
would be obtained in a comparable arm's length
transaction with a Person not an Affiliate;
provided that for the purposes of this Section
7.09 no Loan Party shall be deemed an
Affiliate of any other Loan Party.
ARTICLE VIII. EVENTS OF DEFAULT
Section 8.01. Events of Default. If any
one or more of the following events (each an
"Event of Default") shall occur:
(a) the Borrower shall fail to pay
any principal of any Loan when due,
whether at maturity, by required
prepayment or otherwise; or the Borrower
shall fail to pay any interest on any
Loan or any other Obligation within two
(2) Business Days after the same shall
become due and payable (whether at
maturity, by acceleration or otherwise);
or either Guarantor shall fail to pay any
Obligation in accordance with Section
9.01 hereof when due; or
(b) Any Loan Party shall fail to
perform or observe any covenant,
agreement or provision contained in
Sections 6.07(i) or 6.15 or in Article
VII of this Agreement on its part to be
performed; or any Loan Party shall fail
to perform or observe any covenants or
agreement contained in any other Loan
Document to which it is a party; or any
Loan Party shall fail to perform any
covenant, agreement or provision
contained in Sections 6.07(ii), 6.08
through and including 6.14 and 6.16 of
this Agreement and such default shall
continue unremedied for a period of ten
(10) or more days; or
(c) Any Loan Party shall fail to
perform or observe any other covenant or
agreement contained herein (other than as
described in subsections (a) and (b)
above) and such default shall continue
unremedied for a period of fifteen (15)
or more Business Days; or
(d) Any Loan Party or any of its
respective Subsidiaries shall fail to pay
any principal or interest on any
Indebtedness (other than in the case of
the Borrower the Loans) which
individually or in the aggregate exceeds
$100,000; or any other event shall occur
or condition shall exist under any
agreement or instrument under or pursuant
to which any such Indebtedness of any
Loan Party or any of its respective
Subsidiaries may have been issued,
created, assumed, guaranteed or secured
by any Loan Party or any of its
respective Subsidiaries and any such
payment or other default shall continue
for more than the grace period, if any,
therein specified, if the effect of such
event or condition is to accelerate, or
permit the acceleration of, the maturity
of such Indebtedness; or any such
Indebtedness shall be declared due and
payable prior to the stated maturity
thereof; or
(e) any representation or warranty
made or deemed made by or on behalf of
any Loan Party in any Loan Document or
Related Document to which it is a party
shall prove to have been incorrect in any
material respect when made or deemed
made; or
(f) if any Loan Party or any of its
respective Subsidiaries shall (i) apply
for or consent to the appointment of, or
the taking of possession by, a receiver,
custodian, trustee or liquidator of
itself or of all or a substantial part of
its property, (ii) admit in writing its
inability, or be generally unable, to pay
its debts as they become due, (iii) make
a general assignment for the benefit of
creditors, (iv) commence a voluntary case
under the federal bankruptcy laws (as now
or hereafter in effect), (v) be
adjudicated a bankrupt or insolvent,
(vi) file a petition seeking to take
advantage of any other law providing for
the relief of debtors, or (vii) take any
corporate action for the purpose of
effecting any the foregoing; or
(g) a case or other proceeding
shall be commenced without the
application or consent of any Loan Party
or any of its respective Subsidiaries, in
any court of competent jurisdiction,
seeking the liquidation or readjustment
of debts, the appointment of a trustee,
receiver, custodian or liquidator of such
Loan Party or any of its respective
Subsidiaries or of all or any substantial
part of its property, or any similar
action with respect to any Loan Party or
any of its Subsidiaries under the federal
bankruptcy laws (as now or hereafter in
effect) or any other laws relating to
bankruptcy, insolvency, reorganization,
winding up or composition or adjustment
of debt, and such case or proceeding
shall continue undismissed, or unstayed
and in effect, for a period of sixty (60)
days, or an order for relief against any
Loan Party or any of its Subsidiaries
shall be entered in an involuntary case
under such bankruptcy law; or
(h) (i) any Person shall engage in
any "prohibited transaction" (as defined
in Section 406 of ERISA or Section 4975
of the Code) involving any Plan, (ii) any
"accumulated funding deficiency" (as
defined in Section 302 or ERISA), whether
or not waived, shall exist with respect
to any Plan or any Lien in favor of the
PBGC or a Plan shall arise on the assets
of any Loan Party or any Commonly
Controlled Entity, (iii) a Reportable
Event shall occur with respect to, or
proceedings shall commence to have a
trustee appointed, or a trustee shall be
appointed, to administer or to terminate,
any Single Employer Plan, which
Reportable Event or commencement of
proceedings or appointment of a trustee
is, in the reasonable opinion of the
Lender, likely to result in the
termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single
Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) any
Loan Party or any Commonly Controlled
Entity shall, or in the reasonable
opinion of the Lender is likely to, incur
any liability in connection with a
withdrawal from, or the insolvency or
reorganization of, a Multiemployer Plan
or (vi) any other event or condition
shall occur or exist with respect to a
Plan; and in each case in clauses (i)
through (vi) above, such event or
condition, together with all other such
events or conditions, if any, could have
a Material Adverse Effect; or
(i) a final judgment(s) or order(s)
for the payment of money shall be
rendered against any Loan Party or any of
its respective Subsidiaries which
individually or in the aggregate exceeds
$100,000 and such judgment or order shall
continue unsatisfied and in effect for a
period of thirty (30) consecutive days
unless such judgment or order shall have
been vacated, released, fully bonded or
stayed; or
(j) for any reason the Lender shall
fail to have a valid, perfected first
priority security interest in any of the
Collateral, subject to no other Liens, or
any Loan Document shall for any reason
cease to be in full force and effect or
any Loan Party or any other Person shall
so assert in writing; or
(k) any party to any Related
Document shall fail to perform any of its
obligations under any Related Document to
which it is a party and such failure
shall continue unremedied for a period in
excess of the grace period, if any,
specified therein, as such document is in
effect on the date hereof; or
(l) a Portfolio Event shall occur;
or
(m) the Borrower ceases to be a
wholly-owned Subsidiary of Aegis Auto
Finance, Aegis Auto Finance shall cease
to be a wholly-owned Subsidiary of Aegis
Consumer Finance or Aegis Consumer
Finance ceases to be a wholly-owned
Subsidiary of Aegis in each case free and
clear of all Liens; or
(n) any Loan Party or any Affiliate
thereof shall default under any agreement
with, or other contractual obligation to,
the Lender or any Affiliate of the
Lender; or
(o) a Material Adverse Change shall
occur;
then, and in any such event, (A) if such event
is an Event of Default specified in paragraphs
(f) or (g) above with respect to any Loan
Party, the Commitment hereunder shall
immediately terminate and the Total
Outstandings, together with accrued and unpaid
interest thereon, and all other Obligations
shall immediately become due and payable
without notice of any kind, and (B) if such
event is any other Event of Default and if
such Event of Default shall be continuing, the
Lender may, by notice of default to the
Borrower, terminate the Commitment hereunder,
and/or declare the Total Outstandings,
together with accrued and unpaid interest
thereon, and all other Obligations to be due
and payable forthwith, whereupon the same
shall immediately become due and payable,
and/or pursue any of its other rights,
remedies, power and privileges under the Loan
Documents or otherwise. Except as expressly
provided above in this Section 8.01,
diligence, presentment, protest, demand for
payment and notice of default or nonpayment
and all other notices of any kind are hereby
expressly waived by the Borrower.
ARTICLE IX. GUARANTEE
Section 9.01. Guarantee. (a) Each
Guarantor hereby jointly and severally
unconditionally and irrevocably guarantees to
the Lender and its respective successors,
endorsees, transferees and assigns, the due,
punctual and complete payment and performance
by the Borrower when and as due, whether at
the stated maturity, by acceleration, upon one
or more dates set for repayment or prepayment
or otherwise of the Obligations.
Section 9.02. No Subrogation.
Notwithstanding any payment or payments made
by a Guarantor hereunder or any setoff or
application of funds of any Guarantor by the
Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Lender
against the Borrower or any collateral
security or guarantee or right of offset held
by the Lender for the payment of the
Obligations, nor shall such Guarantor seek or
be entitled to seek any contribution or
reimbursement from the Borrower in respect of
payments made by such Guarantor hereunder,
until all amounts owing to the Lender by the
Borrower and the Guarantors on account of the
Obligations are paid in full and the
Commitment is terminated. If any amount shall
be paid to a Guarantor on account of the
subrogation rights at any time when all of the
Obligations shall not have been paid in full
and the Commitment shall not have been
terminated, the amount shall be held by such
Guarantor in trust for the Lender, segregated
from other funds of such Guarantor, and shall
forthwith upon receipt by such Guarantor, be
turned over to the Lender in the exact form
received by such Guarantor (duly endorsed by
such Guarantor to the Lender, if required), to
be applied against the Obligations, whether
matured or unmatured, at the time and in the
order as the Lender may determine.
Section 9.03. Amendments, etc. with
respect to the Obligations; Waiver of Rights.
Each Guarantor shall remain obligated
hereunder notwithstanding that, without any
reservation of rights against such Guarantor,
and without notice to or further assent by
such Guarantor, any demand for payment of any
of the Obligations made by the Lender may be
rescinded by the Lender, and any of the
Obligations continued, and the Obligations, or
the liability of any other Person upon or for
any part thereof, or any collateral security
or guarantee therefor or right of offset with
respect thereto, may, from time to time, in
whole or in part, be renewed, extended,
amended, modified, accelerated, compromised,
waived, surrendered or released by the Lender,
and this Agreement, any other Loan Document,
and any other documents executed and delivered
in connection therewith may be amended,
modified, supplemented or terminated, in whole
or in part, as the Lender may deem advisable
from time to time, and any collateral
security, guarantee or right of offset at any
time held by the Lender for the payment of the
Obligations may be sold, exchanged, waived,
surrendered or released. The Lender shall
have no obligation to protect, secure, perfect
or insure any Lien at any time held by it as
security for the Obligations or for the
guarantee set forth in this Article IX or any
property subject thereto. When making any
demand hereunder against a Guarantor, the
Lender may, but shall be under no obligation
to, make a similar demand on the Borrower or
any other guarantor (including, without
limitation, any other Guarantor), and any
release of the Borrower or the other guarantor
(including, without limitation, any other
Guarantor), shall not relieve any of its
obligations or liabilities hereunder, and
shall not impair or affect the rights,
remedies, powers and privileges, express or
implied, or as a matter of law, of the Lender
against such Guarantor.
Section 9.04. Guarantee Absolute and
Unconditional. Each Guarantor waives any and
all notice of the creation, renewal, extension
or accrual of any of the Obligations and
notice of or proof of reliance by the Lender
upon the guarantee of such Guarantor set forth
in this Article IX or acceptance of the
guarantee of such Guarantor set forth in this
Article IX; the Obligations, and any of them,
shall conclusively be deemed to have been
created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon
the guarantee of each Guarantor set forth in
this Article IX; and all dealings between the
Borrower or the Guarantors, on the one hand,
and the Lender, on the other, shall likewise
be conclusively presumed to have been had or
consummated in reliance upon the guarantee of
each Guarantor set forth in this Article IX.
Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of
default or nonpayment and all other notices of
any kind to or upon the Borrower or such
Guarantor with respect to the Obligations.
The guarantee of each Guarantor set forth in
this Article IX shall be construed as a
continuing, absolute and unconditional
guarantee of payment, and not of collection,
and without regard to (a) the validity,
regularity or enforceability of this
Agreement, any other Loan Document, any of the
Obligations or any collateral security
therefor or guarantee or right of offset with
respect thereto at any time or from time to
time held by the Lender, (b) any defense, set-
off or counterclaim (other than a defense of
payment or performance) which may at any time
be available to or be asserted by the Borrower
against the Lender, or (c) any other
circumstance whatsoever (with or without
notice to or knowledge of the Lender, the
Borrower or any Guarantor) which may or might
in any manner or to any extent vary the risk
of such Guarantor or otherwise constitutes, or
might be construed to constitute, an equitable
or legal discharge of the Borrower for the
Obligations, or of such Guarantor under the
guarantee set forth in this Article IX, in
bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder
against a Guarantor, the Lender may, but shall
be under no obligation to, pursue the rights,
remedies, powers and privileges as it may have
against the Borrower or any other Person or
against any collateral security or guarantee
for the Obligations or any right of offset
with respect thereto. Any failure by the
Lender to pursue the other rights, remedies,
powers or privileges or to collect any
payments from the Borrower or any other Person
or to realize upon any collateral security or
guarantee or to exercise any right of offset,
or any release of the Borrower or any other
Person or of any the collateral security,
guarantee or right of offset, shall not
relieve a Guarantor of any liability
hereunder, and shall not impair or affect the
rights, remedies, powers or privileges,
whether express, implied or available as a
matter of law, of the Lender against a
Guarantor. The guarantee set forth in this
Article IX shall remain in full force and
effect and be binding in accordance with and
to the extent of its terms upon each Guarantor
and its successors and permitted assigns, and
shall inure to the benefit of the Lender, and
its respective successors, indorsee,
transferees and assigns, until all the
Obligations and the obligations of the
Guarantors under the guarantee set forth in
this Article IX shall have been satisfied by
payment in full and the Commitment shall have
been terminated, notwithstanding that from
time to time while the Commitment is in effect
during the term of this Agreement the Borrower
may be free from any Obligations.
Section 9.05. Reinstatement. The
guarantee set forth in this Article IX shall
continue to be effective, or be reinstated, as
the case may be, if at any time payment, or
any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or
returned by the Lender for any reason
whatsoever, including, without limitation,
upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of a Guarantor
or the Borrower or upon or as a result of the
appointment of a receiver, intervenor or
conservator of, or trustee or similar officer
for, any Loan Party or any substantial party
of its property, or otherwise, all as though
the payments had not been made.
Section 9.06. Payments. All payments by
a Guarantor under the guarantee set forth in
this Article IX shall be paid by such
Guarantor without set-off or counterclaim to
the Lender at its office at 600 Steamboat
Road, Greenwich, Connecticut 06830 or to such
other location or account as the Lender may
specify to the Guarantors from time to time,
in Federal or other immediately available
funds in lawful money of the United States by
1:00 p.m. (New York City time) on the due date
therefor.
ARTICLE X. MISCELLANEOUS
Section 10.01. Notices. Except as
otherwise provided herein, all notices,
requests and other communications to any party
hereunder or under the other Loan Documents
shall be in writing (including telecopy or
similar teletransmission or writing) and shall
be given, to the parties hereto at the
addresses set forth below:
if to Aegis: The Aegis Consumer
Funding Group, Inc.
525 Washington Blvd.
Jersey City, New
Jersey 07310
Attention: Joseph F.
Battiato
Telephone: (201)
418-7337
Telecopy: (201)
418-7339
if to Aegis Consumer: Aegis Consumer
Finance, Inc.
Finance 525 Washington Blvd.
Jersey City, New
Jersey 07310
Attention: Joseph F.
Battiato
Telephone: (201)
418-7337
Telecopy: (201)
418-7339
if to the Borrower: Aegis Auto Funding
Corp. III
525 Washington Blvd.
Jersey City, New
Jersey 07310
Attention: Joseph F.
Battiato
Telephone: (201)
418-7337
Telecopy: (201)
418-7339
if to the Lender: Greenwich Capital
Financial Products, Inc.
600 Steamboat Road
Greenwich,
Connecticut 06830
Attention: Sandra
Fine Rosenbaum
Telephone: (203)
622-5665
Telecopy: (203)
629-4640
or to such other address or telecopier number
as such party may hereafter specify by written
notice to the other parties hereto. Except as
otherwise provided for herein, each such
notice, request or other communication shall
be effective (i) if given by telecopier when
transmitted to the telecopy number specified
in this Section 10.01, (ii) if given by mail,
72 hours after such communication is deposited
in the mails by certified mail, return-receipt
requested, postage prepaid, addressed as
aforesaid, or (iii) if given by any other
means (including without limitation by air
courier), when delivered at the address
specified in this Section 10.01; provided that
any notice required to be given under Sections
2.03 and 3.11 hereof shall not be effective
until actually received by the Lender.
Section 10.02. Amendments, Waivers, etc.
None of the Loan Documents or any terms
thereof may be amended, modified or otherwise
supplemented except in writing signed by the
parties hereto. In the case of any waiver of
a Default or Event of Default, any Default or
Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver
shall extend to any subsequent or other
Default or Event of Default, or impair any
right consequent thereon.
Section 10.03. No Waiver; Remedies
Cumulative. No failure or delay on the part
of the Lender in exercising any right, remedy,
power or privilege under any Loan Document
shall operate as a waiver thereof, nor shall
any single or partial exercise of, or any
abandonment or discontinuance of steps to
enforce any right, remedy, power or privilege
under any Loan Document preclude any other or
further exercise thereof or the exercise of
any other rights, remedies or privileges
thereunder. The rights, remedies, powers and
privileges provided in the Loan Documents are
cumulative and may be exercised singularly or
concurrently and are not exclusive of any
other rights, remedies, powers or privileges
provided by law.
Section 10.04. Payment of Expenses,
Indemnity, etc. Each Loan Party jointly and
severally agrees to:
(i) pay or reimburse the Lender on
demand for all its out-of-pocket costs
and expenses incurred in connection with
the development, preparation and
execution of, and any amendment,
modification or supplement to, or any
waiver under, any Loan Document and any
other document prepared in connection
therewith, and the consummation and
administration of the transactions
contemplated thereby, including without
limitation the reasonable fees and
disbursements of counsel to the Lender;
(ii) pay on demand all reasonable
costs and expenses of the Lender,
including without limitation the
reasonable fees and disbursements of
counsel to the Lender, in connection with
the occurrence or continuance of a
Default or Event of Default and the
enforcement, collection, protection or
preservation (whether through
negotiations, legal proceedings or
otherwise) of this Agreement or any other
Loan Document, the Collateral, any
Obligation or any right, remedy, power or
privilege of the Lender hereunder or
under any other Loan Document;
(iii) pay and hold the Lender
harmless from and against any and all
present and future stamp, excise,
recording or other similar taxes or fees
payable in connection with the execution,
delivery, recording and filing of any
Loan Document and hold the Lender
harmless from and against any and all
liabilities with respect to or resulting
from any delay or omission to pay such
taxes or fees; and
(iv) indemnify the Lender and its
Affiliates and each of their respective
directors, officers, employees and agents
and hold each of them harmless from and
against, any and all liabilities, losses,
damages, penalties, actions, judgments,
suits, claims, costs, expenses and
disbursements, including without
limitation the reasonable fees and
disbursement of counsel to the Lender and
such other parties, incurred by any of
them in connection with, arising out of
or in any way relating to any investiga-
tion, claim, litigation or other
proceeding, pending or threatened
(whether or not any of them is designated
a party thereto), in connection with,
arising out of or in any way related to
this Agreement or any other Loan Document
or any of the transactions contemplated
herein or therein or any use of the
proceeds of any Loan by the Borrower;
provided that the Lender shall not be
entitled to any indemnification for any
of the foregoing resulting from its gross
negligence or willful misconduct as
determined by a final court of competent
jurisdiction.
If and to the extent that the indemnity
obligations of the Borrower under this Section
10.04 may be unenforceable for any reason, the
Borrower hereby agree to make the maximum
contribution to the payment and satisfaction
of each of such indemnity obligations which is
permissible under applicable law.
Section 10.05. Benefits of Agreement.
(a) This Agreement and the other Loan
Documents to which it is a party shall be
binding upon and inure to the benefit of each
of the Loan Parties and the Lender and their
respective successors and assigns, except that
no Loan Party may assign or transfer any of
its rights or obligations under this Agreement
or any other Loan Document to which it is a
party without the prior written consent of the
Lender.
(b) The Lender may assign or transfer
all or any of its rights or obligations under
any Loan Document to any Affiliate of the
Lender at any time without the prior written
consent of any Loan Party.
(c) The Lender may sell or grant
participations in all or any of its rights and
obligations under any Loan Document from time
to time to one or more commercial banks or
other entities upon such terms as the Lender
may determine in its sole discretion without
the prior written consent of any Loan Party.
Each Loan Party agrees that to the extent
permitted by applicable law, each such
participant shall be deemed to have the right
of setoff in respect of its participating
interest in the Loans and the Note to the same
extent as if the amount of its participating
interest in the Loans and the Note were owing
directly to it as "Lender" under this
Agreement or any Note. The Borrower also
agrees that each participant shall be entitled
to all benefits of Sections 3.07, 3.08 and
10.04 hereof with respect to its participating
interest in the Loans and the Note. If the
Lender shall sell or grant any such
participation, each Loan Party shall continue
to deal solely with the Lender.
(d) Each Loan Party hereby authorizes
the Lender to disclose any and all information
regarding each Loan Party and each of its
respective Subsidiaries whether received
pursuant to the Loan Documents or otherwise to
any assignee or participant or any proposed
assignee or participant.
Section 10.06. Right of Setoff. If an
Event of Default shall have occurred and be
continuing, the Lender is hereby authorized at
any time and from time to time, to the fullest
extent permitted by law, to set off and apply
any and all deposits and any and all
indebtedness or other amounts at any time
owing by the Lender to or for the credit or
the account of any Loan Party against any of
and all the obligations of any Loan Party now
or hereafter existing under this Agreement or
any other Loan Document held by the Lender,
irrespective of whether or not the Lender
shall have made any demand under this
Agreement or such other Loan Document and
although such obligations may be unmatured.
The rights of the Lender under this Section
10.06 are in addition to other rights and
remedies (including other rights of setoff)
which the Lender may have.
Section 10.07. Survival of Agreement.
All covenants, agreements, representations and
warranties made by each Loan Party herein, in
the other Loan Documents to which it is a
party and in the certificates or other
instruments prepared or delivered in
connection with or pursuant to this Agreement
or any other Loan Document shall be considered
to have been relied upon by the Lender and
shall survive the making by the Lender of the
Loans, the execution and delivery to the
Lender of the Loan Documents regardless of any
investigation made by the Lender, and shall
continue in full force and effect as long as
any Obligation is outstanding and so long as
the Commitment has not been terminated.
Without prejudice to the survival of any other
agreements contained herein and the other Loan
Documents, the obligations under Sections
3.07, 3.08 and 10.04 hereof shall survive
payment in full of the Obligations and
termination of the Commitment and this
Agreement.
SECTION 10.08. GOVERNING LAW. THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL
BE CONSTRUED IN ACCORDANCE WITH, AND BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION, AND THE EFFECT OF PERFECTION OR
NON-PERFECTION, OF THE SECURITY INTEREST
CONTEMPLATED UNDER THE SECURITY DOCUMENTS MAY
BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION.
Section 10.09. Counterparts. This
Agreement may be executed in any number of
counterparts and by the different parties
hereto in separate counterparts, each of which
when so executed and delivered shall be deemed
an original, and all of which shall together
constitute one and the same agreement.
Section 10.10. Headings Descriptive. The
headings of the several articles and sections
of this Agreement, and the Table of Contents,
are inserted for convenience only and shall
not in any way affect the meaning or
construction of any provisions of this
Agreement.
Section 10.11. Severability. Any
provision of this Agreement or any other Loan
Document which is prohibited, unenforceable or
not authorized in any jurisdiction shall, as
to such jurisdiction, be ineffective to the
extent of such prohibition, unenforceability
or non-authorization without invalidating the
remaining provisions hereof or thereof or
affecting the validity, enforceability or
legality of such provisions in any other
jurisdiction.
Section 10.12. Entire Agreement. This
Agreement and the other Loan Documents
constitute the entire agreement among the
parties relative to the subject matter hereof.
Any previous agreement among the parties with
respect to the subject matter hereof is
superseded by this Agreement and the other
Loan Documents. Nothing in this Agreement or
in the other Loan Documents, expressed or
implied, is intended to confer upon any party
other than the parties hereto and thereto any
rights, remedies, obligations or liabilities
under or by reason of this Agreement or the
other Loan Documents.
Section 10.13. Submission to
Jurisdiction; Venue. (a) Any legal action or
proceeding against any Loan Party with respect
to this Agreement or any other Loan Document
to which it is a party may be brought in the
courts of the State of New York located in New
York County or of the United States for the
Southern District of New York, and, by
execution and delivery of this Agreement, each
Loan Party hereby irrevocably accepts for
itself and in respect of its property,
generally and unconditionally, the
jurisdiction of the aforesaid courts. Each
of the parties hereto agrees that a final
judgment in any such action or proceeding
shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing
herein shall affect the right of the Lender to
commence legal proceedings or otherwise
proceed against any Loan Party in any other
jurisdiction.
(b) Each Loan Party irrevocably consents
to service of process in the manner provided
for notices in Section 10.01. Nothing in this
Agreement will affect the right of the Lender
to serve process in any other manner permitted
by law.
(c) Each Loan Party irrevocably waives
any objection which it may now or hereafter
have to the laying of venue of any of the
aforesaid actions or proceedings arising out
of or in connection with this Agreement or any
other Loan Document to which it is a party in
the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees
not to plead or claim in any such court that
any such action or proceeding brought in any
such court has been brought in an inconvenient
forum.
Section 10.14. Post-Closing Syndication
Amendments. Each Loan Party acknowledges that
the Lender may in its sole discretion
syndicate to other lenders acceptable to the
Lender in its sole and absolute discretion,
all or any part of the Commitment and the
Loans. Each Loan Party agrees to cooperate
with the Lender in connection with such
syndication and to enter into such
restatements of, and amendments, supplements
and other modifications to, this Agreement and
the other Loan Documents in order to give
effect to such syndication.
SECTION 10.15. WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING DIRECTLY
OR INDIRECTLY UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, each of the
parties hereto have caused this Agreement to
be duly executed by their respective officers
thereunto duly authorized, as of the date
first above written.
THE AEGIS CONSUMER
FUNDING GROUP, INC.
By:
Title:
AEGIS CONSUMER
FINANCE, INC.
By:
Title:
AEGIS AUTO FUNDING
CORP. III
By:
Title:
GREENWICH CAPITAL
FINANCIAL
PRODUCTS, INC.
By:
Title:
SCHEDULE II
Underwriting Guidelines
SCHEDULE III
DEALER AGREEMENT
EXHIBIT 10.94.1
EXHIBIT A
[FORM OF NOTE]
$100,000,000
May 17, 1996
New York, New York
FOR VALUE RECEIVED, AEGIS AUTO FUNDING CORP. III,
a
Delaware corporation (the "Borrower"), hereby
unconditionally promises to pay the order of GREENWICH
CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation
(the "Lender"), at its office located at 600 Steamboat
Road, Greenwich, Connecticut 06830 or to such other
location or account as the Lender shall specify to the
Borrower from time to time, in Federal or other
immediately available funds in lawful money of the
United
States the principal amount of ONE HUNDRED MILLION
DOLLARS ($100,000,000) or, if less, the aggregate
unpaid
principal amount of the Loans made by the Lender to the
Borrower pursuant to the Warehouse Lending Agreement,
dated as of May 17, 1996 (such agreement as it may from
time to time be amended, supplemented or otherwise
modified being the "Agreement"), among The Aegis
Consumer
Funding Group, Inc., Aegis Consumer Finance, Inc., the
Borrower and the Lender, on the Termination Date.
The Lender is hereby authorized to record the
dates
and amounts of all Loans made by the Lender to the
Borrower under the Agreement and the dates and amounts
of
all payments and prepayments of the principal amount of
the Loans on the Schedule (and each continuation
thereof)
attached to and forming a part of this Note. Such
recordation shall be conclusive in the absence of
manifest error; provided that the failure of the Lender
to make any such recordation shall not affect the
obligations of the Borrower under this Note or the
Agreement. All Loans made by the Lender under the
Agreement shall be recorded by the Lender on its books
and records.
The Borrower further promises to pay interest on
the
unpaid principal amount of all Loans made hereunder and
under the Agreement from time to time from the date
each
such Loan is made until payment in full thereof to the
Lender in like money at the rates and on the dates set
forth in the Agreement.
This Note is the Note referred to in, and is
entitled to the benefits, and is subject to the terms,
of
the Agreement, which Agreement, among other things,
contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and
also for prepayments on account of the principal hereof
prior to the maturity hereof upon the terms and
conditions specified therein.
Except as otherwise specified in the Agreement,
presentment, demand, protest and all other notices of
any
kind are hereby expressly waived by the Borrower.
Unless otherwise defined herein, defined terms
used
herein shall have the meanings ascribed thereto in the
Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND
BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
AEGIS AUTO FUNDING CORP.
III
By:
Title:
SCHEDULE TO NOTE
DATE
OF
LOAN
AMOUNT
OF
LOAN
DATE OF
PAYMENT/
PREPAYMENT
AMOUNT OF
PAYMENT/
PREPAYMENT
INITIALED
BY
EXHIBIT 10.94.2
EXHIBIT D
[FORM OF SECURITY AGREEMENT]
SECURITY AGREEMENT, dated as of May 17, 1996, made
by AEGIS AUTO FUNDING CORP. III, a Delaware corporation
(the "Pledgor"), in favor of GREENWICH CAPITAL
FINANCIAL
PRODUCTS, INC., a Delaware corporation (the "Pledgee").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Warehouse
Lending
Agreement, dated as of May 17, 1996, among The Aegis
Consumer Funding Group, Inc. and Aegis Consumer
Finance,
Inc. ("Aegis Finance"), each a Delaware corporation,
the
Pledgor and the Pledgee (the "Warehouse Lending
Agreement"), the Pledgee has agreed to make Loans (as
defined therein) to the Pledgor; and
WHEREAS, it is a condition precedent to the
obligation of the Pledgee to enter into the Warehouse
Lending Agreement and to make the Loans to the Pledgor
thereunder that the Pledgor shall have executed and
delivered this Security Agreement to the Pledgor;
NOW, THEREFORE, in consideration of the premises
and
to induce the Pledgee to enter into the Warehouse
Lending
Agreement and to make the Loans to the Pledgor
thereunder, and for other good and valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged, the Pledgor hereby agrees with the
Pledgee as follows:
Section 1. Defined Terms.
(a) Unless otherwise defined herein,
capitalized terms which are defined in the Warehouse
Lending Agreement and used herein shall have the
meanings
given to them in the Warehouse Lending Agreement.
(b) The following terms shall have the
following meanings:
"Aegis Auto Finance" shall mean Aegis Auto
Finance,
Inc., a Delaware corporation.
"Agreement" shall mean this Security Agreement, as
the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms
hereof.
"Code" shall mean the Uniform Commercial Code as
from time to time in effect in the State of New York.
"Collateral" shall have the meaning set forth in
Section 2 hereof.
"Collection Account" shall mean the trust or other
account or accounts approved by and for the benefit of
the Pledgee established by the Servicer at the
Pledgee's
direction with First Interstate Bank of California,
N.A.
and/or such other financial institution or institutions
as determined by the Pledgee upon written notice to the
Pledgor and the Servicer.
"Computer Tape" shall mean the electronic
transmission generated by the Servicer which provides
information relating to the Contracts as more
particularly described in the Servicing Agreement.
"Contracts" shall mean retail installment sales
contracts and security agreements and all addenda
thereto, as amended or supplemented from time to time,
secured by Financed Vehicles and purchased by the
Pledgor
in the ordinary course of its business from Aegis Auto
Finance and pledged by the Pledgor to the Pledgee
hereunder and all moneys received thereon or in respect
thereof on and after the related Cut-off Date allocable
to principal and all moneys received thereon allocable
to
interest accrued thereon from and including the related
Cut-off Date.
"Custodian Agreement" shall mean the Tri-Party
Custodian Agreement, dated as of May 17, 1996, by and
among the Pledgor, the Pledgee and the Custodian,
providing for the custody of the "Collateral Documents"
as defined therein.
"Custodian" shall mean Norwest Bank Minnesota,
National Association, in its capacity as custodian
under
the Custodian Agreement and its successors and assigns
consented to by the Pledgee.
"Cut-off Date" means May 10, 1996 with respect to
the Contracts to be purchased by the Pledgor on the
initial Borrowing Date and thereafter, the last
Business
Day of the calendar week preceding the applicable
Borrowing Date with respect to the Contracts to be
purchased by the Pledgor on such Borrowing Date.
"Dealer" shall mean the dealer who sold a Financed
Vehicle to an Obligor and who originated and assigned
the
Contract relating to such Financed Vehicle to Aegis
Auto
Finance under a Dealer Agreement, and any successor to
such Dealer.
"Dealer Agreement" shall mean any agreement
between
Aegis Auto Finance and a Dealer with respect to the
origination of Contracts, substantially in the form
attached to the Warehouse Lending Agreement as Schedule
III.
"Dealer Recourse" shall mean, with respect to any
Contract, all rights arising under the related Dealer
Agreement or otherwise against the Dealer which
originated such Contract.
"Financed Vehicles" shall mean any new or used
automobile or light-duty truck, together with all
accessions thereto, financed by loans arising under
Contracts.
"Insurance Policies" shall mean any comprehensive
and collision, fire and theft and physical damage
insurance policies maintained by Obligors (including,
without limitation, the Obligor's comprehensive
insurance
policy), any credit policy (including without
limitation
credit life and credit disability), any Risk Default
Policy and/or any VSI Policy covering the Contracts,
Obligors and/or Financed Vehicles.
"Obligor" shall mean, with respect to a Contract,
the purchaser or co-purchaser of the Financed Vehicle
and/or any other Person who owes payments under any
Contract.
"Proceeds" shall have the meaning assigned to it
under the Code and, in any event, shall include, but
not
be limited to, any and all amounts from time to time
paid
or payable under or in connection with any of the
Collateral.
"Purchase Agreement" shall mean the Purchase
Agreement, dated as of May 17, 1996, between the
Pledgor
and Aegis Auto Finance.
"Records" shall mean, with respect to any
Contract,
all documents, books, records and other information
(including, without limitation, computer programs,
tapes,
discs, punch cards, data processing software and
related
property and rights) relating to such Contract.
"Related Assets" shall mean (i) the Titles and the
security interests in Financed Vehicles granted by the
Obligors pursuant to the Contracts, (ii) the Pledgor's
rights, remedies, powers and privileges under the
Contracts, including any personal guaranty thereof,
(iii)
the Pledgor's rights, remedies, powers and privileges
under the Related Documents, (iv) all rights, remedies,
powers and privileges under the Dealer Agreements,
including but not limited to Dealer Recourse and any
holdback amounts, (v) insurance proceeds under
Insurance
Policies, (vi) all other property that shall secure any
Contract and (vii) all proceeds of all or any of the
foregoing.
"Related Documents" shall mean the Custodian
Agreement, the Purchase Agreement, the Servicing
Agreement and the Sub-Servicing Agreement.
"Risk Default Policy" shall mean the risk default
insurance policy providing default insurance with
respect
to Contracts issued by The Connecticut Indemnity
Company
or any other insurance company approved by the Pledgee
in
writing.
"Servicer" shall mean Aegis Auto Finance.
"Servicing Agreement" shall mean the Servicing
Agreement, dated as of May 17, 1996, between the
Pledgor
and the Servicer.
"Sub-Servicer" shall mean American Lenders
Facilities, Inc. or any other Sub-Servicer approved by
the Pledgee in writing.
"Sub-Servicing Agreement" shall mean the Master
Servicing Agreement dated as of April 6, 1996 between
Aegis Consumer Finance, Inc. and the Sub-Servicer.
"Title" shall mean, with respect to each Contract,
the original certificate of title or other document
evidencing the security interest in a Financed Vehicle,
or a guarantee of title or a copy of an application for
title if no certificate of title or other document
evidencing the security interest in the Financed
Vehicle
has yet been issued.
"VSI Policy" shall mean any vendor's single
interest
physical damage insurance policy with respect to
Contracts providing insurance coverage for open peril
physical loss or damage, instrument non-filing,
conversion and confiscation losses and physical loss or
damage to repossessed vehicles.
(c) The words "hereof," "herein" and
"hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and
section and paragraph references are to this Agreement
unless otherwise specified.
(d) The meanings given to terms defined
herein
shall be equally applicable to both the singular and
plural forms of such terms.
Section 2. Grant of Security Interest. As
collateral security for the prompt and complete payment
and performance when due (whether at the stated
maturity,
by acceleration or otherwise) of the Obligations, the
Pledgor hereby pledges, assigns and transfers to the
Pledgee and its successors, endorsees, transferees and
assigns and hereby grants to the Pledgee and its
successors, endorsees, transferees and assigns a
continuing security interest in all of the Debtor's
right, title and interest in, to and under all of the
following property whether now owned or existing or at
any time hereafter acquired or arising by the Pledgor
or
in which the Pledgor now has or at any time in the
future
may acquire any right, title or interest wheresoever
located (collectively, the "Collateral"):
(i) all Contracts and the Vehicles
securing the Contracts;
(ii) all Records;
(iii) all Related Assets;
(iv) the Collection Account and all
moneys and investments held therein; and
(v) all books and records pertaining
to
the Collateral;
(vi) to the extent not otherwise
included, all Proceeds and products of any
and
all of the foregoing.
Section 3. Rights of Pledgee; Limitations on
Pledgee's and Obligations.
(a) No Liability of Pledgee under Contracts
or
Related Assets. The Pledgee shall have no obligation
or
liability under any Contract or any Related Asset by
reason of or arising out of this Agreement or the
receipt
by the Pledgee of any payment relating to such Contract
or any Related Asset pursuant hereto, nor shall the
Pledgee be obligated in any manner to perform any of
the
obligations of the Pledgor under or pursuant to any
Contract or any Related Asset or any other Collateral,
to
make any payment, to make any inquiry as to the nature
or
the sufficiency of any payment received by it or as to
the sufficiency of any performance by any party under
any
Contract or any Related Asset, to present or file any
claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have
been
assigned to it or to which it may be entitled at any
time
or times.
(b) Notice to Obligors, etc. Upon the
request
of the Pledgee at any time after the occurrence and
during the continuance of an Event of Default, the
Pledgor shall notify the parties to any Contract upon
request from the Pledgee that such Contract has been
assigned to the Pledgee and that payments in respect
thereof shall be made directly to the Pledgee. At any
time and from time to time after the occurrence and
during the continuance of an Event of Default, the
Pledgee may in its own name or in the name of others
communicate with the parties to any Contract to verify
with them to its satisfaction the existence, amount and
terms of such Contract.
Section 4. Representations and Warranties.
The
Pledgor hereby represents and warrants to the Pledgee
that:
(a) Power and Authority. The Pledgor has
the
corporate power and authority, and the legal right, to
make, deliver and perform its obligations under, and to
grant the security interest in the Collateral to the
extent provided in, and pursuant to, this Agreement and
has taken all necessary corporate action to authorize
the
execution, delivery and performance of, and grant of
the
security interest in the Collateral to the extent
provided in, and pursuant to, this Agreement.
(b) Title; No Other Liens. Except for the
Liens granted to the Pledgee pursuant to this
Agreement,
the Pledgor owns each item of the Collateral free and
clear of any and all Liens. Except as set forth on
Schedule 2 hereto, no security agreement, financing
statement or other public notice similar in effect with
respect to all or any part of the Collateral is on file
or of record in any public office, except such as have
been filed in favor of the Pledgee pursuant to this
Agreement.
(c) Perfected First Priority Liens. (i)
This
Agreement is effective to create, as collateral
security
for the Obligations, valid and enforceable Liens on the
Collateral in favor of the Pledgee.
(ii) Upon filing of the financing
statements delivered to the Pledgee by the Pledgor on
the
Closing Date in the jurisdictions listed in Schedule 3
hereto (which financing statements are in proper form
for
filing in such jurisdictions) and the delivery to, and
continuing possession by, the Pledgee or its nominee of
all the Contracts, the Liens created pursuant to this
Agreement will constitute a first priority perfected
security interest in the Collateral in favor of the
Pledgee, which Liens will be prior to all other Liens
of
all other Persons and which Liens are enforceable as
such
as against all other Persons.
(d) Consents. Except as set forth on
Schedule
4 hereto, no consent or authorization of, filing with
or
other act by or in respect of any Governmental
Authority
or any other Person is required in connection with the
execution, delivery, performance, validity or
enforceability of any Collateral by the Pledgor or (to
the knowledge of the Pledgor) any other party thereto
other than those which have been duly obtained, made or
performed and are in full force and effect.
(e) Chief Executive Office. The Pledgor's
chief executive office and chief place of business and
the place where it maintains its books and records is
located at 525 Washington Boulevard, Jersey City, New
Jersey 07310 or such other location of which the
Pledgor
shall have provided written notice to the Pledgee
pursuant to Section 5(i) hereof.
(f) Trade Names. Any and all trade names or
prior
names under which the Pledgor transacts, intends to
transact (or has transacted within the five (5) years
preceding the Closing Date) any part of its business
are
those which are set forth on Schedule 5 hereto.
Section 5. Covenants. The Pledgor covenants
and
agrees with the Pledgee that, from and after the date
of
this Agreement until the termination of this Agreement
in
accordance with Section 12(a):
(a) Further Documentation; Delivery of
Instruments. At any time and from time to time,
upon the written request of the Pledgee and at the
sole expense of the Pledgor, the Pledgor will
promptly and duly execute and deliver such further
instruments and documents and take such further
action as the Pledgee may reasonably request for
the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and
powers herein granted, including, without
limitation, the filing of any financing or
continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. The Pledgor
also hereby authorizes the Pledgee to file any
such
financing or continuation statement without the
signature of the Pledgor to the extent permitted
by
applicable law. A carbon, photographic or other
reproduction of this Agreement shall be sufficient
as a financing statement for filing in any
jurisdiction.
(b) Indemnification. The Pledgor agrees to
pay, and to save the Pledgee and its agents,
officers, directors and successors harmless from,
any and all liabilities and reasonable costs and
expenses (including, without limitation,
reasonable
legal fees and expenses) (i) with respect to, or
resulting from, any delay by the Pledgor in paying
any and all excise, sales or other similar taxes
which may be payable or determined to be payable
with respect to any of the Collateral, (ii) with
respect to, or resulting from, any delay by the
Pledgor in complying with any Requirement of Law
applicable to any of the Collateral or (iii) in
connection with any of the transactions
contemplated by this Agreement, provided that such
indemnity shall not, as to the Pledgee or any of
its agents, officers, directors and successors, be
available to the extent that such liabilities,
costs and expenses resulted from the gross
negligence or willful misconduct of any of the
same. In any suit, proceeding or action brought
by
the Pledgee under any Contract or any other
Collateral for any sum owing thereunder, or to
enforce any provisions of any Contract or any
other
Collateral, the Pledgor will save, indemnify and
keep the Pledgee and its agents, officers,
directors and successors harmless from and against
all expense, loss or damage suffered by reason of
any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the obligor
thereunder, arising out of any obligation
thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or
in favor of such account debtor, such obligor or
any of their respective successors from the
Pledgor.
(c) Maintenance of Records. The Pledgor
will
keep and maintain at its own cost and expense
reasonably satisfactory and complete records of
the
Collateral, including, without limitation, a
record
of all payments received and all credits granted
with respect to the Collateral, and shall mark
such
records to evidence this Agreement and the Liens
and the security interests created hereby. For
the
Pledgee's further security, the Pledgee, shall
have
a security interest in all of the Pledgor's books
and records pertaining to the Collateral, and the
Pledgor shall permit the Pledgee or its
representatives to review such books and records
at
the location where such books and records are kept
and at the reasonable request of the Pledgee.
(d) Limitation on Liens on Collateral. The
Pledgor will not create, incur or permit to exist,
will defend the Collateral against, and will take
such other action as is reasonably necessary to
remove, any Lien or adverse claim on or to any of
the Collateral (other than the Liens created
hereby) and will defend the right, title and
interest of the Pledgee in and to any of the
Collateral against the claims and demands of all
Persons whomsoever.
(e) Limitations on Dispositions of
Collateral. Without the prior written consent of
the Pledgee, the Pledgor will not sell, assign,
transfer, exchange or otherwise dispose of, or
grant any option with respect to, the Collateral,
or attempt, offer or contract to do so, except as
otherwise permitted by the Warehouse Lending
Agreement.
(f) Limitations on Discounts, Compromises,
Extensions of Time. At all times, the Pledgor
will
not permit, except in the ordinary course of
business, grant any extension of the time of
payment of any Contract or other Collateral,
compromise, compound or settle the same for less
than the full amount thereof, release, wholly or
partially, any Person liable for the payment
thereof, or allow any credit or discount
whatsoever
thereon, unless such extensions, compromises,
compoundings, settlements, releases, credits or
discounts are expressly permitted by the Warehouse
Lending Agreement.
(g) Limitations on Modifications, Waivers,
Extensions of Contracts. The Pledgor will not,
except in the ordinary course of business, amend,
modify, terminate or waive any material provision
of any Contract, which could reasonable be
expected
to materially adversely affect the value of such
Collateral. The Pledgor will promptly deliver to
the Pledgee a copy of each material demand, notice
or document received by it relating in any way to
any Contract.
(h) Further Identification of Collateral.
The Pledgor will furnish to the Pledgee from time
to time such statements and schedules further
identifying and describing the Collateral, and
such
other reports in connection with the Collateral,
as
the Pledgee may reasonably request, all in
reasonable detail.
(i) Notices. The Pledgor will advise the
Pledgee promptly, in reasonable detail, at its
address set forth in Section 14 hereof, (i) of any
Lien (other than Liens created hereby on, or
material adverse claim asserted against, any of
the
Collateral and (ii) of the occurrence of any other
event which could reasonably be expected in the
aggregate to have a material adverse effect on the
aggregate value of the Collateral or the Liens
created hereunder.
(j) Changes in Locations, Name, etc. The
Pledgor will not (i) change the location of its
chief executive office/chief place of business
from
that specified in Section 4(e) hereof or remove
its
books and records from the location specified in
Section 4(e) hereof, or (ii) change its name,
identity or corporate structure to such an extent
that any financing statement filed in connection
with this Agreement would become seriously
misleading, unless, in each case, the Pledgor (x)
shall have given the Pledgee at least 30 days'
prior written notice thereof and (y) prior to
effecting any such change, shall have taken such
actions as may be necessary or, upon the
reasonable
request of the Pledgee, advisable to continue the
perfection and priority of the Liens granted
pursuant hereto.
Section 6. Pledgee's Appointment as
Attorney-in-Fact.
