AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Exhibit 10.19

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and among

WELLS FARGO PREFERRED CAPITAL, INC.

As Agent

VARIOUS FINANCIAL INSTITUTIONS

As Lenders

AND

C & F FINANCE COMPANY

As Borrower

TABLE OF CONTENTS

 

 

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AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT is made as of the 25th day of August, 2008 by and among C & F FINANCE COMPANY, a Virginia corporation with its chief executive office at 4660 S. Laburnum Avenue, Richmond, VA 23231 (“Borrower Agent”) and such other Persons joined hereto from time to time as borrowers (collectively, the “Borrowers” and each individually is referred to as a “Borrower”), the financial institutions from time to time party hereto (collectively, the “Lenders” and each individually is referred to as a “Lender”), and WELLS FARGO PREFERRED CAPITAL, INC. as agent for Lenders (“Agent”), an Iowa corporation with its principal office located at 206 Eighth Street, Des Moines, Iowa 50309.

BACKGROUND

WHEREAS, Borrowers and Wells Fargo Preferred Capital, Inc. (“WFPC”) are parties to that certain Loan and Security Agreement dated as of August 1, 2005 (as has been amended or modified from time to time, the “Existing Loan Agreement”), pursuant to which WFPC established financing arrangements for the benefit of Borrowers. Borrowers and WFPC are parties to certain other instruments, documents and agreements related thereto (together with the Existing Loan Agreement, the “Existing Loan Documents”).

WHEREAS, Borrowers have requested that Agent and Lenders amend and restate the Existing Loan Agreement in its entirety, all on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties covenant and agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.1 Certain Definitions . The terms defined in this Section 1.1, whenever used and capitalized in this Agreement shall, unless the context otherwise requires, have the respective meanings herein specified.

“ Advance ” means each advance of the Loan made to Borrowers pursuant to Section 2.1 hereof.

“ Affiliate ” means (i) any Person who or entity which directly or indirectly owns, controls or holds 5.0% or more of the outstanding beneficial interest in a Borrower; (ii) any entity of which 5.0% or more of the outstanding beneficial interest is directly or indirectly owned, controlled, or held by a Borrower; (iii) any entity which directly or indirectly is under common control with a Borrower; (iv) any officer, director, partner or employee of a Borrower or any Affiliate; or (v) any immediate family member of any Person who is an Affiliate. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.

 

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“ Agent ” means Wells Fargo Preferred Capital, Inc., an Iowa corporation and its respective successors and assigns.

“ Agreement ” means this Amended and Restated Loan and Security Agreement and all exhibits and schedules hereto, as the same may be amended, modified or supplemented from time to time.

“ Assignment and Acceptance ” means an assignment and acceptance entered into by an assigning Lender and an assignee Lender, accepted by Agent, in accordance with Section 10.8 in form and substance satisfactory to Agent (in its sole and absolute discretion).

“ Availability Statement ” means the certificate in substantially the form of Exhibit B attached hereto and made part hereof to be submitted by Borrowers to Agent in accordance with the provisions of Section 2.1 and Section 3.3 hereof.

“ Bank Products ” means any one or more of the following types of services or facilities extended to a Borrower by the Agent or any WFPC Affiliate: (a) Cash Management Services; (b) products under Hedging Agreements; (c) commercial credit card and merchant card services; and (d) leases and other banking products or services as may be requested by any Borrower or Subsidiary.

“ Bankruptcy Code ” means the United States Bankruptcy Code as now constituted or hereafter amended and any similar statute or law affecting the rights of debtors.

“ Books and Records ” means all of Borrowers’ original ledger cards, payment schedules, credit applications, contracts, lien and security instruments, guarantees relating in any way to the Collateral and other books and records or transcribed information of any type, whether expressed in electronic form in tapes, discs, tabulating runs, programs and similar materials now or hereafter in existence relating to the Collateral.

“ Borrower Agent ” means C&F Finance Company.

“ Borrowers’ Loan Account ” has the meaning assigned to that term in Section 2.1 of this Agreement.

“ Borrowing Base ” means, as of the date of determination and subject to change from time to time as described below, an amount equal to 85% of the aggregate balance of outstanding Eligible Receivables net of unearned interest, fees, commissions, discounts and reserves. Notwithstanding the foregoing, Agent may adjust the above rates in the Borrowing Base from time to time and at any time in Agent’s reasonable credit judgment, upon three (3) days notice to Borrowers, including, without limitation, to reflect, in Agent’s judgment, the experience with Borrowers (including without limitation any increased credit, operational, legal, regulatory, political or reputational risk of Borrowers).

“ Business Day ” means any day except a Saturday, Sunday or other day on which national banks are authorized by law to close including, without limitation, United States federal government holidays.

 

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“ Capital Base ” means the sum of (a) Borrowers’ Tangible Net Worth, plus (b) Subordinated Debt, plus (c) the positive difference, if any, of the aggregate value of Borrowers’ actual allowance for loan losses (in dollars), as calculated in accordance with GAAP, and the rolling twelve month charge-offs (in dollars).

“ Cash Management Services ” any services provided from time to time by Agent or any WPC Affiliate to any Borrower or Subsidiary in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time, and regulations with respect thereto in effect from time to time.