(a) Powers. The Pledgor hereby irrevocably
constitutes and appoints the Pledgee and any officer or
agent of the Pledgee, with full power of substitution,
as
its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead
of
the Pledgor and in the name of the Pledgor or in its
own
name, from time to time in the Pledgee's discretion,
for
the purpose of carrying out the terms of this
Agreement,
to take any and all appropriate action and to execute
any
and all documents and instruments which may be
reasonably
necessary or desirable to accomplish the purposes of
this
Agreement to the extent permitted by law, and, without
limiting the generality of the foregoing, the Pledgor
hereby gives the Pledgee the power and right, on behalf
of the Pledgor, without notice to or assent by the
Pledgor, to do, at any time when an Event of Default
has
occurred and is continuing, the following to the extent
permitted by law:
(i) in the name of the Pledgor or its
own name, or otherwise, to take possession of
and indorse and collect any checks, drafts,
notes, acceptances or other instruments for
the payment of moneys due under any
Collateral
and to file any claim or to take any other
action or institute any proceeding in any
court of law or equity or otherwise deemed
appropriate by the Pledgee for the purpose of
collecting any and all such moneys due under
such Collateral whenever payable;
(ii) to pay or discharge taxes and
Liens
levied or placed on the Collateral, to effect
any repairs or any insurance called for by
the
terms of this Agreement and to pay all or any
part of the premiums therefor and the costs
thereof; and
(iii) (A) to direct any party
liable for
any payment under any of the Collateral to
make payment of any and all moneys due or to
become due thereunder directly to the Pledgee
or as the Pledgee shall direct; (B) to ask
for, or demand, collect, receive payment of
and receipt for, any and all moneys, claims
and other amounts due or to become due at any
time in respect of or arising out of any
Collateral; (C) to sign and indorse any
invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications,
notices and other documents in connection
with
any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings
at
law or in equity in any court of competent
jurisdiction to collect the Collateral or any
thereof and to enforce any other right in
respect of any Collateral; (E) to defend any
suit, action or proceeding brought against
the
Pledgor with respect to any of the
Collateral;
(F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E)
above and, in connection therewith, to give
such discharges or releases as the Pledgee
may
deem appropriate; and (G) generally, to sell,
transfer, pledge and make any agreement with
respect to or otherwise deal with any of the
Collateral as fully and completely as though
the Pledgee were the absolute owner thereof
for all purposes, and to do, at the Pledgee's
option and the Pledgor's expense, at any
time,
or from time to time, all acts and things
which the Pledgee deems reasonably necessary
to protect, preserve or realize upon the
Collateral and the Pledgee's Liens thereon
and
to effect the intent of this Agreement, all
as
fully and effectively as the Pledgor might
do.
The Pledgor hereby ratifies all that said attorneys
shall
lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest
and
shall be irrevocable until the payment in full of the
Obligations and the and the termination of the
Warehouse
Lending Agreement.
(b) Other Powers. The Pledgor also
authorizes
the Pledgee, from time to time if an Event of Default
shall have occurred and be continuing, to execute
and/or
file and record, in connection with any sale provided
for
in Section 9 hereof, any endorsements, assignments or
other instruments of conveyance or transfer with
respect
to the Collateral.
(c) No Duty on the Part of the Pledgee. The
powers conferred on the Pledgee and hereunder are
solely
to protect the Pledgee's interests in the Collateral
and
shall not impose any duty upon the Pledgee to exercise
any such powers. The Pledgee shall be accountable only
for amounts that they actually receive as a result of
the
exercise of such powers, and neither it nor any of its
officers, directors, employees, affiliates, agents or
successors shall be responsible to the Pledgor for any
act or failure to act hereunder, except for their gross
negligence or willful misconduct.
Section 7. Performance by Pledgee of Pledgor's
Obligations. If the Pledgor fails to perform or comply
with any of its agreements contained herein and the
Pledgee, as provided for by the terms of this
Agreement,
shall perform or comply, or otherwise cause performance
or compliance, with such agreements, the reasonable
expenses of the Pledgee incurred in connection with
such
performance or compliance, together with interest
thereon
at a rate per annum equal to the default rate
applicable
to the Loans as set forth in the Warehouse Lending
Agreement, shall be payable by the Pledgor to the
Pledgee
on demand, and the Pledgor's obligations to make such
payments shall constitute Obligations secured hereby.
Section 8. Proceeds. It is agreed that if an
Event of Default shall occur and be continuing, (a) all
Proceeds of any Collateral received by the Pledgor
consisting of cash, checks and other non-cash items
shall
be held by the Pledgor in trust for the Pledgee,
segregated from other funds of the Pledgor, and shall,
forthwith upon receipt by the Pledgor, be turned over
to
the Pledgee in the exact form received by the Pledgor
(duly indorsed by the Pledgor to the Pledgee, if
required) and (b) any and all such Proceeds received by
the Pledgee (whether from the Pledgor or otherwise)
shall
be held by the Pledgee as collateral security for the
Obligations (whether matured or unmatured), and/or then
or at any time thereafter may, in the sole discretion
of
the Pledgee, be applied by the Pledgee against the
Obligations then due and owing in the following order
of
priority:
FIRST, to the payment of all
reasonable costs and expenses
incurred by the Pledgee in
connection with this Agreement, the
Warehouse Lending Agreement, any
other Loan Document or any of the
Obligations, including, without
limitation, all court costs and the
reasonable fees and expenses of its
agents and legal counsel, and any
other reasonable costs or expenses
incurred in connection with the
exercise by the Pledgee of any right
or remedy under this Agreement, the
Warehouse Lending Agreement or any
other Loan Document;
SECOND, to the satisfaction of all
other Obligations; and
THIRD, to the Pledgor or to
whomsoever may be lawfully entitled
to receive the same.
Section 9. Remedies. If an Event of Default
shall occur and be continuing, the Pledgee may exercise
all rights and remedies of a secured party under the
Code, and, to the extent permitted by law, all other
rights and remedies granted to the Pledgee in this
Agreement and the other Loan Documents and in any other
instrument or agreement securing, evidencing or
relating
to the Obligations. Without limiting the generality of
the foregoing, the Pledgee, without demand of
performance
or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law
referred to below) to or upon the Pledgor or any other
Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in
such circumstances, to the extent permitted by law,
forthwith collect, receive, appropriate and realize
upon
the Collateral, or any part thereof, and/or may
forthwith
sell, lease, assign, give option or options to
purchase,
or otherwise dispose of and deliver the Collateral or
any
part thereof (or contract to do any of the foregoing),
in
one or more parcels at public or private sale or sales,
at any exchange, broker's board or office of the
Pledgee
or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without
assumption of any credit risk. The Pledgee shall have
the right, to the extent permitted by law, upon any
such
sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is
hereby waived and released. The Pledgor further
agrees,
at the Pledgee's request, to assemble the Collateral
and
make it available to the Pledgee at places which the
Pledgee shall reasonably select, whether at the
Pledgor's
premises or elsewhere. The Pledgee shall apply the net
proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred
therein or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the
Collateral or the rights of the Pledgee, including,
without limitation, reasonable attorneys' fees and
disbursements, to the payment and performance in whole
or
in part of the Obligations then due and owing, in the
order of priority specified in Section 8 hereof, and
only
after such application and after the payment by the
Pledgee of any other amount required by any provision
of
law, including, without limitation, Section 9-504(1)(c)
of the Code, need the Pledgee account for the surplus,
if
any, to the Pledgor. To the extent permitted by
applicable law, (a) the Pledgor waives all claims,
damages and demands it may acquire against the Pledgee
arising out of the repossession, retention or sale of
the
Collateral, other than any such claims, damages and
demands that may arise from the gross negligence or
willful misconduct of any of: them, and (b) if any
notice
of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before
such sale or other disposition. The Pledgor shall
remain
liable for any deficiency if the proceeds of any sale
or
other disposition of the Collateral are insufficient to
pay in full all Obligations, including, without
limitation, the reasonable fees and disbursements of
any
attorneys employed by the Pledgee to collect such
deficiency, as provided in the Warehouse Lending
Agreement.
Section 10. Limitation on Duties Regarding
Preservation of Collateral. The Pledgee's sole duty
with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to
deal
with it in the same manner as the Pledgee deals with
similar property for its own account. Neither the
Pledgee nor any of its respective directors, officers,
employees, affiliates or agents shall be liable for
failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the
Pledgor
or any other Person.
Section 11. Powers Coupled with an Interest.
All
authorizations and agencies herein contained with
respect
to the Collateral are powers coupled with an interest
and
are irrevocable until the termination of this Agreement
in accordance with Section 12 (a) hereof.
Section 12. Release of Collateral and
Termination. (a) This Agreement shall remain in full
force and effect and be binding in accordance with and
to
the extent of its terms and the security interest
created
by this Agreement shall not be released until the
payment
in full of the Obligations shall have occurred and the
Commitment and Warehouse Lending Agreement shall have
terminated, at which time the Collateral shall be
released from the Liens created hereby, and this
Agreement and all obligations (other than those
expressly
stated to survive such termination) of the Pledgee and
the Pledgor hereunder shall terminate, all without
delivery of any instrument or performance of any act by
any party, and all rights to the Collateral shall
revert
to the Pledgor, provided that if any payment, or any
part
thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Pledgee upon
the
insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Pledgor or any other Loan Party,
or
upon or as a result of the appointment of a receiver,
intervenor or conservator of, or a trustee or similar
officer for, the Pledgor or any other Loan Party or any
substantial part of its property, or otherwise, this
Agreement, all rights hereunder and the Liens created
hereby shall continue to be effective, or be
reinstated,
as though such payments had not been made. Upon
request
of the Pledgor following any such termination, the
Pledgee shall deliver (at the sole cost and expense of
the Pledgor) to the Pledgor any Collateral held by the
Pledgee hereunder, and execute and deliver (at the sole
cost and expense of the Pledgor) to the Pledgor such
documents as the Pledgor shall reasonably request to
evidence such termination.
(b) If any of the Collateral shall be sold,
transferred or otherwise disposed of by the Pledgor in
a
transaction permitted by the Warehouse Lending
Agreement
then the Pledgee shall execute and deliver to the
Pledgor
(at the sole cost and expense of the Pledgor) all
releases or other documents reasonably necessary or
desirable for the release of the Liens created hereby
on
such Collateral.
Section 13. Interpretation. In the event of a
conflict between any term of this Agreement and the
terms
of any of the Warehouse Lending Agreement, the terms of
the Warehouse Lending Agreement shall control.
Section 14. Notices. All notices, requests and
demands under this Agreement shall be given in
accordance
with Section 10.01 of the Warehouse Lending Agreement.
Each of the Pledgor and the Pledgee may change their
respective addresses and transmission numbers for
notices
by notice in the manner provided in this Section 14.
Section 15. Counterparts. This Agreement may be
executed in any number of counterparts and by the
different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed
an original, and all of which shall together constitute
one and the same agreement.
Section 16. Amendments, Waivers, etc. Neither
this
Agreement nor any terms hereof may be amended, modified
or otherwise supplemented except in writing signed by
the
parties hereto. In the case of any waiver of a Default
or Event of Default, any Default or Event of Default
waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right
consequent thereon.
Section 17. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in
exercising
any right, remedy, power or privilege hereunder or
under
any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of,
or
any abandonment or discontinuance of steps to enforce
any
right, remedy, power or privilege hereunder or under
any
other Loan Document preclude any other or further
exercise thereof or the exercise of any other rights,
remedies, powers or privileges hereunder or thereunder.
The rights, remedies, powers and privileges provided
herein and in the other Loan Documents are cumulative
and
may be exercised singularly or concurrently and are not
exclusive of any other rights, remedies, powers or
privileges provided by law.
Section 18. Benefits of Agreement. This
Agreement
shall be binding upon and inure to the benefit of the
Pledgor and the Pledgee and their respective successors
and assigns, except that the Pledgor may not assign or
transfer any of its rights or obligations under this
Agreement without the prior written consent of the
Pledgee.
SECTION 19. GOVERNING LAW. THIS AGREEMENT SHALL
BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK.
Section 20. Headings Descriptive. The headings
of
the sections of this Agreement are inserted for
convenience only and shall not in any way affect the
meaning or construction of any provisions of this
Agreement.
Section 21. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization
without invalidating the remaining provisions hereof or
thereof or affecting the validity, enforceability or
legality of such provisions in any other jurisdiction.
Section 22. Submission to Jurisdiction; Venue.
(i)
Any legal action or proceeding against the Pledgor with
respect to this Agreement may be brought in the courts
of
the State of New York located in New York County or of
the United States for the Southern District of New
York,
and, by execution and delivery of this Agreement, the
Pledgor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing herein
shall affect the right of the Pledgee to commence legal
proceedings or otherwise proceed against the Pledgor in
any other jurisdiction.
(ii) The Pledgor irrevocably consents to service
of
process in the manner provided for notices in Section
14
hereof. Nothing in this Agreement will affect the
right
of the Pledgee to serve process in any other manner
permitted by law.
(iii) The Pledgor irrevocably waives, to the
extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in
connection with this Agreement to which it is a party
in
the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees, to the extent
permitted by law, not to plead or claim in any such
court
that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 23. WAIVER OF JURY TRIAL. EACH OF THE
PLEDGOR, AND THE PLEDGEE, BY ITS ACCEPTANCE HEREOF,
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY
IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY UNDER OR IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the undersigned has caused
this
Agreement to be duly executed and delivered as of the
date first above written.
AEGIS AUTO FUNDING CORP.
III
By:_________________________________
Title:_________________________
ACKNOWLEDGED AND AGREED AS OF
THE DATE HEREOF BY:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., as Pledgee
By:________________________
Title:________________
EXHIBIT 10.94.3
AEGIS AUTO FINANCE, INC.
MASTER SERVICING AGREEMENT
_______________________________________________________
_______________________
_______________________________________________________
_________________________
<PAGE>
DRAFT
AEGIS AUTO FINANCE, INC.
MASTER SERVICING AGREEMENT
This Master Servicing Agreement
(the "Agreement") is entered into as of the
day of May 17, 1996 between Aegis Auto Finance, Inc.
(hereinafter referred to as "Servicer"),
a Delaware corporation and Aegis Auto Funding Corp.
III., a Delaware corporation, its
successors, and assigns (hereinafter collectively
referred to as "Company").
RECITALS
WHEREAS, Servicer provides portfolio
management services, including
collection assistance, loan administration and
financial reporting to financial institutions in
connection with Sales Contracts (as hereinafter
defined); and
WHEREAS, Company and its Affiliates are and
will continue to become the
owners of Sales Contracts; and
WHEREAS, Company desires to continue to avail
itself of the services
provided by Servicer on the terms provided herein with
respect to Sales Contracts identified
to the Servicer for servicing in accordance with the
provisions hereof after the "Effective
Date" (as hereinafter defined).
NOW THEREFORE, in consideration of the
foregoing, other good and
valuable consideration, and the mutual terms and
covenants contained herein, the parties
hereto agree as follows:
ARTIC LE I.
DEFINITIONS
As used in this Agreement, the following terms shall,
unless the context otherwise requires,
have the following meanings (such meanings to be
equally applicable to the singular and
plural forms of the terms defined):
Approved Program. Shall mean, each package or
pool of Receivables held by
Company pursuant to a Warehouse Agreement which is
transferred to a Holder on a
given date provided, however, that Receivables
accumulated under an Approved
Program (whether under a Warehouse Agreement or
otherwise) prior to sale to a
Holder may be delivered to Servicer on a daily
basis, and Servicer will thereupon
service such Receivables pursuant hereto.
Audit. Wherever used in this Agreement (and as
applicable), audit shall define the
scope of responsibilities of Servicer in
overseeing the performance of any and all Sub-
Servicers as outlined in Schedule A.
Business Day. Any day other than Saturday,
Sunday, a regularly scheduled holiday of
Servicer, or a day on which banking institutions
in New Jersey are authorized or
required by law to close.
Closing Holder Principal Balance. With respect to
a Loan Receivable transferred to
Company, the unpaid principal balance of that
Receivable owed to the Holder at the
time of such transfer.
Closing Obligor Loan Balance. The unpaid
principal balance (in the case of a contract
written under the simple interest method of loan
repayment) owed by the Obligor at
the time that Loan Receivable became subject to
this Agreement to the Company.
Credit Agency. A recognized agency to which
Servicer on behalf of the Company
reports repayment delinquencies, repossessions and
redemptions.
Credit Enhancement. Any policy of insurance
(including but not limited to: Skip,
Confiscation, Physical Damage, Obligor Default,
Credit Default, Contingent Excess
Liability, Residual Value Insurance, Vendors
Single Interest Physical Damage and
GAP Auto Protection) written by an Insurer for the
purpose of providing loan
repayment guarantees to Company or Holder.
Custodian. Shall mean Norwest Bank Minnesota,
National Association, in its capacity
as custodian under the Custodian Agreement and its
successors and assigns consented
to by the Company.
Dealer. Any licensed or franchised motor vehicle
dealer from whom Receivables have
been acquired by Company, either directly or
through a financial institution or credit
union which itself acquired Receivables from a
motor vehicle dealer.
Depository Account. A remittance banking account
into which daily collections from
the Lock-box Account shall be deposited.
Effective Date. May 17, 1996.
Holder. As to any Receivable, the Person
purchasing or lending against the security of
such Receivable.
Indirect Lender. As to any Receivable, the Person
acquiring a Sales Contract from an
approved Dealer.
Insurer. Any insurance company which has issued
insurance utilized in the Company's
automobile receivables program.
Lock-Box Account. A bank account or accounts, in
the Company and Servicers name,
into which Obligors, Servicer, Company and the
Insurer (if applicable) shall be
directed to deposit collections with respect to
the Receivables.
Obligor. An account debtor or any other person
obligated under a Sales Contract to
make payments on any Receivable.
Person. Any natural person or any entity,
including without limitation any trust,
corporation, partnership, firm, government or
government agency.
Purchase Agreement. An agreement by which a
Holder purchases Receivables. from
Company in an Approved Program.
Remarketing Agent. An entity responsible for the
disposition of a Vehicle after all
Servicer functions have been completed.
Receivable. A Sales Contract Agreement that:
a) complies with all applicable federal and
state laws and legal requirements;
b) was originated in connection with the sale of
a Vehicle to a person or the
Company or the financing or refinancing of
such a Vehicle;
c) represents a bona fide obligation of an
Obligor and was executed in good faith
by an Obligor and constitutes a legal, valid
and binding payment obligation of
such Obligor in accordance with its terms;
d) has been purchased by Company from a Dealer
or other Indirect Lender of
Receivables or purchased by Company from any
person in the regular course of
Company's business;
e) is secured by a valid and perfected first
priority security interest in a Vehicle
titled or registered in one of the states of
the United States or the District of
Columbia;
f) provides that an Obligor shall make payment
on such Sales Contract in United
States dollars in substantially equal monthly
installments;
g) constitutes chattel paper as defined in the
Uniform Commercial Code provisions
regarding transactions in force in the
jurisdiction whose law governs the
perfection of Company's or a subsequent
Holder's security interest in such
Sales Contract; and falls within the confines
of this Agreement;
h) to the best of Company's knowledge, is one as
to which the property which is
the subject thereof has been delivered to an
Obligor or a member of an
Obligor's family, there are no exceptions,
counterclaims or set-offs on the part
of such Obligor against the amounts payable
and there have been no
representations or warranties made to such
Obligor by the Dealer (if the
Receivable was originated by a Dealer) not
contained in the Sales Contract.
Remaining Holder Principal Balance. As to any
Loan Receivable, the Closing Holder
Principal Balance throughout the entire remittance
process thereof less the aggregate
amount of principal payments, including all
liquidation and Credit Enhancement
proceeds received by the Servicer and remitted to
Holder or Company to its final
payoff pursuant to this Agreement.
Remaining Obligor Loan Balance. As to any Loan
Receivable, the Closing Obligor
Loan Balance thereof less the aggregate amount of
principal payments remitted by
Obligor (in the case of a contract written under
the simple interest method of loan
repayment), or less the remaining unearned finance
charge.
Remittance Date. Shall be the fifteenth (15th)
day of the calendar month immediately
following a Remittance Period (unless another date
is agreed to in writing by both
parties). If such day is not a Business Day, the
Business Day next succeeding such
agreed upon day.
Remittance Period. Shall be the first day
through, and including, the last day of the
calendar month immediately preceding a Remittance
Date.
Reserve Account. If required by a Purchase
Agreement, Warehouse Agreement or
policy of insurance, a bank account in which
Company deposits funds to be used for
making payments due a Holder or Company.
Sales Contract. A motor vehicle retail
installment or conditional sales contract
(comparable loan or other document) pursuant to
which an Obligor has acquired or
refinanced a Vehicle or used a Vehicle as security
for a financing. A motor vehicle
retail installment sales contract shall be deemed
to include any motor vehicle owned
by an Obligor under a loan program.
Sub-Contractor. As used in this Agreement (and as
applicable), that person
performing the responsibilities of Servicer or any
part thereof as outlined in this
Agreement.
Subcontracting Agreement. Any subcontracting
agreement entered into by and
between Servicer and a third party to perform any
or all of the responsibilities of
Servicer as outlined in this Agreement.
Vehicle. A new or used motor vehicle that was
purchased pursuant to a Sales Contract
and serves as collateral for a Receivable.
Warehouse Agreement. An agreement with Greenwich
Capital Financial Products, Inc.
to finance the acquisition and accumulation of
Receivables to be held by the
Company or sold to a Holder.
ARTICLE II.
NATURE AND SCOPE OF RELATIONSHIP
A. Company hereby engages Servicer and Servicer
agrees to render to Company those
services described in this Agreement and in the
attached Schedule A. In performing
its duties under this Agreement, Servicer shall
report in writing solely to such officers
or other employees of Company as Company may
designate from time to time.
Nothing in this Agreement shall be construed as
establishing an employment or agency
relationship or a partnership or joint venture
between Company, any third party
contract purchaser and Servicer.
B. Neither Company, nor its Affiliates shall use or
permit the use of Servicer's name or
the names of any of Servicer's affiliates in any
advertising or promotional material
prepared by Company or on Company's behalf without
the prior written consent of
Servicer which consent shall not be unreasonably
withheld; provided, for purposes of
clarification, the Company shall be permitted to
disclose Servicer's name and the
relationship of Servicer to the Company to third
party rating agencies, investors or
parties to a securitization, and in any case
where disclosure is required as a matter of
law.
C. Company and Servicer agree that this Agreement
shall apply to all Receivables
identified to the Servicer by the Company for
boarding on the Servicer's data
processing systems after the Effective Date.
ARTICLE III.
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER
1. The Servicer, for the Company: (i) shall act
prudently in accordance with
customary and usual servicing procedures for
other institutional servicers; (ii)
shall administer, maintain and service the
Receivables in compliance with all
applicable Federal and State laws and
regulations governing the Servicer and
the Receivables; and (iii) shall use and
exercise that degree of skill and
attention that is customary with other
Servicers in the industry that service
Sales Contracts for themselves as well as
others.
2. The Servicer's duties shall include
collection and posting of all payments,
responding to inquiries by Federal, State, or
local governmental authorities on
the Receivables, investigating delinquencies,
sending payment books or monthly
statements to Obligors, responding to
inquiries by Obligors with respect to the
Receivables and furnishing monthly statements
to the Company with respect to
distributions together with such additional
information as may be reasonably
requested by the Company.
3. The Servicer hereby agrees to act as a
custodian for all the documents or
instruments delivered to the Servicer with
respect to each Receivable, and any
and all other documents that Servicer
receives, creates, generates, or otherwise
possesses which relate to a Receivable, an
Obligor or Vehicle; provided,
however, that the original of the Motor
Vehicle Installment Sale Contract and
the original certificate of title or such
other documents evidencing the securities
interest of any trust in the financed vehicle
and any other documents designated
by the Company to be held by an independent
custodian shall, at the request of
the Company, be delivered to such independent
custodian. The Servicer shall
maintain in its files copies, computer
records or originals of each of the
following documents with respect to each
receivable on the financed vehicle
related thereto:
(i) Application of the Obligor for
Credit;
(ii) A copy of the Retail Installment
Sale Contract and any
amendments thereto;
(iii) A copy of a Certificate of
Title with a lien notation or an
application therefor;
(iv) Such other documents as the
Servicer may reasonably request in
order to accomplish its duties
under this Servicing Agreement.
Items (i), (ii), (iii) and (iv) shall be
referred to collectively as the "Servicer
Files".
4. Servicer shall establish a physical file for
each Receivable, which shall contain
the Servicer Files, as well as copies of all
reports developed by or information
received by Servicer with respect to the
Receivable.
a. In its capacity as custodian of such
files, Servicer shall hold the Servicer
Files and all related files and
documents on behalf of the Company or
Holder designated by the Company, and
maintain such accurate and
complete accounts, records, and computer
systems pertaining to the
Receivables using reasonable care and
that degree of skill and attention
with respect to the Receivables and the
files and documents as is
customary with other companies in the
industry that service motor
vehicle installment sales contracts for
themselves as well as for others.
b. The Servicer shall keep satisfactory
books and records pertaining to
each Receivable and shall make periodic
reports in accordance with this
Servicing Agreement. Such records may
not be destroyed or otherwise
disposed of except as permitted by the
Company and as allowed by
applicable laws, regulations or decrees.
All documents, whether
developed or originated by the Servicer
or not, reasonably required to
document or to properly administer any
Receivable shall remain at all
times the property of the Holder or
Company. The Servicer shall not
acquire any property rights with respect
to such records, and shall not
have the right to possession of them
except as subject to the conditions
stated in this Servicing Agreement.
When Servicer is acting in its
capacity as custodian, the Servicer
shall bear the entire cost of
restoration in the event any Loan
Documents (as defined below) shall
become damaged, lost or destroyed.
5. Servicer shall make available to the Holder
or Company, or their duly
authorized representatives, attorneys, or
auditors, the Servicer Files and any
related accounts, records, and computer
systems maintained by the Servicer,
they shall reasonably instruct, but without
disrupting Servicer's operations.
Without otherwise limiting the scope of the
examination, the Company may,
upon at least two (2) Business Days' prior
notice and at its own expense, using
generally accepted audit procedures, verify
the status of each Receivable and
review the Loan Documents and records
relating thereto for compliance with
the standards represented to exist as to each
Receivable in this Servicing
Agreement. Nothing herein shall require the
Holder or the Company to
conduct any inspection pursuant to this
Section.
6. Unless otherwise specified herein, the
Servicer shall maintain physical
possession, or computerized records, of good
and legible copies of the Servicer
Files received by it; such other instruments
or documents that modify or
supplement the terms or conditions of any of
the foregoing; and, all other
instruments, documents, correspondence and
memoranda generated by or
coming into the possession of the Servicer
(including, but not limited to,
insurance premium receipts, ledger sheets,
payment records, insurance claim
files, correspondence and current and
historical computerized data files) that are
required to document or service any
Receivable. Collectively, all of documents
described in this paragraph 6 with respect to
a Receivable are referred to as
"Loan Documents." The Servicer shall hold
all Loan Documents in trust for
the benefit of the Company or Holder; all
Loan Documents shall remain the
property of the Company or Holder. The
Servicer shall respond to all third
party inquiries concerning ownership of the
Receivables.
7. Servicer may employ or otherwise utilize
subservicers and enter into
subservicing agreements in carrying out its
duties and obligations under this
Servicing Agreement, provided such action by
Servicer shall not have a
material adverse effect on the Company.
8. If the Servicer shall commence a legal
proceeding on behalf of the Company to
enforce a Receivable the Company shall there
upon be deemed to have
automatically assigned such Receivable to the
Servicer which assignment shall
be solely for the purpose of collection. The
Company shall furnish the Servicer
with any powers of attorney and other
documents necessary or appropriate to
enable the Servicer to carry out its
servicing and administrative duties
hereunder.
9. Servicer shall attempt to contact each
Obligor within five (5) days of boarding
a Receivable into Servicer's PRIM system and
shall verify:
(i) the Obligor's home address, home
phone number, as well as
employer name, address and phone number;
(ii) the vehicle's make, model, year,
contents, state of registry and
license plate number.
10. Within five (5) business days after Servicer
has electronically boarded the
Receivable into Servicer's system, Servicer
shall attempt to contact the Obligor
and shall ensure and otherwise verify:
(i) whether the Obligor has been
instructed (A) as to when the first
payment is due and (B) where the first
payment is to be made pursuant
to the Sales Contract executed by the
Obligor;
(ii) whether the Obligor is prepared to
make the first payment due
under the Obligor's Sales Contract;
(iii) whether the Obligor has been
instructed as to the correct process
for successive payments;
(iv) that the information obtained
pursuant to Article III, Section A,
paragraph 6(i) above is true and
accurate;
(v) whether the due date on the
Obligor's payment schedule is
immediately following the date the
Obligor's employment paycheck is
received;
(vi) that all dates and figures
contained in the Contract are true and
accurate;
(vii) and inform the Obligor that the
Obligor shall receive a Welcome
Letter informing them that the Servicer
is collecting for the Company;
and
(viii) whether the Obligor is satisfied
with the motor vehicle and the
dealership from which the Obligor
purchased the vehicle.
11. If a vehicle is reported or discovered to be
stolen or damaged, Servicer shall
coordinate matters with the primary insurance
agent, the Obligor, and
Company. If a vehicle is reported or
discovered to be damaged beyond repair,
Servicer shall coordinate matters with the
primary insurance agent and the
Obligor. Servicer shall administer all
insurance claims and rebates. Upon
notification of the disability of the
Obligor, Servicer's collection manager shall
file any necessary insurance claims and
coordinate and process insurance
payments. Servicer shall be responsible for
the collection of any outstanding or
remaining delinquency.
12. Servicer shall pursue skips for 120 days
prior to the VSI filing at which time
the Obligor's account shall be submitted to
the Servicer's claims manager who
shall file the claim before the account
becomes 150 days delinquent.
13. Servicer shall administer all matters
relating to any Obligor's bankruptcy,
including all legal filings and responses as
outlined in Schedule A herein;
14. Upon notice to either Company or Servicer of
the death of an Obligor, the
Obligor's account shall be transferred to the
Servicer's collection manager who
shall be responsible for either (i) the
repossession or (ii) insurance
administration relating to that Receivable.
15. Servicer shall process Obligor accounts for
which the Obligor fails to make a
payment on the applicable payment due date (a
"Delinquency") on the
following basis:
(i) commencing on the first business
day on which an Obligor is
delinquent by more than four (4) days,
Servicer shall, at Servicer's
discretion, either (A) phone the
Obligor, (B) if no contact is made after
phoning the Obligor, send a letter to
the Obligor asking the Obligor to
immediately contact Servicer, or (C)
order a field call by an outside
agency to the Obligor; and
(ii) in those cases where Servicer
contacts the Obligor, Servicer shall
inform Obligor that payment on Obligor's
account may be made (A) by
quick collect, (B) by bank wire, (C) by
overnight delivery or (D) by
normal payment.
16. When a determination is made by Servicer's
collection manager to repossess a
vehicle, the Servicer's collection manager
shall turn over the account to the
assignment and reinstatement manager for
assignment by the Servicer to a
repossession agency. Upon authorization for
repossession to Servicer by
Company, Servicer shall commence those
activities enumerated in Schedule A,
Section II herein. Servicer shall continue to
track and monitor the repossession
process with the repossession agent until the
vehicle is physically repossessed.
Company shall inform Servicer's NOI processor
whether reinstatement shall be
permitted on a repossessed vehicle. If the
Obligor contacts Servicer during the
NOI period, Servicer shall request the
Obligor to maintain physical damage
insurance. After the vehicle is repossessed,
Servicer shall coordinate and
handle all repossession and liquidation
related matters as outlined in Schedule
A herein. If the Receivable is reinstated and
brought current, all collection
activities relating to the Receivable and
enumerated in Article III Section A
paragraphs 6 through 12 herein, shall revert
back to Servicer.
17. Servicer shall promptly notify Company of all
collection processes implemented
by Servicer or modification of collection
processes implemented by Servicer.
18. The Servicer, in accordance with its
customary servicing procedures, shall use
its best efforts to ensure that each Obligor
maintains physical damage
insurance covering the Financed Vehicle
throughout the term of the
Receivable.
19. In the event of any physical loss or damage
to a Financed Vehicle from any
cause, whether through accidental means or
otherwise, the Servicer shall have
no obligation to cause the affected Financed
Vehicle to be restored or repaired.
However, the Servicer shall comply with the
provisions of any insurance
policy or policies directly or indirectly
related to any physical loss or damage
to a Financed Vehicle.
20. The Servicer will administer the filings of
claims under the VSI Insurance
Policy and the Risk Default Insurance Policy
as provided for in Schedule A,
Section B, paragraph 2(b) hereof.
21. Servicer shall be authorized and empowered by
Company to execute and
deliver, on behalf of itself or Company, any
and all instruments of satisfaction
or cancellation, for a partial or full
release or discharge and all other
comparable instruments, with respect to the
Receivables or the Vehicles.
22. Servicer shall make available to the Company,
or its duly authorized
representative, attorneys, or auditors, the
Receivable files and any related
accounts, records, and computer systems
maintained by the Servicer, at such
times as the Company shall reasonably
instruct, but without disrupting
Servicer's operations.
B. MAINTENANCE AND RECORDS
1. The Servicer shall maintain accounts, books
and records as to each Receivable
accurately and in sufficient detail to
permit: (i) The reader thereof to know at
any time the status of such Receivable,
including payments and recoveries
made and payments owing (and the nature of
each); (ii) Reconciliation between
payments or recoveries on (or with respect
to) each Receivable and the amounts
from time to time owing in respect of such
Receivable. Additionally, the
Servicer shall maintain computer records in
an agreed upon electronic format
which allows the Company or Holder to receive
all information relating to the
Obligor and Holder Balance belonging to the
Company or Holder in the master
file, transactional file and repo file
through its entire remittance period and
final disposition process; such information
shall be provided to Company or
Holder upon request. The Servicer shall not
acquire any property rights with
respect to such accounts, books and records,
and shall not have the right to
possession of them except as subject to the
conditions stated in this Agreement.
The Servicer shall bear the entire cost of
restoration in the event any of the
accounts, books or records shall become
damaged, lost or destroyed.
2. To the extent that such records are
maintained on a computer system, the
Servicer shall also maintain such computer
system so that the Servicer's master
computer records (including archives) that
shall refer to each Receivable
indicate that such Receivable is owned by the
Company or Holder.
3. Such physical and electronic accounts and
records shall be kept only for as
long as Servicer is servicing the Receivables
for Company. Servicer shall
maintain separate accounts and records for
Sales Contracts. At such time as
Servicer is no longer servicing the
Receivables for the Company, Servicer will
transfer physical accounts and records to the
Company or its designated storage
facility, upon Company's request. All
electronic accounts and records shall be
transferred to the Company's facility located
at 6700 Antioch, Suite 400,
Shawnee, Kansas, 66204.
C. MAINTENANCE OF SECURITY INTEREST
The Servicer shall take such steps as are
necessary to maintain perfection of the
security interest created by each Receivable in
the respective financed Vehicle. The
Company hereby authorizes the Servicer and hereby
agrees to take such steps (at
Company's expense), as are necessary to re-perfect
such security interest on behalf of
the Company in the event such re-perfection is
necessary or advisable for any reason.
D. COLLECTION OF RECEIVABLE PAYMENTS
1. The Servicer shall use its best efforts to
collect all payments called for under
the terms and provisions of the Receivables
as and when the same shall become
due.
2. In addition, the Servicer, on behalf of the
Company, shall use its best efforts to
repossess or otherwise recover the Vehicle
securing any Receivable as to which
the Servicer shall have determined, after
consultation with the Company, that
eventual payment in full is unlikely and such
repossession or recovery is
permitted under the terms of the Receivable
and any applicable law. The
Servicer shall be entitled to recover all
reasonable expenses incurred by it in
the course of repossessing and liquidating
the Vehicle into cash proceeds.
3. Subject to the provisions of paragraph III(A)
above, the Servicer shall follow
such customary and usual practices and
procedures as it shall deem necessary
or advisable in its servicing of automotive
receivables, which may include
selling the Vehicle at public or private
sale. The foregoing shall be subject to
the provision that, in any case in which the
Vehicle shall have suffered damage,
the Servicer shall not expend funds except at
the direction of the Company, in
connection with the repair or the
repossession of such Vehicle unless the
Servicer shall determine in its discretion
that such repair and/or repossession
will increase the liquidation proceeds or
insurance proceeds by an amount
greater than the amount of such expenses.
ARTICLE IV.
FIDELITY BOND AND ERRORS AND OMISSIONS
INSURANCE
The Servicer shall maintain, at its own
expense, (i) an errors and omissions
insurance policy and (ii) a blanket fidelity bond (but
only to the extent any subservicer
appointed by the Servicer to perform the collection
activities and related services specified to
be performed in paragraph III. B. 10 hereof does not
maintain a blanket fidelity bond with
respect to such servicing functions to be performed
hereunder; provided if the Servicer does
participate in performing any such functions, it shall
maintain a blanket fidelity bond), in
each case with broad coverage with responsible
companies on all officers, employees or
other persons acting on behalf of the Servicer in any
capacity with regard to the Receivables
to handle funds, money, documents and papers relating
to the Receivables. Any such fidelity
bond and errors and omissions insurance shall protect
and insure the Servicer against losses,
including forgery, theft, embezzlement, fraud, errors
and omissions and negligent acts of
such persons and shall be maintained in a form and
amount that would meet the requirements
of prudent institutional motor vehicle installment
sales contract servicers. No provision of
this paragraph IV.P. requiring such fidelity bond and
errors and omissions insurance shall
diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement.
The Servicer shall be deemed to have complied with this
provision if one of its respective
Affiliates has such fidelity bond and errors and
omissions policy coverage and, by the terms
of such fidelity bond and errors and omission policy,
the coverage afforded thereunder
extends to the Servicer. The Servicer shall cause each
and every subservicer for it to
maintain a policy of insurance covering errors and
omissions and a fidelity bond which
would meet such requirements.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF SERVICER
1. Servicer is a corporation duly organized,
validly existing and in good standing
under the laws of the State of Delaware, and
has full corporate power and
authority to enter into this Agreement and to
carry out the provisions of this
Agreement.
2. This Agreement and all other instruments or
documents to be delivered
hereunder or pursuant hereto, and the
transactions contemplated hereby, have
been duly authorized by all necessary
corporate proceedings of Servicer; this
Agreement has been duly and validly executed
and delivered by Servicer; and,
assuming due authorization, execution and
delivery by Company, this
Agreement is a valid and legally binding
agreement of Servicer enforceable in
accordance with its terms.
3. The execution and delivery of this Agreement
by Servicer hereunder and the
compliance by Servicer with all provisions of
this Agreement do not conflict
with or violate any applicable law,
regulation or order and do not conflict with
or result in a breach of or default under any
of the terms or provisions of any
contract or agreement to which Servicer is
subject or by which it or its property
is bound, nor does such execution, delivery
or compliance violate the
Certificate of Incorporation or by-laws of
Servicer.
4. During the term of this Agreement, Servicer
will maintain fire and theft,
general liability, business interruption and
employee fidelity insurance coverage
in such amounts and upon such terms as shall
be customary given the nature
and extent of Servicer's business activities.
B. REPRESENTATIONS AND WARRANTIES OF COMPANY
1. Company is a corporation duly organized,
validly existing and in good standing
under the laws of the State of Delaware, and
has full corporate power and
authority to enter into this Agreement and to
carry out the provisions of this
Agreement. Company has all licenses,
approvals and consents to conduct its
business as contemplated by this Agreement.
2. This Agreement and all other instruments or
documents to be delivered
hereunder or pursuant hereto, and the
transactions contemplated hereby, have
been duly authorized by all necessary
corporate proceedings of Company; this
Agreement has been duly and validly executed
and delivered by Company; and,
assuming due authorization, execution and
delivery by Servicer, this Agreement
is a valid and legally binding agreement of
Company enforceable in accordance
with its terms.
3. The execution and delivery of this Agreement
by Company hereunder and the
compliance by Company with all provisions of
this Agreement do not conflict
with or violate any applicable law,
regulation or order and do not conflict with
or result in a breach of or default under any
of the terms or provisions of any
contract or agreement to which Company is
subject or by which it or its
property is bound, nor does such execution,
delivery or compliance violate the
Certificate of Incorporation or by-laws of
Company.
4. Company warrants that Company is duly
authorized to enter into the
arrangements contemplated hereby with respect
to the applicable contracts,
including those provisions contained herein
which contemplate that Company
will make decisions that may affect a third
party purchaser's rights under any
given Sales Contract .
ARTICLE VI.
EVENTS OF DEFAULT
A. If any one of the following events ("Events of
Default") shall occur and be
continuing:
1. Any failure by the Servicer to deliver to the
Company any proceeds or payment
required to be so delivered under the terms
of the Agreement that shall
continue unremedied for a period of two (2)
business days after receipt of
written notice to the Servicer by the
Company; or
2. Failure on the part of the Servicer to
observe or to perform in any material
respect any other covenants or agreements set
forth in this Agreement, which
failure shall adversely effect the rights of
the Company and continue
unremedied for a period of thirty (30) days
after the date on which written
notice of such failure shall have been
received by the Servicer; or
3. The entry of a decree or order by a court or
agency or supervisory authority
having jurisdiction in the premises for the
appointment of a conservator,
receiver, trustee, or liquidator for the
Servicer in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets
and liabilities, or similar
proceedings, or for the winding-up or
liquidation of its affairs, and the
continuance of any such decree or order
unstayed and in effect for a period of
thirty (30) consecutive days; or
4. The consent by the Servicer to the
appointment of a trustee, conservator,
receiver, or liquidator in any bankruptcy,
insolvency, readjustment of debt,
marshalling of assets and liabilities, or
similar proceedings of or relating to the
Servicer and involving substantially all of
its property; or
5. The Servicer shall admit in writing its
inability to pay its debts generally as
they become due, file a petition of any
applicable bankruptcy, insolvency, or
reorganization statute, make an assignment
for the benefit of its creditors, or
voluntarily suspend payment of its
obligations;
then, and in each and every case and so long as an
Event of Default described above
shall not have been remedied, the Company may
terminate all of the rights and
obligations of the Servicer under this Agreement.
B. On or after the receipt by the Servicer of such
written notice, all authority and power
of the Servicer under this Agreement, with respect
to the Receivables or otherwise,
shall pass to and be vested in the Company or in
any successor Servicer to be
appointed by the Company and the Company is hereby
authorized and empowered to
execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or
accomplish all other acts with things
necessary to effect the purposes of such notice of
termination, whether to complete the
transfer and endorsement of the Receivable files,
or otherwise.
C. The Servicer shall cooperate with the Company in
effecting the termination of the
responsibilities and rights of the Servicer under
this Agreement, including the transfer
to the Company or any successor Servicer for
administration by it of all cash amounts
that shall at the time be held by the Servicer or
shall have been deposited by the
Servicer in any account or that shall thereafter
be received by the Servicer with respect
to a Receivable.
D. The Company or the successor Servicer appointed by
the Company shall be successor
in all respects to the Servicer in its capacity as
Servicer under this Agreement. Servicer
shall be entitled to receive all servicing fees
and recovery of all costs up to the date of
the transfer of all functions referenced under
this Agreement.
ARTICLE VII.
REMEDIES
In addition to the indemnification rights contained in
Section XI, and the right to terminate
contained in Section XII, Servicer agrees that upon the
happening of any Event of Default (as
defined in this Agreement and/or Schedule A), the
Company may avail itself of any other
relief to which the Company may be legally or equitably
entitled, subject only to the
provision of Section XIII of this Agreement.
ARTICLE VIII.
RESPONSIBILITY AND AUTHORITY OF
SERVICER
A. Servicer shall have the full power and authority,
acting alone and without the consent
of Company, to do any and all things in
connection with such servicing and
administration that it may deem reasonably
necessary or desirable, including but not
limited to the right to subcontract any of its
duties hereunder, to collect the account, to
disburse the proceeds and to protect the interests
of the Company or Holder in the
Receivables.
B. The Company authorizes the Servicer to communicate
with third parties and the
Obligor in the name of the Company as necessary
and proper to perform the services
anticipated by this Agreement.
ARTICLE IX.
LOCK-BOX ACCOUNT
Servicer shall establish, control and maintain the
Lock-Box Account and related bank accounts
and shall collect and hold in trust (for the benefit of
Company or Holder) in such accounts all
funds received on account of the Obligor (other than
Purchased Receivables), all Liquidation
Proceeds, Insurance Proceeds and other Recoveries, all
as collected during the Collection
Period in respect of a Receivable being serviced by the
Servicer, shall be remitted to the
Lock-Box Account as soon as practicable, but in no
event later than the close of business on
the Business Day after receipt thereof by the Servicer.
Company shall be responsible for all
charges, and shall be entitled to receive all interest
earned on amounts in the Lock-Box
Account and related bank accounts. All Lock-Box and
related accounts shall be in a financial
institution selected by Company. Company agrees that
Servicer shall bear no liability for any
losses that occur as a result of the failure or closure
of the financial institution selected by
Company.
ARTICLE X.
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS
1. All documents with respect to an Obligor
account and delivered to Servicer
hereunder will be held in trust and kept
safely by Servicer as delivered.
2. Servicer shall hold in trust and keep safely
for the benefit of Company or
Holder the computer records relating to the
Obligor accounts and the proceeds
thereof.
3. If required by Company or Holder, Servicer
shall retain an independent public
accounting firm to audit the applicable
Obligor accounts on the basis and scope
of audit directed by Company or Holder. All
fees and expenses of such firm
shall be borne by Company or Holder.
4. The Servicer will furnish copies of any audit
reports prepared for the Servicer
(either internal or otherwise) with respect
to the Receivables to the Company
or Holder upon the receipt thereof by
Servicer.
5. All data, documents and information held by
Servicer on behalf of Company or
Holder shall be held in confidence and not
used or disclosed for any purpose
other than as contemplated by this Agreement
or as required by law.
6. Servicer shall provide the Company and Holder
or their designee(s) access to
Servicer's facility but only upon reasonable
request and during normal business
hours and to the extent that such access
would not significantly disrupt the
orderly conduct of business at such facility.
7. If the Company or Holder exercises its right
to gain access to Servicer's
facility pursuant to Article X paragraph 6,
then it shall reimburse Servicer for
the costs of any extraordinary expenses in
connection with Servicer providing
such access, including but not limited to
photocopying, telephone calls, keys
and parking.
8. Company shall cause such Sales Contract
documentation, as Servicer indicates
is necessary for Servicer to perform the
Services, to be delivered to Servicer.
B. REPORTS AND CREDIT AGENCIES
1. In addition to its normal reporting, Servicer
shall also furnish the Company or
Holder with such additional information
underlying the data in the aforesaid
reports as may be reasonably pertinent to
Company's needs and that can be
generated by Servicer's existing data
processing system without undue effort or
expense. The reports required by this
Agreement shall be in a form acceptable
to the Company.
2. Company understands that all transactions
with respect to an Obligor account
will be reported by one or more Credit
Agencies as required by contract and by
law. Company and Servicer will comply with
all Credit Agency agreements.
3. Servicer shall notify one or more Credit
Agencies as required by contract and
by law, of any change in a deficiency balance
of an Obligor's account upon
Company's notification to Servicer of same.
ARTICLE XI.
INDEMNIFICATION
A. The Servicer agrees to indemnify the Company,
their respective officers, employees
and agents harmless against any and all claims,
losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any
other costs, fees and expenses that the
Company, as the case may be, may sustain in any
way related to failure of the
Servicer to perform its duties and service the
Receivables in compliance with the
terms of this Servicing Agreement. The Servicer
shall immediately notify the
Company if a claim is made by a third party with
respect to this Servicing
Agreement or the Receivables, assume (with the
consent of Company) the defense of
any such claim and pay all expenses in connection
therewith, including counsel fees,
and promptly pay, discharge and satisfy any
judgment or decree which may be entered
against it or the Company in respect of such
claim. The Company shall indemnify
the Servicer against, and holds Servicer harmless
from, any and all other claims and
damages relating to this Agreement, provided that
prompt written notice of any such
claim or damage (when known by Servicer) is given
to Company. This right to
indemnification shall survive the termination of
this Servicing Agreement.
B. Company shall be entitled to assume the complete
control of the defense or settlement
of any such claim at Company's expense. Servicer
shall not settle or compromise any
such claim without Company's prior written consent
unless Company has not agreed to
assume the complete control of the defense or
settlement thereof.
ARTICLE XII.
TERM AND TERMINATION
A. The term of this Agreement shall be for one (1)
year from the date of signing of this
Agreement. Company shall have the option,
exercisable at any time prior to thirty (30)
days from the expiration of the initial term of
this Agreement, to renew this
Agreement for subsequent terms with each such
subsequent term running one (1) year.
B. Servicer or Company shall have the right to
terminate this Agreement (but not the
servicing of any Obligor's accounts being serviced
under the original or any
subsequent term.) upon not less than ninety (90)
days written notice sent by overnight
mail. For tolling purposes the date of notice
shall be the date the non-moving party
receives written notice of the moving parties
intent to either terminate the Agreement.
C. Notwithstanding the expiration or earlier
termination of this Agreement, Servicer
agrees to service all Obligor accounts for their
full term and until their expiration or
early termination.
ARTICLE XIII.
ARBITRATION AND ATTORNEYS' FEES
A. It is understood that this Agreement is made in
good faith and should there arise, from
any unforeseen cause, a difference of opinion or
of interpretation of this Agreement
which cannot be settled amicably between Company
and Servicer, such difference or
interpretations shall be submitted to a decision
of a board of arbitration.
B. The aforementioned board of arbitration shall be
composed of two (2) arbitrators and
an umpire meeting in Irvine, California, unless
otherwise agreed to by Company and
Servicer.
C. 1. The members of the board of arbitration shall
be active or retired disinterested
officials of insurance companies or financial
institutions. Each party shall
appoint its arbitrator, and the two
arbitrators shall choose an umpire before
instituting the hearing. If the respondent
fails to appoint its arbitrator within
thirty (30) days after being requested to do
so by the claimant, the latter shall
also appoint the second arbitrator.
2. If the two arbitrators fail to agree upon the
appointment of an umpire within
two (2) weeks after their nominations, each
of them shall name three (3), of
whom the other shall decline two (2) and the
decision shall be made by
drawing lots. The claimant shall submit its
initial brief within twenty (20) days
from appointment of the umpire. The
respondent shall submit its brief within
twenty (20) days thereafter, and the claimant
may submit a reply brief within
ten (10) days after filing of the
respondent's brief.
D. 1. The board shall make an award with regard to
the custom and usage of the
business contemplated by this Agreement. The
board shall issue its award in
writing based upon a hearing at which
evidence may be introduced without
following strict rules of evidence but in
which cross-examination and rebuttal
shall be allowed.
2. The board shall make its award within thirty
(30) days following the
termination of the hearing unless the parties
consent to an extension. A decision
by the majority of the members of the board
shall become the award of the
board and shall be final and binding upon all
parties to the proceeding. Either
party may apply to the United States District
Court, Los Angeles, California,
for an order confirming the award. If such an
order is issued, the attorneys'
fees of the party so applying and the court
cost will be paid by the party
against whom confirmation is sought.
E. Each party shall bear the expense of its
arbitrator and shall jointly and equally bear
with the other party the expense of the umpire.
The remaining costs of the arbitration
proceeding (including attorneys' fees of the
parties) shall be allocated by the board in
its award.
ARTICLE XIV.
WAIVERS
No failure or delay on the part of Servicer or Company
in exercising any power, right or
remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial
exercise of any such power, right or remedy, preclude
any other or further exercise thereof or
the exercise of any other power, right or remedy,
except by a written instrument signed by the
party to be charged or as otherwise expressly provided
herein.
ARTICLE XV.
NOTICES
Except as otherwise provided herein, all notices,
requests, consents, demands and other
communications given hereunder shall be in writing. All
notices of whatever kind shall be
either personally delivered or sent by telecopy or
other form of rapid transmission and
confirmed by United States mail, properly addressed and
with full postage prepaid, addressed
as follows:
To Servicer: Aegis Auto Finance, Inc.
525 Washington Blvd.
Jersey City, New Jersey 07310
Attn: Joseph F. Battiato, President
Telecopy No. (201) 418-7339
To Company: Aegis Auto Funding Corp. III.
525 Washington Blvd.
Jersey City, New Jersey 07310
Attn: Angelo R. Appierto, President
Telecopy No. (201) 418-7339
or to such other address as such party shall have
specified in writing in the manner set forth
above.
ARTICLE XVI.
ASSIGNABILITY
Neither party may assign any of its rights or
obligations hereunder without the prior written
consent of the other party. Nothing in this Agreement
is intended to confer, expressly or by
implication, upon any Person other than Company and
Servicer any rights or remedies under
or by reason of this Agreement.
ARTICLE XVII.
FURTHER ASSURANCES
Each party agrees, if reasonably requested by the other
party, to execute and deliver such
additional documents or instruments and take such
further actions as may be reasonably
necessary to effect the transactions contemplated by
this Agreement.
ARTICLE XVIII.
COUNTERPARTS
This Agreement may be executed in counterparts, each of
which shall be deemed an original
but all of which taken together shall constitute but
one and the same document.
ARTICLE XIX.
ENTIRE AGREEMENT; AMENDMENTS
This Agreement, including the Schedules attached hereto
and the documents referred to
herein, contains the entire agreement between the
parties hereto with respect to the
transactions contemplated hereby and supersedes all
prior understandings, negotiations,
commitments and writings with respect thereto. This
Agreement may not be modified,
changed or supplemented except upon the express written
consent of both of the parties
hereto. In the event of any conflict between this
Agreement and a Schedule hereto, the
Schedule shall govern.
ARTICLE XX.
INSPECTION
Either party or its designated agents may, during
ordinary business hours and after reasonable
notice, inspect, audit, check and make abstracts from
the other party's books, accounts,
records and other papers directly pertaining to the
subject matter of this Agreement or
Schedule A hereto. All costs and expenses of such
activities shall be borne by the inspecting
party. The other party shall reasonably facilitate any
such inspection.
This Agreement shall be governed by and
construed in accordance with the
laws of the State of California.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be
executed as of the date first written above.
SERVICER:
AEGIS AUTO FINANCE, INC.
Attest
___________________ _______________________
By: Joseph F. Battiato
Title: President
COMPANY:
AEGIS AUTO FUNDING CORP.
III.
Attest
___________________ _______________________
By: Angelo R. Appierto
Title: President
Servicer and Company agree that neither the
Servicer nor the Company will at
any time, without the written consent of the other
party, disclose to anyone nor permit anyone
under either parties direction to disclose to anyone
not properly entitled to disclosure, any
information contained in or relating to this Agreement.
For purposes of this Agreement,
persons properly entitled to such information shall be
only employees and agents of employer
and such other persons as are legally entitled to such
information.
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES - COLLECTIONS:
1. Promptly following the execution of this
Agreement, Servicer shall
establish a Lock-box Account in both the
Company's and Lender's
name, at First Interstate Bank of
California, N.A., subject to future
change at the discretion of the Company.
a. The Servicer shall maintain the
Lock-Box Account and shall
collect and hold in trust (for the
benefit of the Company or
Holder) in such account all funds
received on account of the
Obligors until such funds are
transferred to the Company or
Holder in accordance with their
instructions. On a daily basis
the posted balance (in excess of
$2,000) related to the
Receivables in the Lock-Box Account
shall be transferred by
wire transfer to the Company, Holder
or its designee.
b. Such funds shall not be commingled
with the funds of any other
person; provided that there may be
deposited in the Lock-Box
Account moneys collected on other
motor vehicle installment
sales contracts originated by Aegis
Auto Funding Corp. III and
its affiliates. The Servicer shall be
responsible for all charges
with respect to the Lock-Box Account
and, insofar as such
charges relate to the Receivables,
shall be reimbursed in
accordance with the instructions set
forth in the Monthly
Servicer Certificate. The Servicer
shall provide written notice
to, the Company and Holder or its
designee (respectively), of
the location and account number of the
Lock-Box Accounts
promptly after establishing or
changing the same.
c. First Interstate Bank of California,
N.A. will serve as the initial
Lock-Box Account Depository with
respect to the Receivables.
The Servicer shall provide thirty (30)
days' prior notice to the
Company and Holder of its appointment
of a successor Lock-
Box Account Depository, which such
successor Lock-Box
Account Depository shall be an
eligible institution agreed to by
Company.
d. The Servicer shall deposit into the
Lock-Box Account all
amounts (including late payments)
remitted by Obligors to the
Servicer under the terms of the
Receivables within one (1)
Business Day after receipt thereof.
The Servicer shall provide
the Lock-Box Account Depository with a
report providing
instructions related to distributions
of funds from the Lock-Box
Account to the Collection Account.
e. The Servicer shall deposit in the
Collection Account the
aggregate purchase amount with respect
to Purchased
Receivables. All such deposits shall
be made in Automated
Clearinghouse Corporation next-day
funds or immediately
available funds, on the Business Day
following receipt thereof.
2. Within two business days that a Receivable
is entered into Servicer's
computer system, Servicer shall send each
Obligor a "Welcome Letter"
in a form agreeable to both Servicer and
Company, which will advise
the Obligor of the payment procedures and
such further information as
the parties deem appropriate.
3. Servicer shall be responsible for the
mailing of payment coupon books
or monthly statements as directed by the
Company. Payment books shall
contain coupons in sufficient quantity to
allow Obligor to enclose a
coupon with each scheduled payment per the
terms of the related
contract. Each payment coupon book may
contain up to 36 coupons.
4. Servicer shall process Obligor accounts for
which the Obligor fails to
make a payment on the applicable payment
due date (a "Delinquency")
on the following basis:
a. Commencing on the first business day
on which an Obligor is
delinquent by more than four (4) days,
Servicer shall, at the
Servicer's discretion, either (1)
phone the Obligor; (2) if no
contact is made after phoning the
Obligor, may send a letter to
the Obligor asking the Obligor to
immediately contact the
Servicer; or (3) order a field call by
an outside agency to the
Obligor. If Server contacts the
Obligor, Aegis shall inform
Obligor that payment on Obligor's
account may be made (A) by
quick collect, (B) by bank wire, (C)
by overnight delivery or (D)
by normal payment.
b. Servicer shall request Company's
authorization to repossess an
Obligor's Vehicle at any time after an
Obligor is delinquent and
Servicer has satisfactory reason to
believe that Obligor will not
pay. However, such authorization will
be deemed waived if
Servicer cannot obtain authorization,
provided the Servicer has
determined that any delay would impede
the Servicer's ability to
secure the Vehicle. Servicer shall
supply a report of any Vehicle
it repossesses and events leading to
such actions.
c. If an Obligor requests a change to his
normal monthly due date
(a "Due Date Change"), Servicer shall
have the right to grant
such Due Date Change; however, no Due
Date Change shall be
granted beyond the currently due
payment.
d. Except as otherwise provided in this
agreement, if an Obligor
has been delinquent for more than
thirty-five (35) days, Servicer
shall request Company's authorization
to repossess pursuant to
Section I-A-4.b of this Schedule A.
e. Servicer shall grant a Loan Extension
only to those Obligors
who have made at least six (6)
regularly scheduled payments;
and in no case shall more than one
Loan Extension per year
and/or three (3) Loan Extensions per
loan term be granted to any
one Obligor or in no case more than
allowed by an insurer.
f. Loan Extensions other than as provided
for herein shall require
the Company's approval. In no event
shall Servicer permit more
Loan Extensions than permitted by a
Credit Enhancement
Insurer.
B. CONTRACT SERVICES - CUSTOMER SERVICE:
1. If Servicer receives written or oral notice
from an Obligor of such
Obligor's refusal to make payments on the
Obligor's account, Servicer
shall enter such notice into its computer
records.
2. Within the provisions of the General
Servicing Fee contained in the Fee
Schedule, Servicer shall perform the
following insurance functions with
respect to a Receivable and will comply
with all necessary operating
and claims filing procedures (which may be
modified by the insurance
company from time to time and by mutual
consent of the Company and
the Servicer) pursuant to each Credit
Enhancement:
a. With respect to the Company's Credit
Default Insurance Policy
("Credit Default"), Servicer shall:
(1) Initial Notice of Loss to be
filed within 45 days of Date
of Loss (which shall mean for
purposes of this Section
only, the earlier of the
repossession date or last pay to
date plus ninety (90) days);
(2) Forward a completed claim form
for liquidation of a
Vehicle and evidence of loss to
AESIC or Lee & Mason
Financial Services, Inc.
(depending upon which policy is
applicable in each case) within
the required time frame as
prescribed by the applicable
policy, but in no event
longer than ninety (90) days of
Date of Loss;
(3) Maintain claim data components;
(4) Calculate the claim amount;
(5) Prepare a correct and complete
claim form; and
(6) Submit claim form to either
AESIC, Dixie Terminal B
Building South, Suite 300, 49
East Fourth Street,
Cincinnati, Ohio, 45202-3803 or,
Lee & Mason Financial
Services, Inc., Box 270,
Northville, NY, 12134-270,
(518) 863-4311 or (518) 863-6963,
depending upon
which policy is applicable in
each case.
b. With respect to the Company's Vender's
Single Interest Policy
(the "VSI Policy"), Servicer shall:
(1) If appropriate, prior to
liquidation and within ninety (90)
days of Date of Loss, file an
Initial Notice of Loss which
shall mean the following for
purposes of this Section
only:
(A) For Physical Damage,
the date of repossession;
(B) For Instrument Non-Filing
Insurance, the date of
filing of a superior lien;
(C) For a Skip, the date
of the first delinquency plus
150 days;
and
(D) For a Repossession, the
date the damage occurred.
(2) Maintain physical and
electronic information;
(3) Calculate the claim amount;
(4) Prepare physical and electronic
information and complete
claim form; and
(5) In the case of a claim
dispute, select an independent
appraiser and file an
appraisal report within thirty (30)
days of initial claim filing
rejection
c. With respect to the Company's Gap
Insurance Policy (the "Gap
Policy"), Servicer shall:
(1) Initial Notice of Loss
within sixty (60) days of Date of
Loss which shall mean for
purposes of this Section only,
the repossession date;
(2) Maintain claim data
components; and
(3) Calculate the claim amount (4)
prepare a correct and
complete claim form and (5)
submit claim to either
AESIC, Dixie Terminal B Building
South, Suite 300, 49
East Fourth Street, Cincinnati,
Ohio, 45202-3803 or, Lee
& Mason Financial Services, Inc.,
Box 270, Northville,
NY, 12134-0270. Phone number
(518) 863-4311 or (518)
863-6963.
d. With respect to the Obligor's physical
damage insurance and
Company's rights to proceeds as lender
and/or owner of Vehicle,
Servicer shall:
1) Receive from the Company the
initial physical damage
insurance information at the time
of portfolio boarding;
2) Notify Company if Servicer has
not received a copy of a
physical damage insurance policy
for an Obligor's
Vehicle within twenty (20) days
of the receipt of a Notice
of Cancellation/Non-Renewal;
3) Produce a monthly Insurance
Expiration report showing
those Obligor accounts for
whom a Notice of
Cancellation/Non-Renewal has
been received or the
expiration date for an
Obligor's insurance policy in
Servicer's computer records
has elapsed;
4) Not be liable for any loss or
liability resulting from the
lack of insurance coverage on any
Obligor vehicles.
3. Company authorizes Servicer to negotiate
and settle any claims relating
to physical damage to a Vehicle and to
endorse any insurance company
drafts for such claim subject to the
following conditions:
a. Servicer shall endorse a draft for
payment of a claim to body
shop or other auto repair service.
b. If the Obligor's account is more than
thirty (30) days delinquent,
Servicer shall attempt to collect all
currently due amounts. If
unable to make such collection,
Servicer shall request Company's
authorization to repossess Vehicle
from the repair facility
pursuant to Section I-A-4.b of this
agreement. To effect such
repossession, Servicer may negotiate
for the release of the
Vehicle from the repair facility in
exchange for the endorsed
draft in the amount of the repairs and
an agreement to hold the
repair facility harmless for the
release of the Vehicle.
c. Company authorization is required for
settlements where the
claim payment differs from the
Remaining Obligor Loan Balance
(in case of a total loss to a Vehicle)
by an amount greater than
the policy deductible plus collection
expenses; or in all other
cases, the amount necessary to repair
damage by an amount
greater than the policy deductible.
4. Servicer shall calculate early payoffs of
Remaining Obligor Loan
Balance per the terms of the related sales
contract. Company
authorization is required for any payoff
amount other than the full
calculated amount. Notwithstanding any
condition in this Agreement,
Servicer, however, shall have the right (in
the event of early payoff) to
waive any Remaining Obligor Loan Balance of
twenty-five dollars
($25.00) or less.
5. Upon receipt by Servicer of the full
payment of the Remaining Obligor
Loan Balance by the Obligor, Servicer shall
release and forward to the
Obligor the original of the conditional
Sales Contract.
II. SPECIAL COLLECTION ACTIVITIES:
A. REPOSSESSION AND SALE
If Servicer receives authorization from Company
to repossess a Vehicle, the
following terms shall govern the repossession
and sale of the Vehicle:
1. Servicer shall order repossession services
from licensed, bonded agents.
2. After repossession, Servicer shall prepare
and mail a Notice of Intent
(the "NOI") to the Obligor within five (5)
business days, or the time
period allowed under applicable state
statute, whichever is less, and send
a copy of the NOI to Company.
3. Upon request, Servicer will provide Company
with names, contact
names, addresses, phone numbers, and fax
numbers of all sub-
contractors performing any service with
respect to Company assets.
4. Servicer shall cause the repossessed
Vehicle to be delivered to a location
as designated by Company in a timely
manner. Servicer shall cause
Vehicle to remain at the designated
location for the amount of time
required by applicable State law for
Obligor redemption (the "Obligor
Redemption Period").
5. After the expiration of the Obligor
Redemption Period, Company may
authorize Servicer to arrange for the sale
and disposition of the Vehicle.
If Company elects to have Servicer dispose
of the Vehicle, Servicer
shall effectuate such sale in a timely
manner, including delivering the
Vehicle's title and all other paperwork
necessary to effectuate the sale
of the Vehicle.
B. BANKRUPTCIES
If Servicer receives written notice that an
Obligor has become subject to
bankruptcy proceedings under Federal or State
law, Servicer or its designee
(attorney if required) shall provide the
following services as necessary:
1. Servicer shall immediately cease all
collection activity and otherwise
comply with the Bankruptcy Code and all
related laws and regulations.
2. Servicer shall file a claim with the
applicable court.
3. Servicer shall obtain legal services for
the prosecution of the claim
when necessary.
4. Servicer shall monitor the receipts of
funds being paid through the
applicable bankruptcy plan.
5. Upon dismissal of an action under
bankruptcy, Servicer shall service the
Obligor's account pursuant to the standard
collection procedures of
Section I of this Schedule A.
6. Should the Obligor account be the subject
of a reaffirmation or court
ordered modified payment schedule, Servicer
shall administer and
collect the account in the same fashion as
that prior to the bankruptcy
proceedings, and Servicer shall update its
computer system to reflect the
bankruptcy status of the Obligor's account.
C. DISABILITY
If Servicer is notified in writing of an
Obligor's disability claim and evidence
of the Obligor's disability insurance policy is
on file, Servicer shall suspend all
collection activity on such Obligor's account
until such time as Obligor
resumes his normal payment schedule, however:
1. Servicer shall continue to monitor such
Obligor's account until the
earlier of the date on which:
a. A claim approval or denial has been
received; or
b. The Obligor resumes payment, at which
time Servicer will
resume collection activity pursuant to
Section III of this
Agreement.
2. If Obligor's disability claim is denied,
Servicer shall resume collection
activity pursuant to Section I of this
Agreement and the terms and
conditions of the related Sales Contract .
3. Servicer's collection procedures for a
disability account shall comply
with the terms stipulated on the related
Sales Contract.
D. ALLOTMENTS
1. Company shall notify Servicer at the time
of loan boarding if an
Obligor will be subject to military
allotment processing.
2. If Servicer has not received an allotment
verification on a designated
allotment account within 60 days of any
subsequent allotment
establishment and the designated Obligor's
account is greater than 45
days delinquent, Servicer shall request
Company's authorization to
repossess pursuant to Section I-A-4.b of
this Schedule A.
E. SKIPS
If Servicer determines that Obligor has become
a skip, Servicer shall conduct
skip-tracing efforts for a period of 30 days. If
such skip-tracing efforts prove
unsuccessful, Servicer will file (if applicable)
the necessary claim forms with
Company's insurance carriers or with the
relevant insurance policies.
III. CUSTODIAL DUTIES.
A. Upon the execution and delivery of this
Agreement, Company shall revocably
appoint the Servicer, and the Servicer shall
accept such appointment, to act for
the Company as Custodian.
B. Company shall deliver to the Servicer as
Custodian the documents or
instruments pertaining to each Receivable
electronically boarded with the
Servicer. The Servicer as Custodian shall
independently verify the data
received by the Servicer against the Receivable
documents and instruments.
The following information will be verified by
the Servicer as Custodian: (1)
Receivable identifying number; (2) the name of
the Obligor; (3) the mailing
and garaging address(es); (4) the year, make,
model and VIN of the Vehicle;
(5) the amount financed, term, rate and monthly
payment as applicable; (6) the
contract and first payment due dates; and (7)
owner and lienholder information.
Custodian shall inform the Company of any and
all discrepancies;
C. Company shall deliver and release to Custodian,
including but not limited to,
the following documents pertaining to each
Receivable:
1. The original Sales Contract;
2. The original credit application;
3. The original certificate of title or
supporting vehicle documentation
(copy of title certificate, MSO, MCO,
guarantee of title) as applicable
evidencing the ownership and security
interest of the company or
lienholder in the Vehicle or efforts made
by the Company or its
assignee to perfect such ownership or
security interest;
4. All documents provided by the Company
evidencing the existence of
physical damage and liability insurance
covering a motor Vehicle.
Upon receipt of the original title,
Servicer as Custodian shall in addition
to its customary review of title, review
the seventh character of the VIN
for an "X." If an "X" appears in the
seventh position of the VIN,
Servicer acting as Custodian, shall notify
the Company upon discovery.
D. Upon receipt and review of the documentation
indicated above, Servicer as
Custodian shall establish an independent
electronic file for each Receivable,
which shall contain the data and document
tracking information in an agreed
upon electronic format which will allow the
Company or lienholder to receive
all information relating to the Custodian's
file; such information shall be
provided upon request.
E. In the event Company or any Holder subsequent to
the execution of this
Agreement appoints any Person other than
Servicer as custodian of the
documents and instruments indicated in III. C
above, Company shall indemnify
Servicer against any liability arising from such
subsequent appointment;
excepting for liability arising from Servicer's
actions during the period of their
appointment. In its capacity as Custodian,
Servicer shall hold all files and
documents on behalf of the Company, and maintain
such accurate and complete
accounts, records, and computer systems
pertaining to the Receivables using
reasonable care and that degree of skill and
attention with respect to the
Receivables and the files and documents as is
customary with other companies
in the industry that service motor Vehicle
conditional Sales Contracts for
themselves as well as for others.
F. Company (if applicable) shall have the
responsibility to verify application for
title to the motor Vehicle covered by the
contract. Company shall send, or
cause to be sent, to Servicer all titles to such
motor Vehicles. With respect to
titles received, Servicer shall verify that
Company or its designee is lienholder
with respect to the Vehicle. Servicer as
Custodian shall verify that Company
is the legal and registered owner of the
Vehicle.
G. Custodian shall notify Company of any
discrepancies with respect to the
lienholder indicated on received titles.
Servicer shall further notify Company of
missing titles. Company shall be responsible for
correcting title discrepancies
and obtaining missing titles.
H. Custodian shall not release any title to a
Vehicle except upon the full payment
of the Remaining Obligor Loan Balance by the
Obligor or others, or the
repossession and sale of the related vehicle, or
the release of the title to
Company for the correcting of title problems, or
as required by law, or as
directed by Company.
I. Custodian shall deliver to Company, within two
business days of Company's
request, the original certificate of title or
supporting vehicle documentation if
within Servicer's possession. If the original
certificate of title or supporting
vehicle documentation is in the possession of a
custodian other than the
Servicer, the Servicer shall have two business
days to request the original
certificate of title or supporting documentation
from the custodian, and upon
receipt of same, the Servicer will have
twenty-four (24) hours to deliver the
requested material to the Company.
J. Custodian agrees to deliver its custodial files
to the possession of a custodian,
prior to the closing of any securitization,
whole loan sale or other financing, as
directed by the Company. The Company shall give
the Custodian at least ten
(10) calendar days notice, but will endeavor to
give notice soon as is possible,
prior to the closing date. Notice shall be
accomplished by the Company's (i)
transmittal of a memo to Custodian (specifically
addressed to Jerry Sokolow,
John Marasco and C. Joseph Bruno) identifying
the date of the closing, and (ii)
by the Company's electronic file transfer
(specifically addressed to Jerry
Sokolow and John Marasco) to Custodian of
information sufficient for
Custodian to identify the custodial files to be
copied and transferred.
IV. FEE SCHEDULE
Servicer shall be entitled to receive from Company
the following fees and costs no
later than the Remittance Date (all fees and costs
shall be documented on a report
delivered to Company on the Remittance Date)
immediately following each related
Remittance Period:
A. LOAN BOARDING AND CUSTODIAL FEE
For $15 per Subject Receivable, Servicer shall:
(1) enter the Subject Receivable
into Servicer's computer system electronically
during the related Remittance
Period; (2) transmit Electronic Receivable
files to the Company at its offices
located at 6700 Antioch, Suite 400, Shawnee,
Kansas, 66204, unless otherwise
mutually agreed upon.
B. GENERAL SERVICING
1. For all Receivables with a Remaining
Obligor Loan Balance greater
than zero ($0.00) dollars as of the first
day of the related Remittance
Period, the Company shall pay a monthly
servicing fee equal to one-
twelfth of 1.85% (annualized) of the
outstanding Remaining Obligor
Loan Balance or $10.00, whichever is
greater.
2. For those Receivables boarded onto
Servicer's computer system during
the related Remittance Period the monthly
servicing fee stated above
will be pro-rated for the number of days
from such boarding through the
last day of the related Remittance Period.
3. In the event that the Company ceases to
utilize Servicer's services, the
monthly servicing fee for the existing
receivables shall be set at a
$1,000 minimum.
4. In addition, Servicer shall receive:
a. All extension fees that are received
during the related Remittance
Period.
b. All late charges that are received
during the related Remittance
Period.
c. A charge of $ 25.00 per filing of
Credit Enhancement claims
forms with the designated Insurers
during the related Remittance
Period.
C. EXPENSE REIMBURSEMENT
1. All out-of-pocket expenses incurred by
Servicer in the pursuit of its job
functions as described in this Schedule
(including but not limited to;
filing fees, investigation fees,
repossession fees, transportation and
storage fees, legal fees, DMV fees, etc.)
shall be reimbursed to the
Servicer at Servicer's actual cost plus
eight percent (8%). Servicer shall
provide Company with documentation for all
such out-of-pocket
expenses.
2. In the event Company elects the use of
monthly payment statements
versus coupon books, Company shall
reimburse Servicer for all
preparation costs associated with such
statements.
3. All postage costs associated with the
mailing of insurance follow-up
letters, payment statements, including
Notice of Intent and Deficiency
Statement, during the related Remittance
Period.
4. Company shall reimburse Servicer for all
programming expenses
arising from modification of the servicing
software which the Company
has requested in writing and which both the
Company and Servicer have
approved. The amount to be reimbursed will
be based upon Servicer's
invoiced cost for outside contractors, if
any. Servicer shall provide
Company with copies of invoices, time
sheets and all supporting
documentation reasonably required by
Company to verify the cost of
such programming charges.
D. METHOD OF PAYMENT
1. All General Servicing fees as indicated in
Section IV. above earned
during a Remittance Period may be withdrawn
by Servicer from the
applicable bank account on the tenth (10th)
day following the related
Remittance Period to the extent such fees
are available from the bank
account.
2. In the event the applicable bank account
has insufficient funds to pay all
fees due, Company shall issue a check for
any unpaid balance within
five (5) days of the billing by Servicer
for such fees.
3. All boarding fees, postage reimbursement
and out-of-pocket expense
reimbursement earned during a Remittance
Period shall be billed by
Servicer and paid by Company to Servicer by
the tenth (10th) day
following the related Remittance Period.
In the event Company fails to
pay the applicable out-of-pocket expense
reimbursement by the date
indicated, Servicer shall have the right to
withdraw such expense
reimbursement from the applicable bank
account.
E. NON-PERFORMING LOANS
1. In accordance with instructions
provided by Company, Servicer
shall cause those Receivables who have
met criteria established
in the various Purchase Agreements to
be transferred to a Non-
performing pool (the "Aegis-A" pool).
2. All reports generated on Receivables residing in
the Aegis-A pool shall contain
the necessary information to allow for any
reconciliation to the "host" pool
from which the Receivable was originally
transferred. All transactions will be
processed against the Aegis-A pool with
receipted funds being reported to
applicable trustees for deposit to the
corresponding Reserve Accounts.
3. Servicer will charge Company a monthly fee based
on the following schedule:
a. $1.00 per month for months 1-4 that a
Subject Receivable remains in
the Aegis-A pool.
b. $.50 per month for months 5-8 that a
Subject Receivable remains in the
Aegis-A pool.
c. $.10 per month for each month thereafter
that a Subject Receivable
remains in the Aegis-A pool.
V. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING OF CLAIMS
UNDER INSURANCE POLICIES; DAILY RECORDS AND
REPORTS.
A The Servicer, on behalf of the Company or Holder
(respectively), will
administer and enforce all rights and
responsibilities of the holder of the
Receivables provided for in the Insurance
Policies relating to the Receivables.
The Servicer, on behalf of the Company or Holder
(respectively), shall verify
that an endorsement listing each Receivable has
been issued with respect to
each Receivable under the Risk Default Insurance
Policy, that each Receivable
is listed by the VSI Insurer as covered under
the VSI Insurance Policy, and
that the Risk Default Insurance Policy names the
Company or Holder
(respectively) as the insured and the VSI
Insurance Policy names the Company
or Holder (respectively) as an additional
insured.
B. The Servicer will administer the filings of
claims under the VSI Insurance
Policy and Risk Default Insurance Policy by
filing the appropriate notices
related to claims as well as claims with the
respective carriers or their
authorized agents, all in accordance with the
terms of the VSI Insurance Policy
and Risk Default Insurance Policy. The Servicer
shall file such claims on a
timely basis after obtaining knowledge of the
events giving rise to such claims,
subject to the servicing standard set forth in
Schedule A, Section B. paragraph
2. hereof. The Servicer will utilize such
notices, claim forms and claim
procedures as are required by the respective
insurance carriers. The Servicer
shall notify the Company or Holder
(respectively) of (i) any such claims
actually denied under the applicable Risk
Default Insurance Policy or VSI
Insurance Policy and (ii) those claims which
would have been denied under
such Risk Default Insurance Policy or VSI
Insurance Policy had the
Receivable(s) not been repurchased from the
Holder, and in both cases, the
reasons for such denials. The Servicer shall
cause all Insurance Proceeds to
be deposited to the Lock-Box Account within two
(2) Business Days of receipt
thereof.
C The Servicer shall not be required to pay any
premiums or, other than
administering the filing of claims and
performing reporting requirements
specified in the VSI Insurance Policy and Risk
Default Insurance Policy in
connection with filing such claims, perform any
obligations of any named
insured under the foregoing VSI Insurance Policy
and Risk Default Insurance
Policy, and shall not be required to institute
any litigation or proceeding or
otherwise enforce the obligations of any insurer
thereunder. Notwithstanding
any provision to the contrary in the Agreement,
the Servicer shall not be
responsible to the Company or Holder
(respectively) (i) for any act or
omission to act done in order to comply with the
requirements or satisfy any
provisions of the VSI Insurance Policy or Risk
Default Insurance Policy or (ii)
for any act or omission to act, absent willful
misconduct or gross negligence,
done or omitted in compliance with this
Agreement. In the case of any
inconsistency between this Agreement and the
terms of any VSI Insurance
Policy or Risk Default Insurance Policy, the
Servicer shall comply with the
latter.
VI. MONTHLY SERVICING CERTIFICATES.
The Servicer shall deliver to the Company Monthly
Servicing Certificate on the eighth
(8) business day of each month (but in no case later
than the eleventh (11) calendar
day of each month ) for the previous month,
substantially in the form of, but not
limited to, Schedule B attached hereto, containing
all information requested by the
Company or Trust.
VII. ANNUAL STATEMENT AS TO COMPLIANCE; ACCOUNTANTS'
SERVICING
REPORT.
A The Servicer shall deliver to the Company or its
designee (respectively), on
or before March 31 of each year, an Officer's
Certificate, dated effective as of
December 31 of the preceding year beginning with
the calendar year ended
December 31, 1996, stating that (i) a review of
the activities of the Servicer
during the preceding 12-month period and of its
performance under this
Servicing Agreement has been made under such
officer's supervision and (ii)
based on such review, the Servicer has
materially fulfilled all its obligations
under this Servicing Agreement throughout such
year, or, if there has been a
default in the fulfillment of any such
obligation, specifying each such default
known to such officer and the nature and status
thereof. A copy of such
certificate may be obtained by any
Certificateholder by a request in writing to
the Servicer from any such Certificateholder.
B Upon request by the Company, Holder or each
Rating Agency, and at the
expense of the Company or Holder (respectively),
a firm of Independent
Public Accountants shall furnish a statement to
the Company or Holder and
each Rating Agency to the effect that such firm
has examined certain
documents and records relating to the servicing
of the Receivables and the
reporting requirements with respect thereto as
set forth in the Agreement or
Schedule A herein, and that, on the basis of
such examination, such servicing
and reporting requirements have been conducted
in compliance with the
Agreement or Schedule A herein, except for (i)
such exceptions as such firm
shall believe to be immaterial and (ii) such
other exceptions as shall be set
forth in such statement.
VIII. PAYMENT IN FULL ON RECEIVABLE.
Upon payment in full on any Receivable, the Servicer
shall notify the Company,
Holder or its designee (respectively), by a
certificate of a Servicing Officer
substantially in the form of Schedule C hereto and
request certificate which shall
include a statement to the effect that all amounts
received in connection with such
payment in full which are required to be deposited in
the Collection Account or the
Lock-Box Account, have been deposited. The custodian
shall be authorized, upon
receipt of a request for release from the Servicer in
the form of Schedule C hereto, to
execute an instrument in satisfaction of such
Receivable and to take such other actions
and execute such other documents as the Servicer
deems necessary to discharge the
Obligor thereunder and eliminate the security
interest in the Financed Vehicle related
thereto. Upon request of a Servicing Officer, the
Company, Holder or its designee
(respectively), shall perform such other acts as
reasonably requested by the Servicer
and otherwise cooperate with the Servicer in
enforcement of the rights and remedies
of the Company, Holder or its designee
(respectively), with respect to the
Receivables.
IX. SUBSTITUTION OF COLLATERAL
In the event a Financed Vehicle sustains significant
physical damage, such that the
insurance company carrying the physical damage
insurance covering such Financed
Vehicle determines that the Financed Vehicle is not
repairable, the Company may
permit the Obligor to pledge a vehicle of equal or
greater market value than that of
the Financed Vehicle immediately prior to sustaining
the physical damage, provided,
that any such substitution shall not be made if to do
so would void coverage of the
related Receivable under the VSI Insurance Policy or
the Risk Default Insurance
Policy. The second vehicle shall be substituted as
the collateral ("Substituted
Financed Vehicle") for the Receivable and the terms
of the Receivable shall not be
amended or modified except to reflect the substituted
collateral. The Company shall,
within 90 days of the purchase of the Substituted
Financed Vehicle, cause the
certificate of title for the Substituted Financed
Vehicle to be delivered to the Servicer.
<PAGE>
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust
1996-1
Automobile Receivable Pass-Through
Certificates
Series 1996-1
I. COLLECTION ACTIVITY INTEREST
PRINCIPAL TOTALS
Beginning of Period Pool Principal Balance
0
Additional Receivables Purchased
0
Scheduled Payments 0 0
0
Full & Partial Prepayments 0 0
0
Risk Default Insurance Cash Proceeds 0
0 0
Receivables Repurchased by Seller
Recoveries (on Liquidated and Defaulted
Receivables)
Miscellaneous Servicer Collections
Available Distribution Amount 0
0 0
Net Losses 0
End of Period Pool Balance 0
II. SERVICING COMPENSATION
Amount
(ATTACH BREAKOUT OF FEES)
Servicer Compensation
III. POOL BALANCE INFORMATION
Beginning of Period End
of Period
Original Pool Balance:
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM)
Remaining Number of Contracts
IV. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Additional Receivables Substituted
Principal Amount
V. EXTENSIONS
Number of Extensions granted
Principal Amount
VI. DELINQUENCY INFORMATION*
% of
# of Principal
Outstanding
Contracts
Balance Pool Balance
30-59 Days Delinquent
60-90 Days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VII. REPOSSESSION INFORMATION
Current Period
Inventory
Number of Receivables as to which Vehicles have been
Repossessed (and NOI expired)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and NOI expired)
VIII. LIQUIDATED AND DEFAULTED RECEIVABLES
Current Period
Cumulative
Number of Liquidated Receivables*
Principal Balance of Liquidated Receivables**
(Prior to Liquidation)
Number of Defaulted Receivables***
Principal Balance of Defaulted Receivables
Total Principal Balance of Liquidated Defaulted
Receivables
*Includes Receivables transferred to Risk Default
Insurer for liquidation
**Excludes Receivables previously characterized as
Defaulted Receivables
***180 days delinquent
IX. RECOVERIES
Current Period
Cumulative
Liquidation Proceeds
VSI Physical Damage/Loss Insurance Proceeds
Rebates of Servicer Cancelled Warranty Contracts
Consumer Insurance
Other
Total Recoveries
X. RISK DEFAULT POLICY INSURED RETENTION AMOUNT
Beginning Balance
Add: Prefunded Receivables
Add: Quarterly Reserve Loss Deficiency
Less: Approved Claims
Less: Surplus in Quarterly Loss Reserve
Ending Balance
<PAGE>
XI. NET LOSSES
Current Period
Cumulative
Principal Balance of Liquidated and Defaulted
Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XII. INSURANCE CLAIMS
Current Period
Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Retention Amount
Number of VSI Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Defaulted Insurance Claims Rejected
Principal Balance of Receivables relating to Risk
Default
Insurance Claims Rejected
SERVICER COMPENSATION BREAKDOWN Amount
Servicing Fees
Collection Expenses Incurred
Claim Filing Fees
Bank Charges
Late fees, extension fees collected
Postage
Total Servicer Compensation
<PAGE>
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0069
Re: Aegis Auto May 17, 1996 by and among
Aegis Auto Finance, Inc., as
Servicer and Aegis Auto Funding Corp.
III, as Company.
In connection with the administration of the
pool of Receivables held by you as
Custodian for the Company, we request the release and
acknowledge receipt of the
(Custodian's Receivable Files/[specify documents]) for
the Receivable described below, for
the reason indicated.
Borrower's Name, Address & Zip Code:
Receivable Number: [list here or on attached schedule]
Reason for Requesting Documents (check one or put code
on attached schedule)
1. Receivable Paid in Full (Servicer hereby certifies
that all amounts received in
connection therewith have been credited to the
appropriate Collection Account.)
_____ 2. Receivable Repurchased (Servicer hereby
certifies that any applicable
repurchase price has been credited to the
appropriate Collection Account.)
_____ 3. Receivable [to be] Liquidated (Servicer
hereby certifies that all proceeds of
foreclosure, insurance or other liquidation
[have been finally received and
credited] [when received shall be credited]
to the appropriate Collection
Account.)
_____ 4. Receivable to be transferred to Risk Default
Insurer for liquidation (Servicer
hereby certifies that all proceeds of
insurance when received shall be credited
to the appropriate Collection Account).
_____ 5. Receivable in Foreclosure
_____ 6. Other (explain)
If box 1, 2, 3 or 4 above is checked, and if
all or part of the Custodian's
Receivable File was previously released to us, please
deliver to us a copy of our previous
request for release on file with you, as well as any
additional documents in your possession
relating to the above specified Receivable.
If box 5 or 6 above is checked, upon our
return of all of the above documents
to you as Custodian, please acknowledge your receipt by
signing in the space indicated
below, and returning this form.
AEGIS AUTO FINANCE, INC.
Servicer
By:________________________________
Name:
Title:
Date:______________________________
Documents returned to Custodian:
NORWEST BANK MINNEAPOLIS, NATIONAL ASSOCIATION,
as Custodian
By: _______________________________
Name:
Title:
Date:
______________________________
EXHIBIT 10.95
$5,000,000
CREDIT AGREEMENT
Dated as of May 17, 1996
AMONG
THE AEGIS CONSUMER FUNDING GROUP,
INC.,
as Borrower,
AEGIS CONSUMER FINANCE, INC.,
as Guarantor
AEGIS AUTO FINANCE, INC.,
as Guarantor
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS,
INC.,
as Lender
TABLE OF
CONTENTS
Page
ARTICLE I. DEFINITIONS; CONSTRUCTION. . . . . . . . .
. . . . . . . . . 1
Section 1.01. Definitions. . . . . . . . . . . .
. . . . . . . . . 1
Section 1.02. Accounting Terms and
Determinations . . . . . . . . . . . . . . .
. . . . . . . . . 9
Section 1.03. Other Definitional Terms . . . . .
. . . . . . . . . 9
ARTICLE II. AMOUNT AND TERMS OF THE LOANS . . . . . .
. . . . . . . . . 10
Section 2.01. The Loans. . . . . . . . . . . . .
. . . . . . . . . 10
Section 2.02. The Note . . . . . . . . . . . . .
. . . . . . . . . 10
Section 2.03. Making the Loans . . . . . . . . .
. . . . . . . . . 10
Section 2.04. Use of Proceeds. . . . . . . . . .
. . . . . . . . . 11
ARTICLE III. INTEREST, PAYMENTS, ETC. . . . . . . . .
. . . . . . . . . 11
Section 3.01. Interest on the Loans. . . . . . .
. . . . . . . . . 11
Section 3.02. Optional Prepayments . . . . . . .
. . . . . . . . . 11
Section 3.03. Mandatory Repayments and
Prepayments. . . . . . . . . . . . . . . . .
. . . . . . . . . 12
Section 3.04. Funds; Manner of Payment . . . . .
. . . . . . . . . 12
Section 3.05. Default Interest . . . . . . . . .
. . . . . . . . . 12
Section 3.06. Requirements of Law. . . . . . . .
. . . . . . . . . 12
Section 3.07. Indemnity. . . . . . . . . . . . .
. . . . . . . . . 13
Section 3.08. Illegality; Substituted
Interest Rate, etc.. . . . . . . .
. . . . . . . . . 14
Section 3.09. Application of Payments, etc.. . .
. . . . . . . . . 15
Section 3.10. Extension of Termination Date. . .
. . . . . . . . . 15
ARTICLE IV. CONDITIONS TO CLOSING AND THE LOANS . . .
. . . . . . . . . 15
Section 4.01. Conditions Precedent to the
Closing. . . . . . . . . . . . . . . . . . .
. . . . . . . . . 15
Section 4.02. Conditions Precedent to All
Loans. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 18
ARTICLE V. REPRESENTATIONS AND WARRANTIES . . . . . .
. . . . . . . . . 19
Section 5.01. Existence; Conduct of Business
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 19
Section 5.02. Corporate Power and Authority. . .
. . . . . . . . . 19
Section 5.03. No Violation . . . . . . . . . . .
. . . . . . . . . 20
Section 5.04. Approvals, Authorizations,
Consents, etc. . . . . . . . . . .
. . . . . . . . . 20
Section 5.05. No Litigation. . . . . . . . . . .
. . . . . . . . . 20
Section 5.06. Tax Liability. . . . . . . . . . .
. . . . . . . . . 20
Section 5.07. Regulation G . . . . . . . . . . .
. . . . . . . . . 21
Section 5.08. Permits, Licenses, Approvals,
Consents, Compliance with
Requirements of Law, etc. . . . . .
. . . . . . . . . 21
Section 5.09. Financial Statements; Material
Adverse Change. . . . . . . . . . . .
. . . . . . . . . 21
Section 5.10. The Investment Company Act,
Etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 21
Section 5.11. The Security Agreements. . . . . .
. . . . . . . . . 21
Section 5.12. Ownership of Properties;
Insurance. . . . . . . . . . . . . . . . . .
. . . . . . . . . 21
Section 5.13. Ownership of the Guarantors. . . .
. . . . . . . . . 22
Section 5.14. Full Disclosure. . . . . . . . . .
. . . . . . . . . 22
Section 5.15. Intellectual Property. . . . . . .
. . . . . . . . . 22
Section 5.16. ERISA. . . . . . . . . . . . . . .
. . . . . . . . . 22
Section 5.17. Subsidiaries.. . . . . . . . . . .
. . . . . . . . . 23
Section 5.18. III Loan Agreements. . . . . . . .
. . . . . . . . . 23
ARTICLE VI. AFFIRMATIVE COVENANTS . . . . . . . . . .
. . . . . . . . . 23
Section 6.01. Financial Statements and Other
Information. . . . . . . . . . . .
. . . . . . . . . 23
Section 6.02. Compliance with Laws, etc. . . . .
. . . . . . . . . 24
Section 6.03. Preservation of Corporate
Existence; Conduct of Business. . .
. . . . . . . . . 25
Section 6.04. Payment of Taxes and Claims,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 25
Section 6.05. Keeping of Books, Visitation,
Inspection, etc. . . . . . . . . . .
. . . . . . . . . 25
Section 6.06. Pay Obligations. . . . . . . . . .
. . . . . . . . . 25
Section 6.07. Notice of Default, etc.. . . . . .
. . . . . . . . . 25
Section 6.08. Notice of Material Adverse
Change . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 26
Section 6.09. Further Assurances . . . . . . . .
. . . . . . . . . 26
Section 6.10. Monthly Reporting Requirements
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 26
Section 6.11. Insurance. . . . . . . . . . . . .
. . . . . . . . . 26
Section 6.12. III Loan Agreements, Etc.. . . . .
. . . . . . . . . 27
ARTICLE VII. NEGATIVE COVENANTS . . . . . . . . . . .
. . . . . . . . . 27
Section 7.01. Liens and Other Interests. . . . .
. . . . . . . . . 27
Section 7.02. Merger or Consolidation. . . . . .
. . . . . . . . . 27
Section 7.03. Net Worth of the Borrower. . . . .
. . . . . . . . . 28
Section 7.04. Total Indebtedness to Net Worth
of the Borrower. . . . . . . . . . .
. . . . . . . . . 28
Section 7.05. Dividends, etc.. . . . . . . . . .
. . . . . . . . . 28
Section 7.06. Transactions with Affiliates . . .
. . . . . . . . . 28
ARTICLE VIII. EVENTS OF DEFAULT . . . . . . . . . . .
. . . . . . . . . 28
Section 8.01. Events of Default. . . . . . . . .
. . . . . . . . . 28
ARTICLE IX. GUARANTEE . . . . . . . . . . . . . . . .
. . . . . . . . . 31
Section 9.01. Guarantee. . . . . . . . . . . . .
. . . . . . . . . 31
Section 9.02. No Subrogation . . . . . . . . . .
. . . . . . . . . 32
Section 9.03. Amendments, etc. with respect
to the Obligations; Waiver of
Rights . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 32
Section 9.04. Guarantee Absolute and
Unconditional. . . . . . . . . . . . . . . .
. . . . . . . . . 33
Section 9.05. Reinstatement. . . . . . . . . . .
. . . . . . . . . 34
Section 9.06. Payments . . . . . . . . . . . . .
. . . . . . . . . 34
ARTICLE X. MISCELLANEOUS. . . . . . . . . . . . . . .
. . . . . . . . . 35
Section 10.01. Notices. . . . . . . . . . . . . .
. . . . . . . . . 35
Section 10.02. Amendments, Waivers, etc.. . . . .
. . . . . . . . . 36
Section 10.03. No Waiver; Remedies Cumulative
. . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
Section 10.04. Payment of Expenses, Indemnity,
etc. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 36
Section 10.05. Benefits of Agreement. . . . . . .
. . . . . . . . . 37
Section 10.06. Right of Setoff. . . . . . . . . .
. . . . . . . . . 38
Section 10.07. Survival of Agreement. . . . . . .
. . . . . . . . . 38
Section 10.08. GOVERNING LAW. . . . . . . . . . .
. . . . . . . . . 38
Section 10.09. Counterparts . . . . . . . . . . .
. . . . . . . . . 38
Section 10.10. Headings Descriptive . . . . . . .
. . . . . . . . . 39
Section 10.11. Severability . . . . . . . . . . .
. . . . . . . . . 39
Section 10.12. Entire Agreement . . . . . . . . .
. . . . . . . . . 39
Section 10.13. Submission to Jurisdiction;
Venue. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 39
Section 10.14. WAIVER OF JURY TRIAL . . . . . . .
. . . . . . . . . 41
EXHIBITS
EXHIBIT A FORM OF NOTE
EXHIBIT B FORM OF NOTICE OF BORROWING
EXHIBIT C-1 FORM OF AEGIS AUTO FINANCE SECURITY AND
PLEDGE AGREEMENT
EXHIBIT C-2 FORM OF AEGIS CONSUMER FINANCE SECURITY
AND
PLEDGE AGREEMENT
EXHIBIT D-1 FORM OF OPINION OF COUNSEL TO THE
BORROWER
AND THE GUARANTORS
EXHIBIT D-2 FORM OF OPINION OF COUNSEL TO THE
BORROWER
AND THE GUARANTORS
EXHIBIT E FORM OF PORTFOLIO CONTRACTS CERTIFICATE
SCHEDULES
SCHEDULE I III LOAN AGREEMENTS
SCHEDULE II INSURANCE
SCHEDULE III PLANS
SCHEDULE IV SUBSIDIARIES CREDIT AGREEMENT,
dated as of May 17, 1996, between
THE AEGIS CONSUMER FUNDING GROUP, INC., a Delaware
corporation (the "Borrower), AEGIS CONSUMER FINANCE,
INC., a Delaware corporation ("Aegis Consumer
Finance"),
AEGIS AUTO FINANCE, INC., a Delaware corporation
("Aegis
Auto Finance") and GREENWICH CAPITAL FINANCIAL
PRODUCTS,
INC., a Delaware corporation (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower wishes to borrow certain
sums
from the Lender hereunder and the Lender is willing,
upon
the terms and conditions set forth below, to lend such
sums to the Borrower;
NOW THEREFORE, in consideration of the premises
and
for other good and valuable consideration, the receipt
of
which is hereby acknowledged, the parties hereto agree
as
follows:
ARTICLE I. DEFINITIONS;
CONSTRUCTION
Section 1.01. Definitions. As used herein and in
the Schedules and the Exhibits hereto, the following
terms shall have the meanings herein specified (to be
equally applicable to both the singular and plural
forms
of the terms defined):
"Aegis Auto Finance" shall have the meaning set
forth in the preamble hereof.
"Aegis Auto Finance Security Agreement" shall mean
the security and pledge agreement made by Aegis Auto
Finance in favor of the Lender substantially in the
form
of Exhibit C-1 hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Aegis Consumer Finance" shall have the meaning
set
forth in the preamble hereof.
"Aegis Consumer Finance Security Agreement" shall
mean the security and pledge agreement made by Aegis
Auto
Finance in favor of the Lender substantially in the
form
of Exhibit C-2 hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Affiliate" shall mean, with respect to any
Person,
any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common
control
with, such Person. For purposes of this definition,
control of a Person shall mean the power, direct or
indirect, (i) to vote 5% or more of the securities
having
ordinary voting power for the election of directors of
such Person or (ii) to direct or cause the direction of
the management and policies of such Person whether by
contract or otherwise.
"Agreement" shall mean this Credit Agreement, as
amended, supplemented or otherwise modified from time
to
time in accordance with the terms hereof.
"Applicable Initial LIBOR Rate" shall mean, as of
the date of determination, the Initial LIBOR Rate in
effect on the Initial Interest Rate Determination Date
immediately preceding such date of determination;
provided that if such date of determination is also an
Initial Interest Rate Determination Date, the
Applicable
Initial LIBOR Rate for such date shall be the Initial
LIBOR Rate as determined on such date.
"Applicable LIBOR Rate" shall mean, as of the date
of determination, for each Loan for the period from and
including the Borrowing Date applicable to such Loan,
to
but excluding the first Interest Rate Determination
Date
to occur after such Borrowing Date, the Applicable
Initial LIBOR Rate in effect on such date, and
thereafter, the LIBOR Rate in effect on the Interest
Rate
Determination Date immediately preceding such date of
determination; provided that if such date of
determination is also an Interest Rate Determination
Date, the Applicable LIBOR Rate for such date shall be
the LIBOR Rate as determined on such date.
"Available Commitment" shall mean, as of the date
of
determination, the amount by which the Commitment
exceeds
the outstanding principal amount of the Loans.
"Board" shall mean the Board of Governors of the
Federal Reserve System.
"Borrower" shall have the meaning set forth in the
preamble hereof.
"Borrowing" shall mean a borrowing of a Loan on a
Borrowing Date.
"Borrowing Date" shall mean the date a Borrowing
occurs hereunder.
"Business Day" shall mean any day of the year
other
than a Saturday, Sunday or other day on which the New
York Stock Exchange, Inc. is closed or commercial banks
in The City of New York are authorized or required by
law
or executive order to close.
"Capital Stock" shall mean any and all shares,
interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and
all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options
to purchase any of the foregoing.
"Closing Date" shall mean the date that all of the
conditions precedent set forth in Section 4.01 hereof
have been fulfilled.
"Code" shall mean the Internal Revenue Code of
1986,
as amended from time to time.
"Collateral" shall mean the collective reference
to
the "collateral" as defined in each of the Security
Agreements.
"Collateral Value Deficiency" shall have the
meaning
set forth in Section 3.03(b) hereof.
"Commitment" shall have the meaning set forth in
Section 2.01 hereof.
"Commitment Period" shall mean the period
commencing
with the Closing Date and ending on the Business Day
immediately preceding the Termination Date.
"Commonly Controlled Entity" shall mean, as to any
Person, an entity whether or not incorporated, which is
under common control with such Person within the
meaning
of Section 4001 of ERISA or is part of a group which
includes such Person and which is treated as a single
employer under Section 414 of the Code.
"Default" shall mean any condition, act or event
which, with notice or lapse of time or both, would
constitute an Event of Default.
"Dollar" and the sign "$" shall mean lawful money
of
the United States of America.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Event of Default" shall have the meaning set
forth
in Section 8.01 hereof.
"GAAP" shall mean generally accepted accounting
principles as in effect in the United States, as may be
in place from time to time, on a consistent basis.
"Governmental Authority" shall mean any nation,
government, or State, or any political subdivision
thereof, or any court, stock exchange, entity or agency
exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to govern-
ment.
"Guarantee" shall mean, as to any Person (the
"guaranteeing person"), any obligation of the
guaranteeing person guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or
other
obligations (the "primary obligations") of any other
third Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without
limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such
primary obligation or any property constituting direct
or
indirect security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of any such
primary
obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain
the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily
for the purpose of assuring the owner of any such
primary
obligation of the ability of the primary obligor to
make
payment of such primary obligation or (iv) otherwise to
assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided,
however, that the term Guarantee shall not include the
endorsements of instruments for deposit or collection
in
the ordinary course of business. The amount of any
Guarantee of any guaranteeing person shall be deemed to
be the lower of (a) an amount equal to the stated or
determinable amount of the primary obligation in
respect
of which such Guarantee is made and (b) the maximum
amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such
Guarantee, unless such primary obligation and the
maximum
amount for which such guaranteeing person may be liable
are not stated or determinable, in which case the
amount
of such Guarantee shall be such guaranteeing person's
maximum reasonably anticipated liability in respect
thereof as determined by the guaranteeing person in
good
faith.
"III Finance" shall mean III Finance Ltd., a
Cayman
Islands corporation.
"III Loan Agreements" shall have the meaning set
forth in the Intercreditor Agreement.
"III Obligations" shall have the meaning set forth
in the Intercreditor Agreement.
"Guarantors" shall mean the collective reference
to
Aegis Consumer Finance and Aegis Auto Finance.
"Indebtedness" shall mean with respect to any
Person, without duplication, (a) all obligations of
such
Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar
instruments, (c) all indebtedness of others secured by
(or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby
have been assumed (only to the extent of the fair
market
value of such asset if such Indebtedness has not been
assumed by such Person), (d) all Guarantees of such
Person, (e) all capitalized lease obligations of such
Person, and (f) all obligations of such Person as an
account party in respect of letters of credit and
similar
instruments issued for the account of such Person.
"Initial LIBOR Rate" shall mean, with respect to
each Initial Interest Rate Determination Date, the rate
of interest per annum (rounded upwards, if necessary,
to
the nearest 1/100th of 1%) for Dollar deposits with a
duration of one (1) month at or about 11:00 a.m.
(London
time) on the second (2nd )LIBOR Business Day prior to
such Initial Interest Rate Determination Date on the
Bloomberg Money Markets Page 28 on such date, or, if
such
page ceases to display such information, then on the
Telerate Page 3750 on such date, or if such page ceases
to display such information, then such other page as
may
replace it on that service for the purpose of display
of
such information (the "Telerate Rate"). If the
Telerate
Rate cannot be determined, then the LIBOR Rate shall
mean, with respect to such Initial Interest Rate
Determination Date, the arithmetic mean of the rates of
interest (rounded upwards, if necessary, to the nearest
1/100th of 1%) offered to two prime banks in the London
interbank market (selected by the Lender) of Dollar
deposits with a duration of one (1) month at or about
11:00 a.m. (London time) on the second (2nd) LIBOR
Business Day prior to such Initial Interest Rate
Determination Date.
"Initial Interest Rate Determination Date" shall
mean with respect to each Borrowing, the Borrowing Date
for such Borrowing.
"Intellectual Property" shall have the meaning set
forth in Section 5.15 hereof.
"Intercreditor Agreement" shall mean the
intercreditor agreement between III Finance and the
Lender, as the same may be amended, supplemented or
otherwise modified from time to time.
"Interest Rate Determination Date" shall mean
initially, the Closing Date, and thereafter the first
LIBOR Business Day of each calendar month during the
term
hereof.
"Lender" shall have the meaning set forth in the
preamble hereof.
"LIBOR Business Day" shall mean a Business Day on
which trading in Dollars is conducted by and between
banks in the London interbank market.
"LIBOR Rate" shall mean, with respect to each
Interest Rate Determination Date, the rate of interest
per annum (rounded upwards, if necessary, to the
nearest
1/100th of 1%) for Dollar deposits with a duration of
one
(1) month at or about 11:00 a.m. (London time) on the
second (2nd) Business Day prior to such Interest Rate
Determination Date on the Bloomberg Money Markets Page
28
on such date, or, if such page ceases to display such
information, then on the Telerate Page 3750 on such
date
or, if such page ceases to display such information
then
such other page as may replace it on that service for
the
purpose of display of such information (the "Telerate
Rate"). If the Telerate Rate cannot be determined,
then
the LIBOR Rate shall mean, with respect to such
Interest
Rate Determination Date the arithmetic mean of the
rates
of interest (rounded upwards, if necessary, to the
nearest 1/100th of 1%) offered to two prime banks in
the
London interbank market (selected by the Lender) of
Dollar deposits with a duration of one (1) month at or
about 11:00 a.m. (London time) on the second (2nd)
Business Day prior to such Interest Rate Determination
Date.
"LIBOR Rate Margin" shall mean nine percent
(9.0%).
"Lien" shall mean any interest in property
securing
an obligation owed to, or a claim by, a Person other
than
the owner of such property, whether such interest is
based on the common law, statute or contract, and
including, but not limited to, the security interest,
security title or lien arising from a security
agreement,
mortgage, deed of trust, deed to secure debt,
encumbrance
or pledge for security purposes.
"Loan Parties" shall mean the collective reference
to the Borrower and the Guarantors
"Loans" shall have the meaning specified in
Section
2.01 hereof.
"Loan Documents" shall mean and include this
Agreement, the Note, the Security Agreements and all
other documents and instruments executed and delivered
in
connection herewith or therewith.
"Margin Stock" shall have the meaning set forth in
Regulation G of the Board.
"Material Adverse Change" shall mean a material
adverse change in, or the disclosure or discovery of
any
information not previously disclosed to the Lender
which
the Lender reasonably deems material and adverse
relating
to, the business, operations, properties, condition
(financial or otherwise) or prospects of any Loan
Party,
individually, or of such Loan Party and its operating
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean a material
adverse effect on (a) the business, operations,
properties, condition (financial or otherwise) or
prospects of any Loan Party, individually, or of such
Loan Party and its operating Subsidiaries, taken as a
whole, or (b) the validity or enforceability of this or
any of the other Loan Documents or the rights or
remedies
of the Lender hereunder or thereunder, or (c) the
ability
of any Loan Party to perform its obligations under any
Loan Document to which it is a party.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
"Net Worth" shall mean the excess of total assets
of
the Borrower over total liabilities of the Borrower
determined in accordance with GAAP.
"Note" shall have the meaning specified in Section
2.02 hereof.
"Notice of Borrowing" shall have the meaning set
forth in Section 2.03 hereof.
"Obligations" shall mean (i) the unpaid principal
of
and premiums, if any, and interest (including interest
accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in this
Agreement after the filing of any petition in
bankruptcy,
or the commencement of any insolvency, reorganization
or
like proceedings, relating to the Borrower whether or
not
a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans, when and as
due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise and (ii) all
other obligations and liabilities of every nature of
the
Borrower from time to time owing to the Lender, in each
case whether direct or indirect, absolute or
contingent,
due or to become due, or now existing or hereafter
incurred (including monetary obligations incurred
during
the pendency of any bankruptcy, insolvency,
receivership
or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), which may
arise
under, out of, or in connection with, this Agreement or
any other Loan Document or under any other document
made,
delivered or given in connection with any of the
foregoing, in each case whether on account of
principal,
premium, if any, interest, fees, indemnities, costs,
expenses or otherwise (including all fees and
disbursements of counsel to the Lender) that are
required
to be paid by the Borrower pursuant to the terms of
this
Agreement or any other Loan Document.
"Permitted Lien" shall mean, with respect to each
Guarantor, all Liens in favor of III Finance under the
III Loan Agreements, and with respect to the Loan
Parties
in the aggregate, mortgage Liens on real property not
to
exceed $3,000,000 at any one time outstanding, other
Liens securing obligations not to exceed $500,000 in
the
aggregate at any one time outstanding and Liens
securing
equipment in connection with "true" leases of such
equipment.
"Person" shall mean any individual, partnership,
firm, corporation, association, joint venture, trust,
limited liability company or other entity.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of
Title IV of ERISA.
"Plan" shall mean, at a particular time, any
employee benefit plan which is covered by ERISA and in
respect of which the Borrower or a Commonly Controlled
Entity is (or, if such plan were terminated at such
time,
would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Portfolio Contract" shall mean any motor vehicle
retail installment sales contract and installment loan
agreement secured by Vehicles originated or purchased
by
Aegis Auto Finance or any Affiliate thereof.
"Portfolio Contracts Certificate" shall mean a
portfolio contracts certificate substantially in the
form
of Exhibit E hereof.
"Portfolio Event" shall mean the occurrence of one
or more of the following events:
(i) as of the last day of any calendar
month and as of the last day of the two (2)
immediately preceding calendar months, the average
aggregate percentage of the unpaid principal
balance of Portfolio Contracts (including
Portfolio
Contracts which are delinquent thirty (30) days or
more, as to which the Obligor is bankrupt or as to
which the related Vehicle is authorized for
repossession or the related vehicle has been
repossessed and the related Vehicle has not been
liquidated) that are delinquent thirty (30) days
or
more equals or exceeds sixteen percent (16%) (on a
three (3) month rolling basis) of the unpaid
principal balance of all Portfolio Contracts; or
(ii) the product of (x) the aggregate
percentage as of the last day of any calendar
month
and as of the last day of the two (2) immediately
preceding calendar months of the unpaid principal
balance of Portfolio Contracts as to which a
notice
of intention to liquidate the related Vehicle has
expired and (y) four (4), equals or exceeds
fifteen
percent (15%) of the unpaid principal balance of
all Portfolio Contracts; or
(iii) as of the last day of any calendar
month and as of the last day of the three (3)
immediately preceding calendar months, the average
annualized gross losses on Portfolio Contracts
equals or exceeds seven and one-half percent
(7.5%)
(on a four (4) month rolling basis) of the unpaid
principal balance of all Portfolio Contracts.
"Prime Rate" shall mean the prime rate (or if a
range is given, the highest prime rate) listed under
"Money Rates" in The Wall Street Journal for such date
or, if The Wall Street Journal is not published on such
date, then in The Wall Street Journal most recently
published.
"Regulation G" shall mean Regulation G promulgated
by the Board.
"Reportable Event" shall mean any of the events
set
forth in Section 4043(b) of ERISA.
"Requirement of Law" shall mean, as to any Person,
any law, statute, rule, treaty, regulation, or
determination of an arbitrator, court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its properties or to
which any such Person or any of its properties may be
bound or affected.
"Responsible Officer" shall mean any of the
President, the chief executive officer and chief
financial officer of any Loan Party.
"Security Agreements" shall mean the collective
reference to the Aegis Auto Finance Security Agreement
and the Aegis Consumer Finance Security Agreement.
"Series C Preferred Stock Redemption" shall mean
the
Certificate of Designation, Number, Powers,
Preferences,
and Relative, Participating, Optional, and Other
Special
Rights and Qualifications, Limitations, Restrictions,
and
Other Distinguishing Characteristics of Series C
Preferred Stock of the Borrower dated January 30, 1996.
"Subsidiary" shall mean, as to any Person, a
corporation, partnership of other entity of which
shares
of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership
interests having such power only by reason of the
happening of a contingency) to elect a majority of the
board of directors or other managers of such
corporation,
partnership or other entity are at the time owned, or
the
management of which is otherwise controlled, directly
or
indirectly through one or more intermediaries, or both,
by such Person.
"Termination Date" shall mean May 16, 1997, or
such
later date if such date is otherwise extended by the
Lender in writing in accordance with the terms of
Section
3.10 hereof, or such earlier date if the Commitment is
sooner terminated in accordance with the terms hereof.
"Vehicle" shall mean a new or used automobile or
light duty truck.
Section 1.02. Accounting Terms and
Determinations.
Unless otherwise defined or specified herein, all
accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all
financial statements required to be delivered hereunder
shall be prepared and all financial records shall be
maintained in accordance with GAAP.
Section 1.03. Other Definitional Terms. The
words
"hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular
provision
of this Agreement, and article, section, schedule,
exhibit and like references are to this Agreement
unless
otherwise specified.
Any defined term which relates to a document shall
include within its definition any amendments,
modifications, renewals, restatements, extensions,
supplements or substitutions which may have been
heretofore or may be hereafter executed in accordance
with the terms thereof.
ARTICLE II. AMOUNT AND TERMS OF THE
LOANS
Section 2.01. The Loans. The Lender agrees, upon
the terms and subject to the conditions and relying
upon
the representations and warranties hereinafter set
forth,
to make one or more loans (each, a "Loan", and
together,
the "Loans") to the Borrower up to a maximum principal
amount at any one time outstanding of FIVE MILLION
DOLLARS ($5,000,000) (the "Commitment") during the
Commitment Period; provided that no Loan shall be made
(i) on a day other than a Business Day; or (ii) in an
amount which would exceed the Available Commitment on
such day; and provided that no more than four (4)
Borrowings shall be permitted under this Agreement
during
the term hereof; provided further that if the initial
Termination Date is extended in accordance with the
provisions of Section 3.10 hereof, two (2) additional
Borrowings shall be permitted during the term of any
such
extension. All Loans may be borrowed, repaid and
reborrowed in accordance with the terms of this
Agreement.
Section 2.02. The Note. (a) The Loans shall be
evidenced by a promissory note substantially in the
form
of Exhibit A hereto, duly executed by the Borrower,
dated
the Closing Date, payable to the order of the Lender in
the principal amount equal to $5,000,000 (the "Note").
The Lender is hereby authorized to record the dates and
amounts of all Loans made by the Lender to the Borrower
under this Agreement and the dates and amounts of all
payments and prepayments of the principal of the Loans
on
the Schedule (and each continuation thereof) attached
to
and constituting part of the Note. Such recordation
shall be conclusive in the absence of manifest error;
provided that the failure of the Lender to make any
such
recordation or any error in such recordation shall not
affect the obligations of the Borrower hereunder and
under the Note.
(b) The outstanding principal amount of the Loans
shall be payable as set forth in Article III hereof.
The
Borrower shall pay interest on the outstanding
principal
amount of the Loans from the date each such Loan is
made
until the principal amount thereof is paid in full at
the
rates and pursuant to the terms set forth in Article
III
hereof.
Section 2.03. Making the Loans. Each Borrowing
shall be made on notice, given not later than 12:00
noon
(New York City time) on the fifth (5th) Business Day
prior to the proposed Borrowing Date by the Borrower to
the Lender. Each such notice of borrowing (a "Notice
of
Borrowing") shall be irrevocable and shall be
substantially in the form of Exhibit B hereto. Upon
fulfillment of the applicable conditions set forth in
Article IV hereof, the Lender shall make the proceeds
of
the Borrowing available to the Borrower in immediately
available funds to such account(s) as the Borrower
shall
designate to the Lender in writing.
Section 2.04. Use of Proceeds. The proceeds of
each Borrowing shall only be used by the Borrower to
finance anticipated expenses relating to the transfer
of
certain loan servicing responsibilities to the Borrower
or any of its Subsidiaries from American Lenders
Facilities, Inc., effecting upgrades to its systems,
funding reserve funds required in connection with
securitization transactions, renting additional space
to
accommodate increased staff, and other general
corporate
purposes.
ARTICLE III. INTEREST, PAYMENTS,
ETC.
Section 3.01. Interest on the Loans. (a) Except
as otherwise provided herein, each Loan shall bear
interest on the outstanding principal amount thereof,
for
each day from the date of the making of such Loan until
the principal amount thereof shall be paid in full, at
a
rate per annum equal to (x) the Applicable LIBOR Rate
for
such day, plus the LIBOR Rate Margin, or (y) at the
Borrower's option irrevocably determined on the Closing
Date, fifteen percent (15%), (in each case calculated
on
the basis of the actual number of days elapsed in a
year
of 360 days).
(b) Except as otherwise provided herein, all
accrued and unpaid interest on the Loans shall be
payable
monthly in arrears on the first day of each calendar
month during the term hereof commencing on the first
such
day to occur after the Closing Date and on the
Termination Date.
(c) If, by the terms of this Agreement or the
Note,
the Borrower at any time is required or obligated to
pay
interest at a rate in excess of the maximum rate
permitted by applicable law, the rate of interest shall
be deemed to be immediately reduced to such maximum
rate
and the portion of all prior interest payments in
excess
of such maximum rate shall be applied and shall be
deemed
to have been payments made in reduction of the
outstanding principal amount of the Loans.
Section 3.02. Optional Prepayments. The Borrower
may prepay the Loans on any Interest Rate Determination
Date, in whole or in part, without premium or penalty,
on
two (2) Business Day's prior written notice to the
Lender. Any such prepayment shall be accompanied by
payment of all accrued and unpaid interest due and
owing
to the date of such prepayment on the principal amount
of
the Loans so prepaid.
Section 3.03. Mandatory Repayments and
Prepayments.
(a) On the Termination Date the Borrower promises to
pay
to the Lender the outstanding principal amount of the
Loans in full, together with all accrued and unpaid
interest due and owing hereunder.
(b) If the Lender determines that the value of
the
Collateral is not adequate to secure the then
outstanding
III Obligations and the unpaid principal amount of the
Loans, together with all interest due and owing thereon
and all other Obligations due to the Lender hereunder
(a
"Collateral Value Deficiency"), the Borrower shall
within
three (3) Business Days after the Lender has notified
the
Borrower in writing of the occurrence of a Collateral
Value Deficiency, either pledge additional collateral
to
the Lender in form and substance satisfactory to the
Lender or prepay the outstanding principal amount of
the
Loans by an amount equal to such Collateral Value
Deficiency, together with all accrued and unpaid
interest
due and owing on the principal amount of Loans so
prepaid.
Section 3.04. Funds; Manner of Payment. Each
payment and each prepayment of principal of and
interest
on any Loan, and each payment on account of all other
Obligations shall be paid by the Borrower without
set-off
or counterclaim to the Lender at its office located at
600 Steamboat Road, Greenwich, Connecticut 06830 or to
such other location or account as the Lender may
specify
to the Borrower from time to time, in Federal or other
immediately available funds in lawful money of the
United
States of America, not later than 1:00 p.m. (New York
City time) on the date on which any such payment or
prepayment is payable. If any payment hereunder or
under
the Note becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to
the next succeeding Business Day. If the date for any
payments or prepayments of principal is extended by
operation of law or otherwise, interest thereon shall
be
payable at the then applicable rate during such
extension.
Section 3.05. Default Interest. If the Borrower
shall default in the payment of the principal of or
interest on the Loans or any other Obligation, the
Borrower shall on demand pay interest on such overdue
principal amount and, to the extent permitted by
applicable law, on such overdue interest and any other
overdue amount, for each day at a rate per annum equal
to
the Applicable LIBOR Rate for such day plus twelve
percent (12%) or, if the Borrower has made the election
described in Section 3.01(a) (y), eighteen percent
(18%)
(in each case calculated on the basis of the actual
number of days elapsed in a year of 360 days), accruing
from the date such payment was due until such amount is
paid in full (after as well as before judgment).
Section 3.06. Requirements of Law. (a) If any
Requirement of Law or any change in the interpretation
or
application thereof or compliance by the Lender with
any
request or directive (whether or not having the force
of
law) from any central bank or other Governmental
Authority made subsequent to the date hereof:
(i) shall subject the Lender to any tax
of any kind whatsoever with respect to this
Agreement, the Note or any Loan made by it
(excluding net income taxes) or change the basis
of
taxation of payments to the Lender in respect
thereof;
(ii) shall impose, modify or hold
applicable any reserve, special deposit,
compulsory
loan or similar requirement against assets held
by,
deposits or other liabilities in or for the
account
of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any
office of the Lender which is not otherwise
included in the determination of the Applicable
LIBOR Rate hereunder;
(iii) shall impose on the Lender any
other
condition;
and the result of any of the foregoing is to increase
the
cost to the Lender, by an amount which the Lender deems
to be material, of making, continuing or maintaining
any
Loan or to reduce any amount receivable hereunder in
respect thereof, then, in any such case, the Borrower
shall promptly pay the Lender such additional amount or
amounts as will compensate the Lender for such
increased
cost or reduced amount receivable.
(b) If the Lender shall have determined that the
adoption of or any change in any Requirement of Law
regarding capital adequacy or in the interpretation or
application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or
directive regarding capital adequacy (whether or not
having the force of law) from any Governmental
Authority
made subsequent to the date hereof shall have the
effect
of reducing the rate of return on the Lender's or such
corporation's capital as a consequence of its
obligations
hereunder to a level below that which the Lender or
such
corporation (taking into consideration the Lender's or
such corporation's policies with respect to capital
adequacy) by an amount deemed by the Lender to be
material, then from time to time, the Borrower shall
promptly pay to the Lender such additional amount or
amounts as will compensate the Lender for such
reduction.
(c) If the Lender becomes entitled to claim any
additional amounts pursuant to this subsection, it
shall
promptly notify the Borrower of the event by reason of
which it has become so entitled. A certificate as to
any
additional amounts payable pursuant to this subsection
submitted by the Lender to the Borrower shall be
conclusive in the absence of manifest error.
Section 3.07. Indemnity. The Borrower agrees to
indemnify the Lender and to hold it harmless from any
cost, loss or expense which the Lender may sustain or
incur as a consequence of (a) the Borrower making any
payment or prepayment (other than pursuant to Section
3.03 hereof) of principal of any Loan on a day which is
not an Interest Rate Determination Date, (b) any
failure
by the Borrower to make a Borrowing hereunder after
notice of such Borrowing has been given pursuant to
this
Agreement, (c) any default by the Borrower in making
any
prepayment of the principal amount of the Loans on the
due date therefor, and (d) any acceleration of the
maturity of any Loans by the Lender in accordance with
the terms of this Agreement, including, but not limited
to, any cost, loss or expense arising in liquidating
the
Loans and from interest or fees payable by the Lender
to
lenders of funds obtained by it in order to maintain
the
Loans hereunder. In the event the Borrower is required
to make any payment pursuant to this Section 3.07, the
Lender shall provide to the Borrower in writing the
basis
upon which such charges were calculated in reasonable
detail.
Section 3.08. Illegality; Substituted Interest
Rate, etc. Notwithstanding any other provisions
herein,
(a) if any Requirement of Law or any change therein or
in
the interpretation or application thereof shall make it
unlawful for the Lender to make or maintain any Loans
at
the LIBOR Rate as contemplated by this Agreement, or
(b)
in the event that the Lender shall have determined
(which
determination shall be conclusive and binding upon the
Borrower) that by reason of circumstances affecting the
LIBOR interbank market either adequate and reasonable
means do not exist for ascertaining the LIBOR Rate, or
(c) the Lender shall have determined (which
determination
shall be conclusive and binding on the Borrower) that
the
Applicable LIBOR Rate will not adequately and fairly
reflect the cost to the Lender of maintaining or
funding
the Loans based on such LIBOR Rate, (x) the obligation
of
the Lender to make or maintain Loans at the LIBOR Rate
shall forthwith be suspended and the Lender shall
promptly notify the Borrower thereof (by telephone
confirmed in writing) and (y) each Loan then
outstanding,
if any, shall, from and including the next Interest
Rate
Determination Date, or at such earlier date as may be
required by law, until payment in full thereof, bear
interest at the rate per annum equal to the greater of
the Prime Rate and the rate of interest (including the
LIBOR Rate Margin) in effect on the date immediately
preceding the date any event described in clauses (a),
(b) or (c) above occurred (calculated on the basis of
the
actual number of days elapsed in a year of 360 days).
If
any such conversion of the LIBOR Rate to the Prime Rate
is made on a day which is not an Interest Rate
Determination Date, the Borrower shall pay to the
Lender
such amounts, if any, as may be required pursuant to
Section 3.06 hereof. If subsequent to such suspension
of
the obligation of the Lender to make or maintain the
Loans at the LIBOR Rate it becomes lawful for the
Lender
to make or maintain the Loans at the LIBOR Rate, or the
circumstances described in clause (b) or (c) above no
longer exist, the Lender shall so notify the Borrower
and
its obligation to do so shall be reinstated effective
as
of the date it becomes lawful for the Lender to make or
maintain the Loans at the LIBOR Rate or the
circumstances
described in clause (b) or (c) above no longer exist.
Section 3.09. Application of Payments, etc. All
payments made hereunder shall be applied to the
Obligations as specified by the Borrower; except that
if
a Default or Event of Default shall have occurred and
be
continuing any and all such payments shall be applied
to
the Obligations in such order as the Lender may
determine.
Section 3.10. Extension of Termination Date. The
Termination Date may, with the consent of the Lender,
be
extended to November 16, 1997. No such extension shall
be effective unless approved in writing by the Lender.
The Borrower shall request any such extension in
writing
delivered to the Lender at least sixty (60) days prior
to
the Termination Date. The Lender shall notify the
Borrower at least thirty (30) days prior to the
Termination Date if the Lender has determined not to
extend the Termination Date hereunder; provided that
the
failure to give such notice shall not obligate the
Lender
to so extend the Termination Date. The consent of the
Lender to such extension shall not be unreasonably
withheld if as of the Termination Date (before giving
effect to such extension request) each of the following
is true and correct:
(i no Default or Event of Default has
occurred and is continuing;
(ii during the term of this Agreement, no
Default under Articles VI or VII shall have
occurred and no Portfolio Event shall have
occurred;
(iii during the term of this Agreement, the
Borrower has originated at least $400 million in
aggregate original principal amount of automobile
and light duty truck receivables; and
(iv the Lender shall have a reasonable
expectation that a secondary public equity
offering
or other cash infusion or revenue event will
provide a source for repayment of the Obligations
on the extended Termination Date.
ARTICLE IV. CONDITIONS TO CLOSING AND THE
LOANS
Section 4.01. Conditions Precedent to the
Closing.
The obligation of the Lender to enter into this
Agreement
is subject to fulfillment of the following conditions
precedent, on or before the Closing Date:
(a) Receipt of Documents. Receipt by the Lender
of
the following documents, each dated as of the Closing
Date, as applicable, in form and substance satisfactory
to the Lender and its counsel:
(i This Agreement, executed and delivered
on behalf of the Borrower;
(ii The Note, executed and delivered on
behalf of the Borrower;
(iii The Aegis Auto Finance Security
Agreement, executed and delivered on behalf of
Aegis Auto Finance, together with:
(x UCC-1 financing statements
executed and delivered by Aegis Auto Finance
naming Aegis Auto Finance as "debtor" and the
Lender as "secured party" filed in all
jurisdictions as may be necessary in the
reasonable opinion of the Lender, to perfect
the security interest contemplated under the
Aegis Auto Finance Security Agreement; and
(y evidence that all other actions
necessary to perfect the security interest
contemplated under the Aegis Auto Finance
Security Agreement have been taken;
(iv The Aegis Consumer Finance Security
Agreement, executed and delivered on behalf of
Aegis Consumer Finance, together with:
(x UCC-1 financing statements
executed and delivered by Aegis Consumer
Finance naming Aegis Consumer as "debtor" and
the Lender as "secured party" filed in all
jurisdictions as may be necessary in the
reasonable opinion of the Lender, to perfect
the security interest contemplated under the
Aegis Consumer Finance Security Agreement;
and
(y evidence that all other actions
necessary to perfect the security interest
contemplated under the Aegis Consumer Finance
Security Agreement have been taken;
(v A copy of the resolutions of the
Borrower authorizing (A) the execution, delivery
and performance of the Loan Documents to which it
is a party by the Borrower, and (B) the borrowings
contemplated hereunder, certified by the Secretary
or an Assistant Secretary of the Borrower as of
the
Closing Date, which certificate shall state that
the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the
date of such certificate;
(vi A certificate of the Secretary or an
Assistant Secretary of the Borrower certifying the
names and the signatures of the officers of the
Borrower authorized to sign the Loan Documents to
which it is a party to be delivered hereunder;
(vii Copies of (A) the Certificate of
Incorporation of the Borrower and each amendment
thereto and (B) the By-Laws of the Borrower and
each amendment thereto, certified by the Secretary
or an Assistant Secretary of the Borrower as being
true, complete and correct as of the Closing Date;
(viii Original certificates or other
evidence
from the Secretary of State or other appropriate
authority of the State of Delaware and of each
jurisdiction where the Borrower is qualified to do
business, evidencing the good standing of the
Borrower in the State of Delaware and such other
jurisdictions;
(ix A copy of the resolutions of each
Guarantor authorizing the execution, delivery and
performance of the Loan Documents to which it is a
party and the granting of the security interest
contemplated under the Security Agreement to which
it is a party, certified by the Secretary or an
Assistant Secretary of such Guarantor as of the
Closing Date, which certificate shall state that
the resolutions thereby certified have not been
amended, modified, revoked or rescinded as of the
date of such certificate;
(x A certificate of the Secretary or an
Assistant Secretary of each Guarantor certifying
the names and the signatures of the officers of
such Guarantor authorized to sign the Loan
Documents to which it is a party to be delivered
hereunder;
(xi Copies of (A) the Certificate of
Incorporation of each Guarantor and each amendment
thereto and (B) the By-Laws of each Guarantor and
each amendment thereto, certified by the Secretary
or an Assistant Secretary of such Guarantor as
being true, complete and correct as of the Closing
Date;
(xii Original certificates or other
evidence
from the Secretary of State or other appropriate
authority of the State of Delaware and of each
jurisdiction where each Guarantor is qualified to
do business, evidencing the good standing of such
Guarantor in the State of Delaware and such other
jurisdictions;
(xiii The Lender shall have received
copies
of each III Loan Agreement existing on the Closing
Date and listed on Schedule I hereto and all
Partnership Agreements, if any, and Pooling and
Servicing Agreements referred to therein and all
amendments thereto (all in form and substance
satisfactory to the Lender and its counsel)
certified by the Secretary or an Assistant
Secretary of each Guarantor, respectively, as
being
true, complete and correct as of the Closing Date;
(xiv A certificate of a Responsible Officer
of each Loan Party certifying that there is no
default under any credit agreement to which such
Loan Party is a party;
(xv UCC, judgment and tax lien search
reports for the Borrower and the Guarantors in
form
and substance satisfactory to the Lender and its
counsel;
(xvi) III Finance shall have executed and
delivered the Intercreditor Agreement;
(xvii Opinion of counsel to the
Borrower and
the Guarantors substantially in the form of
Exhibits D-1 and D-2 hereto; and
(xviii Such other documents and
instruments as
the Lender or its counsel shall reasonably
request.
(b) Representation and Warranties. Each of the
representations and warranties made by or on behalf of
each Loan Party herein or in any other Loan Document
shall be true and correct in all respects on and as of
the Closing Date.
(c) No Default or Event of Default. No Default
or
Event of Default shall have occurred and be continuing
on
and as of the Closing Date.
(d) Fees. On the Closing Date, the Borrower
shall
have paid all fees and expenses incurred by the Lender
in
connection herewith including, without limitation, fees
and expenses of counsel to the Lender and such other
categories of fees and expenses as Lender shall advise
the Borrower at least two (2) Business Days prior to
the
Closing Date.
(e) Due Diligence. The Lender shall have
completed
to its satisfaction its due diligence review of each
Loan
Party and its respective management, controlling
stockholders, systems, underwriting, servicing and
collection operations, static pool performance and its
loan files.
(f) No Material Adverse Change. No Material
Adverse Change shall have occurred.
(g) Servicing Audit Report. The Lender shall
have
received a copy of the most recent servicing audit
report
prepared by Deloitte & Touche LLP with respect to the
servicing of the Portfolio Contracts.
Section 4.02. Conditions Precedent to All Loans.
The Lender's obligation to make any Loan hereunder is
subject to the following conditions precedent and the
giving of a Notice of Borrowing by the Borrower
pursuant
to Section 2.03 and the acceptance of the proceeds of
any
Borrowing by the Borrower shall be deemed certification
by the Borrower that the following conditions shall
have
been met:
(a) Representation and Warranties. Each of the
representations and warranties made by or on behalf of
the Borrower herein or in any other Loan Document shall
be true and correct in all respects on and as of the
Borrowing Date, before and after giving effect to the
Borrowing to be made on such date and the application
of
the proceeds therefrom, as though made on and as of
such
date.
(b) No Default or Event of Default. After giving
effect to such Borrowing and the application of
proceeds
therefrom, no Default or Event of Default shall have
occurred and be continuing on and as of such Borrowing
Date.
(c) No Violation. The making of the Loans on
such
Borrowing Date will not violate any Requirement of Law
applicable to the Lender.
(d) Collateral Value Deficiency. After giving
effect to such Borrowing, no Collateral Value
Deficiency
will exist.
(e) Number of Borrowings. Except as otherwise
provided in Section 2.01 hereof, no more than four (4)
Borrowing shall have occurred under this Agreement.
ARTICLE V. REPRESENTATIONS AND
WARRANTIES
In order to induce the Lender to enter into this
Agreement and to make the Loans hereunder, each Loan
Party hereby represents and warrants to the Lender as
follows:
Section 5.01. Existence; Conduct of Business.
Each
Loan Party, and each of its respective Subsidiaries, is
a duly organized and valid existing corporation in good
standing under the laws of the State of its
incorporation
and is duly qualified to do business and in good
standing
in each jurisdiction where the conduct of its business
or
the ownership, lease or operation of its property
requires such qualification, except where the failure
to
be so qualified could not have a Material Adverse
Effect.
Each Loan Party and each of its respective Subsidiaries
has all requisite power and authority to own and
operate
its property, to lease its property it operates as
lessee
and to conduct and transact the business in which it is
engaged.
Section 5.02. Corporate Power and Authority.
Each
Loan Party has all requisite corporate power and
authority to execute and deliver the Loan Documents to
which it is a party and to carry out the terms and
provisions thereof on its part to be performed and each
Loan Party has taken or caused to be taken all
necessary
corporate action to authorize the execution, delivery
and
performance by such Loan Party of the Loan Documents to
which it is a party and in the case of the Borrower,
the
Borrowings contemplated hereunder, and in the case of
the
Guarantors the granting of the security interest
contemplated by the Security Agreement to which it is a
party. Each Loan Document to which it is a party
constitutes a legal, valid and binding obligation of
each
Loan Party, and is enforceable against such Loan Party
in
accordance with its respective terms, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of
creditors' rights generally, and by general equitable
principles regardless of whether enforcement is sought
in
a proceeding in equity or at law.
Section 5.03. No Violation. Neither the
execution
and delivery of the Loan Documents to which it is a
party
nor the consummation of the transactions contemplated
thereby, nor compliance with the provisions thereof
will
violate any provision of the Certificate of
Incorporation
or By-Laws of any Loan Party or will violate any
Requirement of Law or conflict with, or result in the
breach of, or constitute a default under, any
indenture,
mortgage, deed of trust, agreement or other instrument
or
contractual obligation to which any Loan Party is a
party
or by which it or any of its property may be bound or
affected or result in the creation or imposition of any
Lien upon any property of any Loan Party thereunder,
except, as contemplated by the Security Agreements.
Section 5.04. Approvals, Authorizations,
Consents,
etc. All approvals, authorizations, consents, orders
or
other actions or registrations with or notices to any
Person or Governmental Authority required to be
obtained,
made or given by any Loan Party in connection with the
execution, delivery and performance of the Loan
Documents
to which it is a party and the consummation of the
transactions contemplated thereby have been duly and
properly obtained, made or given by such Loan Party and
are in full force and effect.
Section 5.05. No Litigation. Except as otherwise
disclosed to the Lender in writing on or before the
Closing Date, there are no pending or, to such Loan
Party's knowledge, threatened actions, suits or other
proceedings by or against any Loan Party or any of its
respective Subsidiaries before any court, arbitrator or
other Governmental Authority which challenge or affect
the legality, validity or enforceability of any Loan
Document or the transactions contemplated thereby or
which individually or in the aggregate could have a
Material Adverse Effect.
Section 5.06. Tax Liability. Each Loan Party and
each of its respective Subsidiaries has filed or caused
to be filed all tax returns (Federal, State and local)
(or requests for extension which are routinely granted)
which are required to be filed and, except as otherwise
permitted by Section 6.04 hereof, has paid all taxes
including those which have become due pursuant to such
returns or pursuant to any assessments made against it
or
any of its properties, as the case may be, and all
other
material taxes or other charges imposed on it or any of
its properties by any Governmental Authority; and no
tax
Liens have been filed.
Section 5.07. Regulation G. No proceeds of any
Loan will be used, directly or indirectly, by the
Borrower for the purpose of purchasing or carrying any
Margin Stock or for the purpose of reducing or retiring
any Indebtedness which was originally incurred to
purchase or carry Margin Stock or for any other purpose
which might cause any Loan to be a "purpose credit"
within the meaning of Regulation G of the Board.
Section 5.08. Permits, Licenses, Approvals,
Consents, Compliance with Requirements of Law, etc.
Each Loan Party and each of its respective Subsidiaries
has obtained any and all permits, licenses, approvals
and
consents of any Governmental Authority as may be
required
to conduct or transact its business or own, lease or
operate its properties and is in material compliance
with
all applicable Requirements of Law.
Section 5.09. Financial Statements; Material
Adverse Change. (a) All financial statements of each
Loan Party delivered to the Lender fully and accurately
present the financial position of such Loan Party, as
of
the respective dates thereof in accordance with GAAP.
(b) Since June 30, 1995, there has been no
Material
Adverse Change.
Section 5.10. The Investment Company Act, Etc..
No
Loan Party is, or is directly or indirectly, controlled
by any Person which is, an "investment company" within
the meaning of the Investment Company Act of 1940, as
amended. No Loan Party is subject to regulation under
any Requirement of Law (other than Regulation X of the
Board) which limits its ability to incur Indebtedness.
Section 5.11. The Security Agreements. Each of
the
representations and warranties of each Guarantor
contained in each Security Agreement is true and
correct.
Section 5.12. Ownership of Properties; Insurance.
(a) Each Loan Party has good and marketable title to
any
and all of its respective properties and assets free
and
clear of Liens, except as contemplated by the Security
Agreements and Permitted Liens.
(b) Set forth on Schedule II hereto is a true and
accurate list of all insurance maintained by each Loan
Party. Each such policy is in full force and effect
and
all premiums due and owing thereon are current.
Section 5.13. Ownership of the Guarantors. The
Borrower owns beneficially and of record all of the
issued and outstanding Capital Stock of Aegis Consumer
Finance and Aegis Consumer Finance owns beneficially
and
of record all of the issued and outstanding shares of
the
Capital Stock of Aegis Auto Finance in each case free
and
clear of all Liens.
Section 5.14. Full Disclosure. No representation
or warranty made by or on behalf of any Loan Party
contained in any Loan Document and no information
(written or oral), certificate, financial statement or
report furnished or to be furnished by or on behalf of
any Loan Party thereunder or in connection with the
transactions contemplated thereby, contains or will
contain an untrue statement of a material fact, or,
omits
or will omit to state any material fact (including
without limitation, whether any Loan Party or any of
its
respective Subsidiaries or any of their respective
officers or directors (past or present) is (or during
the
last five (5) years has been) under civil or criminal
investigation by any Governmental Authority or is under
indictment by any Governmental Authority) necessary to
make the statements herein or therein contained, in
light
of the circumstances in which made, not misleading.
Section 5.15. Intellectual Property. Each Loan
Party and each of its respective Subsidiaries owns, or
is
licensed to use, all trademarks, trade names,
copyrights,
technology, know-how and processes necessary for the
conduct of its business as currently conducted (the
"Intellectual Property") except for those the failure
to
own or license which could not have a Material Adverse
Effect. No claim has been asserted and is pending by
any
Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness
of
any such Intellectual Property, nor does any Loan Party
know of any valid basis for any such claim. The use of
such Intellectual Property by each Loan Party or its
respective Subsidiaries does not infringe on the rights
of any Person, except for such claims and infringements
that, in the aggregate, could not have a Material
Adverse
Effect.
Section 5.16. ERISA. Except as set forth on
Schedule III hereto, no Loan Party nor any of its
respective Subsidiaries maintains any Plans, and each
Loan Party agrees to notify the Lender in advance of
forming any Plans. No Loan Party nor any Commonly
Controlled Entity has any obligations or liabilities
with
respect to any employee pension benefit plans or
Multiemployer Plans, nor have any such Persons had any
obligations or liabilities with respect to any such
Plans
during the five-year period prior to the date this
representation is made or deemed made. Each Loan Party
will give notice if at any time it or any Commonly
Controlled Entity has any obligations or liabilities
with
respect to any employee pension benefit plan or
Multiemployer Plan. All Plans maintained by any Loan
Party or any Commonly Controlled Entity are in
substantial compliance with all applicable laws
(including ERISA). No Loan Party is an employer under
any Multiemployer Plan.
Section 5.17. Subsidiaries. The Persons listed
on
Schedule IV constitute all the principal operating
Subsidiaries of each Loan Party at the date hereof.
Schedule IV sets forth the name, type of entity and
jurisdiction of organization of each such Subsidiary,
the
amount of authorized, and issued and outstanding
Capital
Stock of each such Subsidiary, and the holder or
holders
of such issued and outstanding Capital Stock of each
such
Subsidiary, in each case as of the date hereof.
Section 5.18. III Loan Agreements. Copies of
each
of the III Loan Agreements, Partnership Agreements, if
applicable, and Pooling and Servicing Agreements
delivered to the Lender are true, accurate and complete
and no "Default" or "Event of Default" (as defined in
each III Loan Agreement) has occurred and is
continuing.
ARTICLE VI. AFFIRMATIVE COVENANTS
Until all of the Obligations have been paid in
full,
the Commitment has been terminated and this Agreement
has
been terminated:
Section 6.01. Financial Statements and Other
Information. Each Loan Party shall furnish to the
Lender:
(a) as soon as available, but in any event within
ninety (90) days after the end of each fiscal year,
sixty
(60) days after the end of each fiscal quarter and
forty-
five (45) days after the end of each fiscal month of
such
Loan Party, occurring during the term of this
Agreement,
a copy of the balance sheet of such Loan Party, as at
the
end of such fiscal year, fiscal quarter or fiscal
month,
as applicable, and the related statements of income,
cash
flow and changes in stockholders equity (for the
year-end
statements only) for such Loan Party, for such fiscal
period, in each case setting forth in comparative form
the corresponding figures for the previous year,
accompanied by all relevant notes and, in the case of
its
fiscal year-end balance sheet, an opinion, without a
going concern or like qualification or qualification
arising out of the scope of the audit, by independent
certified public accountants of nationally recognized
standing as fairly presenting the financial condition
and
results of operation of such Loan Party;
(b) concurrently with the delivery of the
financial
statements referred to in Section 6.01(a) above a
certificate of a Responsible Officer of such Loan Party
that such financial statements were prepared in
accordance with GAAP (except that with respect to
monthly
and quarterly financial statements, pursuant to interim
accounting disclosure rules and regulations, certain
information and footnote disclosures normally included
in
financial statements prepared in accordance with GAAP
will be condensed or omitted) and that, to the best of
such officer's knowledge after due inquiry, such Loan
Party, during such period has observed or performed all
of its covenants and other agreements, and satisfied
every condition, contained in the Loan Documents to be
observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or
Event
of Default, except as specified in such certificate,
which certificate shall also demonstrate in reasonable
detail the calculations used in determining compliance
with Sections 7.03, 7.04 and 7.05 hereof;
(c) promptly upon receipt thereof, copies of all
reports (including, without limitation management
letters), if any, submitted to any Loan Party by its
auditors, in connection with each audit or review of
its
books by such auditors;
(d) promptly, and in any event no later than
three
(3) Business Days, after the commencement thereof or
any
adverse development with respect thereto, written
notice
of any actions, suits or proceedings (including
arbitrations) threatened or pending by or against any
Loan Party or any of its respective Subsidiaries before
any court, arbitrator or other Governmental Authority
which, individually or in the aggregate, could have a
Material Adverse Effect;
(e) promptly, upon the issuance thereof, copies
of
all notices, reports and registration statements, if
any,
which any Loan Party or any of its respective
Subsidiaries files with or receives from, as
applicable,
the Securities and Exchange Commission or other
Governmental Authority;
(f) promptly upon completion thereof, a copy of
each servicing audit report prepared by independent
certified public accountants of nationally recognized
standing with respect to the servicing of the Portfolio
Contracts; and
(g) with reasonable promptness, such other
information respecting the business, operations,
properties or condition (financial or otherwise) or
prospects of each Loan Party and its respective
Subsidiaries or the Collateral as the Lender may
reason-
ably request from time to time.
Section 6.02. Compliance with Laws, etc. Each
Loan
Party shall, and shall cause each of its respective
Subsidiaries to, comply (i) in all material respects
with
all Requirements of Law and any change therein or in
the
application, administration or interpretation thereof
(including, without limitation any request, directive,
guideline or policy, whether or not having the force of
law) by any Governmental Authority charged with the
administration or interpretation thereof; and (ii) with
all indentures, mortgages, deeds of trust, agreements,
or
other instruments or contractual obligations to which
it
is a party or by which it or any of its properties may
be
bound or affected, individually or in the aggregate,
the
failure to comply therewith could have a Material
Adverse
Effect.
Section 6.03. Preservation of Corporate
Existence;
Conduct of Business. Each Loan Party shall, and shall
cause each of its respective Subsidiaries to, preserve
and maintain its corporate existence, rights,
franchises
and privileges in the jurisdiction of its
incorporation,
and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the
failure to preserve and maintain such qualification
could
have a Material Adverse Effect and continue to engage
in
the same type of business in which it is engaged on the
Closing Date.
Section 6.04. Payment of Taxes and Claims, etc.
Each Loan Party shall, and shall cause each of its
respective Subsidiaries to, pay, when due (after giving
effect to any extensions), (i) all taxes, assessments
and
governmental charges imposed upon it or upon any of its
properties and (ii) all claims (including without
limitation claims for labor, materials, supplies or
services) which could, if unpaid, individually or in
the
aggregate, have a Material Adverse Effect or become a
Lien upon its respective properties.
Section 6.05. Keeping of Books, Visitation,
Inspection, etc. (a) Each Loan Party shall, and
shall
cause each of its respective Subsidiaries to, keep
proper
books of record and account, containing complete and
accurate entries of all financial and business
transactions relating to the business, operations,
properties or condition (financial or otherwise) of
such
Loan Party in conformity with GAAP and all Requirements
of Law.
(b) Each Loan Party shall, and shall cause each
of
its respective Subsidiaries to, permit any
representative
of the Lender to visit and inspect any of the
properties
of such Loan Party and each such Subsidiary to examine
the books and records of such Loan Party and each of
its
Subsidiaries and to make copies and take extracts
therefrom, and to discuss the business, operations,
properties, condition (financial or otherwise) or
prospects of such Loan Party and each such Subsidiary
or
any of the Collateral with the officers and independent
public accountants thereof and as often as the Lender
may
reasonably request, and so long as no Default or Event
of
Default shall have occurred and be continuing, all at
such reasonable times during normal business hours upon
reasonable notice.
Section 6.06. Pay Obligations. Each Loan Party
shall, and shall cause each of its respective
Subsidiaries to, pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as
the case may be, all obligations under or pursuant to
all
its material obligations, except when the amount or
validity thereof is currently being contested in good
faith by appropriate proceedings and such Loan Party or
such Subsidiary has established adequate reserves in
accordance with GAAP with respect thereto and no Liens
in
respect thereof have been filed.
Section 6.07. Notice of Default, etc. Each Loan
Party shall promptly, and in any event within two (2)
Business Days, after such Loan Party has knowledge
thereof, notify the Lender in writing of (i) the
occurrence of any Default or Event of Default, or (ii)
any default, or event, condition or occurrence which
with
notice or lapse of time, or both, would constitute a
default by any party thereto under any indenture,
mortgage, deed of trust, agreement or other instrument
or
contractual obligation to which it is a party or by
which
any of its properties may be bound or affected, or any
other event or occurrence which in any such case
individually or in the aggregate could have a Material
Adverse Effect.
Section 6.08. Notice of Material Adverse Change;
Material Adverse Effect. Each Loan Party shall
promptly,
and in any event within two (2) Business Days, after
such
Loan Party becomes, or reasonably should have become,
aware thereof, give the Lender notice in writing of the
occurrence of any Material Adverse Change, and of the
occurrence of any event or condition that may have a
Material Adverse Effect.
Section 6.09. Further Assurances. At its sole
cost
and without expense to the Lender, on demand, each Loan
party shall do, execute, acknowledge and deliver all
and
every such further acts, deeds, conveyances,
assignments,
notices of assignment, transfers and assurances as the
Lender shall from time to time reasonably require for
better assuring, conveying, assigning, transferring and
confirming unto the Lender the property and rights
pledged or assigned or intended now or hereafter so to
be, or which any Loan Party may be or may hereafter
become bound to convey, pledge or assign to the Lender,
or for carrying out the intention or facilitating the
performance of the terms of this Agreement or any of
the
other Loan Documents, or for filing, registering or
recording of any Security Agreement.
Section 6.10. Monthly Reporting Requirements.
The
Borrower shall deliver to the Lender no later than the
twentieth (20th) calendar day of each calendar month
during the term hereof, a Portfolio Contracts
Certificate
signed by a Responsible Officer of the Borrower stating
that as of the last day of the immediately preceding
calendar month, no Portfolio Event has occurred or if a
Portfolio Event occurred, a statement to that effect
and
a description of the nature thereof, which certificate
shall demonstrate in reasonable detail the calculations
used in determining whether any Portfolio Event has
occurred and attaching thereto true, complete and
correct
copies of its "Repossession, Inventory, Claims Pending,
Gross and Net Loss Experience" and "Non-Performing
Receivables" and "Historical Bucket" management
reports,
in each case in the form attached to Exhibit E hereto.
Section 6.11. Insurance. Each Loan Party shall,
and shall cause each of its respective Subsidiaries to,
maintain the insurance set forth in Schedule II hereto
and shall maintain, and shall cause each of its
Subsidiaries to maintain, such other insurance as is
customary for a Person engaged in a similar business
and
each Loan Party shall, and shall cause each of its
respective Subsidiaries to, pay all insurance premiums
payable for such insurance coverage on or before the
due
date therefor. Each Loan Party shall upon request of
the
Lender deliver a copy of the policies of such insurance
to the Lender, together with evidence of payment of all
premiums therefor.
Section 6.12. III Loan Agreements, Etc. (a) Each
Loan Party shall promptly and in any event within one
(1)
Business Day after receipt thereof deliver to the
Lender
a copy of all notices, demands and other communications
received by such Loan Party from III Finance under or
in
connection with any III Loan Agreement to which it is a
party.
(b) Each Loan Party shall provide to the Lender a
copy of each notice, certificate or other writing
delivered to III Finance under or in connection with
any
III Loan Agreement to which it is a party
simultaneously
with the delivery thereof to III Finance.
(c) Each Loan Party agrees that it will not
amend,
supplement or otherwise modify any III Loan Agreement
without the prior written consent of the Lender.
(d) Each Loan Party shall provide the Lender at
least ten (10) Business Days' prior written notice of
its
intention to enter into any additional III Loan
Agreement, which notice shall include a copy of such
additional III Loan Agreement.
ARTICLE VII. NEGATIVE COVENANTS
Until all of the Obligations have been paid in
full,
the Commitment has been terminated and this Agreement
has
been terminated:
Section 7.01. Liens and Other Interests. No
Guarantor will sell, pledge, assign or transfer to any
other Person, or grant, create, incur, assume or suffer
to exist any Lien or any other interest in, any of its
properties or assets including, without limitation, any
option to buy or right to receive income with respect
to
the Collateral, except as contemplated by the Security
Agreement to which it is a party and as contemplated by
the III Loan Agreements.
Section 7.02. Merger or Consolidation. No Loan
Party will, sell, pledge, assign or transfer to any
other
Person, all or substantially all of its properties or
assets, or merge or consolidate with or acquire all or
substantially all of the assets or properties of, any
other Person; provided that so long as no Default or
Event of Default has occurred and is continuing or will
result therefrom, any Loan Party may merge or
consolidate
with or acquire all or substantially all of the assets
of
another Person, provided that in the case of any merger
or consolidation, such Loan Party is the surviving
corporation and such merger or consolidation does not
have an adverse effect on the condition (financial or
otherwise) of such Loan Party.
Section 7.03. Net Worth of the Borrower. The
Borrower shall not permit its Net Worth at any time to
be
less than the greater of (i) $15,000,000; and (ii)
eighty-five percent (85%) of its Net Worth as at the
end
of the prior fiscal year.
Section 7.04. Total Indebtedness to Net Worth of
the Borrower. The Borrower shall not permit the ratio
of
its total Indebtedness (excluding Indebtedness related
to
structured receivables transactions) to Net Worth to
exceed 13:1. The Borrower shall advise the Lender of
the
incurrence or assumption of any Indebtedness, except
any
Indebtedness incurred in the ordinary course of
business.
Section 7.05. Dividends, etc. No Loan Party
shall
pay any dividends, whether in cash or property (other
than through the issuance of the shares of its Capital
Stock), on or redeem, repurchase or otherwise acquire
any
shares of its Capital Stock (other than in the case of
the Borrower, redemptions of the Series C Preferred
Stock
Redemption); provided that so long as no Default or
Event
of Default shall have occurred and be continuing or
would
result therefrom, Aegis Auto Finance may pay cash
dividends to Aegis Consumer Finance and Aegis Consumer
Finance may pay cash dividends to the Borrower and the
Borrower may pay cash dividends on its Capital Stock
from
funds legally available therefor in an aggregate amount
not to exceed the lesser of (x) $1,000,000 and (y)
fifty
percent (50%) of its net income as determined in
accordance with GAAP for the prior fiscal year.
Section 7.06. Transactions with Affiliates. No
Loan Party will, or will permit any of its respective
Subsidiaries to, enter into, or be a party to, any
transaction with any Affiliate thereof, except, in the
ordinary course of business, and upon fair and
reasonable
terms which are no less favorable to such Loan Party or
such Subsidiary than would be obtained in a comparable
arm's length transaction with a Person not an
Affiliate;
provided that for the purposes of this Section 7.06 no
Loan Party shall be deemed an Affiliate of any other
Loan
Party.
ARTICLE VIII. EVENTS OF DEFAULT
Section 8.01. Events of Default. If any one or
more of the following events (each an "Event of
Default")
shall occur:
(a) the Borrower shall fail to pay any
principal of any Loan when due, whether at
maturity, by required prepayment or otherwise; or
the Borrower shall fail to pay any interest on any
Loan or any other Obligation within two (2)
Business Days after the same shall become due and
payable (whether at maturity, by acceleration or
otherwise); or either Guarantor shall fail to pay
any Obligation in accordance with Section 9.01
hereof when due; or
(b) Any Loan Party shall fail to perform or
observe any covenant, agreement or provision
contained in Sections 6.07(i) or 6.12 or in
Article
VII of this Agreement on its part to be performed;
or any Loan Party shall fail to perform or observe
any covenants or agreement contained in any other
Loan Document to which it is a party; or any Loan
Party shall fail to perform any covenant,
agreement
or provision contained in Sections 6.07(ii), 6.08
through and including 6.11 of this Agreement and
such default shall continue unremedied for a
period
of ten (10) or more days; or
(c) Any Loan Party shall fail to perform or
observe any other covenant or agreement contained
herein (other than as described in subsections (a)
and (b) above) and such default shall continue
unremedied for a period of fifteen (15) or more
Business Days; or
(d) Any Loan Party or any of its respective
Subsidiaries shall fail to pay any principal or
interest on any Indebtedness (other than in the
case of the Borrower the Loans) which individually
or in the aggregate exceeds $100,000; or any other
event shall occur or condition shall exist under
any agreement or instrument under or pursuant to
which any such Indebtedness of any Loan Party or
any of its respective Subsidiaries may have been
issued, created, assumed, guaranteed or secured by
any Loan Party or any of its respective
Subsidiaries and any such payment or other default
shall continue for more than the grace period, if
any, therein specified, if the effect of such
event
or condition is to accelerate, or permit the
acceleration of, the maturity of such
Indebtedness;
or any such Indebtedness shall be declared due and
payable prior to the stated maturity thereof; or
(e) any representation or warranty made or
deemed made by or on behalf of any Loan Party in
any Loan Document to which it is a party shall
prove to have been incorrect in any material
respect when made or deemed made; or
(f) if any Loan Party or any of its
respective Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial
part of its property, (ii) admit in writing its
inability, or be generally unable, to pay its
debts
as they become due, (iii) make a general
assignment
for the benefit of creditors, (iv) commence a
voluntary case under the federal bankruptcy laws
(as now or hereafter in effect), (v) be
adjudicated
a bankrupt or insolvent, (vi) file a petition
seeking to take advantage of any other law
providing for the relief of debtors, or (vii) take
any corporate action for the purpose of effecting
any the foregoing; or
(g) a case or other proceeding shall be
commenced without the application or consent of
any
Loan Party or any of its respective Subsidiaries,
in any court of competent jurisdiction, seeking
the
liquidation or readjustment of debts, the
appointment of a trustee, receiver, custodian or
liquidator of such Loan Party or any of its
respective Subsidiaries or of all or any
substantial part of its property, or any similar
action with respect to any Loan Party or any of
its
Subsidiaries under the federal bankruptcy laws (as
now or hereafter in effect) or any other laws
relating to bankruptcy, insolvency,
reorganization,
winding up or composition or adjustment of debt,
and such case or proceeding shall continue
undismissed, or unstayed and in effect, for a
period of sixty (60) days, or an order for relief
against any Loan Party or any of its Subsidiaries
shall be entered in an involuntary case under such
bankruptcy law; or
(h) (i) any Person shall engage in any
"prohibited transaction" (as defined in Section
406
of ERISA or Section 4975 of the Code) involving
any
Plan, (ii) any "accumulated funding deficiency"
(as
defined in Section 302 or ERISA), whether or not
waived, shall exist with respect to any Plan or
any
Lien in favor of the PBGC or a Plan shall arise on
the assets of any Loan Party or any Commonly
Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall
commence to have a trustee appointed, or a trustee
shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event
or
commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the
Lender, likely to result in the termination of
such
Plan for purposes of Title IV of ERISA, (iv) any
Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Loan Party or any
Commonly Controlled Entity shall, or in the
reasonable opinion of the Lender is likely to,
incur any liability in connection with a
withdrawal
from, or the insolvency or reorganization of, a
Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a
Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all
other such events or conditions, if any, could
have
a Material Adverse Effect; or
(i) a final judgment(s) or order(s) for the
payment of money shall be rendered against any
Loan
Party or any of its respective Subsidiaries which
individually or in the aggregate exceeds $100,000
and such judgment or order shall continue
unsatisfied and in effect for a period of thirty
(30) consecutive days unless such judgment or
order
shall have been vacated, released, fully bonded or
stayed; or
(j) for any reason the Lender shall fail to
have a valid, perfected security interest in any
of
the Collateral, subject to no other Liens other
than Liens in favor of III Finance, or any Loan
Document shall for any reason cease to be in full
force and effect or any Loan Party or any other
Person shall so assert in writing; or
(k) a Portfolio Event shall occur; or
(l) Aegis Consumer Finance ceases to be a
direct wholly-owned Subsidiary of the Borrower or
Aegis Auto Finance ceases to be a direct wholly-
owned Subsidiary of Aegis Consumer Finance in each
case free and clear of all Liens; or
(m) any Loan Party or any Affiliate thereof
shall default under any agreement with, or other
contractual obligation to, the Lender or any
Affiliate of the Lender; or
(n) III Finance shall default on any of its
covenants or agreements set forth in the
Intercreditor Agreement; or
(o) a Material Adverse Change shall occur;
then, and in any such event, (A) if such event is an
Event of Default specified in paragraphs (f) or (g)
above
with respect to any Loan Party, the Commitment
hereunder
shall immediately terminate and the outstanding
principal
amount of the Loans, together with accrued and unpaid
interest thereon, and all other Obligations shall
immediately become due and payable without notice of
any
kind, and (B) if such event is any other Event of
Default
and if such Event of Default shall be continuing, the
Lender may, by notice of default to the Borrower,
terminate the Commitment hereunder, and/or declare the
outstanding principal amount of the Loans, together
with
accrued and unpaid interest thereon, and all other
Obligations to be due and payable forthwith, whereupon
the same shall immediately become due and payable,
and/or
pursue any of its other rights, remedies, power and
privileges under the Loan Documents or otherwise.
Except
as expressly provided above in this Section 8.01,
diligence, presentment, protest, demand for payment and
notice of default or nonpayment and all other notices
of
any kind are hereby expressly waived by the Borrower.
ARTICLE IX. GUARANTEE
Section 9.01. Guarantee. (a) Each Guarantor
hereby jointly and severally unconditionally and
irrevocably guarantees to the Lender and its respective
successors, indorsees, transferees and assigns, the
due,
punctual and complete payment and performance by the
Borrower when and as due, whether at the stated
maturity,
by acceleration, upon one or more dates set for
repayment
or prepayment or otherwise of the Obligations.
(b) It is the intention of all parties
hereto
that the guarantee set forth in this Article IX not
constitute a fraudulent transfer or conveyance for the
purposes of any applicable bankruptcy, fraudulent
transfer or conveyance law or any other similar law.
To
effectuate the foregoing intention, the Lender and the
Guarantor agree that the obligations of each Guarantor
under the guarantee set forth in this Article IX shall
be
limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent
and fixed obligations of such Guarantor that are
relevant
under such laws, and after giving effect to any
collections from rights to receive contribution from or
payments made by or on behalf of the other Guarantor in
respect of such other Guarantor, the obligations of
such
Guarantor under the guarantee set forth in this Article
IX would not constitute a fraudulent transfer or
conveyance.
Section 9.02. No Subrogation. Notwithstanding
any
payment or payments made by a Guarantor hereunder or
any
setoff or application of funds of any Guarantor by the
Lender, no Guarantor shall be entitled to be subrogated
to any of the rights of the Lender against the Borrower
or any collateral security or guarantee or right of
offset held by the Lender for the payment of the
Obligations, nor shall such Guarantor seek or be
entitled
to seek any contribution or reimbursement from the
Borrower in respect of payments made by such Guarantor
hereunder, until all amounts owing to the Lender by the
Borrower and the Guarantors on account of the
Obligations
are paid in full and the Commitment is terminated. If
any amount shall be paid to a Guarantor on account of
the
subrogation rights at any time when all of the
Obligations shall not have been paid in full and the
Commitment shall not have been terminated, the amount
shall be held by such Guarantor in trust for the
Lender,
segregated from other funds of such Guarantor, and
shall
forthwith upon receipt by such Guarantor, be turned
over
to the Lender in the exact form received by such
Guarantor (duly endorsed by such Guarantor to the
Lender,
if required), to be applied against the Obligations,
whether matured or unmatured, at the time and in the
order as the Lender may determine.
Section 9.03. Amendments, etc. with respect to
the
Obligations; Waiver of Rights. Each Guarantor shall
remain obligated hereunder notwithstanding that,
without
any reservation of rights against such Guarantor, and
without notice to or further assent by such Guarantor,
any demand for payment of any of the Obligations made
by
the Lender may be rescinded by the Lender, and any of
the
Obligations continued, and the Obligations, or the
liability of any other Person upon or for any part
thereof, or any collateral security or guarantee
therefor
or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived,
surrendered or released by the Lender, and this
Agreement, any other Loan Document, and any other
documents executed and delivered in connection
therewith
may be amended, modified, supplemented or terminated,
in
whole or in part, as the Lender may deem advisable from
time to time, and any collateral security, guarantee or
right of offset at any time held by the Lender for the
payment of the Obligations may be sold, exchanged,
waived, surrendered or released. The Lender shall have
no obligation to protect, secure, perfect or insure any
Lien at any time held by it as security for the
Obligations or for the guarantee set forth in this
Article IX or any property subject thereto. When
making
any demand hereunder against a Guarantor, the Lender
may,
but shall be under no obligation to, make a similar
demand on the Borrower or any other guarantor
(including,
without limitation, any other Guarantor), and any
release
of the Borrower or the other guarantor (including,
without limitation, any other Guarantor), shall not
relieve any of its obligations or liabilities
hereunder,
and shall not impair or affect the rights, remedies,
powers and privileges, express or implied, or as a
matter
of law, of the Lender against such Guarantor.
Section 9.04. Guarantee Absolute and
Unconditional.
Each Guarantor waives any and all notice of the
creation,
renewal, extension or accrual of any of the Obligations
and notice of or proof of reliance by the Lender upon
the
guarantee of such Guarantor set forth in this Article
IX
or acceptance of the guarantee of such Guarantor set
forth in this Article IX; the Obligations, and any of
them, shall conclusively be deemed to have been
created,
contracted or incurred, or renewed, extended, amended
or
waived, in reliance upon the guarantee of each
Guarantor
set forth in this Article IX; and all dealings between
the Borrower or the Guarantors, on the one hand, and
the
Lender, on the other, shall likewise be conclusively
presumed to have been had or consummated in reliance
upon
the guarantee of each Guarantor set forth in this
Article
IX. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or
nonpayment and all other notices of any kind to or upon
the Borrower or such Guarantor with respect to the
Obligations. The guarantee of each Guarantor set forth
in this Article IX shall be construed as a continuing,
absolute and unconditional guarantee of payment, and
not
of collection, and without regard to (a) the validity,
regularity or enforceability of this Agreement, any
other
Loan Document, any of the Obligations or any collateral
security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held
by
the Lender, (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which
may at any time be available to or be asserted by the
Borrower against the Lender, or (c) any other
circumstance whatsoever (with or without notice to or
knowledge of the Lender, the Borrower or any Guarantor)
which may or might in any manner or to any extent vary
the risk of such Guarantor or otherwise constitutes, or
might be construed to constitute, an equitable or legal
discharge of the Borrower for the Obligations, or of
such
Guarantor under the guarantee set forth in this Article
IX, in bankruptcy or in any other instance. When
pursuing its rights and remedies hereunder against a
Guarantor, the Lender may, but shall be under no
obligation to, pursue the rights, remedies, powers and
privileges as it may have against the Borrower or any
other Person or against any collateral security or
guarantee for the Obligations or any right of offset
with
respect thereto. Any failure by the Lender to pursue
the
other rights, remedies, powers or privileges or to
collect any payments from the Borrower or any other
Person or to realize upon any collateral security or
guarantee or to exercise any the right of offset, or
any
release of the Borrower or any the other Person or of
any
collateral security, guarantee or right of offset,
shall
not relieve a Guarantor of any liability hereunder, and
shall not impair or affect the rights, remedies, powers
or privileges, whether express, implied or available as
a matter of law, of the Lender against a Guarantor.
The
guarantee set forth in this Article IX shall remain in
full force and effect and be binding in accordance with
and to the extent of its terms upon each Guarantor and
its successors and permitted assigns, and shall inure
to
the benefit of the Lender, and its respective
successors,
indorsee, transferees and assigns, until all the
Obligations and the obligations of the Guarantors under
the guarantee set forth in this Article IX shall have
been satisfied by payment in full and the Commitment
shall have been terminated, notwithstanding that from
time to time while the Commitment is in effect during
the
term of this Agreement the Borrower may be free from
any
Obligations.
Section 9.05. Reinstatement. The guarantee set
forth in this Article IX shall continue to be
effective,
or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Obligations
is rescinded or must otherwise be restored or returned
by
the Lender for any reason whatsoever, including,
without
limitation, upon the insolvency, bankruptcy,
dissolution,
liquidation or reorganization of a Guarantor or the
Borrower or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or
similar officer for, any Loan Party or any substantial
party of its property, or otherwise, all as though the
payments had not been made.
Section 9.06. Payments. All payments by a
Guarantor under the guarantee set forth in this Article
IX shall be paid by such Guarantor without set-off or
counterclaim to the Lender at its office at 600
Steamboat
Road, Greenwich, Connecticut 06830 or to such other
location or account as the Lender may specify to the
Guarantors from time to time, in Federal or other
immediately available funds in lawful money of the
United
States by 1:00 p.m. (New York City time) on the due
date
therefor.
ARTICLE X. MISCELLANEOUS
Section 10.01. Notices. Except as otherwise
provided herein, all notices, requests and other
communications to any party hereunder or under the
other
Loan Documents shall be in writing (including telecopy
or
similar teletransmission or writing) and shall be
given,
to the parties hereto at the addresses set forth below:
if to the Borrower: The Aegis Consumer Funding
Group, Inc.
525 Washington Blvd.
Jersey City, New Jersey 07310
Attention: Joseph F. Battiato
Telephone: (201) 418-7337
Telecopy: (201) 418-7339
if to Aegis Consumer
Finance: Aegis Consumer Finance, Inc.
525 Washington Blvd.
Jersey City, New Jersey 07310
Attention: Joseph F. Battiato
Telephone: (201) 418-7337
Telecopy: (201) 418-7339
if to Aegis Auto
Finance: Aegis Auto Finance, Inc.
525 Washington
Blvd.
Jersey City, New Jersey 07310
Attention: Joseph F. Battiato
Telephone: (201) 418-7337
Telecopy: (201) 418-7339
if to the Lender: Greenwich Capital Financial
Products, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Attention: Sandra Fine
Rosenbaum
Telephone: (203) 622-5665
Telecopy: (203) 629-4640
or to such other address or telecopier number as such
party may hereafter specify by written notice to the
other parties hereto. Except as otherwise provided for
herein, each such notice, request or other
communication
shall be effective (i) if given by telecopier when
transmitted to the telecopy number specified in this
Section 10.01, (ii) if given by mail, 72 hours after
such
communication is deposited in the mails by certified
mail, return-receipt requested, postage prepaid,
addressed as aforesaid, or (iii) if given by any other
means (including without limitation by air courier),
when
delivered at the address specified in this Section
10.01;
provided that any notice required to be given under
Sections 2.03 or 3.09 hereof shall not be effective
until
actually received by the Lender.
Section 10.02. Amendments, Waivers, etc. None of
the Loan Documents or any terms thereof may be amended,
modified or otherwise supplemented except in writing
signed by the parties hereto. In the case of any
waiver
of a Default or Event of Default, any Default or Event
of
Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or
impair any right consequent thereon.
Section 10.03. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Lender in
exercising
any right, remedy, power or privilege under any Loan
Document shall operate as a waiver thereof, nor shall
any
single or partial exercise of, or any abandonment or
discontinuance of steps to enforce any right, remedy,
power or privilege under any Loan Document preclude any
other or further exercise thereof or the exercise of
any
other rights, remedies or privileges thereunder. The
rights, remedies, powers and privileges provided in the
Loan Documents are cumulative and may be exercised
singularly or concurrently and are not exclusive of any
other rights, remedies, powers or privileges provided
by
law.
Section 10.04. Payment of Expenses, Indemnity,
etc.
Each Loan Party jointly and severally agrees to:
(i) pay or reimburse the Lender on demand
for
all its out-of-pocket costs and expenses incurred
in connection with the development, preparation
and
execution of, and any amendment, modification or
supplement to, or any waiver under, any Loan
Document and any other document prepared in
connection therewith, and the consummation and
administration of the transactions contemplated
thereby, including without limitation the
reasonable fees and disbursements of counsel to
the
Lender;
(ii) pay on demand all reasonable costs and
expenses of the Lender, including without limita-
tion the reasonable fees and disbursements of
counsel to the Lender, in connection with the
occurrence or continuance of a Default or Event of
Default and the enforcement, collection,
protection
or preservation (whether through negotiations,
legal proceedings or otherwise) of this Agreement
or any other Loan Document, the Collateral, any
Obligation or any right, remedy, power or
privilege
of the Lender hereunder or under any other Loan
Document;
(iii) pay and hold the Lender harmless from
and against any and all present and future stamp,
excise, recording or other similar taxes or fees
payable in connection with the execution,
delivery,
recording and filing of any Loan Document and hold
the Lender harmless from and against any and all
liabilities with respect to or resulting from any
delay or omission to pay such taxes or fees; and
(iv) indemnify the Lender and its Affiliates
and each of their respective directors, officers,
employees and agents and hold each of them
harmless
from and against, any and all liabilities, losses,
damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements,
including without limitation the reasonable fees
and disbursement of counsel to the Lender and such
other parties, incurred by any of them in
connection with, arising out of or in any way
relating to any investigation, claim, litigation
or
other proceeding, pending or threatened (whether
or
not any of them is designated a party thereto), in
connection with, arising out of or in any way
related to this Agreement or any other Loan
Document or any of the transactions contemplated
herein or therein or any use of the proceeds of
any
Loan by the Borrower; provided that the Lender
shall not be entitled to any indemnification for
any of the foregoing resulting from its gross
negligence or willful misconduct as determined by
a
final court of competent jurisdiction.
If and to the extent that the indemnity obligations of
any Loan Party under this Section 10.04 may be
unenforceable for any reason, each Loan Party hereby
agree to make the maximum contribution to the payment
and
satisfaction of each of such indemnity obligations
which
is permissible under applicable law.
Section 10.05. Benefits of Agreement. (a) This
Agreement and the other Loan Documents to which it is a
party shall be binding upon and inure to the benefit of
each of the Loan Parties and the Lender and their
respective successors and assigns, except that no Loan
Party may assign or transfer any of its rights or
obligations under this Agreement or any other Loan
Document to which it is a party without the prior
written
consent of the Lender.
(b) The Lender may assign or transfer all or any
of
its rights or obligations under any Loan Document to
any
Affiliate of the Lender at any time without the prior
written consent of any Loan Party.
(c) The Lender may sell or grant participations
in
all or any of its rights and obligations under any Loan
Document from time to time to one or more commercial
banks or other entities upon such terms as the Lender
may
determine in its sole discretion without the prior
written consent of any Loan Party. Each Loan Party
agrees that to the extent permitted by applicable law,
each such participant shall be deemed to have the right
of setoff in respect of its participating interest in
the
Loans and the Note to the same extent as if the amount
of
its participating interest in the Loans and the Note
were
owing directly to it as "Lender" under this Agreement
or
the Note. The Borrower also agrees that each
participant
shall be entitled to all benefits of Sections 3.06,
3.07
and 10.04 hereof with respect to its participating
interest in the Loans and the Note. If the Lender
shall
sell or grant any such participation, each Loan Party
shall continue to deal solely with the Lender.
(d) Each Loan Party hereby authorizes the Lender
to
disclose any and all information regarding each Loan
Party and each of its respective Subsidiaries whether
received pursuant to the Loan Documents or otherwise to
any assignee or participant or any proposed assignee or
participant.
Section 10.06. Right of Setoff. If an Event of
Default shall have occurred and be continuing, the
Lender
is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and
apply any and all deposits and any and all indebtedness
or other amounts at any time owing by the Lender to or
for the credit or the account of any Loan Party against
any of and all the obligations of any Loan Party now or
hereafter existing under this Agreement or any other
Loan
Document held by the Lender, irrespective of whether or
not the Lender shall have made any demand under this
Agreement or such other Loan Document and although such
obligations may be unmatured. The rights of the Lender
under this Section 10.06 are in addition to other
rights
and remedies (including other rights of setoff) which
the
Lender may have.
Section 10.07. Survival of Agreement. All
covenants, agreements, representations and warranties
made by each Loan Party herein, in the other Loan
Documents to which it is a party and in the
certificates
or other instruments prepared or delivered in
connection
with or pursuant to this Agreement or any other Loan
Document shall be considered to have been relied upon
by
the Lender and shall survive the making by the Lender
of
the Loans, the execution and delivery to the Lender of
the Loan Documents regardless of any investigation made
by the Lender, and shall continue in full force and
effect as long as any Obligation is outstanding and so
long as the Commitment has not been terminated.
Without
prejudice to the survival of any other agreements
contained herein and the other Loan Documents, the
obligations under Sections 3.06, 3.07 and 10.04 hereof
shall survive payment in full of the Obligations and
termination of the Commitment and this Agreement.
Section 10.08. GOVERNING LAW. THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN
ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW
YORK, EXCEPT TO THE EXTENT THAT THE PERFECTION, AND THE
EFFECT OF PERFECTION OR NON-PERFECTION, OF THE SECURITY
INTEREST CONTEMPLATED UNDER THE SECURITY AGREEMENTS MAY
BE GOVERNED BY THE LAWS OF ANOTHER JURISDICTION.
Section 10.09. Counterparts. This Agreement may
be
executed in any number of counterparts and by the
different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed
an original, and all of which shall together constitute
one and the same agreement.
Section 10.10. Headings Descriptive. The headings
of the several articles and sections of this Agreement,
and the Table of Contents, are inserted for convenience
only and shall not in any way affect the meaning or
construction of any provisions of this Agreement.
Section 10.11. Severability. Any provision of
this
Agreement or any other Loan Document which is
prohibited,
unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the
extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining
provisions hereof or thereof or affecting the validity,
enforceability or legality of such provisions in any
other jurisdiction.
Section 10.12. Entire Agreement. This Agreement
and
the other Loan Documents constitute the entire
agreement
among the parties relative to the subject matter
hereof.
Any previous agreement among the parties with respect
to
the subject matter hereof is superseded by this
Agreement
and the other Loan Documents. Nothing in this
Agreement
or in the other Loan Documents, expressed or implied,
is
intended to confer upon any party other than the
parties
hereto and thereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement or the
other Loan Documents.
Section 10.13. Submission to Jurisdiction; Venue.
(a) Any legal action or proceeding against any Loan
Party with respect to this Agreement or any other Loan
Document to which it is a party may be brought in the
courts of the State of New York located in New York
County or of the United States for the Southern
District
of New York, and, by execution and delivery of this
Agreement, each Loan Party hereby irrevocably accepts
for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid
courts. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions
by
suit on the judgment or in any other manner provided by
law. Nothing herein shall affect the right of the
Lender
to commence legal proceedings or otherwise proceed
against any Loan Party in any other jurisdiction.
(b) Each Loan Party irrevocably consents to
service
of process in the manner provided for notices in
Section
10.01. Nothing in this Agreement will affect the right
of the Lender to serve process in any other manner
permitted by law.
(c) Each Loan Party irrevocably waives any
objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this
Agreement or any other Loan Document to which it is a
party in the courts referred to in clause (a) above and
hereby further irrevocably waives and agrees not to
plead
or claim in any such court that any such action or
proceeding brought in any such court has been brought
in
an inconvenient forum.
[Remainder of this page intentionally left
blank.]
Section 10.14. WAIVER OF JURY TRIAL. EACH OF THE
PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION ARISING
DIRECTLY OR INDIRECTLY UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, each of the parties hereto
have
caused this Agreement to be duly executed by their
respective officers thereunto duly authorized, as of
the
date first above written.
THE AEGIS CONSUMER FUNDING
GROUP, INC.
By:
Title:
AEGIS CONSUMER FINANCE, INC.
By:
Title:
AEGIS AUTO FINANCE, INC.
By:
Title:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By:
Title:
EXHIBIT 10.95.1
EXHIBIT A
[FORM OF NOTE]
$5,000,000 May 17,
1996
New York, New
York
FOR VALUE RECEIVED, THE AEGIS CONSUMER FUNDING
GROUP, INC., a Delaware corporation (the "Borrower"),
hereby unconditionally promises to pay the order of
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation (the "Lender"), at its office located at
600
Steamboat Road, Greenwich, Connecticut 06830 or to such
other location or account as the Lender shall specify
to
the Borrower from time to time, in Federal or other
immediately available funds in lawful money of the
United
States the principal amount of FIVE MILLION DOLLARS
($5,000,000) or, if less, the aggregate unpaid
principal
amount of the Loans made by the Lender to the Borrower
pursuant to the Credit Agreement, dated as of May 17,
1996 (such agreement as it may from time to time be
amended, supplemented or otherwise modified being the
"Agreement"), among the Borrower, Aegis Consumer
Finance., Inc., Aegis Auto Finance, Inc. and the
Lender,
on the Termination Date.
The Lender is hereby authorized to record the
dates
and amounts of all Loans made by the Lender to the
Borrower under the Agreement and the dates and amounts
of
all payments and prepayments of the principal amount of
the Loans on the Schedule (and each continuation
thereof)
attached to and forming a part of this Note. Such
recordation shall be conclusive in the absence of
manifest error; provided that the failure of the Lender
to make any such recordation shall not affect the
obligations of the Borrower under this Note or the
Agreement. All Loans made by the Lender under the
Agreement shall be recorded by the Lender on its books
and records.
The Borrower further promises to pay interest on
the
unpaid principal amount of all Loans made hereunder and
under the Agreement from time to time from the date
each
such Loan is made until payment in full thereof to the
Lender in like money at the rates and on the dates set
forth in the Agreement.
This Note is the Note referred to in, and is
entitled to the benefits, and is subject to the terms,
of
the Agreement, which Agreement, among other things,
contains provisions for acceleration of the maturity
hereof upon the happening of certain stated events and
also for prepayments on account of the principal hereof
prior to the maturity hereof upon the terms and
conditions specified therein.
Except as otherwise specified in the Agreement,
presentment, demand, protest and all other notices of
any
kind are hereby expressly waived by the Borrower.
Unless otherwise defined herein, defined terms
used
herein shall have the meanings ascribed thereto in the
Agreement.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH,
AND
BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
THE AEGIS CONSUMER FUNDING
GROUP, INC.
By:
Title:
SCHEDULE TO NOTE
DATE
OF
LOAN
AMOUNT
OF
LOAN
DATE OF
PAYMENT/
PREPAYMENT
AMOUNT OF
PAYMENT/
PREPAYMENT
INITIALED
BY
EXHIBIT
10.95.2
EXHIBIT C-1
[FORM OF AEGIS CONSUMER FINANCE SECURITY
AND PLEDGE
AGREEMENT]
SECURITY AND PLEDGE AGREEMENT, dated as of May 17,
1996, made by AEGIS CONSUMER FINANCE, INC., a Delaware
corporation (the "Pledgor") in favor of GREENWICH
CAPITAL
FINANCIAL PRODUCTS, INC., a Delaware corporation (the
"Pledgee").
W I T N E S E T H :
WHEREAS, pursuant to that certain Credit
Agreement,
dated as of May 17, 1996, among The Aegis Consumer
Funding Group, Inc., a Delaware corporation (the
"Borrower"), the Pledgor, Aegis Auto Finance, Inc. a
Delaware corporation ("Aegis Auto Finance") and the
Pledgee (the "Credit Agreement"), the Pledgee has
agreed
to make one or more Loans (as defined below) to the
Borrower; and
WHEREAS, the Pledgor is a wholly-owned Subsidiary
of
the Borrower; and
WHEREAS, the Pledgor is the legal and beneficial
owner of the limited partnership interests issued by
each
of the Partnerships; and
WHEREAS, the Pledgor has guaranteed the obligations
of the Borrower under the Credit Agreement and the
other
Loan Documents; and
WHEREAS, it is a condition precedent to the
obligation of the Pledgee to enter into the Credit
Agreement and to make the Loans thereunder to the
Borrower that the Pledgor shall have executed and
delivered this Agreement to the Pledgor;
NOW, THEREFORE, in consideration of the premises
and
to induce the Pledgee to enter into the Credit
Agreement
and to make the Loans thereunder to the Borrower, and
for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the
Pledgor
hereby agrees with the Pledgee as follows:
Section 1. Defined Terms. (a) Unless otherwise
defined herein, terms which are defined in the Credit
Agreement and used herein shall have the meanings given
to them in the Credit Agreement, as the context
requires,
and the following terms shall have the following
meanings:
"Additional Interests" shall mean as defined
in Section 5(a) of this Agreement.
"Agreement" shall mean this Security and
Pledge Agreement, as the same may be amended,
supplemented or otherwise modified from time to
time.
"Bailee" shall mean Norwest Bank Minnesota,
National Association, in its capacity as Bailee for
the Pledgee.
"Code" shall mean the Uniform Commercial Code
from time to time in effect in the State of New
York.
"Collateral" shall have the meaning set forth
on Section 2 hereof.
"Guarantee" shall mean the guarantee of the
Pledgor set forth in Article IX of the Credit
Agreement.
"III Finance" shall mean III Finance Ltd., a
Cayman Islands corporation.
"III Loan Agreements" shall mean each III Loan
Agreement (as defined in the Intercreditor
Agreement) to which the Pledgor is a party.
"III Obligations" shall have the meaning set
forth in the Intercreditor Agreement.
"Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated as of May 16, 1996,
between III Finance and the Pledgee.
"LP Units" shall mean those units representing
limited partnership interests in the Partnerships
listed on Schedule 1 hereto, together with all
certificates representing any or all such
partnership interests, if any.
"Partnerships" shall mean each of the
partnerships identified on Schedule 1 attached
hereto as the issuer of the respective LP Units,
together with any successor to any such
partnership.
"Partnership Agreements" shall mean each
partnership agreement described on Schedule 1
hereto relating to the respective Partnership.
"Proceeds" shall have the meaning set forth in
Section 9-306(1) of the Code, and in any event
shall include (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable
to the Pledgor from time to time with respect to
any of the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to
the Pledgor from time to time in connection with
any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the
Collateral by any governmental authority, (iii) any
distributions, redemptions or similar payments in
respect of any Collateral; and (iv) any and all
amounts from time to time paid or payable under or
in connection with any of the Collateral.
"Secured Obligations" shall mean all
Obligations as defined in the Credit Agreement and
all obligations and liabilities of the Pledgor
which may arise under or in connection with the
Guarantee, this Agreement or any other Loan
Document to which the Pledgor is a party, whether
on account of principal, premium, if any, interest,
fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and
expenses of counsel to the Pledgee that are
required to be paid by the Pledgor pursuant to the
terms of the Guarantee, this Agreement or any other
Loan Document to which the Pledgor is a party).
"Securities Act" shall mean the Securities Act
of 1933, as amended.
(b) The words "hereof," "herein" and
"hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and
section and Section references are to this Agreement
unless otherwise specified.
(c) The meanings given to terms defined
herein
shall be equally applicable to both the singular and
plural forms of such terms.
Section 2. Pledge; Grant of Security Interest.
The
Pledgor hereby pledges and grants to the Pledgee and
its
successors, indorsees, transferees and assigns, as
collateral security for the prompt and complete payment
and performance when due (whether at the stated
maturity,
by acceleration or otherwise) of the Secured
Obligations,
a security interest in and assignment of all of the
Pledgor's rights, title and interest in and to the
following property and interests in property, whether
now
owned or existing or hereafter arising or acquired and
wheresoever located and whether the same comprise
accounts, instruments, securities, chattel paper or
general intangibles (as each such term is defined in
the
Code) (the "Collateral"):
(i) all of the Pledgor's rights in the LP
Units, and all of the Pledgor's rights, as a
partner in each of the Partnerships, in and to the
property (and interests in property) that is owned
by each of the Partnerships;
(ii) all of the Pledgor's rights, if any, to
participate in the management of each of the
Partnerships;
(iii) all rights, privileges, authority and
powers of the Pledgor as owner or holder of its
partnerships interests in each of the Partnerships,
including, but not limited to, all general
intangible and contract rights related thereto;
(iv) all documents and certificates
representing or evidencing the Pledgor's
partnership interests in each of the Partnerships;
(v) all of the Pledgor's interest in and to
the profits and losses of each of the Partnerships
and the Pledgor's right as a partner in each of the
Partnerships to receive distributions of each of
the Partnership's respective assets, upon complete
or partial liquidation or otherwise;
(vi) all of the Pledgor's right, title and
interest to receive payments of principal and
interest on any loans and/or other extensions of
credit made by the Pledgor or its Affiliates to any
of the Partnerships and any all instruments
creating or evidencing such rights;
(vii) all distributions, cash, instruments and
other property from time to time received,
receivable or otherwise distributed in respect of,
or in exchange for, the Pledgor's partnership
interests in each of the Partnerships; and
(viii) any other right, title, interest,
privilege, authority and power of the Pledgor in or
relating to each of the Partnerships, all whether
now existing or hereafter arising, and whether
arising under the respective Partnership Agreements
(as the same may be amended, modified or restated
from time to time) or otherwise, or at law or in
equity and any and all Proceeds of any of the
foregoing and all books and records of the Pledgor
pertaining to any of the foregoing.
Section 3. Stock Powers. Concurrently with the
delivery to the Bailee, on behalf of the Pledgor, of
each
certificate, if any, representing one or more of the LP
Units pursuant to Section 2 above, the Pledgor shall
deliver an undated stock power covering such
partnership
interests, duly executed in blank by the Pledgor with,
if
the Pledgee so requests, signature guaranteed.
Section 4. Representations and Warranties. The
Pledgor represents and warrants that:
(a) The Pledgor has the corporate power and
authority to grant the security interest in the
Collateral pursuant to this Agreement and has taken
all necessary corporate action to grant the
security interest in the Collateral pursuant to
this Agreement.
(b) The LP Units constitute all the limited
partnership interests of the respective
Partnerships. No LP Unit is evidenced by any
certificate or other instrument (as defined in the
Code) except as described in Schedule I hereto.
(c) All the shares of the LP Units have been
duly and validly issued and are fully paid and
nonassessable.
(d) The Pledgor is the record and beneficial
owner of, and has good title to, the LP Units, free
of any and all Liens or options in favor of, or
claims of, any other Person, except the security
interest created by this Agreement and those
created in favor of III Finance pursuant to the III
Loan Agreements to which it is a party.
(e) Upon the delivery to the Bailee, on
behalf of the Pledgee, of the certificates
representing the LP Units, the security interest
created by this Agreement, assuming the continuing
possession by the Bailee, will constitute a valid,
perfected security interest in the Collateral to
the extent provided in the Code in favor of the
Pledgee, enforceable in accordance with its terms
against all creditors (other than III Finance) of
the Pledgor and any Persons purporting to purchase
any Collateral from the Pledgor.
(f) The Pledgor's chief executive office and
principal place of business are located at 525
Washington Boulevard, Jersey City, New Jersey
07310.
(g) Each of the representations and
warranties of the Pledgor set forth in Sections
4.1, 4.2, 4.4, 4.5 and 4.7 with respect to the
Partnerships and Sections 4.6(a) and 4.13 of each
III Loan Agreement to which the Pledgor is a party
applicable to such Partnership, respectively is
true and correct in all respects as of the date
hereof as if made on such date and is incorporated
herein by reference mutatis mutantis. No "Default"
or "Event of Default" (as defined in any III Loan
Agreement) has occurred and is continuing.
Section 5. Covenants. The Pledgor covenants and
agrees with the Pledgee that, from and after the date
of
this Agreement until the termination of this Agreement
in
accordance with the provisions of Section 16 hereof:
(a) If the Pledgor acquires (by purchase,
additional contribution, reclassification or
otherwise): (i) any percentage interests, shares,
units or options or warrants of partnership
interests in any of the Partnerships (whether or
not certificated or otherwise evidenced in
writing); (ii) any subscriptions, warrants or any
other rights or options issued in connection with
any of the Collateral; or (iii) any options,
warrants or convertible securities in connection
with the Collateral; (all of the foregoing being
collectively referred to as the "Additional
Interests"), then all such Additional Interests
shall be promptly delivered to and held by the
Bailee, on behalf of the Pledgor, (if the same are
certificated) under the terms of this Agreement,
accompanied by duly executed stock powers,
instruments of transfer or assignments in blank, as
applicable, all in form and substance satisfactory
to the Pledgor, and the same shall constitute
Collateral hereunder.
(b) To the extent not otherwise required to
be applied to the III Obligations in accordance
with the terms of any III Loan Agreement, all
distributions by each of the Partnerships, all
Additional Interests and other payments that are
made, paid, issued, distributed or delivered by
each of the Partnerships to the Pledgor in cash or
otherwise shall be received in trust for the
benefit of the Pledgee and shall be delivered to
the Pledgee for application in accordance with the
terms of this Agreement to the Secured Obligations.
(c) Without the prior written consent of the
Pledgee, the Pledgor will not (i) vote to enable,
or take any other action to permit, any of the
Partnerships to issue any partnership interests or
other equity securities of any nature or to issue
any other securities convertible into or granting
the right to purchase or exchange for any
partnership interest or other equity securities of
any nature of any of the Partnerships, (ii) sell,
assign, transfer, exchange, or otherwise dispose
of, or grant any option with respect to, the
Collateral or (iii) create, incur or permit to
exist any Lien or option in favor of, or any
adverse claim of any Person with respect to, any of
the Collateral, or any interest therein, except for
the security interests created by this Agreement
and for the security interests created in favor of
III Finance under the III Loan Agreements to which
it is a party.
(d) The Pledgor shall maintain the security
interest created by this Agreement as a perfected
security interest with the priority specified in
Section 4(e) hereof and shall defend such security
interest against claims and demands of all Persons
whomsoever (other than III Finance). At any time
and from time to time, upon the written request of
the Pledgee, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute
and deliver such further instruments and documents
and take such further actions as the Pledgee may
reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement and
of the rights and powers herein granted. If any
amount payable under or in connection with any of
the Collateral shall be or become evidenced by any
instrument (including any certificated security or
promissory note) or chattel paper (in each case as
defined in the Code), such instrument or chattel
paper shall be immediately delivered to the Bailee,
on behalf of the Pledgee, duly endorsed in a manner
satisfactory to the Pledgee, to be held as
Collateral pursuant to this Agreement. Prior to
such delivery, the Pledgor shall hold all such
instruments or chattel paper in trust for the
Pledgee, and shall not commingle any of the
foregoing with any assets of the Pledgor.
(e) The Pledgor shall pay, and save the
Pledgee harmless from, any and all liabilities with
respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be
payable with respect to any of the Collateral or in
connection with any of the transactions
contemplated by this Agreement.
(f) The Pledgor agrees to comply with each of
the covenants set forth in Sections 5.1(c) and (d),
5.9, 5.10 and 5.11 of each III Loan Agreement to
which it is a party as in effect on the date hereof
and in any similar provision set forth in any other
III Loan Agreement to which it is a party and the
Pledgor hereby agrees that each such covenant is
incorporated herein by reference mutatis mutandis
regardless of whether all or any such III
Agreements cease to be full force in effect after
the date hereof (except that for the purposes of
Section 5.11 thereof, the address of the Pledgor
shall be as set forth in Section 4(f) hereof).
(g) The Pledgor agrees to furnish to the
Pledgee a copy of each report, certificate or
notice required to be delivered pursuant to Section
5.2(b) of each III Finance Agreement to which it is
a party as in effect on the date hereof and in any
similar provision set forth in any other III
Finance Agreement to which it is a party regardless
of whether all or any such III Finance Agreements
cease to be in full force and effect after the date
hereof and any notice, demand or other written
communication Pledgor receives from III Finance
under any III Finance Agreement to which it is a
party.
Section 6. Cash Distributions; Voting Rights.
Subject to the provisions of Section 5(b) hereof,
unless
an Event of Default shall have occurred and be
continuing, to the extent permitted by the Credit
Agreement, the Pledgor shall be permitted to receive
all
cash distributions paid in respect of the LP Units and
to
exercise all voting and partnership rights with respect
to the LP Units; provided, however, that no vote shall
be
cast or partnership right exercised or other action
taken
which, in the Pledgee's reasonable judgment, could
materially impair the Collateral or which would be
inconsistent with or result in any violation of any
provision of any of the Credit Agreement, this
Agreement
or any other Loan Document.
Section 7. Rights of the Pledgee. (a) All
Proceeds while held by the Pledgee (or by the Pledgor
in
trust for the Pledgee) shall continue to be held as
collateral security for all the Secured Obligations and
shall not constitute payment thereof until applied as
provided in Section 8(a) hereof.
(b) Subject to the provisions of the Intercreditor
Agreement, if an Event of Default shall occur and be
continuing, (i) the Pledgee shall have the right to
receive any and all cash distributions paid in respect
of
the LP Units and make application thereof to the
Secured
Obligations in such order as is provided in Section
8(a)
hereof, and (ii) all shares of the LP Units or
Additional
Interests shall, at the election of the Pledgee, be
registered in the name of the Pledgee or its nominee,
and
the Pledgee or its nominee may thereafter exercise (A)
all voting, partnership and other rights pertaining to
such shares of the LP Units at any meeting of partners
of
each of the Partnerships or otherwise and (B) any and
all
rights of conversion, exchange, subscription and any
other rights, privileges or options pertaining to such
LP
Units as if it were the absolute owner thereof
(including, without limitation, the right to exchange
at
its discretion any and all of the LP Units upon the
merger, consolidation, reorganization, recapitalization
or other fundamental change in the partnership
structure
of any Partnership, or upon the exercise by the Pledgee
of any right, privilege or option pertaining to such LP
Units, and in connection therewith, the right to
deposit
and deliver any and all of the LP Units with any
committee, depositary, transfer agent, registrar or
other
designated agency upon such terms and conditions as the
Pledgee may determine), and (iii) notify any Person
obligated on any Collateral of the rights of the
Pledgee
hereunder, enter into any extension, settlement or
compromise agreement relating to or affecting the
Collateral, receive payment or performance of any
insurance claims, claims for breach of warranty or any
other claims concerning the Collateral, all without
liability (other than for its gross negligence or
willful
misconduct) except to account for property actually
received by it, but the Pledgee shall have no duty to
the
Pledgor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so
or
delay in so doing.
Section 8. Remedies. (a) If an Event of
Default
shall have occurred and be continuing, at any time at
the
Pledgee's election, the Pledgee may apply all or any
part
of Proceeds of the Collateral in payment of the Secured
Obligations in the following order of priority:
FIRST, to the payment of all reasonable
costs and expenses incurred by the Pledgee in
connection with this Agreement, the Credit
Agreement, any other Loan Document or any of
the Secured Obligations, including, without
limitation, all court costs and the reasonable
costs or expenses incurred in connection with
the exercise by the Pledgee of any right or
remedy under this Agreement, the Credit
Agreement or any other Loan Document;
SECOND, to the satisfaction of all other
Secured Obligations; and
THIRD, any excess to the Pledgor or to
whomsoever may be lawfully entitled to receive
the same.
(b) Subject to the provisions of the
Intercreditor
Agreement, if an Event of Default shall occur and be
continuing, the Pledgee may exercise, in addition to
all
other rights and remedies granted in this Agreement and
in any other instrument or agreement securing,
evidencing
or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without
limiting the generality of the foregoing, to the extent
permitted by law, the Pledgee, without demand of
performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the
Pledgor
or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived
to
the extent permitted by law), may in such circumstances
forthwith collect, receive, appropriate and realize
upon
the Collateral, or any part thereof, and/or may
forthwith
sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing),
in
one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange,
broker's
board or office of the Pledgee or elsewhere upon such
terms and conditions as it may deem advisable and at
such
prices as it may deem best, for cash or on credit or
for
future delivery without assumption of any credit risk.
The Pledgee shall have the right upon any such public
sale or sales, and, to the extent permitted by law,
upon
any such private sale or sales, to purchase the whole
or
any part of the Collateral so sold, free of any right
or
equity of redemption in the Pledgor, which right or
equity is hereby waived and released. The Pledgee
shall
apply any Proceeds from time to time held by it and the
proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or
safekeeping
of any of the Collateral or in any way relating to the
Collateral or the rights of the Pledgee hereunder,
including, without limitation, reasonable attorneys'
fees
and expenses of counsel to the Pledgee, to the payment
in
whole or in part of the Secured Obligations, in the
order
of priority specified in Section 8(a) hereof, and only
after such application and after the payment by the
Pledgee of any other amount required by any provision
of
law, including, without limitation, Section 9-504(1)(c)
of the Code, need the Pledgee account for the surplus,
if
any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims, damages
and demands it may acquire against the Pledgee arising
out of the exercise by them of any rights hereunder,
other than any such claims, damages and demands that
may
arise from its gross negligence or willful misconduct.
If any notice of a proposed sale or other disposition
of
Collateral shall be required by law, to the extent
permitted by law such notice shall be deemed reasonable
and proper if given at least 10 days before such sale
or
other disposition. The Pledgor shall remain liable for
any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the
Secured Obligations and the fees and expenses of any
attorneys employed by the Pledgee to collect such
deficiency, as provided in the Credit Agreement.
Section 9. Private Sales, Etc. The Pledgor
recognizes that the Pledgee may be unable to effect a
public sale of any or all of the LP Units, by reason of
certain prohibitions contained in the Securities Act
and
applicable state securities laws or otherwise, and may
be
compelled to resort to one or more private sales
thereof
to a restricted group of purchasers which will be
obliged
to agree, among other things, to acquire such
securities
for their own account for investment and not with a
view
to the distribution or resale thereof. The Pledgor
acknowledges and agrees that any such private sale may
result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall
be
deemed to have been made in a commercially reasonable
manner. The Pledgee shall be under no obligation to
delay a sale of any of the LP Units for the period of
time necessary to permit any Partnership to register
such
securities for public sale under the Securities Act, or
under applicable state securities laws, even if any
such
Partnership would agree to do so.
Section 10. Irrevocable Authorization and
Instruction to the Partnerships. The Pledgor hereby
authorizes and instructs each Partnership to comply
with
any instruction received by it from the Pledgee in
writing that (a) states that an Event of Default has
occurred and is continuing and (b) is otherwise in
accordance with the terms of this Agreement and any
other
Loan Document to which it is a party, without any other
or further instructions from the Pledgor, and the
Pledgor
agrees that each Partnership shall be fully protected
in
so complying.
Section 11. Pledgee's Appointment as Attorney-in-
Fact. (a) The Pledgor hereby irrevocably constitutes
and appoints the Pledgee and any officer or agent of
the
Pledgee, with full power of substitution, as its true
and
lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Pledgor and in
the name of the Pledgor or in the Pledgee's own name,
from time to time in the Pledgee's discretion, for the
purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any
and all documents and instruments which may be
necessary
or desirable to accomplish the purposes of this
Agreement, to the extent permitted by law, including,
without limitation, any financing statements,
endorsements, assignments or other instruments of
transfer.
(b) The Pledgor hereby ratifies all that said
attorneys shall lawfully do or cause to be done
pursuant
to the power of attorney granted in Section 11(a)
hereof.
All powers, authorizations and agencies contained in
this
Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the
security interests created hereby are released.
Section 12. Duty of the Pledgee. The Pledgee's
sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or
otherwise,
shall be to deal with it in the same manner as the
Pledgee deals with similar securities and property for
its own account. Neither the Pledgee nor any of its
respective directors, officers, employees or agents
shall
be liable for failure to demand, collect or realize
upon
any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the
Pledgor
or any other Person or to take any other action
whatsoever with regard to the Collateral or any part
thereof.
Section 13. Execution of Financing Statements.
Pursuant to Section 9-402 of the Code, the Pledgor
authorizes the Pledgee to file financing statements
with
respect to the Collateral without the signature of the
Pledgor in such form and in such filing offices as the
Pledgor reasonably determines appropriate to perfect
the
security interests of the Pledgee under this Agreement.
A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement
for filing in any jurisdiction.
Section 14. Notices. All notices, requests and
demands under this Agreement shall be given in
accordance
with Section 10.01 of the Credit Agreement. Each of
the
Pledgor and the Pledgee may change their respective
addresses and transmission numbers for notices by
notice
in the manner provided in this Section 14.
Section 15. Counterparts. This Agreement may be
executed in any number of counterparts and by the
different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed
an original, and all of which shall together constitute
one and the same agreement.
Section 16. Term of Agreement. This Agreement
shall remain in full force and effect and be binding in
accordance with and to the extent of its terms and the
security interest created by this Agreement shall not
be
released until the payment in full of the Secured
Obligations shall have occurred and the Commitment and
the Credit Agreement shall have terminated, at which
time
the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other
than those expressly stated to survive such
termination)
of the Pledgee and the Pledgor hereunder shall
terminate,
all without delivery of any instrument or performance
of
any act by any party, and all rights to the Collateral
shall revert to the Pledgor, provided that if any
payment, or any part thereof, of any of the Secured
Obligations is rescinded or must otherwise be restored
or
returned by the Pledgee upon the insolvency,
bankruptcy,
dissolution, liquidation or reorganization of the
Pledgor
or any other Loan Party, or upon or as a result of the
appointment of a receiver, intervenor or conservator
of,
or a trustee or similar officer for, the Pledgor or any
other Loan Party or any substantial part of its
property,
or otherwise, this Agreement, all rights hereunder and
the Liens created hereby shall continue to be
effective,
or be reinstated, as though such payments had not been
made. Upon request of the Pledgor following any such
termination, the Pledgee shall execute and deliver (at
the sole cost and expense of the Pledgor) to the
Pledgor
such documents as the Pledgor shall reasonably request
to
evidence such termination.
Section 17. Amendments, Waivers, etc. Neither
this
Agreement nor any terms hereof may be amended, modified
or otherwise supplemented except in writing signed by
the
parties hereto. In the case of any waiver of a Default
or Event of Default, any Default or Event of Default
waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right
consequent thereon.
Section 18. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in
exercising
any right, remedy, power or privilege hereunder or
under
any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of,
or
any abandonment or discontinuance of steps to enforce
any
right, remedy, power or privilege hereunder or under
any
other Loan Document preclude any other or further
exercise thereof or the exercise of any other rights,
remedies, powers or privileges hereunder or thereunder.
The rights, remedies, powers and privileges provided
herein and in the other Loan Documents are cumulative
and
may be exercised singularly or concurrently and are not
exclusive of any other rights, remedies, powers or
privileges provided by law.
Section 19. Benefits of Agreement. This Agreement
shall be binding upon and inure to the benefit of the
Pledgor and the Pledgee and their respective successors
and assigns, except that the Pledgor may not assign or
transfer any of its rights or obligations under this
Agreement without the prior written consent of the
Pledgee.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL
BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT
THE PERFECTION, AND THE EFFECT OF PERFECTION OR NON-
PERFECTION, MAY BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION.
Section 21. Headings Descriptive. The headings of
the sections of this Agreement are inserted for
convenience only and shall not in any way affect the
meaning or construction of any provisions of this
Agreement.
Section 22. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization
without invalidating the remaining provisions hereof or
thereof or affecting the validity, enforceability or
legality of such provisions in any other jurisdiction.
Section 23. Submission to Jurisdiction; Venue.
(i)
Any legal action or proceeding against the Pledgor with
respect to this Agreement may be brought in the courts
of
the State of New York located in New York County or of
the United States for the Southern District of New
York,
and, by execution and delivery of this Agreement, the
Pledgor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing herein
shall affect the right of the Pledgee to commence legal
proceedings or otherwise proceed against the Pledgor in
any other jurisdiction.
(ii) The Pledgor irrevocably consents to service of
process in the manner provided for notices in Section
14
hereof. Nothing in this Agreement will affect the
right
of the Pledgee to serve process in any other manner
permitted by law.
(iii) The Pledgor irrevocably waives, to the
extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in
connection with this Agreement to which it is a party
in
the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees, to the extent
permitted by law, not to plead or claim in any such
court
that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 24. Intercreditor Agreement. This
Agreement and the rights of the Pledgee hereunder are
subject to the terms and provisions of the
Intercreditor
Agreement.
SECTION 25. WAIVER OF JURY TRIAL. EACH OF THE
PLEDGOR, AND THE PLEDGEE, BY ITS ACCEPTANCE HEREOF,
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY
IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY UNDER OR IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the
day
first above written.
AEGIS CONSUMER FINANCE,
INC.
By:
Title:
ACKNOWLEDGED AND AGREED AS
OF THE DATE HEREOF BY:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., as Pledgee
By: ________________________
Title:
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt
of a copy
of the Security and Pledge Agreement (as the same may
be amended,
supplemented, waived or otherwise modified from time to
time, the
"Agreement"; terms used herein and not defined herein
shall have
the meanings given to them in the Agreement), dated as
of May 16,
1996, made by Aegis Consumer Finance, Inc., a Delaware
corporation
("the "Pledgor"), in favor of Greenwich Capital
Financial Products,
Inc., a Delaware corporation (the "Pledgee"). Each of
the
undersigned agrees for the benefit of the Pledgee as
follows:
1. Each of the undersigned acknowledges the
security
interest of the Pledgee in the Collateral as
defined in the
Agreement and has noted such security interest on
its books
and records and will not release such security
interest
without the prior written consent of the Pledgee.
2. Each of the undersigned will be bound by
the terms of
the Agreement and will comply with such terms
insofar as such
terms are applicable to the undersigned.
3. Each of the undersigned will notify the
Pledgee
promptly in writing of the occurrence of any of the
events
described in Section 5(a) of the Agreement.
4. Each of the undersigned agrees that,
subject to the
terms of the Agreement, upon the occurrence of an
Event of
Default, and upon written request therefor by the
Pledgee, all
payments the undersigned would otherwise make to
the Pledgor
shall be made to the Pledgee.
Aegis Auto Receivables
1994-A, L.P.
By: Aegis Auto
Receivables
Corporation, its
General
Partner,
By:
Title:
Aegis Auto Receivables
1994-2, L.P.
By: 94-2 Auto
Receivables
Corporation, its
General
Partner,
By:
Title:
Aegis Auto Receivables
1994-3, L.P.
By: 94-3 Auto
Receivables
Corporation,
its General
Partner,
By:
Title:
Aegis Auto Receivables
1994-5-1, L.P.
By: 95-1 Auto
Receivables
Corporation,
its General
Partner,
By:
Title:
SCHEDULE 1 TO
AGREEMENT
DESCRIPTION OF LP UNITS
Partnerships
Class of
Interest
Certificate
No., if any,
No. of
Units
Aegis Auto
Receivables 1994-A,
L.P.
Limited
Partnership
R-1
40
Aegis Auto
Receivables 1994-2,
L.P.
Limited
Partnership
R-2
40
Aegis Auto
Receivables 1994-3,
L.P.
Limited
Partnership
R-1
40
Aegis Auto
Receivables 1995-1,
L.P.
Limited
Partnership
R-1
50
EXHIBIT 10.95.3
EXHIBIT C-2
[FORM OF AEGIS AUTO FINANCE SECURITY AND
PLEDGE
AGREEMENT]
SECURITY AND PLEDGE AGREEMENT, dated as of May 17,
1996, made by AEGIS AUTO FINANCE, INC., a Delaware
corporation (the "Pledgor") in favor of GREENWICH
CAPITAL
FINANCIAL PRODUCTS, INC., a Delaware corporation (the
"Pledgee").
W I T N E S E T H :
WHEREAS, pursuant to that certain Credit
Agreement,
dated as of May 17, 1996, among The Aegis Consumer
Funding Group, Inc., a Delaware corporation (the
"Borrower"), Aegis Consumer Finance, Inc. a Delaware
corporation ("Aegis Consumer Finance"), the Pledgor,
and
the Pledgee (the "Credit Agreement"), the Pledgee has
agreed to make one or more Loans (as defined below) to
the Borrower; and
WHEREAS, the Pledgor is a wholly-owned Subsidiary
of
the Borrower; and
WHEREAS, the Pledgor is the legal and beneficial
owner of the shares of Pledged Stock issued by the
Issuer; and
WHEREAS, the Pledgor has guaranteed the obligations
of the Borrower under the Credit Agreement and the
other
Loan Documents; and
WHEREAS, it is a condition precedent to the
obligation of the Pledgee to enter into the Credit
Agreement and to make the Loans thereunder to the
Borrower that the Pledgor shall have executed and
delivered this Agreement to the Pledgor;
NOW, THEREFORE, in consideration of the premises
and
to induce the Pledgee to enter into the Credit
Agreement
and to make the Loans thereunder to the Borrower, and
for
other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the
Pledgor
hereby agrees with the Pledgee as follows:
Section 1. Defined Terms. (a) Unless otherwise
defined herein, terms which are defined in the Credit
Agreement and used herein shall have the meanings given
to them in the Credit Agreement, as the context
requires,
and the following terms shall have the following
meanings:
"Additional Interests" shall mean as defined
in Section 5(a) of this Agreement.
"Agreement" shall mean this Security and
Pledge Agreement, as the same may be amended,
supplemented or otherwise modified from time to
time.
"Bailee" shall mean Norwest Bank Minnesota,
National Association, in its capacity as Bailee for
the Pledgee.
"Code" shall mean the Uniform Commercial Code
from time to time in effect in the State of New
York.
"Collateral" shall have the meaning set forth
on Section 2 hereof.
"Guarantee" shall mean the guarantee of the
Pledgor set forth in Article IX of the Credit
Agreement.
"III Finance" shall mean III Finance Ltd., a
Cayman Islands corporation.
"III Loan Agreements" shall mean each III Loan
Agreement (as defined in the Intercreditor
Agreement) to which the Pledgor is a party.
"III Obligations" shall have the meaning set
forth in the Intercreditor Agreement.
"Intercreditor Agreement" shall mean the
Intercreditor Agreement, dated as of May 17, 1996,
between III Finance and the Pledgee.
"Issuer" shall mean each corporation
identified on Schedule 1 attached hereto, as the
same may be amended or supplemented from time to
time in accordance with Section 5(d) hereof, as the
issuer of the Pledged Stock, together with any
successor to each such corporation.
"Pledged Stock" shall mean the shares of
capital stock listed on Schedule 1 hereto, as the
same may be amended or supplemented from time to
time in accordance with Section 5(d) hereof,
together with all stock certificates representing
all such shares of capital stock.
"Proceeds" shall have the meaning set forth in
Section 9-306(1) of the Code, and in any event
shall include (i) any and all proceeds of any
insurance, indemnity, warranty or guaranty payable
to the Pledgor from time to time with respect to
any of the Collateral, (ii) any and all payments
(in any form whatsoever) made or due and payable to
the Pledgor from time to time in connection with
any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the
Collateral by any governmental authority, (iii) any
dividends, distributions, redemptions or similar
payments in respect of any Collateral; and (iv) any
and all amounts from time to time paid or payable
under or in connection with any of the Collateral.
"Secured Obligations" shall mean all
Obligations as defined in the Credit Agreement and
all obligations and liabilities of the Pledgor
which may arise under or in connection with the
Guarantee, this Agreement or any other Loan
Document to which the Pledgor is a party, whether
on account of principal, premium, if any, interest,
fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and
expenses of counsel to the Pledgee that are
required to be paid by the Pledgor pursuant to the
terms of the Guarantee, this Agreement or any other
Loan Document to which the Pledgor is a party).
"Securities Act" shall mean the Securities Act
of 1933, as amended.
(b) The words "hereof," "herein" and
"hereunder" and words of similar import when used in
this
Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and
section and Section references are to this Agreement
unless otherwise specified.
(c) The meanings given to terms defined
herein
shall be equally applicable to both the singular and
plural forms of such terms.
Section 2. Pledge; Grant of Security Interest.
The
Pledgor hereby pledges and grants to the Pledgee and
its
successors, indorsees, transferees and assigns, as
collateral security for the prompt and complete payment
and performance when due (whether at the stated
maturity,
by acceleration or otherwise) of the Secured
Obligations,
a security interest in and assignment of all of the
Pledgor's rights, title and interest in and to the
following property and interests in property, whether
now
owned or existing or hereafter arising or acquired and
wheresoever located and whether the same comprise
accounts, instruments, securities, chattel paper or
general intangibles (as each such term is defined in
the
Code) (the "Collateral"):
(i) all of the Pledgor's rights in the Pledged
Stock, and all of the Pledgor's rights, as a
shareholder of each of the Issuers, in and to the
property (and interests in property) that is owned
by each of the Issuers;
(ii) all warrants, options and other rights to
acquire stock in each of the Issuers and all of the
Pledgor's rights, if any, to participate in the
management of each of the Issuers;
(iii) all rights, privileges, authority and
powers of the Pledgor as owner or holder of its
equity interest in each of the Issuers, including,
but not limited to, all general intangible and
contract rights related thereto;
(iv) all documents and certificates
representing or evidencing the Pledgor's equity
interest in each of Issuers;
(v) all of the Pledgor's interest in and to
the profits and losses of each of the Issuers and
the Pledgor's right as shareholder of each of the
Issuers to receive dividends on account of each of
the Issuer's capital stock or to receive
distributions of each of the Issuer's respective
assets, upon complete or partial liquidation or
otherwise;
(vi) all of the Pledgor's right, title and
interest to receive payments of principal and
interest on any loans and/or other extensions of
credit made by the Pledgor or its Affiliates to any
of the Issuers, all other accounts and other rights
to payment which may be owing by each of the
Issuers to the Pledgor, and any all instruments
creating or evidencing such rights;
(vii) all distributions, cash, instruments and
other property from time to time received,
receivable or otherwise distributed in respect of,
or in exchange for, the Pledgor's interest in each
of the Issuers; and
(viii) any other right, title, interest,
privilege, authority and power of the Pledgor in or
relating to each of the Issuers, all whether now
existing or hereafter arising, and whether arising
at law or in equity and any and all Proceeds of any
of the foregoing and all books and records of the
Pledgor pertaining to any of the foregoing.
Section 3. Stock Powers. Concurrently with the
delivery to the Bailee, on behalf of the Pledgor, of
each
certificate representing one or more shares of Pledged
Stock pursuant to Section 2 above, the Pledgor shall
deliver an undated stock power covering such
certificate,
duly executed in blank by the Pledgor with, if the
Pledgee so requests, signature guaranteed.
Section 4. Representations and Warranties. The
Pledgor represents and warrants that:
(a) The Pledgor has the corporate power and
authority to grant the security interest in the
Collateral pursuant to this Agreement and has taken
all necessary corporate action to grant the
security interest in the Collateral pursuant to
this Agreement.
(b) The shares of Pledged Stock constitute
all the issued and outstanding shares of all
classes of the capital stock of each of the
Issuers.
(c) All the shares of the Pledged Stock have
been duly and validly issued and are fully paid and
nonassessable.
(d) The Pledgor is the record and beneficial
owner of, and has good title to, the Pledged Stock,
free of any and all Liens or options in favor of,
or claims of, any other Person, except the security
interest created by this Agreement and those
created in favor of III Finance pursuant to the III
Loan Agreements to which it is a party.
(e) Upon delivery to the Bailee, on behalf of
the Pledgee, of the stock certificates evidencing
the Pledged Stock, the security interest created by
this Agreement, assuming the continuing possession
of the Pledged Stock by the Bailee, on behalf of
the Pledgee, will constitute a valid, perfected
security interest in the Collateral to the extent
provided in the Code in favor of the Pledgee,
enforceable in accordance with its terms against
all creditors (other than III Finance) of the
Pledgor and any Persons purporting to purchase any
Collateral from the Pledgor.
(f) The Pledgor's chief executive office and
principal place of business are located at 525
Washington Boulevard, Jersey City, New Jersey
07310.
(g) Each of the representations and
warranties of the Pledgor set forth in Sections
4.1, 4.2, 4.4, 4.5 and 4.7 with respect to the
Issuer and Sections 4.6(a) and 4.13 of each III
Loan Agreement to which the Pledgor is a party are
true and correct in all respects as of the date
hereof as if made on such date and are incorporated
herein by reference mutatis mutantis. No "Default"
or "Event of Default" (as defined in any III Loan
Agreement) has occurred and is continuing.
Section 5. Covenants. The Pledgor covenants and
agrees with the Pledgee that, from and after the date
of
this Agreement until the termination of this Agreement
in
accordance with the provisions of Section 16 hereof:
(a) If the Pledgor acquires (by dividend,
purchase, additional contribution, reclassification
or otherwise): (i) any additional stocks, shares,
units or options or warrants of stock in any of the
Issuers (whether or not certificated or otherwise
evidenced in writing); (ii) any subscriptions,
warrants or any other rights or options issued in
connection with any of the Collateral; or (iii) any
options, warrants or convertible securities in
connection with the Collateral; (all of the
foregoing being collectively referred to as the
"Additional Interests"), then all such Additional
Interests shall be promptly delivered to and held
by the Bailee, on behalf of the Pledgor, (if the
same are certificated) under the terms of this
Agreement, accompanied by duly executed stock
powers, instruments of transfer or assignments in
blank, as applicable, all in form and substance
satisfactory to the Pledgor, and the same shall
constitute Collateral hereunder.
(b) To the extent not otherwise required to
be applied to the III Obligations in accordance
with the terms of any III Loan Agreement, all
distributions by each of the Issuers, all
Additional Interests and other payments that are
made, paid, issued, distributed or delivered by
each of the Issuers to the Pledgor in cash or
otherwise shall be received in trust for the
benefit of the Pledgee and shall be delivered to
the Pledgee for application in accordance with the
terms of this Agreement to the Secured Obligations.
(c) Without the prior written consent of the
Pledgee, the Pledgor will not (i) vote to enable,
or take any other action to permit, any of the
Issuers to issue any stock or other equity
securities of any nature or to issue any other
securities convertible into or granting the right
to purchase or exchange for any stock or other
equity securities of any nature of any of the
Issuers, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with
respect to, the Collateral or (iii) create, incur
or permit to exist any Lien or option in favor of,
or any adverse claim of any Person with respect to,
any of the Collateral, or any interest therein,
except for the security interests created by this
Agreement and for the security interests created in
favor of III Finance under the III Loan Agreements
to which the Pledgor is a party.
(d) If the Pledgor shall create, form or
otherwise use any special purpose corporation in
connection with any securitization transaction, the
Pledgor shall notify the Pledgee in writing at
least [five (5)] Business Days prior to the
creation, formation or other use thereof, of the
name of such entity and the number of shares of
stock owned (or to be owned) by the Pledgor thereof
and the Pledgor hereby authorizes the Pledgee to
amend Schedule 1 hereto to reflect the addition of
such entity. The Pledgor shall cause each such
entity to execute and deliver an acknowledgement
and consent in substantially the form attached
hereto. All representations and warranties set
forth in Section 4 hereof shall be deemed made with
respect to such entity on the date Schedule 1 is
amended in accordance with the terms hereof. The
Pledgor shall maintain the security interest
created by this Agreement as a perfected security
interest with the priority specified in Section
4(e) hereof and shall defend such security interest
against claims and demands of all Persons
whomsoever (other than III Finance). At any time
and from time to time, upon the written request of
the Pledgee, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute
and deliver such further instruments and documents
and take such further actions as the Pledgee may
reasonably request for the purposes of obtaining or
preserving the full benefits of this Agreement and
of the rights and powers herein granted. If any
amount payable under or in connection with any of
the Collateral shall be or become evidenced by any
instrument (including any certificated security or
promissory note) or chattel paper (in each case as
defined in the Code), such instrument or chattel
paper shall be immediately delivered to the Bailee,
on behalf of the Pledgee, duly endorsed in a manner
satisfactory to the Pledgee, to be held as
Collateral pursuant to this Agreement. Prior to
such delivery, the Pledgor shall hold all such
instruments or chattel paper in trust for the
Pledgee, and shall not commingle any of the
foregoing with any assets of the Pledgor.
(e) The Pledgor shall pay, and save the
Pledgee harmless from, any and all liabilities with
respect to, or resulting from any delay in paying,
any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be
payable with respect to any of the Collateral or in
connection with any of the transactions
contemplated by this Agreement.
(f) The Pledgor agrees to comply with each of
the covenants set forth in Sections 5.1(c) and (d),
5.9, 5.10 5.11 and 5.13 of each III Loan Agreement
to which it is a party as in effect on the date
hereof and in any similar provision set forth in
any other III Loan Agreement to which it is a party
and the Pledgor hereby agrees that each such
covenant is incorporated herein by reference
mutatis mutandis regardless of whether all or any
such III Agreements cease to be full force in
effect after the date hereof.
(g) The Pledgor agrees to furnish to the
Pledgee a copy of each report, certificate or
notice required to be delivered pursuant to Section
5.2(b) of each III Finance Agreement to which it is
a party as in effect on the date hereof and in any
similar provision set forth in any other III
Finance Agreement to which it is a party regardless
of whether all or any such III Finance Agreements
cease to be in full force and effect after the date
hereof and any notice, demand or other written
communication Pledgor receives from III Finance
under any III Finance Agreement to which it is a
party.
Section 6. Cash Dividends; Voting Rights. Subject
to the provisions of Section 5(b) hereof, unless an
Event
of Default shall have occurred and be continuing, to
the
extent permitted by the Credit Agreement, the Pledgor
shall be permitted to receive all cash dividends and
distributions paid in respect of the Pledged Stock and
to
exercise all voting and corporate rights with respect
to
the Pledged Stock; provided, however, that no vote
shall
be cast or corporate right exercised or other action
taken which, in the Pledgee's reasonable judgment,
could
materially impair the Collateral or which would be
inconsistent with or result in any violation of any
provision of any of the Credit Agreement, this
Agreement
or any other Loan Document.
Section 7. Rights of the Pledgee. (a) All
Proceeds while held by the Pledgee (or by the Pledgor
in
trust for the Pledgee) shall continue to be held as
collateral security for all the Secured Obligations and
shall not constitute payment thereof until applied as
provided in Section 8(a) hereof.
(b) Subject to the provisions of the Intercreditor
Agreement, if an Event of Default shall occur and be
continuing, (i) the Pledgee shall have the right to
receive any and all cash dividends or distributions
paid
in respect of the Pledged Stock and make application
thereof to the Secured Obligations in such order as is
provided in Section 8(a) hereof, and (ii) all shares of
the Pledged Stock or Additional Interests shall, at the
election of the Pledgee, be registered in the name of
the
Pledgee or its nominee, and the Pledgee or its nominee
may thereafter exercise (A) all voting, corporate and
other rights pertaining to such shares of the Pledged
Stock at any meeting of shareholders of each of the
Issuers or otherwise and (B) any and all rights of
conversion, exchange, subscription and any other
rights,
privileges or options pertaining to such shares of the
Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange
at
its discretion any and all of the Pledged Stock upon
the
merger, consolidation, reorganization, recapitalization
or other fundamental change in the corporate structure
of
any Issuer, or upon the exercise by the Pledgee of any
right, privilege or option pertaining to such shares of
the Pledged Stock, and in connection therewith, the
right
to deposit and deliver any and all of the Pledged Stock
with any committee, depositary, transfer agent,
registrar
or other designated agency upon such terms and
conditions
as the Pledgee may determine), and (iii) notify any
Person obligated on any Collateral of the rights of the
Pledgee hereunder, enter into any extension, settlement
or compromise agreement relating to or affecting the
Collateral, receive payment or performance of any
insurance claims, claims for breach of warranty or any
other claims concerning the Collateral, all without
liability (other than for its gross negligence or
willful
misconduct) except to account for property actually
received by it, but the Pledgee shall have no duty to
the
Pledgor to exercise any such right, privilege or option
and shall not be responsible for any failure to do so
or
delay in so doing.
Section 8. Remedies. (a) If an Event of
Default
shall have occurred and be continuing, at any time at
the
Pledgee's election, the Pledgee may apply all or any
part
of Proceeds of the Collateral in payment of the Secured
Obligations in the following order of priority:
FIRST, to the payment of all reasonable
costs and expenses incurred by the Pledgee in
connection with this Agreement, the Credit
Agreement, any other Loan Document or any of
the Secured Obligations, including, without
limitation, all court costs and the reasonable
costs or expenses incurred in connection with
the exercise by the Pledgee of any right or
remedy under this Agreement, the Credit
Agreement or any other Loan Document;
SECOND, to the satisfaction of all other
Secured Obligations; and
THIRD, any excess to the Pledgor or to
whomsoever may be lawfully entitled to receive
the same.
(b) Subject to the provisions of the
Intercreditor
Agreement, if an Event of Default shall occur and be
continuing, the Pledgee may exercise, in addition to
all
other rights and remedies granted in this Agreement and
in any other instrument or agreement securing,
evidencing
or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without
limiting the generality of the foregoing, to the extent
permitted by law, the Pledgee, without demand of
performance or other demand, presentment, protest,
advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the
Pledgor
or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived
to
the extent permitted by law), may in such circumstances
forthwith collect, receive, appropriate and realize
upon
the Collateral, or any part thereof, and/or may
forthwith
sell, assign, give option or options to purchase or
otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing),
in
one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange,
broker's
board or office of the Pledgee or elsewhere upon such
terms and conditions as it may deem advisable and at
such
prices as it may deem best, for cash or on credit or
for
future delivery without assumption of any credit risk.
The Pledgee shall have the right upon any such public
sale or sales, and, to the extent permitted by law,
upon
any such private sale or sales, to purchase the whole
or
any part of the Collateral so sold, free of any right
or
equity of redemption in the Pledgor, which right or
equity is hereby waived and released. The Pledgee
shall
apply any Proceeds from time to time held by it and the
proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or
safekeeping
of any of the Collateral or in any way relating to the
Collateral or the rights of the Pledgee hereunder,
including, without limitation, reasonable attorneys'
fees
and expenses of counsel to the Pledgee, to the payment
in
whole or in part of the Secured Obligations, in the
order
of priority specified in Section 8(a) hereof, and only
after such application and after the payment by the
Pledgee of any other amount required by any provision
of
law, including, without limitation, Section 9-504(1)(c)
of the Code, need the Pledgee account for the surplus,
if
any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims, damages
and demands it may acquire against the Pledgee arising
out of the exercise by them of any rights hereunder,
other than any such claims, damages and demands that
may
arise from its gross negligence or willful misconduct.
If any notice of a proposed sale or other disposition
of
Collateral shall be required by law, to the extent
permitted by law such notice shall be deemed reasonable
and proper if given at least 10 days before such sale
or
other disposition. The Pledgor shall remain liable for
any deficiency if the proceeds of any sale or other
disposition of Collateral are insufficient to pay the
Secured Obligations and the fees and expenses of any
attorneys employed by the Pledgee to collect such
deficiency, as provided in the Credit Agreement.
Section 9. Private Sales, Etc. The Pledgor
recognizes that the Pledgee may be unable to effect a
public sale of any or all of the Pledged Stock, by
reason
of certain prohibitions contained in the Securities Act
and applicable state securities laws or otherwise, and
may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will
be
obliged to agree, among other things, to acquire such
securities for their own account for investment and not
with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private
sale may result in prices and other terms less
favorable
than if such sale were a public sale and,
notwithstanding
such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially
reasonable manner. The Pledgee shall be under no
obligation to delay a sale of any of the Pledged Stock
for the period of time necessary to permit any Issuer
to
register such securities for public sale under the
Securities Act, or under applicable state securities
laws, even if any such Issuer would agree to do so.
Section 10. Irrevocable Authorization and
Instruction to the Issuers. The Pledgor hereby
authorizes and instructs each Issuer to comply with any
instruction received by it from the Pledgee in writing
that (a) states that an Event of Default has occurred
and
is continuing and (b) is otherwise in accordance with
the
terms of this Agreement and any other Loan Document to
which it is a party, without any other or further
instructions from the Pledgor, and the Pledgor agrees
that each Issuer shall be fully protected in so
complying.
Section 11. Pledgee's Appointment as Attorney-in-
Fact. (a) The Pledgor hereby irrevocably constitutes
and appoints the Pledgee and any officer or agent of
the
Pledgee, with full power of substitution, as its true
and
lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Pledgor and in
the name of the Pledgor or in the Pledgee's own name,
from time to time in the Pledgee's discretion, for the
purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any
and all documents and instruments which may be
necessary
or desirable to accomplish the purposes of this
Agreement, to the extent permitted by law, including,
without limitation, any financing statements,
endorsements, assignments or other instruments of
transfer.
(b) The Pledgor hereby ratifies all that said
attorneys shall lawfully do or cause to be done
pursuant
to the power of attorney granted in Section 11(a)
hereof.
All powers, authorizations and agencies contained in
this
Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the
security interests created hereby are released.
Section 12. Duty of the Pledgee. The Pledgee's
sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or
otherwise,
shall be to deal with it in the same manner as the
Pledgee deals with similar securities and property for
its own account. Neither the Pledgee nor any of its
respective directors, officers, employees or agents
shall
be liable for failure to demand, collect or realize
upon
any of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the
Pledgor
or any other Person or to take any other action
whatsoever with regard to the Collateral or any part
thereof.
Section 13. Execution of Financing Statements.
Pursuant to Section 9-402 of the Code, the Pledgor
authorizes the Pledgee to file financing statements
with
respect to the Collateral without the signature of the
Pledgor in such form and in such filing offices as the
Pledgor reasonably determines appropriate to perfect
the
security interests of the Pledgee under this Agreement.
A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement
for filing in any jurisdiction.
Section 14. Notices. All notices, requests and
demands under this Agreement shall be given in
accordance
with Section 10.01 of the Credit Agreement. Each of
the
Pledgor and the Pledgee may change their respective
addresses and transmission numbers for notices by
notice
in the manner provided in this Section 14.
Section 15. Counterparts. This Agreement may be
executed in any number of counterparts and by the
different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed
an original, and all of which shall together constitute
one and the same agreement.
Section 16. Term of Agreement. This Agreement
shall remain in full force and effect and be binding in
accordance with and to the extent of its terms and the
security interest created by this Agreement shall not
be
released until the payment in full of the Secured
Obligations shall have occurred and the Commitment and
the Credit Agreement shall have terminated, at which
time
the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other
than those expressly stated to survive such
termination)
of the Pledgee and the Pledgor hereunder shall
terminate,
all without delivery of any instrument or performance
of
any act by any party, and all rights to the Collateral
shall revert to the Pledgor, provided that if any
payment, or any part thereof, of any of the Secured
Obligations is rescinded or must otherwise be restored
or
returned by the Pledgee upon the insolvency,
bankruptcy,
dissolution, liquidation or reorganization of the
Pledgor
or any other Loan Party, or upon or as a result of the
appointment of a receiver, intervenor or conservator
of,
or a trustee or similar officer for, the Pledgor or any
other Loan Party or any substantial part of its
property,
or otherwise, this Agreement, all rights hereunder and
the Liens created hereby shall continue to be
effective,
or be reinstated, as though such payments had not been
made. Upon request of the Pledgor following any such
termination, the Pledgee shall execute and deliver (at
the sole cost and expense of the Pledgor) to the
Pledgor
such documents as the Pledgor shall reasonably request
to
evidence such termination.
Section 17. Amendments, Waivers, etc. Neither
this
Agreement nor any terms hereof may be amended, modified
or otherwise supplemented except in writing signed by
the
parties hereto. In the case of any waiver of a Default
or Event of Default, any Default or Event of Default
waived shall be deemed to be cured and not continuing;
but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right
consequent thereon.
Section 18. No Waiver; Remedies Cumulative. No
failure or delay on the part of the Pledgee in
exercising
any right, remedy, power or privilege hereunder or
under
any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of,
or
any abandonment or discontinuance of steps to enforce
any
right, remedy, power or privilege hereunder or under
any
other Loan Document preclude any other or further
exercise thereof or the exercise of any other rights,
remedies, powers or privileges hereunder or thereunder.
The rights, remedies, powers and privileges provided
herein and in the other Loan Documents are cumulative
and
may be exercised singularly or concurrently and are not
exclusive of any other rights, remedies, powers or
privileges provided by law.
Section 19. Benefits of Agreement. This Agreement
shall be binding upon and inure to the benefit of the
Pledgor and the Pledgee and their respective successors
and assigns, except that the Pledgor may not assign or
transfer any of its rights or obligations under this
Agreement without the prior written consent of the
Pledgee.
SECTION 20. GOVERNING LAW. THIS AGREEMENT SHALL
BE
CONSTRUED IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT
THAT
THE PERFECTION, AND THE EFFECT OF PERFECTION OR NON-
PERFECTION, MAY BE GOVERNED BY THE LAWS OF ANOTHER
JURISDICTION.
Section 21. Headings Descriptive. The headings of
the sections of this Agreement are inserted for
convenience only and shall not in any way affect the
meaning or construction of any provisions of this
Agreement.
Section 22. Severability. Any provision of this
Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition, unenforceability or non-authorization
without invalidating the remaining provisions hereof or
thereof or affecting the validity, enforceability or
legality of such provisions in any other jurisdiction.
Section 23. Submission to Jurisdiction; Venue.
(i)
Any legal action or proceeding against the Pledgor with
respect to this Agreement may be brought in the courts
of
the State of New York located in New York County or of
the United States for the Southern District of New
York,
and, by execution and delivery of this Agreement, the
Pledgor hereby irrevocably accepts for itself and in
respect of its property, generally and unconditionally,
the jurisdiction of the aforesaid courts. Each of the
parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing herein
shall affect the right of the Pledgee to commence legal
proceedings or otherwise proceed against the Pledgor in
any other jurisdiction.
(ii) The Pledgor irrevocably consents to service of
process in the manner provided for notices in Section
14
hereof. Nothing in this Agreement will affect the
right
of the Pledgee to serve process in any other manner
permitted by law.
(iii) The Pledgor irrevocably waives, to the
extent permitted by law, any objection which it may now
or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in
connection with this Agreement to which it is a party
in
the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees, to the extent
permitted by law, not to plead or claim in any such
court
that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
SECTION 24. Intercreditor Agreement. This
Agreement and the rights of the Pledgee hereunder are
subject to the terms and provisions of the
Intercreditor
Agreement.
SECTION 25. WAIVER OF JURY TRIAL. EACH OF THE
PLEDGOR, AND THE PLEDGEE, BY ITS ACCEPTANCE HEREOF,
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY
IN RESPECT OF ANY LITIGATION ARISING DIRECTLY OR
INDIRECTLY UNDER OR IN CONNECTION WITH THIS AGREEMENT.
IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly executed and delivered as of the
day
first above written.
AEGIS AUTO FINANCE, INC.
By:
Title:
ACKNOWLEDGED AND AGREED AS
OF THE DATE HEREOF BY:
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC., as Pledgee
By: ________________________
Title:
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt
of a copy
of the Security and Pledge Agreement (as the same may
be amended,
supplemented, waived or otherwise modified from time to
time, the
"Agreement"; terms used herein and not defined herein
shall have
the meanings given to them in the Agreement), dated as
of May 17,
1996, made by Aegis Auto Finance, Inc., a Delaware
corporation
("the "Pledgor"), in favor of Greenwich Capital
Financial Products,
Inc., a Delaware corporation (the "Pledgee"). Each of
the
undersigned agrees for the benefit of the Pledgee as
follows:
1. Each of the undersigned acknowledges the
security
interest of the Pledgee in the Collateral as
defined in the
Agreement and has noted such security interest on
its books
and records and will not release such security
interest
without the prior written consent of the Pledgee.
2. Each of the undersigned will be bound by
the terms of
the Agreement and will comply with such terms
insofar as such
terms are applicable to the undersigned.
3. Each of the undersigned will notify the
Pledgee
promptly in writing of the occurrence of any of the
events
described in Section 5(a) of the Agreement.
4. Each of the undersigned agrees that,
subject to the
terms of the Agreement, upon the occurrence of an
Event of
Default, and upon written request therefor by the
Pledgee, all
payments the undersigned would otherwise make to
the Pledgor
shall be made to the Pledgee.
Aegis Auto Funding Corp.
By:
Title:
Aegis Auto Funding Corp.
II
By:
Title:
SCHEDULE 1 TO
AGREEMENT
DESCRIPTION OF PLEDGED STOCK
Issuer
Class of
Stock
Stock
Certificate
No.
No. of
Shares
Aegis Auto Funding
Corp.
Common
1
1,500
Aegis Auto Funding
Corp. II
Common
1
1,500
EXHIBIT 10.96
EXECUTION COPY (6/24/96)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") is
made as of this 25th day
of June, 1996 between AEGIS AUTO FINANCE, INC., a
Delaware corporation
("Borrower") and III FINANCE LTD., a Cayman Islands
company ("Lender").
PRELIMINARY STATEMENT:
WHEREAS, Borrower has requested, and Lender
has agreed, on the terms
and conditions set forth therein, that Lender advance
to the Borrower up to
$7,500,000.00 on a revolving credit basis;
NOW, THEREFORE, in consideration of the terms
and conditions
contained herein, and of any loans or extension of
credit now or hereafter made to
or for the benefit of Borrower by Lender hereunder, the
parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 General Terms. When used
herein, the following terms shall
have the following meanings:
"ABS" shall mean that model of prepayments
commonly applied to
automobile loans which measures prepayments as a
percentage of original pool
balance.
"Additional Loan" shall mean any Loan other
than the Initial Loan.
"Affiliate" shall mean, as to any Person, any
other Person that, directly or
indirectly, controls, is controlled by or is under
common control with such Person
or is a director or officer of such Person.
"Applicable Insured Percentage" shall mean,
(A) with respect to Insured
Receivables, so long as the Insurer is obligated (by
endorsement or otherwise) to
make payments on the Risk Default Policy and maintains
the A.M. Best Rating
specified below, the percentage specified below
opposite such rating, calculated
monthly as of each month end; (B) with respect to
Uninsured Receivables, 35%
and (C) with respect to Insured Receivables, if the
Insurer does not remain so
obligated as described in clause A above, then 35%.
Rating Applicable Insured
Percentage
A- or better 80%
Less than A- but
B or better 65%
Less than B but
C or better 50%
Below C 35%.
"Applicable Stress Factor" means 2.0;
provided however, that if the
Lender, in its discretion, deems the collection history
of the various receivables
portfolios underlying the "Collateral" under this
Agreement and the other Secured
Loan Agreements to be materially weaker than such
collection history as of the
end of March 1996, the Lender may, upon not less than
five (5) Business Days'
prior written notice to the Borrower, increase the
Applicable Stress Factor to a
number not exceeding 2.50 and such increase shall take
effect in the next
calculation of the Borrowing Base to be made under
Section 2.1.
"Average Pool Balance" shall have the meaning
set forth in Section 2.1
hereof.
"Backup Servicer" shall have the meaning set
forth in the Pooling and
Servicing Agreement.
"Borrowing Base" shall have the meaning set
forth in Section 2.1 hereof.
"Business Day" shall mean any day other than
a Saturday, Sunday, legal
holiday or other day under the laws of Bermuda, the
United States, or the State of
New York, on which commercial banking institutions are
obligated by law or
executive order to be closed.
"Cash Flow Valuation Report" shall mean a
monthly report delivered
pursuant to Section 2.2 (b) or Section 5.1(c) in the
form attached hereto as Exhibit
A.
"Change in Control" shall mean any of the
following: (i) Parent ceases to
be the owner, directly or indirectly, of 100% of the
equity interest in, and capital
stock of, the Borrower; or (ii) Joseph Battiato and/or
Angelo Appierto shall cease
to hold their offices as President and Chief Executive
Officer, respectively, of the
Borrower.
"Collateral" shall have the meaning set forth
in Section 6.1.
"Default" shall mean any event which, with
the passage of time or the
giving of notice, or both, would constitute an Event of
Default.
"Default Rate" shall have the meaning set
forth in Section 2.1.
"Default Ratio" shall have the meaning set
forth in Section 2.1.
"Defaulted Receivables" shall mean,
collectively, "Defaulted Receivables"
and "Liquidated Receivables" as each such term is
defined in the Pooling and
Servicing Agreement.
"Delinquency Rate" shall have the meaning set
forth in Section 2.1.
"Delinquency Ratio" shall have the meaning
set forth in Section 2.1.
"Distribution Date" shall have the meaning
set forth in the Pooling and
Servicing Agreement.
"Event of Default" shall mean any one or more
of the events specified in
Section 7.1.
"Excess Receipts" shall have the meaning set
forth in the Pooling and
Servicing Agreement.
"Existing AAF Loan Agreements" shall mean
those certain Loan and
Security Agreements between the Borrower and Lender,
dated as of June 20,
1995, September 25, 1995, December 20, 1995, March 22,
1996 and May 20,
1996, respectively, as the same have been or may
hereafter be amended, restated
or otherwise modified from time to time.
"Existing ACF Loan Agreements" shall mean
those certain Loan and
Security Agreements between Aegis Consumer Finance,
Inc. and Lender, dated as
of August 11, 1994, September 28, 1994, December 22,
1994 and March 22,
1995, respectively, as the same have been or may
hereafter be amended, restated
or otherwise modified from time to time.
"Existing Loan Agreements" shall mean the
Existing ACF Loan
Agreements and the Existing AAF Loan Agreements.
"Existing Loans" shall mean the "Loans"
outstanding from time to time
under the Existing Loan Agreements.
"Financing Agreements" shall mean all
agreements, instruments and
documents, including, without limitation, this
Agreement, the Guaranty, the Note,
the SPC Acknowledgment and all other assignments,
security agreements, pledge
instructions, loan agreements, notes, guarantees,
certificates of title, subordination
agreements, pledges, powers of attorney, consents,
assignments, contracts,
notices, leases, financing statements, instruments,
documents and all other written
matter whether heretofore, now or hereafter executed by
or on behalf of Borrower
in connection with the transactions contemplated by
this Agreement.
"Funding Date" shall mean any date on which a
Loan (other than the Initial
Loan) is made hereunder.
"Governmental Authority" shall mean any
nation or government, any
federal, state, local or other political subdivision
thereof and any entity exercising
executive, legislative, judicial, regulatory or
administrative functions of or
pertaining to government.
"Guaranty" shall mean that certain Guaranty
executed by Parent pursuant to
which Parent guaranties all of the Obligations of
Borrower to Lender under this
Agreement.
"Indebtedness" of any Person shall mean (i)
indebtedness of such Person for
borrowed money, (ii) obligations of such Person
evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations
of such Person to pay the
deferred purchase price of property or services, (iv)
obligations of such Person as
lessee under leases which shall have been or should be,
in accordance with
generally accepted accounting principles, recorded as a
capital lease, (v)
obligations secured by any Lien upon property or assets
owned by such Person,
even though such Person has not assumed or become
liable for the payment of
such obligations, and (vi) obligations of such Person
under direct or indirect
guaranties in respect of, and obligations (contingent
or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor
against loss in respect of,
indebtedness or obligations of others of the kinds
referred to in clause (i) through
(v) above.
"Initial Funding Date" shall mean the date on
which the Initial Loan is
made.
"Initial Loan" shall mean the initial Loan
made by Lender to Borrower
hereunder.
"Insured Receivable" shall mean each
Receivable loss on which is insured
under the Risk Default Policy.
"Insurer" shall mean The Connecticut
Indemnity Company.
"IRC" shall mean the Internal Revenue Code of
1986, as amended.
"Lien" shall mean any security interest,
charge, pledge, option or lien or
other encumbrance of any nature, whether arising under
contract or by operation
of law.
"Liquidation Period" shall have the meaning
set forth in Section 2.1.
"Loans" shall have the meaning set forth in
Section 2.1.
"Maximum Rate" shall have the meaning
ascribed to such term in Section
2.4(c) hereof.
"Note" shall mean a promissory note of
Borrower in favor of Lender
substantially in the form of Exhibit B.
"Obligations" shall mean all of the payment
and performance obligations
and liabilities of Borrower to Lender under this
Agreement, the Existing Loan
Agreements, the other Financing Agreements, and the
other "Financing
Agreements" (as such term is defined in each Existing
Loan Agreement).
"Parent" shall mean The Aegis Consumer
Funding Group, Inc., a Delaware
corporation formerly known as Aegis Holdings
Corporation.
"Person" shall mean any individual, sole
proprietorship, partnership, joint
venture, trust, unincorporated organization,
association, corporation, institution,
entity, party or government (whether national, federal,
state, provincial, county,
city, municipal or otherwise, including without
limitation, any instrumentality,
division, agency, body or department thereof).
"Pledged Stock" shall mean the issued and
outstanding stock of the SPC.
"Pool Balance" shall have the meaning set
forth in the Pooling and
Servicing Agreement.
"Pooling and Servicing Agreement" shall mean
that certain Pooling and
Servicing Agreement dated as of June 1, 1996 among the
SPC, Norwest Bank
Minnesota, National Association, as Backup Servicer,
and Norwest Bank
Minnesota, National Association, as Trustee, a copy of
which is attached hereto as
Exhibit C.
"Prepayment Rate" shall have the meaning set
forth in Section 2.1.
"Purchase Agreement" shall mean the Purchase
Agreement made as of June
1, 1996 between Borrower, as seller, and the SPC as
purchaser.
"Receivables" shall have the meaning set
forth in the Pooling and Servicing
Agreement.
"Recovery Upon Default" shall have the
meaning set forth in Section 2.1.
"Registry" shall have the meaning set forth
in Section 2.1.
"Report Date" shall mean the 20th day of each
calendar month or, if such
day is not a Business Day, then the next succeeding
Business Day.
"Repossessed Receivables" shall have the
meaning set forth in Section 2.1.
"Residual Interest" shall have the meaning
set forth in the Pooling and
Servicing Agreement.
"Risk Default Policy" shall have the meaning
set forth in the Pooling and
Servicing Agreement.
"Secured Loan Agreement" shall mean each
Existing Loan Agreement and
each other loan agreement or credit agreement entered
into by Borrower or any of
its Affiliates with Lender from time to time which is
designated in writing as a
"Secured Loan Agreement" within the meaning of this
Agreement; provided,
however, that the term "Secured Loan Agreement" shall
not include that certain
Loan and Security Agreement dated as of November 8,
1993 by and among Aegis
Auto Finance, Inc., Aegis Capital Markets, Inc., Aegis
Acceptance Corp. and
Lender (as amended, restated or otherwise modified from
time to time).
"Secured Obligations" shall mean,
collectively, all of the "Obligations" as
defined under this Agreement and under any other
Secured Loan Agreement and
including all indebtedness and other obligations owed
by Borrower or any of its
Affiliates to Lender under any Secured Loan Agreement.
"Servicer" shall have the meaning set forth
in the Pooling and Servicing
Agreement.
"SPC" shall mean Aegis Auto Funding Corp., a
Delaware corporation and a
wholly-owned subsidiary of the Borrower.
"SPC Acknowledgment" shall mean that certain
Acknowledgment executed
by the SPC as of the Initial Funding Date whereby the
SPC acknowledges the
terms of this Agreement and agrees to comply with
certain provisions hereof
pertaining to the SPC and agrees, from and after an
Event of Default, to to pay
directly to the Lender any and all amounts owed by the
SPC to the Borrower.
"Termination Date" shall mean the earlier of
(i) the second anniversary of
the Initial Funding Date and (ii) the date on which
Lender terminates this
Agreement pursuant to Section 7.1(A).
"Trust" shall mean the Aegis Auto Receivables
Trust 1996-2 created
pursuant to the Pooling and Servicing Agreement.
"Trust Certificates" shall mean the Aegis
Auto Receivables Trust 1996-2
Automobile Receivable Pass-Through Certificates, Series
1996-2, issued pursuant
to the Pooling and Servicing Agreement.
"Uninsured Receivables" shall mean all
Receivables which are not Insured
Receivables.
"Voting Notice" shall have the meaning set
forth in Section 6.1(c).
"VSI Insurance Policy" shall have the meaning
set forth in the Pooling and
Servicing Agreement.
Section 1.2 Terms Defined in Uniform
Commercial Code. All other terms
contained in this Agreement (and which are not
otherwise specifically defined
herein) shall have the meanings provided by the Uniform
Commercial Code as in
effect from time to time in the State of New York (the
"Code") to the extent the
same are used or defined therein.
Section 1.3 Accounting Terms. All
accounting terms not specifically
defined herein shall be construed in accordance with
generally accepted
accounting principles, consistently applied.
Section 1.4 Other Terms. Any references
herein to exhibits, sections,
articles or schedules, unless otherwise specified, are
references to exhibits,
sections, articles or schedules of this Agreement. The
words "hereof", "herein",
and "hereunder" and words of similar import when used
in this Agreement shall
refer to this Agreement as a whole and not to any
particular provisions of this
Agreement. Wherever appropriate in context, terms used
herein in the singular
also include the plural, and vice-versa, and each
masculine, feminine or neuter
pronoun shall also include the other gender.
Section 1.5 Preliminary Statement. The
Preliminary Statement is
incorporated herein by this reference thereto.
ARTICLE II
LOANS AND INTEREST
Section 2.1 Loans. (a) Subject to the
terms and conditions contained in
this Agreement, Lender will from time to time, prior to
the Termination Date,
extend loans ("Loans") to Borrower up to an aggregate
principal amount equal to
the lesser of (i) Seven Million, Five Hundred Thousand
Dollars and No Cents
($7,500,000.00); or (ii) the Borrowing Base (as defined
below); provided, that if
the Lender ceases trading activities, dissolves or
commences distribution of a
material portion of its assets, then the Lender may,
from and after written notice to
the Borrower, refuse to advance any further Loans to
the Borrower. The
"Borrowing Base" shall be calculated on each Funding
Date and monthly on each
Report Date in the Cash Flow Valuation Report then
delivered and shall equal the
discounted present value of the Excess Receipts
(utilizing a discount rate equal to
twelve percent (12%)) as calculated by the Borrower in
each Cash Flow Valuation
Report in a manner reasonably satisfactory to the
Lender in accordance with the
following parameters:
(i) Assume that the number of Receivables
which will become Defaulted
Receivables on an annualized basis will equal the
Default Rate times the
outstanding principal balance of the Receivables as of
the most recent month end.
As used herein, (a) the "Default Rate" shall mean the
greater of (1) the Applicable
Stress Factor times the Default Ratio as of the end of
the most recent calendar
month and (2) eighteen percent (18%) and (b) the
"Default Ratio" shall mean,
with respect to the three most recent calendar months,
a fraction, (1) the
numerator of which equals four times the sum of (A) the
dollar amount of
Receivables which became Defaulted Receivables during
such three-month period
and (B) the dollar amount of "Repossessed Receivables")
(as defined below)
acquired during such three- month period, and (2) the
denominator of which
equals the "Average Pool Balance" of the Receivables
during such three- month
period. As used above, the term "Repossessed
Receivables" with respect to any
three-month period shall mean the outstanding principal
amount of Receivables
the underlying collateral for which has been
repossessed during such period but
which have not become Defaulted Receivables during such
period. The Average
Pool Balance shall be computed by taking the sum of the
Pool Balance as of the
beginning of the three-month period referred to above
plus the Pool Balance as of
the end of such three-month period and dividing such
number by two.
(ii) Assume that Receivables will be prepaid
in accordance with the most
recently calculated Prepayment Rate. As used herein,
the "Prepayment Rate"
shall mean the greater of (a) one and one-half times
the most recently monthly
prepayment rate, as calculated by utilizing the
standard ABS formula (also known
as the "Absolute Prepayment Model") as of the end of
the most recent calendar
month and (b) one hundred and twenty percent times the
standard ABS
benchmark rate.
(iii) Assume that Receivables will become or
remain past due on an
annualized basis in accordance with the most recently
calculated Delinquency
Rate. The "Delinquency Rate" for Receivables which may
become or remain 30,
60, and 90 days past due shall mean two times the
Delinquency Ratio as of the
end of the most recent calendar month. As used herein,
the "Delinquency Ratio"
shall mean, with respect to Receivables which may
become or remain 30, 60 or 90
days past due, a fraction, the numerator of which is
twelve times the amount of
Receivables which became or remained 30, 60 and/or 90
days past due during the
most recent calendar month, as applicable, and the
denominator of which equals
the outstanding principal balance of the Receivables as
of the beginning of such
calendar month.
(iv) Assume that collections and other
recoveries with respect to Defaulted
Receivables and Repossessed Receivables, after
application of all cash payments
including insurance proceeds, shall equal the Recovery
Upon Default and shall
not be collected until the expiration of the
Liquidation Period with respect to such
Receivables. As used herein, (a) the "Recovery Upon
Default", with respect to
any Defaulted Receivable or Repossessed Receivable,
shall mean the Applicable
Insured Percentage times the outstanding principal
balance of such Receivable
and (b) the "Liquidation Period" with respect to any
Defaulted Receivables or
Repossessed Receivables, shall equal the greater of (1)
one and one-half times the
average number of days outstanding between the date
such Receivables first
became Defaulted Receivables or Repossessed
Receivables, as the case may be,
and the date such Receivables are paid, through
liquidation of the underlying
collateral therefor or otherwise, according to a
methodology acceptable to the
Lender, and (2) 270 days.
The Borrower shall set forth in the Cash Flow Valuation
Report, delivered
monthly pursuant to Section 5.1(c), the calculation of
the Borrowing Base in
reasonable detail and with such supporting information
as may be reasonably
requested by Lender. In the event of any discrepancy
between the Borrower's and
the Lender's calculation of the Borrowing Base or of
any component thereof, the
Lender's calculation, absent manifest error, shall
control. It is expressly
understood and agreed that amounts on deposit in the
"Funding Account" (as such
term is defined in the Pooling and Servicing Agreement)
shall not be credited
towards the Borrowing Base Calculation.
(b) The aggregate principal amount of the
Loans shall be evidenced by a
Note and shall be payable in accordance with Section
2.5.
(c) Borrower may prepay any portion of the
Loans in whole or in part;
provided, however, that simultaneously with such
prepayment, Borrower shall
pay all interest accrued and unpaid on the amount so
prepaid through the date of
prepayment.
Section 2.2 Making the Loans. (a) No Loan
shall be in an aggregate
amount of less than $100,000, nor shall it be in an
amount greater than the
Borrowing Base minus the aggregate principal amount of
all Loans previously
advanced and still outstanding.
(b) On or prior to each Funding Date, the
Borrower shall deliver a Cash
Flow Valuation Report setting forth the calculation of
the Borrowing Base as of
the last day of the preceding calendar month in
accordance with the parameters set
forth in Section 2.1 above based on the Receivables
which, as of the close of
business on such Funding Date, will have been
transferred to the Trust pursuant to
the Pooling and Servicing Agreement. The Initial Loan
shall be in an aggregate
amount not exceeding the Borrowing Base as calculated
in such report. Each
subsequent Loan shall be in an aggregate amount not
exceeding the Borrowing
Base as calculated in such report minus the aggregate
principal amount of all
Loans previously advanced and still outstanding.
Notwithstanding anything to the
contrary in this Agreement, Lender's obligations to
make any subsequent Loans
hereunder shall terminate on the earlier of (i) the end
of the "Funding Period" (as
such term is defined in the Pooling and Servicing
Agreement) and (ii) September
20, 1996.
Section 2.3 Note. Concurrently with the
execution hereof, Borrower shall
execute and deliver to Lender the Note to evidence the
aggregate amount of all
Loans outstanding from time to time. The Note shall be
dated the date hereof and
shall mature on the Termination Date. Lender is hereby
authorized to endorse the
amount of each Loan, each repayment or prepayment of
principal thereof on the
schedule attached to and constituting a part of the
Note, which endorsement shall
constitute prima facie evidence of the accuracy of the
information so endorsed;
provided, that failure by Lender to make such
endorsement shall not affect the
obligations of Borrower hereunder or under the Note.
In lieu of endorsing such
schedule, Lender is hereby authorized, at its option,
to record such Loans,
repayments or prepayments in its books and records,
such books and records
constituting prima facie evidence of the accuracy of
the information contained
therein.
Section 2.4 Interest. (a) Borrower hereby
promises to pay to Lender
interest on the unpaid principal amount of each Loan
for the period commencing
on the date such Loan was made until, but not
including, the date such Loan shall
be paid in full. All Loans shall bear interest at a
rate equal to twelve percent
(12%) per annum. Each interest payment shall be
computed on the basis of a
360-day year for the actual number of days elapsed.
Interest shall be paid,
monthly in arrears on each Distribution Date,
commencing on the first
Distribution Date after the Initial Loan is made, for
all accrued and unpaid interest
on the unpaid principal of the Loans through such date.
In addition, on any date
of any principal prepayment hereunder pursuant to
Sections 2.5 and 7.1, the
Borrower shall pay accrued and unpaid interest on the
amount of such prepayment
to the extent such interest is not otherwise paid
pursuant to the immediately
preceding sentence.
(b) After the occurrence and during the
continuance of an Event of Default,
the Loans shall bear interest at a rate equal to the
rate set forth in Section 2.4(a)
plus two percent (2.00%).
(c) Notwithstanding the foregoing, nothing
in this Agreement shall require
Borrower to pay interest at a rate exceeding the
maximum rate (the "Maximum
Rate") permitted by applicable law. If the interest
rate provided for hereunder on
any date would exceed the Maximum Rate, then the
interest rate shall be
automatically reduced to the Maximum Rate and the
interest rate for any
subsequent period, to the extent less than the Maximum
Rate, shall be increased to
equal the Maximum Rate until such time as the interest
paid hereunder equals the
amount which would have been paid if the interest
otherwise payable hereunder
had at all times been permitted under applicable law.
Section 2.5 Repayments; Prepayments. (a)
The Loans shall be payable as
follows:
(i) Whenever the aggregate principal amount
of Loans outstanding less the
sum of any accrued and unpaid interest on the Loans
exceeds the Borrowing Base,
as calculated pursuant to Section 2.1 hereof, then a
mandatory prepayment of
principal shall be made in the amount of such excess.
Such prepayments shall be
applied to the Obligations as set forth in Section
2.5(b) and shall be accompanied
by a payment of all interest accrued and unpaid through
the date of such
mandatory prepayment and allocable to the amount so
prepaid.
(ii) The entire remaining outstanding
principal balance of the Loans,
together with any accrued and unpaid interest and any
other Obligations
hereunder, shall be due and payable on the Termination
Date.
(iii) In addition to the foregoing, if the
Lender ceases trading activities,
dissolves or commences distribution of a material
portion of its assets, then the
Lender may demand payment of all Loans then
outstanding, in which event the
entire remaining outstanding principal balance of the
Loans, together with any
accrued and unpaid interest and any other Obligations
hereunder, shall be due and
payable on the ninetieth day following such written
notice.
(b) Subject to Section 7.2(d), all payments
of any amounts due under any
provision of this Agreement or any other Financing
Agreement, shall be applied
in the following order: first to payment of interest
due and owing; second to the
then outstanding principal balance of the Loans; and
third to the remaining
balance of the Obligations. If any payment becomes due
on a Saturday, Sunday
or any day on which Lender is legally closed for
business, such payment shall be
made on the next succeeding Business Day, and, in the
case of a principal
payment, interest on such principal payment shall be
payable for such extension
of time and shall be included with such payment.
(c) Borrower shall make each payment
hereunder and under the Note on the
day when due in lawful money of the United States of
America to Lender at The
First National Bank of Chicago, Chicago, Illinois,
account number 52-61333, or at
such other account which Lender may hereafter designate
to Borrower in writing.
(d) The obligation of Borrower to pay the
Loans and other Obligations
shall be a general obligation of Borrower, absolute and
unconditional.
ARTICLE III
CONDITIONS TO LENDING
Section 3.1 Conditions Precedent to the
Initial Loan. The obligation of
Lender to make the Initial Loan is subject to the
satisfaction of all of the following
conditions precedent:
(a) Documents. Lender shall have received,
on or before the Initial
Funding Date, this Agreement, the Note, the SPC
Acknowledgement, the
Guaranty, and all other agreements, documents,
financing statements and
instruments described in the List of Closing Documents
attached hereto as Exhibit
D and made a part hereof, each duly executed where
appropriate, dated the Initial
Funding Date where appropriate and in form and
substance reasonably
satisfactory to Lender.
(b) Governmental and Other Consents and
Approvals. All notices to and
filings with all regulatory bodies and other Persons
required to be given or made,
and all consents or other approvals therefrom shall
have been obtained in
connection with the transactions contemplated by this
Agreement and the other
Financing Agreements.
(c) Pooling and Servicing Agreement. (i)
The transactions contemplated
by the Pooling and Servicing Agreement shall have been
consummated, (ii) the
SPC shall have received the net cash proceeds from the
sale of Trust Certificates
thereunder and (iii) the Borrower and its Affiliates
shall have made all
prepayments owed to the Lender under that certain Loan
and Security Agreement
dated as of November 8, 1993 among Lender and certain
of Borrower's Affiliates
on account of the transactions contemplated by the
Pooling and Servicing
Agreement.
Section 3.2 Conditions Precedent to All
Loans. The obligation of Lender
to make any Loans hereunder (including the Initial
Loan) shall be subject to the
further conditions precedent that on each such date (a)
the following statements
shall be true (and the request for any Loans and the
acceptance by Borrower of the
proceeds of such Loan, shall constitute a
representation and warranty by Borrower
that on the date of making of such Loan such statements
are true):
(i) The representations and warranties
contained in Article IV are true and
correct in all respects on and as of the date of such
Loan, before and after giving
effect to such Loan, as though made on and as of such
date;
(ii) No event has occurred and is
continuing, or would result from such
Loan, which constitutes a Default or an Event of
Default;
(iii) There has been no material adverse
change in the business operations
or financial condition of Parent or Borrower since June
30, 1995;
(iv) No law, regulation, order, judgment or
decree of any Governmental
Authority shall enjoin, prohibit or restrain, or impose
or result in the imposition of
any material adverse condition upon, Lender's making of
the requested Loan; and
(v) the aggregate outstanding amount of all
Loans hereunder (after giving
effect to the requested Loan hereunder), together with
all "Loans" outstanding
under Lender's other loan agreements with Borrower and
Borrower's Affiliates,
shall not exceed 35% of Lender's "net assets" (as such
term is defined in Lender's
Articles of Association).
(vi) the Lender shall have received such
other approvals, opinions or
documents as Lender may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this Agreement
and make the Loans
provided for herein, Borrower hereby makes the
following representations and
warranties to Lender, each of which shall survive the
execution and delivery of
this Agreement or any other Financing Agreement and
shall be deemed remade as
of the date of each Additional Loan to Borrower:
Section 4.1 Corporate Existence. Each of
the Borrower, the Parent and the
SPC is duly organized, validly existing and in good
standing under the laws of the
State of Delaware, and has authority to conduct
business and is in good standing
in all other states where the nature and extent of the
business transacted by it or
the ownership of its assets makes such authorization
necessary.
Section 4.2 Corporate Authority; No
Conflicts. The borrowings hereunder
and the execution, delivery and performance by the
Borrower of this Agreement,
the Note and the other Financing Agreements (i) are
within Borrower's corporate
powers, (ii) have been duly authorized by all necessary
corporate and stockholder
action, (iii) do not contravene Borrower's Certificate
of Incorporation or by-laws,
and (iv) do not contravene nor result in a default
under, nor result in the creation
of a Lien (other than the Liens in favor of Lender
created pursuant to the terms of
this Agreement) under, any law or any contractual
restriction binding on or
affecting Borrower. No consent or approval of any
holder of any indebtedness or
obligation of Borrower, and no consent, permission,
authorization, order or
license of any Governmental Authority, is necessary in
connection with the
execution, delivery and performance of the Financing
Agreements, including,
without limitation, this Agreement and the Note, or any
transaction contemplated
hereby or thereby. The execution, delivery and
performance by the Parent of the
Guaranty (i) are within the Parent's corporate powers,
(ii) have been duly
authorized by all necessary corporate and stockholder
action, (iii) do not
contravene the Parent's Certificate of Incorporation or
by-laws, and (iv) do not
contravene nor result in a default under, nor result in
the creation of a Lien under,
any law or any contractual restriction binding on or
affecting the Parent. The
execution, delivery and performance by the SPC of the
SPC Acknowledgement (i)
are within the SPC's corporate powers (ii) have been
duly authorized by all
necessary corporate and stockholder action, (iii) do
not contravene the SPC's
Certificate of Incorporation or by-laws, and (iv) do
not contravene nor result in a
default under, nor result in the creation of a Lien
under, any law or contractual
restriction binding on or affecting the SPC. This
Agreement, the Note and the
other Financing Agreements to which the Borrower is a
party constitute valid,
binding and legal obligations of the Borrower
enforceable in accordance with
their terms, the Guaranty constitutes the valid,
binding and legal obligation of the
Parent enforceable in accordance with its terms, and
the SPC Acknowledgement
constitutes the valid, binding and legal obligation of
the SPC enforceable in
accordance with its terms.
Section 4.3 Financial Condition. The
audited consolidated financial
statements of the Parent and its subsidiaries
(including the Borrower) dated as of
June 30, 1995, and all interim financial statements
previously delivered to Lender
are complete and correct and such financial statements
have been prepared in
conformity with generally accepted accounting
principles and practices
consistently applied and fairly present the financial
condition and results of
operations of the Parent and the Borrower as of the
date thereof (and for the
period then ended) in conformity with such accounting
principles and practices
(subject, in the case of interim statements, to normal
year-end adjustments). Since
June 30, 1995, there has been no material adverse
change is such financial
condition or results of operation for the Parent and/or
the Borrower.
Section 4.4 Litigation. There is no
litigation, tax claim, proceeding or
dispute pending or, to the Borrower's knowledge,
threatened against the Borrower,
the Parent, or the SPC, or affecting their respective
properties or assets, which, if
determined adversely to Borrower, the Parent, or the
SPC as the case may be, (a)
could reasonably be expected to adversely affect (i)
the execution, delivery or
enforceability of this Agreement or the other Financing
Agreements, or (ii) the
ability of Borrower to perform its obligations under
this Agreement or any of the
other Financing Agreements, or (b) could reasonably be
expected to have a
material adverse effect on the financial condition of
the Borrower or the SPC.
Section 4.5 Compliance with Laws and
Regulations. Borrower, the Parent
and the SPC are in compliance with all laws, orders,
regulations and ordinances of
all Governmental Authorities relating to their business
operations and assets.
Section 4.6 Title to Pledged Stock and
Excess Receipts. (a) Attached as
Exhibit C to the Exisitng Loan Agreement dated June 20,
1995 is a true, complete
and accurate copy of the Certificate of Incorporation
of the SPC, which has not
been amended since June 20, 1995. Borrower is the
legal and beneficial owner of
100% of the Pledged Stock free and clear of any Lien
except for (i) Liens in favor
of Lender created pursuant to the Secured Loan
Agreements and (ii) Liens in
favor of Greenwich Capital Financial Products, Inc.
which are subordinated to the
Liens of the Lender on terms agreed to by Lender in
writing, and the SPC is the
legal and beneficial holder of the Residual Interest
free and clear of any Lien, and
has the unencumbered right to receive the Excess
Receipts. Such Pledged Stock
represents 100% of the issued and outstanding stock of
the SPC. After giving
effect to the anticipated depletion to zero of the
"Funding Account" (as defined in
the Pooling and Servicing Agreement), the Residual
Interest will be valued on the
books and records of the SPC at $6,644,076.97 and the
Borrower's interest in the
Pledged Stock will be valued on the books and records
of the Borrower at the sum
of (x) the equivalent amount, plus (y) the current
valuation of the "Class B
Certificates" referred to in Section 4.6 of each
Existing Loan Agreement.
Borrower has the right to vote the Pledged Stock and to
pledge and grant a
security interest in all of the Collateral to the
Lender. Except as otherwise
provided in the Pooling and Servicing Agreement or in
the SPC's Certificate of
Incorporation or in the Existing Loan Agreements, there
are no restrictions upon
any of the rights associated with, or the transfer of,
any of the Collateral, which
would interfere with the Lender's ability to exercise
the Lender's rights and
remedies hereunder. Borrower has no obligation to make
capital contributions or
make any other payments to the SPC with respect to its
interests, the non-
payment of which would in any way create a right of
offset from the SPC as
against distributions otherwise payable to the
Borrower. The SPC (i) has
conducted no business other than the transactions
evidenced by and contemplated
(x) under the Purchase Agreement and the Pooling and
Servicing Agreement, and
(y) the "Purchase Agreement" and "Pooling and Servicing
Agreement" (as each
such term is defined in each Existing Loan Agreement),
(ii) has no properties
other than the Residual Interest and the "Residual
Interest" (as defined in each
Existing Loan Agreement) and (iii) has no Indebtedness
to any third-parties
(including Affiliates) except for any Indebtedness
expressly created under the
above-referenced agreements.
(b) Lender has a perfected, first-priority
security interest in the Collateral
constituting the Pledged Stock and any general
intangibles relating thereto and no
further action is required to perfect such security
interest.
Section 4.7 No Defaults. No event has
occurred and is continuing or
would result from the making of a Loan which
constitutes a Default or an Event
of Default. Neither Borrower, Parent nor the SPC is in
default under any loan or
credit agreement or any other material agreement, lease
or instrument to which
they are parties or by which it or any of their
properties are bound.
Section 4.8 Taxes. Each of Borrower and the
Parent have filed all required
federal and local tax returns and paid all material
taxes due pursuant to said
returns or any assessments against Borrower or Parent,
as the case may be, except
for those taxes being contested in good faith and for
which adequate reserves have
been provided on the books and records of Borrower or
Parent, as the case may
be.
Section 4.9 Margin Stock. None of the
proceeds of any Loan will be used,
directly or indirectly, for the purpose, whether
immediate, incidental or ultimate,
of purchasing or carrying any "margin stock" within the
meaning of Regulation G
and Regulation X of the Board of Governors of the
Federal Reserve System.
Borrower is not engaged in the business of extending
credit for the purpose of
purchasing or carrying any such margin stock and no
part of the proceeds of the
Loans will be used to purchase or carry any such margin
stock of for any other
purpose that violates or is inconsistent with such
Regulation G or Regulation X.
Section 4.10 Investment Company Act.
Borrower is not an "investment
company" or a company "controlled" by an "investment
company," within the
meaning of the Investment Company Act of 1940, as
amended.
Section 4.11 Disclosure. No representation
or warranty of Borrower
contained in this Agreement or any certificate or
similar instrument required to be
furnished to Lender by or on behalf of Borrower in
connection with the
transactions contemplated by this Agreement contains or
will contain any untrue
statement of a material fact or omits to state a
material fact (known to Borrower,
in the case of any document not furnished by it)
necessary in order to make the
statements contained herein or therein not misleading.
Section 4.12 Chief Executive Office.
Borrower's chief executive office and
principal place of business are located at 525
Washington Street, Jersey City, New
Jersey 07310, or, from and after the date hereof, at
such other location with
respect to which all necessary actions under Section
5.11 hereof have been
performed.
Section 4.13 Pooling and Servicing
Agreement. Attached hereto as Exhibit
C is a true, complete and accurate copy of the Pooling
and Servicing Agreement.
There are no agreements written or otherwise, which
would modify or otherwise
affect the rights of the SPC under the Pooling and
Servicing Agreement. All of
the representations and warranties made by the
Borrower, the SPC or any
Affiliates thereof in the aforementioned agreements are
true and correct in all
material respects and are hereby confirmed.
ARTICLE V
COVENANTS
Borrower covenants and agrees that, so long
as any Obligations remain
outstanding, and (even if there shall be no Obligations
outstanding) so long as this
Agreement remains in effect:
Section 5.1 Reports/Financial Information.
Borrower shall deliver to
Lender:
(a) As soon as practicable, and in any event
within forty-five (45) days
after the end of each calendar month, the consolidated
balance sheet and income
statement of Parent and its subsidiaries as at the end
of such month, which for
each month coinciding with the end of a calendar
quarter shall set forth
comparative figures for the related periods in the
prior fiscal year, all of which
shall be certified by the chief financial officer,
chief accounting officer or chief
executive officer of Borrower, subject to changes
resulting from audit and normal
year-end adjustments;
(b) As soon as practicable, and in any event
within one-hundred-twenty
(120) days after the end of each fiscal year of Parent,
the consolidated balance
sheet and income statement of Parent and its
subsidiaries as at the end of such
year, certified by independent certified public
accountants of recognized national
standing whose certification shall be without
qualification as to the scope of audit,
together with a certificate of such accounting firm
stating that in the course of its
regular audit of the business of the Parent and
Borrower, which audit was
conducted in accordance with generally accepted
auditing standards, such
accounting firm has obtained no knowledge of any
Default or Event of Default
under Sections 5.1(a), (b), (f), 5.2(a), 5.6(a), 5.10
or 5.12 hereof which has
occurred or is continuing or, if in the opinion of such
accounting firm such a
Default or Event of Default under the above-referenced
Sections has occurred and
is continuing, a statement as to the nature thereof;
(c) On or before the Report Date of each
calendar month, a schedule of
activity for the preceding calendar month, which sets
forth (i) the aggregate
outstanding principal amount of Receivables and of the
Trust Certificates, (ii) a
Cash Flow Valuation Report in the form attached hereto
as Exhibit A, setting
forth, among other things, the calculation of the
Borrowing Base with supporting
information in reasonable detail, (iii) copies of the
monthly reports distributed to
holders of the Trust Certificates pursuant to Section
5.09 of the Pooling and
Servicing Agreement or any successor provisions and
(iv) any other pertinent
information reasonably requested by Lender.
(d) Promptly upon receipt thereof, copies of
(i) any financial reports or
other information required to be delivered by Borrower
or the SPC or any other
affiliate thereof pursuant to the terms of the Pooling
and Servicing Agreement and
(ii) any written reports, certifications or other
material notices given to the
Borrower, the SPC or any affiliate thereof by the
Trustee, Servicer or Backup
Servicer.
(e) Promptly, such other financial or
portfolio information related to this
Agreement or the Financing Agreements that Lender may
reasonably request from
time to time.
(f) As soon as practicable, and in any event
within forty-five (45) days after
the end of each fiscal quarter of Borrower, a list of
all agreements entered into by
Borrower pursuant to which Borrower may (i) incur any
Indebtedness to any
Person in excess of $100,000 or (ii) become the obligee
with respect to any loan,
advance or other Indebtedness of any Affiliate; such
notice shall include the name
and date of the agreement, the name of the
counterparty, the maximum amount of
Indebtedness thereunder, and a description of any
security thereunder for such
Indebtedness; provided, however, that after the
occurrence and during the
continuance of an Event of Default, the Borrower shall
notify Lender immediately
upon entering into any agreement described in this
Section 5.1(f).
Section 5.2 Notices. Borrower shall give
prompt written notice to Lender
of:
(a) Any litigation, including, without
limitation, adversary proceedings or
contested matters brought by Parent, Borrower or by any
other Person against
Parent or Borrower (or any material change in such
litigation), where the amount
in controversy is $100,000 or more and all litigation
when the aggregate amounts
in controversy equal or exceed $500,000, or any other
litigation or proceeding
which Borrower deems material or which could materially
and adversely affect
the operations, financial condition or prospects of
Parent and/or Borrower, and, if
requested by Lender, deliver to Lender copies of all
pleadings with respect to any
such matters served on or filed by Parent or Borrower;
(b) Any Event of Default or Default and
Borrower's proposed cure therefor;
any such notice shall refer to this Agreement, describe
such Event of Default or
Default and state that such notice is a "Notice of
Default"; and
Section 5.3 Corporate Existence. Borrower
shall maintain and preserve its
corporate existence and all rights, privileges and
franchises now enjoyed, and
conduct its business in accordance with the terms of,
and otherwise comply with,
its formation documents. Borrower shall cause the SPC
to maintain and preserve
its corporate existence and all rights, privileges and
franchises now enjoyed by it.
Section 5.4 Compliance with Law. Borrower
shall, and shall cause the
SPC to, comply in all material respects with all
applicable laws, rules, regulations
and orders.
Section 5.5 Compliance with Financing
Agreements. Borrower shall
comply promptly with any and all covenants and
provisions of this Agreement,
the Note and the other Financing Agreements, and shall
cause the SPC and its
other Affiliates to comply promptly with any and all
covenants and provisions to
be performed by such parties under the Pooling and
Servicing Agreement.
Section 5.6 Books and Records; Right of
Inspection. (a) Borrower shall,
and shall cause the SPC to, maintain adequate books,
accounts and records, and
prepare all financial statements required hereunder in
accordance with generally
accepted accounting principles and, once per calendar
year after reasonable notice,
and at any time after the occurrence and during the
continuance of an Event of
Default, permit employees or agents of Lender at any
reasonable time to inspect
the properties of Borrower and the SPC and to examine
or audit each of their
books, accounts and records and make copies and memo-
randa thereof.
(b) Borrower shall maintain all records
necessary for compliance with the
exception to withholding for portfolio interest under
Section 871(h) of the Internal
Revenue Code.
Section 5.7 Further Assurances. (a)
Borrower shall furnish to Lender such
periodic, special, or other reports and information as
reasonably requested by
Lender.
(b) From time to time, at its own expense,
Borrower will take whatever
action is reasonably requested by Lender or its legal
counsel to preserve, protect
or perfect the security interest in the Collateral
granted pursuant to Article VI,
including, without limitation, executing UCC financing
statements, endorsing
notes, executing additional security documents or
delivering possession of
Collateral, and shall perform such acts as Lender shall
reasonably deem necessary
or appropriate to effectuate the purposes of this
Agreement. Borrower will appear
in and defend at its own expense any action or
proceeding which may affect
Borrower's title to the Collateral, the security
interest granted hereunder or the
SPC's title to the Excess Receipts and the Residual
Interest.
Section 5.8 Maintenance of Insurance. (a)
Borrower shall maintain and
keep in force in adequate amounts insurance with
responsible and reputable
companies or implement and maintain a reasonable
program of self-insurance,
and accept no self-insurance risks which are
substantially greater than those
historically carried by Borrower.
(b) Borrower shall cause to be paid all
annual insurance premiums with
respect to the Risk Default Policy and the VSI
Insurance Policy and shall take all
other actions necessary or possible to be taken on its
part in order to maintain the
effectiveness of each such policy and the liability of
the Insurer with respect
thereto.
Section 5.9 Pooling and Servicing Agreement.
Without the prior written
consent of Lender, Borrower shall not, and shall not
permit any of its affiliates to
(i) amend, modify, restate, supplement, cancel or
terminate the Pooling and
Servicing Agreement, (ii) waive any of its rights under
any provision thereof, (iii)
consent to any deviation from the terms thereof or (iv)
otherwise grant any
consents provided for thereunder, or default in its
obligations thereunder.
Section 5.10 Merger; Consolidation, Etc.
Borrower shall not, and shall not
permit the SPC to, liquidate, dissolve, merge into or
consolidate with another
entity; or sell, lease or otherwise dispose of all or a
substantial portion of its
business or assets, except for sales of loans not
constituting Receivables in the
ordinary course of its business. Borrower shall not
permit the SPC to engage in
any business other than the holding of the Residual
Interest and the "Residual
Interest" (as defined in each Existing Loan Agreement),
nor to acquire any other
assets nor incur any Indebtedness not expressly
permitted under Section 4.6
hereof except that the SPC shall be permitted to hold
residual interests which are
substantially similar in nature to the Residual
Interest and to incur any
Indebtedness under any other pooling and servicing
agreement which is
substantially similar in nature to the Pooling and
Servicing Agreement and to
which the Lender has consented.
Section 5.11 Change of Principal Office.
Borrower shall not (a) change the
location of its chief executive office and principal
place of business from Newport
Tower, 525 Washington Street, Jersey City, New Jersey
07310 or (b) change its
name, identity or corporate structure to such an extent
that any financing
statement filed in connection with this Agreement would
become seriously
misleading, unless Borrower shall have given Lender at
least 30 days prior written
notice thereof and prior to effecting any such change,
taken such steps as Lender
may deem necessary or desirable to continue the
perfection and priority of the
Liens in favor of Lender granted in connection
herewith.
Section 5.12 Net Worth. The sum of the
Parent's consolidated total assets
minus the Parent's consolidated total liabilities (each
determined in conformity
with generally accepted accounting principles,
consistently applied and without
duplication) shall not be less than $15,000,000 as of
the Initial Funding Date, and
the greater of such amount or ten percent (10%) of
Parent's consolidated assets
(without duplication) on any subsequent date; provided,
however that for purposes
of this Section, the Collateral shall constitute an
asset of Borrower and any assets
which have been sold by any Person in a non-recourse
sale to an unaffiliated third
party in a securitization transaction shall not
constitute assets of any such Person.
Section 5.13 Limited Business of SPC. The
Borrower will take all actions
which may be required on its part to ensure that the
SPC engages in no business
and incurs no Indebtedness or other liabilities other
than that permitted under
Section 4.6 and Section 5.10 above or and issues no
capital stock or other equity
interest in favor of any Person other than the
Borrower.
ARTICLE VI
COLLATERAL
Section 6.1 Security Interest. (a) To
secure the prompt and complete
payment, observance and performance of all of the
Secured Obligations, Borrower
hereby (1) reaffirms the grant of a security interest
in the Collateral made under
the Existing Loan Agreements and (2) pledges and grants
to Lender a security
interest in and assignment of all of Borrower's rights,
title and interest in and to
the following property and interests in property,
whether now owned or existing
or hereafter arising or acquired and wheresoever
located and whether the same
comprise accounts, instruments, securities, chattel
paper or general intangibles
(the "Collateral"):
(i) all of Borrower's rights in the Pledged
Stock, and all of Borrower's
rights, as a shareholder of the SPC, in and to the
property (and interests in
property) that is owned by the SPC;
(ii) all warrants, options and other rights
to acquire stock in the SPC and all
of Borrower's rights, if any, to participate in the
management of the SPC;
(iii) all rights, privileges, authority and
powers of Borrower as owner or
holder of its equity interest in the SPC, including,
but not limited to, all general
intangibles and contract rights related thereto;
(iv) all documents and certificates
representing or evidencing Borrower's
equity interest in the SPC;
(v) all of Borrower's interest in and to the
profits and losses of the SPC and
Borrower's right as a shareholder of the SPC to receive
dividends on account of
the SPC's capital stock or to receive distributions of
the SPC's assets, upon
complete or partial liquidation or otherwise;
(vi) all of Borrower's right, title and
interest to receive payments of
principal and interest on any loans and/or other
extensions of credit made by
Borrower or its Affiliates to the SPC, all other
accounts and other rights to
payment which may be owing by the SPC to Borrower, and
any all instruments
creating or evidencing such rights;
(vii) all distributions, cash, instruments
and other property from time to
time received, receivable or otherwise distributed in
respect of, or in exchange for,
Borrower's interest in the SPC; and
(viii) any other right, title, interest,
privilege, authority and power of
Borrower in or relating to the SPC, all whether now
existing or hereafter arising,
and whether arising at law or in equity and any and all
proceeds of any of the
foregoing and all books and records of Borrower
pertaining to any of the
foregoing.
(b) Pursuant to the Existing Loan Agreement
dated June 20, 1995,
Borrower has delivered to Lender all stock certificates
evidencing the Collateral.
If Borrower acquires (by dividend, purchase, additional
contribution,
reclassification or otherwise): (a) any additional
stock, shares, units, options or
warrants of stock in the SPC (whether or not
certificated or otherwise evidenced
in writing); (b) any subscriptions, warrants or any
other rights or options issued in
connection with any of the Collateral; or (c) any
options, warrants or convertible
securities in connection with the Collateral; (all of
the foregoing being
collectively referred to as the "Additional
Interests"), then all such Additional
Interests shall be promptly delivered to and held by
the Lender (if the same are
certificated) under the terms of this Agreement,
accompanied by duly executed
stock powers, instruments of transfer or assignments in
blank, as applicable, all in
form and substance satisfactory to the Lender, and the
same shall constitute
Collateral hereunder.
(c) Notwithstanding the foregoing, prior to
the delivery of a Voting Notice
(as defined below in this paragraph (c)), Borrower
shall be entitled to exercise any
and all voting rights pertaining to the Collateral (or
any portion thereof), except as
otherwise provided in Section 5.9 above. As used
herein, the term "Voting
Notice" means a written notice from the Lender to each
of the Borrower and the
SPC providing that the Lender may exercise all of the
voting rights and powers
described in subparagraph (a) of Section 6 hereof.
Borrower hereby
acknowledges and agrees that upon the receipt of a
Voting Notice, the Lender
shall be entitled to exercise all of said voting rights
and powers and all of the
Borrower's voting rights and powers shall immediately
cease. Except as
otherwise expressly provided herein, under no
circumstances shall the Lender
have, or be deemed to have or have had, any right to
exercise, or to direct
Borrower to exercise, any voting, managerial, election
or other rights of an owner
of the Pledged Stock.
(d) All distributions by the SPC, all
Additional Interests and other payments
that are made, paid, issued, distributed or delivered
by the SPC to Borrower in
cash or otherwise shall be received in trust for the
benefit of the Lender and shall
be delivered to the Lender for application (i) to the
extent such payments are
attributable or allocable to Excess Receipts or other
amount distributable in
respect of the Residual Interest, in accordance with
the terms of this Agreement;
(ii) to the extent such payments are attributable or
allocable to "Excess Receipts"
or other amounts distributable in respect of the "Class
B Certificate" as each such
term is defined in any Existing Loan Agreement, in
accordance with the terms of
such Existing Loan Agreement; and (iii) to the extent
such payments are
attributable or allocable to similar amounts received
in respect of any residual
interest received under any similar transaction and in
respect of which Lender has
given value under any subsequent loan agreement with
Borrower, in accordance
with the terms of such other loan agreement.
Section 6.2 Perfection of the Security
Interest. (a) Borrower agrees (i)
promptly to deliver to the Lender or its designee, all
certificates, instruments and
other documents evidencing any portion of the
Collateral, which may at any time
come into the possession of the Borrower and in which a
security interest may be
perfected, (ii) to execute and deliver such notices of
the Lender's security interest
in the Collateral (which notice shall be satisfactory
in form and substance to the
Lender and which may request acknowledgment from the
addressee) to any third
party designated by the Lender, (iii) to execute and
deliver to the Lender such
financing statements as the Lender may request with
respect to the Collateral, (iv)
to cause the SPC to indicate in its records the
security interests granted hereby, in
a manner satisfactory to the Lender, and (v) to take
such other steps as the Lender
may from time to time request in order to perfect the
Lender's security interest in
the Collateral under applicable law. Borrower agrees
that this Agreement or a
photocopy of this Agreement shall be sufficient as a
financing statement to the
extent permitted by applicable law.
Section 6.3 Power of Attorney. Subject to
the terms and provisions of this
Agreement, at any time, without notice and at the
expense of Borrower, Lender
may, and Borrower hereby appoints Lender its true
attorney-in-fact (such agency
being coupled with an interest) for such purposes.
(a) Upon the occurrence of an Event of
Default, perform any obligation of
Borrower hereunder in Bor- rower's name or otherwise;
(b) Upon the occurrence of any Event of
Default, notify any Person
obligated on any Collateral of the rights of Lender
hereunder;
(c) Upon the occurrence of any Event of
Default, enter into any extension,
settlement or compromise agreement relating to or
affecting the Collateral and, in
connection therewith, to sell, transfer or dispose of
any of the Collateral, and take
such action as Lender may deem proper, and apply any
money or property
received in exchange for any of such Collateral to any
of the Secured Obligations;
(d) Upon the occurrence of any Event of
Default, endorse, deliver evidence
of title, enforce and collect by legal action or
otherwise any of the Collateral;
(e) Upon the occurrence of any Event of
Default, receive payment or
performance in connection with any insurance claims,
claims for breach of
warranty or any other claims concerning any of the
Collateral; and
(f) Upon the occurrence of any Event of
Default, protect, defend and
preserve the Collateral including, without limitation,
filing or prosecution of any
third party claim or other legal action or proceeding
which Lender deems
necessary to protect any of the rights, interests or
priorities of Lender with respect
to any of the Collateral.
ARTICLE VII
DEFAULT; REMEDIES
Section 7.1 Events of Default. Upon the
occurrence of any of the
following events (each an "Event of Default"):
(a) Borrower fails to make any payment of
principal of or interest on the
Note, or payment of any other Obligation due hereunder,
under the Note or under
any other Financing Agreement on or before the date
such payment is due;
(b) Any breach by Borrower in the due
observance or performance of any
covenant set forth in Sections 5.1 to 5.3 or 5.5 to
5.12, and such breach continues
unremedied for five (5) Business Days after any officer
of Borrower obtains
knowledge thereof;
(c) Any breach by Borrower of any covenant,
other than those covenants
enumerated in Section 7.1 (a) or (b) of this Agreement,
which remains
unremedied for thirty (30) days after the date such
breach occurs;
(d) Any representation or warranty made by
Borrower under this
Agreement or by Borrower or Parent under any other
Financing Agreement or in
any certificate, report, financial statement or other
agreement, instrument or
document furnished in connection with this Agreement or
any other Financing
Agreement shall prove to have been false or misleading
in any material respect
when made;
(e) Default in, or breach of, any provision
of the SPC Acknowledgment by
the SPC or by Borrower;
(f) Any representation or warranty made by
Borrower, the SPC or any
Affiliates in the Purchase Agreement or in the Pooling
and Servicing Agreement
or in any certificate or report a copy of which is
delivered to Lender pursuant to
this Agreement shall prove to have been false or
misleading in any material
respect when made;
(g) The occurrence of a default, breach or
failure of condition by Borrower,
any guarantor of the Obligations or Parent under any
other Financing Agreement
which (unless such default otherwise constitutes an
Event of Default pursuant to
the other provisions of this Section 7.1) is not
remedied within the applicable cure
period contained therein, if any;
(h) Any default by Borrower, any guarantor
of the Obligations, the SPC or
Parent after any applicable notice and cure period,
shall occur under any
Indebtedness with respect to which Borrower or Parent,
as applicable, is a party as
borrower or guarantor, provided, that any such default
by Parent described in this
subsection 7.01(h) shall not constitute an Event of
Default unless the aggregate
Indebtedness owed under such agreement is greater than
or equal to $100,000;
(i) Borrower, the SPC, any guarantor of the
Obligations or Parent shall
generally not pay its debts as they become due or shall
admit in writing its
inability to pay its debts, or shall make a general
assignment for the benefit of
creditors;
(j) Borrower, the SPC, any guarantor of the
Obligations, or Parent, shall (i)
apply for or consent to the appointment of a receiver,
trustee, custodian,
intervenor or liquidator of it, or of all or a
substantial part of its assets, (ii) file a
voluntary petition in bankruptcy, (iii) file a petition
or answer seeking
reorganization or an arrangement with creditors, or to
take advantage of any
applicable liquidation, conservatorship bankruptcy,
moratorium, arrangement,
receivership, insolvency, reorganization or similar
laws affecting the rights of
creditors generally, (iv) file an answer admitting the
material allegations of, or
consent to, or default in answering, a petition filed
against it in any bankruptcy,
reorganization or insolvency proceeding, or (v) take
corporate action for the
purpose of effecting any of the foregoing;
(k) An involuntary petition or complaint
shall be filed against Borrower,
the SPC, any guarantor of the Obligations, or Parent,
seeking bankruptcy or
reorganization of such Person or the appointment of a
receiver, custodian, trustee,
intervenor or liquidator of such Person, or all or
substantially all of its assets, and
such petition or complaint shall not have been
dismissed within sixty (60) days of
the filing thereof; or an order, order for relief,
judgment or decree shall be entered
by any court of competent jurisdiction or other
competent authority approving a
petition or complaint seeking reorganization of such
Person or appointing a
receiver, custodian, trustee, intervenor or liquidator
of such Person, or of all or
substantially all of its assets;
(l) Any final judgment or order for the
payment of money in excess of
$100,000 shall be rendered against Borrower, the SPC or
the Parent, and either (i)
enforcement proceedings shall have been commenced by
any creditor upon such
judgment or order or (ii) the same remains undischarged
or unpaid for a period of
sixty (60) days, during which period the execution of
such judgment is not
effectively stayed;
(m) (i) Any of the Financing Agreements, or
any Lien or priority claim
granted thereunder shall terminate, cease to be
effective or cease to be the legal,
valid, binding and enforceable obligation of Borrower,
the SPC, Parent or any
guarantor of the Obligations; (ii) Borrower or any of
its Affiliates, shall, directly
or indirectly, contest in any manner such
effectiveness, validity, binding nature or
enforceability (it being understood that Borrower may,
in good faith, question the
accuracy of any mathematical calculation of an amount
owed hereunder); or (iii)
any Lien or priority claim securing the Secured
Obligations shall cease to be
effective and to be of first priority;
(n) Any Person shall levy on, seize or
attach all or any material portion of
the assets of Borrower, the SPC or Parent and within
thirty (30) days thereafter
such person shall not have dissolved such levy or
attachment, as the case may be,
and, if applicable, regained possession of such seized
assets;
(o) the occurrence of a Change in Control;
(p) either the Risk Default Policy or the
VSI Insurance Policy shall cease to
be in full force and effect;
(r) an "Event of Backup Servicing Default"
shall have occurred and been
continuing under the Pooling and Servicing Agreement;
or
(s) this Agreement, the Note or any other
Financing Agreement shall for
any reason cease to be in full force and effect, or be
declared null and void or
unenforceable in whole or in part as the result of any
action initiated by any
Person other than Lender;
then, and in every such event and at any time
thereafter during the continuance of
such event, Lender may, at the same or different times,
take one or more of the
following actions:
(A) By notice to Borrower (which may be
telephonic notice confirmed in
writing) declare Lender's obligation to make any future
Loans hereunder
terminated and/or declare the occurrence of the
Termination Date, whereupon, in
each case, such obligations shall be terminated and/or
the Termination Date shall
have occurred; and
(B) By notice to Borrower, declare the
unpaid principal amount and
interest of the Loans and all other amounts payable by
Borrower hereunder to be
forthwith due and payable, whereupon such amounts shall
become forthwith due
and payable, both as to principal and interest, without
presentment, demand,
protest or any other notice of any kind, all of which
are hereby expressly waived,
anything contained herein or in the Financing
Agreements to the contrary
notwithstanding.
Notwithstanding the foregoing, upon the
occurrence of an Event of Default
described in paragraph (j) or (k) of this Section 7.1,
with respect to the Parent, the
SPC or Borrower the actions described in paragraphs (A)
and (B) above shall
occur automatically without the requirement of giving
of any notice to Borrower.
Section 7.2 Remedies. (a) Lender shall have
all rights and remedies
provided to Lender at law, in equity, under the
Financing Agreements and under
the Uniform Commercial Code as in effect in the State
of New York (the "Code"),
all of which rights and remedies shall be cumulative,
and, in addition, upon the
occurrence of any Event of Default, Lender may exercise
any one or more of the
following rights and remedies:
(i) Exercise all the rights and remedies
avail- able to secured parties under
the provisions of the Code.
(ii) Institute legal proceedings to
foreclose upon and against the Lien
granted by the Financing Agreements to recover judgment
for the Obligations and
to collect the same out of any of the Collateral or the
proceeds of any sale thereof.
(iii) Without being responsible for loss or
damage to such Collateral
beyond the responsibility to use reasonable care with
respect to the Collateral,
require delivery to Lender of any Collateral then being
held by Borrower, sell and
dispose of, or cause to be sold and disposed of, all or
any part of the Collateral at
one or more public or private sales, or other
dispositions, at such places and times
and on such terms and conditions and in such order as
Lender may deem fit,
without any previous demand or advertisement but with
reasonable notification to
Borrower of any such sale or other disposal.
Reasonable notification pursuant to
this Section 7.2(a)(iii) shall be deemed to be written
or telephonic notice at least
ten (10) days prior to such public or private sale.
(b) Any notice of sale or other disposition,
adver- tisement and other
notice or demand, any right or equity of redemption and
any obligation of a
prospective purchaser to inquire as to the power and
authority of Lender to sell or
otherwise dispose of the Collateral or as to the
application of the proceeds of sale
or otherwise, which would otherwise be required by, or
available to Borrower
under, applicable law are hereby expressly waived by
Borrower to the fullest
extent permitted by such law.
(c) All moneys received or collected by
Lender pursuant to this Agreement
from and after an Event of Default shall be applied, at
Lender's discretion, first to
the payment of all costs incurred in the collection of
such moneys (including
reasonable attorneys' fees and legal expenses). All
remaining amounts shall be
applied pursuant to Section 2.5(b). The balance, if
any, of such moneys
remaining after payment in full of the Secured
Obligations shall be remitted to
Borrower or as otherwise directed by a court of
competent jurisdiction.
(d) In view of the fact that federal and
state securities laws may impose
certain restrictions on the method by which a sale of
the Collateral may be
effected, the Borrower agrees that, upon the occurrence
and during the
continuance of an Event of Default and without notice
except as otherwise
specified hereinabove, the Lender may attempt to sell
all or any part of the
Collateral by means of a private placement, restricting
the bidders and prospective
purchasers to those who are qualified and who will
represent and agree that they
are purchasing in accordance with an exemption from
registration under the
federal or state securities laws. In so doing, the
Lender may solicit offers to buy
the Collateral, or any part of it, for cash, from a
limited number of institutional
investors deemed by the Lender in its reasonable
judgment to be financially
responsible parties who might be interested in
purchasing such Collateral and, if
the Lender solicits such offers from not less than four
(4) such investors, the
acceptance by the Lender of the highest offer obtained
therefrom shall be deemed
to be a commercially reasonable method of disposing of
such Collateral.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc. No amendment
or waiver of any provision
of this Agreement or the Note, nor consent to any
departure by Borrower
therefrom, shall be effective unless the same shall be
in writing and signed by
Lender, and then such waiver or consent shall be
effective only in the specific
instance and for the specific purpose for which given.
Section 8.2 Notices. All notices and other
communications provided for
hereunder shall be in writing (including telegraphic or
facsimile transmission) and
mailed by registered mail, return receipt requested, or
telexed, telecopied or hand
delivered, (a) as to Lender:
III Finance Ltd.
c/o International Fund Administration, Ltd.
48 Par-La-Ville Road, Suite 464
Hamilton, HM11 Bermuda
Telecopy: (441) 295-9637
Confirmation: (441) 295-4718
Attention: Rebecca Lewis
with a copy to:
III Offshore Advisors
250 South Australian Avenue, Suite 600
West Palm Beach, Florida 33401
Telecopy: (407) 655-6871
Confirmation: (407) 655-5885
Attention: Walter Lesbirel
(b) as to Borrower:
Aegis Auto Finance, Inc.
525 Washington Street, 29th Floor
Jersey City, New Jersey, 07310
Telecopy: (201) 418-7370
Confirmation: (201) 418-7379
Attention: Joseph Battiato
or (c) at such other address as shall be designated by
such party in a written notice
to the other party. All such notices and
communications shall be effective and
deemed delivered only when received by the party to
which it is sent; provided,
however, that a telecopy transmission shall be deemed
to be received when
transmitted so long as the transmitting machine has
provided an electronic
confirmation of such transmission.
Section 8.3 Survival of Representations and
Warranties. All
representations and warranties made herein shall
survive the execution, delivery
and acceptance of this Agreement, the Note and the
other Financing Agreements.
Section 8.4 No Waiver; Remedies. No failure
on the part of Lender to
exercise, and no delay in exercising any right
hereunder or under the Note or any
other Financing Agreement shall operate as a waiver
thereof; nor shall any single
or partial exercise of any right hereunder or under the
Note preclude any other or
further exercise thereof or the exercise of any other
right. The remedies herein
provided are cumulative and not exclusive of any
remedies provided by law.
Section 8.5 Costs and Expenses. Except as otherwise
provided in the
immediately subsequent sentence, each party hereto
agrees to pay its own costs
and expenses (including attorneys' and paralegals' fees
and expenses) in
connection with the execution and delivery of this
Agreement, the Note and the
other Financing Agreements. Borrower agrees to pay (a)
all costs and expenses
incurred by Lender in maintaining, preserving or
insuring any Collateral and (b)
all costs and expenses of Lender (including reasonable
attorneys' and paralegals'
fees and expenses) in connection with the enforcement
of this Agreement, the
Note, the other Financing Agreements and/or the Lien on
any of the Collateral.
All of the costs, fees and expenses enumerated in the
immediately preceding
sentence shall constitute Obligations.
Section 8.6 Relationship; Indemnity. (a)
The rela- tionship of Borrower
to the Lender under the Financing Agreements is, and
shall at all times remain,
solely that of borrower and lender; other than as set
forth in Section 7.2(a)(iii),
Lender does not undertake or assume any responsibility
or duty to Borrower or to
any third party with respect to the Collateral.
(b) Borrower hereby indemnifies and agrees
to hold harmless Lender and
its officers, directors, employees, attorneys and
agents (collectively, the
"Indemnified Parties") from any and all losses, damages
(whether general,
punitive or otherwise), liabilities, claims, causes of
action and other costs and
expenses, including reasonable attorneys' fees, which
any Indemnified Party may
suffer or incur by or as a result of claims by third
parties in any manner relating to
or arising out of this Agreement or the other Financing
Agreements, or any act,
event or transaction related thereto, the making of
Loans, the use or intended use
of the proceeds of the Loans, or any of the other
transactions contemplated by the
Financing Agreements.
(c) Promptly after any Indemnified Party is
served with process in
connection with the commencement of any action, such
Indemnified Party shall, if
a claim against Borrower in respect thereof is to be
made pursuant to this
indemnification, notify Borrower of the commencement
thereof. Borrower shall
pay any Obligations arising under this indemnity to
such Indemnified Party
immediately upon demand. The duty of Borrower to
indemnify Lender shall
survive the release and cancellation of this Agreement
or any of the other
Financing Agreements.
Section 8.7 Successors and Assigns;
Assignment. This Agreement shall be
binding upon and inure to the benefit of Borrower and
Lender and their respective
successors and assigns, except that no Borrower shall
have the right to assign its
rights hereunder or any interest herein without the
prior written consent of Lender.
Lender, at its sole option, shall have the right to
assign this Agreement, the Note
and any of its rights and interest hereunder and
thereunder.
Section 8.8 Registered Obligations. The
Loans (including the Note
evidencing the Loans) are registered obligations and
the right, title and interest of
Lender and its assigns (and of a Person who takes a
participation in a Loan
directly from Lender) in and to such Loan shall be
transferrable only upon
notation of such transfer in a registry (the
"Registry") maintained to record the
interest of Lender and its assigns (and such direct
participants). A Note shall only
evidence Lender's, or its assigns', right, title and
interest in and to the related
Loans, and in no event is any such Note to be
considered a bearer instrument or
obligation. This Section 8.8 shall be construed so
that the Loans are at all times
maintained in "registered form" within the meaning of
Section 163(f), 871(h)(2)
and 881(c)(2) of the IRC and any related regulations
(or any successor provisions
of the IRC or such regulations). Borrower shall
maintain the Registry in which
Borrower will register the Loans. No transfer by
Lender or any of its assigns of
(or direct participant with respect to) any of the
Loans shall be permitted or
effective unless and until recorded on the Registry.
Any such transfer shall be
made only by written application by the transferring
Lender, its assigns, or
participants to Borrower stating the name of the
proposed transferee. Borrower
agrees that within five (5) Business Days after its
receipt of such written notice,
Borrower shall, at its own expense, record such
transfer on the Registry and shall,
if requested by Lender or the transferee, execute new
Notes to the order of Lender
and/or the transferee, as applicable, in exchange for
the surrendered Note or
Notes. Such new Note or Notes shall be in an aggregate
principal amount equal to
the unpaid aggregate principal amount of such
surrendered Note or Notes, shall be
dated the effective date of the assignment and shall
otherwise be in substantially
the form of Exhibit B.
Section 8.9 Binding Effect; Governing Law.
This Agreement constitutes
the complete and final expression of the parties'
agreement with respect to the
matters set forth herein and supersedes all oral
negotiations and prior writings in
respect of such matters. This Agreement and the Note
shall be governed by, and
construed in accordance with, the laws and decisions of
the State of New York.
Whenever possible, each provision of this Agreement
shall be interpreted in such
manner as to be effective and valid under applicable
law, but if any provision of
this Agreement shall be prohibited or invalid under
applicable law, such provision
shall be ineffective only to the extent of such
prohibition or invalidity, without
invalidating the remainder of such provision or the
remaining provisions of this
Agreement.
Section 8.10 WAIVER OF TRIAL BY JURY;
SUBMISSION TO
JURISDICTION. BORROWER AND LENDER EACH HEREBY AGREE TO
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER OR IN
CONNECTION
WITH THIS AGREEMENT OR ANY FINANCING AGREEMENT,
WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE.
BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY
LOCAL OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE
BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE
CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT; NOTHING IN
THIS SECTION 8.10 SHALL AFFECT LENDER'S RIGHT TO BRING
ANY
ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY
IN
THE COURTS OF ANY OTHER JURISDICTION.
Section 8.11 Term. This Agreement shall
become effective when
executed and delivered by the parties hereto and shall
expire upon that date
occurring on or after the Termination Date when Lender
has received indefeasible
payment in full in cash of the Obligations.
Notwithstanding the foregoing,
Borrower's agreement to indemnify Lender under Section
8.6 shall survive the
termination of this Agreement.
Section 8.12 Headings. Article and Section
headings in this Agreement
are included for convenience of reference only and
shall not affect any
construction or interpretation of this Agreement.
Section 8.13 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 taken together
shall constitute one and the
same agreement.
Section 8.14 Reference to and Effect Upon
Existing Loan Agreements.
The parties hereto agree that, to the extent the
transactions evidenced hereby
would not be permitted under the terms of the Existing
Loan Agreements, the
terms of the Existing Loan Agreements shall be waived
to the extent, and solely to
the extent, necessary to permit such transactions.
[Rest of Page Intentionally Left
Blank]
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement
to be executed by their respective officers thereunto
duly authorized, as of the date
first written above.
III FINANCE LTD.
By______________________________
Name:
Title:
AEGIS AUTO FINANCE, INC.
By______________________________
Name:
Title:
The undersigned, Aegis Consumer Finance,
Inc., a Delaware corporation,
hereby acknowledges the foregoing Loan and Security
Agreement (the "New
AAF Loan Agreement") between Aegis Auto Finance, Inc.
and III Finance, Ltd.
and hereby agrees that: (i) such New AAF Loan Agreement
shall constitute a
"Secured Loan Agreement" within the meaning of the
"Existing ACF Loan
Agreements" (as such term is defined in the New AAF
Loan Agreement) and (ii)
the "Obligations" under the New AAF Loan Agreement
shall be secured by all of
the "Collateral" in which a security interest has been
granted by the undersigned
under the Existing ACF Loan Agreements.
AEGIS CONSUMER
FINANCE, INC.
By:
_______________________
Title:_____________________
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of June 25, 1996
BETWEEN
AEGIS AUTO FINANCE, INC.
as Borrower
AND
III FINANCE LTD.
as Lender
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
Section 1.1 General Terms. . . . . . . . . . . .
. . . . . . . . . .1
Section 1.2 Terms Defined in Uniform Commercial
Code.. . . . . . . .7
Section 1.3 Accounting Terms.. . . . . . . . . .
. . . . . . . . . .7
Section 1.4 Other Terms. . . . . . . . . . . . .
. . . . . . . . . .7
Section 1.5 Preliminary Statement. . . . . . . .
. . . . . . . . . .8
ARTICLE II LOANS AND
INTEREST
Section 2.1 Loans. . . . . . . . . . . . . . . .
. . . . . . . . . .8
Section 2.2 Making the Loans.. . . . . . . . . .
. . . . . . . . . 10
Section 2.3 Note.. . . . . . . . . . . . . . . .
. . . . . . . . . 10
Section 2.4 Interest.. . . . . . . . . . . . . .
. . . . . . . . . 11
Section 2.5 Repayments; Prepayments. . . . . . .
. . . . . . . . . 11
ARTICLE III CONDITIONS
TO LENDING
Section 3.1 Conditions Precedent to the Initial
Loan.. . . . . . . 12
Section 3.2 Conditions Precedent to All Loans. .
. . . . . . . . . 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence. . . . . . . . .
. . . . . . . . . 14
Section 4.2 Corporate Authority; No Conflicts. .
. . . . . . . . . 14
Section 4.3 Financial Condition. . . . . . . . .
. . . . . . . . . 15
Section 4.4 Litigation.. . . . . . . . . . . . .
. . . . . . . . . 15
Section 4.5 Compliance with Laws and
Regulations.15. . . . . . . . .
Section 4.6 Title to Pledged Stock and Excess
Receipts.. . . . . . 15
Section 4.7 No Defaults. . . . . . . . . . . . .
. . . . . . . . . 16
Section 4.8 Taxes. . . . . . . . . . . . . . . .
. . . . . . . . . 17
Section 4.9 Margin Stock.. . . . . . . . . . . .
. . . . . . . . . 17
Section 4.10 Investment Company Act.. . . . . . .
. . . . . . . . . 17
Section 4.11 Disclosure.. . . . . . . . . . . . .
. . . . . . . . . 17
Section 4.12 Chief Executive Office . . . . . . .
. . . . . 17
Section 4.13 Pooling and Servicing Agreement. . .
. . . . . . . . . 17
ARTICLE V
COVENANTS
Section 5.1 Reports/Financial Information. . . .
. . . . . . . . . 18
Section 5.2 Notices. . . . . . . . . . . . . . .
. . . . . . . . . 19
Section 5.3 Corporate Existence. . . . . . . . .
. . . . . . . . . 19
Section 5.4 Compliance with Law. . . . . . . . .
. . . . . . . . . 20
Section 5.5 Compliance with Financing Agreements.
. . . 20 . . . . .
Section 5.6 Books and Records; Right of
Inspection.. . . . . . . . 20
Section 5.7 Further Assurances.. . . . . . . . .
. . . . . . . . . 20
Section 5.8 Maintenance of Insurance.. . . . . .
. . . . . . . . . 20
Section 5.9 Pooling and Servicing Agreement. . .
. . . . . . . . . 21
Section 5.10 Merger; Consolidation, Etc.. . . . .
. . . . . . . . . 21
Section 5.11 Change of Principal Office.. . . . .
. . . . . . . . . 21
Section 5.12 Net Worth. . . . . . . . . . . . . .
. . . . . . . . . 21
Section 5.13 Limited Business of SPC. . . . . . .
. . . . . . . . . 22
ARTICLE VI COLLATERAL
Section 6.1 Security Interest. . . . . . . . . .
. . . . . . . . . 22
Section 6.2 Perfection of the Security Interest.
. . . . . . . . . 24
Section 6.3 Power of Attorney. . . . . . . . . .
. . . . . . . . . 24
ARTICLE VII DEFAULT;
REMEDIES
Section 7.1 Events of Default. . . . . . . . . .
. . . . . . . . . 25
Section 7.2 Remedies.. . . . . . . . . . . . . .
. . . . . . . . . 28
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc. . . . . . . . . . .
. . . . . . . . . 30
Section 8.2 Notices. . . . . . . . . . . . . . .
. . . . . . . . . 30
Section 8.3 Survival of Representations and
Warranties.. . . . . . 31
Section 8.4 No Waiver; Remedies. . . . . . . . .
. . . . . . . . . 31
Section 8.5 Costs and Expenses.. . . . . . . . .
. . . . . . . . . 31
Section 8.6 Relationship; Indemnity. . . . . . .
. . . . . . . . . 31
Section 8.7 Successors and Assigns; Assignment .
. . . . . . . . . 32
Section 8.8 Registered Obligations . . . . . . .
. . . . . . . . . 32
Section 8.9 Binding Effect; Governing Law. . . .
. . . . . . . . . 33
Section 8.10 WAIVER OF TRIAL BY JURY; SUBMISSION
TO
JURISDICTION.33
Section 8.11 Term.. . . . . . . . . . . . . . . .
. . . . . . . . . 33
Section 8.12 Headings.. . . . . . . . . . . . . .
. . . . . . . . . 33
Section 8.13 Counterparts.. . . . . . . . . . . .
. . . . . . . . . 33
Section 8.14 Reference to and Effect Upon Existing
Loan
Agreements.33
EXHIBIT 10.96.1
EXECUTION COPY
NOTE
U.S. $7,500,000.00
June 25, 1996
FOR VALUE RECEIVED, AEGIS AUTO FINANCE, INC.,
a Delaware
corporation ("Borrower") hereby promises to pay to III
FINANCE LTD., a
Cayman Islands company ("Lender"), the principal amount
of U.S. SEVEN
MILLION, FIVE HUNDRED THOUSAND DOLLARS AND ZERO CENTS
($7,500,000.00) or, if less, the unpaid principal
amount of the Loans made by
Lender to Borrower under that certain Loan and Security
Agreement dated as of
June 25, 1996 between Borrower and Lender (as amended,
restated, supplemented
or otherwise modified from time to time, the "Loan
Agreement"), on the
Termination Date, and to pay interest on the unpaid
principal balance hereof at the
rates and at the times set forth in the Loan Agreement.
Capitalized terms used
herein without definition are used as defined in the
Loan Agreement.
Interest shall be paid monthly in arrears on
each Payment Date of each
month on the principal amount outstanding hereunder at
the rate of twelve percent
(12%) per annum, calculated on the basis of a 360-day
year for the actual number
of days elapsed, and on the date of any prepayment of
principal on the Note on the
principal amount so prepaid. Upon the occurrence and
during the continuance of
an Event of Default, the interest rate shall be
increased by two percent (2.00%)
per annum above the rate of interest otherwise
applicable. In no event shall the
interest payable hereunder exceed the Maximum Rate.
This Note is referred to in, is issued
pursuant to, and is entitled to the
benefits of, the Loan Agreement, to which reference is
hereby made for a more
complete statement of the terms and conditions under
which the Loans evidenced
hereby are made and are to be repaid.
This Note is a registered obligation (as more
particularly described in
Section 8.8 of the Loan Agreement), and it is the
intent of the parties to the Loan
Agreement that the Loans be maintained in "registered
form" within the meaning
of Section 163(f), 871(h)(2) and 881(c)(2) of the
Internal Revenue Code.
Upon and after the occurrence of an Event of
Default, this Note may, as
provided in the Loan Agreement, without demand, notice
or legal process of any
kind, be declared, and immediately shall become, due
and payable. The Loan
Agreement also contains provisions for optional and
mandatory prepayments on
account of the principal hereof prior to maturity upon
the terms and conditions
specified therein.
All payments of principal of and interest on
this Note shall be made to
Lender at such account as Lender shall in writing
direct Borrower, in immediately
available funds and in currency of the United States of
America which at the time
of payment shall be legal tender for the payment of
public and private debts.
Borrower promises to pay all costs and
expenses, including reasonable
attorneys' fees and disbursements incurred in the
collection and enforcement of
this Note or any appeal of a judgment rendered thereon,
all in accordance with the
provisions of the Loan Agreement. Borrower hereby
waives diligence,
presentment, protest, demand and notice of every kind
except as required pursuant
to the Loan Agreement and to the full extent permitted
by law the right to plead
any statute of limitations as a defense to any demands
hereunder.
This Note is secured by all Collateral
securing the Secured Obligations
pursuant to the Loan Agreement and the other Financing
Agreements.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
AEGIS AUTO FINANCE, INC.
By______________________________
Name:
Title:
10_96.1 September 9, 1996 (12:16p)
THE AEGIS CONSUMER FUNDING GROUP, INC.
EARNINGS PER SHARE CALCULATIONS
YEAR AND THREE MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
Three months Fiscal year
ended ended
June 30, 1996 June 30, 1996
------------- -------------
Primary Earnings Per Share:
Weighted average shares outstanding 15,120,398 14,862,263
Less escrowed shares (1,066,458) (1,075,362)
Employee stock options granted 176 4,645
Warrants Outstanding 0 11,923
Convertible Preferred Series C Stock 1,240,057 525,161
--------- ----------
Weighted average number of
common and common equivalent shares 15,294,173 14,328,630
========== ==========
Net income $2,909,254 $9,288,615
Less: Preferred stock dividends 141,460 270,639
---------- ----------
Net income available to common stockholders 2,767,794 9,017,976
Adjustments to net income available to
common stockholders:
Add: Preferred stock dividends on stock deemed
to be common stock equivalents 141,460 270,639
---------- ----------
Adjusted net income $2,909,254 $9,288,615
========== ==========
Net income per common and common equivalent
share $0.19 $0.65
===== =====
Fully Diluted Earnings Per Share:
Weighted average shares outstanding 15,120,398 14,862,263
Employee stock options granted 320 4,645
Warrants Outstanding 0 11,923
Convertible Preferred Series C Stock 1,240,057 311,862
---------- ----------
Weighted average number of
common and common equivalent shares 16,360,775 15,190,693
========== ==========
Net income $2,909,254 $9,288,615
Less: Preferred stock dividends 141,460 270,639
---------- ----------
Net income available to common stockholders 2,767,794 9,017,976
Adjustments to net income available to
common stockholders:
Add: Preferred stock dividends on stock deemed
to be common stock equivalents 141,460 270,639
---------- ----------
Adjusted net income $2,909,254 $9,288,615
========== ==========
Net income per common and common equivalent
share $0.18 $0.61
===== =====
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE AEGIS CONSUMER FUNDING GROUP,
INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS WHICH START ON PAGE F-1 OF THIS REPORT.
</LEGEND>
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR YEAR 12-MOS 12-MOS
12-MOS
<FISCAL-YEAR-END> JUN-30-1995 JUN-30-1996 JUN-30-1994 JUN-30-1995
JUN-30-1996
<PERIOD-END> JUN-30-1995 JUN-30-1996 JUN-30-1994 JUN-30-1995
JUN-30-1996
<CASH> 5,970,571 5,970,571 0 0
0
<SECURITIES> 0 0 0 0
0
<RECEIVABLES> 40,967,546 44,201,906 0 0
0
<ALLOWANCES> (1,183,988) (3,143,684) 0 0
0
<INVENTORY> 0 0 0 0
0
<CURRENT-ASSETS> 0 0 0 0
0
<PP&E> 0 0 0 0
0
<DEPRECIATION> 0 0 0 0
0
<TOTAL-ASSETS> 84,736,947 121,451,754 0 0
0
<CURRENT-LIABILITIES> 69,039,627 87,460,289 0 0
0
<BONDS> 0 0 0 0
0
0 0 0 0
0
0 53 0 0
0
<COMMON> 147,768 154,560 0 0
0
<OTHER-SE> 15,549,552 33,836,852 0 0
0
<TOTAL-LIABILITY-AND-EQUITY> 84,736,947 121,451,754 0 0
0
<SALES> 0 0 0 0
0
<TOTAL-REVENUES> 0 0 11,176,796 17,810,301
43,327,887
<CGS> 0 0 0 0
0
<TOTAL-COSTS> 0 0 0 0
0
<OTHER-EXPENSES> 0 0 7,166,715 9,033,417
15,971,915
<LOSS-PROVISION> 0 0 286,892 941,354
3,504,622
<INTEREST-EXPENSE> 0 0 968,180 4,793,885
10,090,712
<INCOME-PRETAX> 0 0 2,755,009 3,041,645
16,760,638
<INCOME-TAX> 0 0 1,352,338 1,768,024
7,472,022
<INCOME-CONTINUING> 0 0 0 0
0
<DISCONTINUED> 0 0 0 0
0
<EXTRAORDINARY> 0 0 0 0
0
<CHANGES> 0 0 0 0
0
<NET-INCOME> 0 0 1,452,671 1,273,621
9,288,616
<EPS-PRIMARY> 0 0 0.00<F2>
0.12<F1> 0.65
<EPS-DILUTED> 0 0 0.00<F2>
0.11<F1> 0.61
<FN>
<F1>Amount reflects pro-forma adjustments in connection with the Company's
initital public offering on April 5, 1995 for (i) the redemption of
approximately $2.5 million of the Company's preferred stock Series B and
related dividends paid of $194,198, (ii) the termination of a consulting
agreement providing consulting fees of $139,751, net of taxes, (iii) the
repayment of approximately $5.0 million of indebtedness under the
Company's revolving credit facility and related interest expense of
$192,157, net of taxes.
<F2>Not applicable for period presented since the Company went public on
April 5, 1995.
</FN>
</TABLE>