“ Collateral ” means

 

(i)

All of each Borrower’s Receivables, now owned or existing or hereafter arising or acquired;

 

(ii)

All collateral, security and guaranties now or hereafter in existence for any Receivables;

 

(iii)

All insurance related to any Receivables, to any collateral or security for any Receivables or to any obligor in respect of any Receivables and all proceeds of such insurance (including, without limitation, all non-filing insurance, credit insurance and credit life insurance related to any Receivables, to any collateral or security for any Receivables, or to any obligor in respect of any Receivables and all proceeds of such insurance);

 

(iv)

All of each Borrower’s Books and Records related to any Receivables including all computers and computer related equipment, tapes and software;

 

(v)

All notes, drafts, deposit accounts, acceptances, documents of title, deeds, policies and policies or certificates of insurance (including without limitation credit insurance, credit life insurance, non-filing insurance and title insurance) and securities (domestic and foreign) and letter of credit rights now or hereafter owned by each Borrower or in which a Borrower has or at any time acquires an interest in connection with any Receivables;

 

(vi)

All of each Borrower’s Accounts, Documents, Instruments, General Intangibles and Chattel Paper as defined in Section 1.2 (b) of this Agreement, now owned or existing or hereafter arising or acquired, and all payment obligations owed to a Borrower, now owned or existing or hereafter arising or acquired; together with all collateral, security and guaranties now or hereafter in existence for any of the foregoing; and

 

(vii)

All cash and non-cash proceeds of all the foregoing.

 

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“ Collections ” means payment of principal, interest and fees on Receivables, the cash and non-cash proceeds realized from the enforcement of such Receivables and any security therefor, or the Collateral, proceeds of credit, group life or non-filing insurance, or proceeds of insurance on any real or personal property which is part of the collateral for the Receivables.

“ Commitment ” means with respect to each Lender, a commitment of such Lender to make its portion of the Advances in a principal amount up to each such Lender’s Commitment Percentage of the Maximum Principal Amount.

“ Commitment Percentag e” means, for any Lender, the percentage identified as the Commitment Percentage on Schedule I, as such percentage maybe modified in connection with any assignment made in accordance with Section 10.8.

“ Consumer Finance Laws ” means all applicable laws and regulations, federal, state and local, relating to the extension of consumer credit, and the creation of a security interest in personal property or a mortgage in real property in connection therewith, as the case may be, and laws with respect to protection of consumers’ interests in connection with such transactions, including without limitation, any usury laws, the Federal Consumer Credit Protection Act, the Federal Fair Credit Reporting Act, RESPA, the Magnuson-Moss Warranty Act, the Federal Trade Commission’s Rules and Regulations and Regulations B and Z of the Federal Reserve Board, as any of the foregoing may be amended from time to time.

“ Consumer Purpose Loans ” means loans to one or more individuals the proceeds of which are used to purchase goods, services or merchandise for personal, household or family use.

“ Credit Documents ” means this Agreement, the Notes, the Subordination Agreement(s), the Custodian Agreement(s) and any and all additional documents, instruments, agreements and other writings executed and delivered pursuant to or in connection with this Agreement.

“ Custodian Agreement ” means that certain Custodian Agreement dated of even date herewith by and among Agent, Borrowers, and an individual custodian, substantially in the form of Exhibit C attached hereto and made part hereof, as the same may be amended, modified, restated or extended from time to time.

“ Debt ” means, as of the date of determination, all outstanding indebtedness (other than deferred loan origination fees of Borrowers) including without limitation (a) all loans made hereunder to Borrowers; (b) accounts payable as of the date of determination; (c) income tax liabilities; (d) mortgages; (e) deposits and debenture instruments; and (f) Subordinated Debt.

“ Default ” means an event, condition or circumstance which, with the giving of notice or the passage of time, or both, would constitute an Event of Default.

“ Defaulting Lender ” has the meaning assigned to that term in Section 2.7(d) of this Agreement.

“ EBITDA Ratio ” means Borrowers’ earnings before payments of interest, taxes, depreciation and amortization expense for the twelve month period ending on the date of determination, net of any deficits from the amount required as an allowance for loan losses under Section 6.4(c) hereof and the amount of any accounts to be charged off, that have not been charged off, to the extent there is not an excess reserve, in Section 6.4(e) hereof, as a percent of interest expense during such twelve month period in accordance with GAAP principles pursuant to Section 6.4 of this Agreement.

 

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“ Eligible Receivables ” means, as of the date of determination, Receivables (net of unearned interest, fees, unearned discounts, reserves and commissions thereon) which are Chattel Paper, which conform to the warranties set forth in Section 4.1 hereof, in which Agent has a validly perfected first priority Lien, and which are not any of the following; (i) Receivables for which a payment is 61 or more days past due on a contractual basis; (ii) Receivables subject to litigation, foreclosure, repossession or bankruptcy proceedings or the account debtor with respect to which is a debtor under the Bankruptcy Code unless they are contractually current; (iii) Receivables from officers, employees or shareholders of any Borrower or any Affiliate; (iv) Receivables which have been deferred or extended more than twice during any rolling 12 month period; (v) Receivables which have been restructured or modified as a result the account debtor’s delinquencies; (vi) Interest Only Accounts; (vii) Real Estate Related Accounts; (viii) Receivables arising from deficiency balance accounts; (ix) Receivables for which Custodian or Agent has not received the corresponding original certificate of title within 120 days from the origination of such Receivable; (x) Receivables with balloon payments; (xi) Receivables purchased from a dealer to the extent such Receivables exceed an amount equal to 15% of gross Receivables; and (xii) Receivables which, in Agent’s reasonable credit judgment, do not constitute acceptable collateral.

“ Environmental Control Statutes ” means any federal, state, county, regional or local laws governing the control, storage, removal, spill, release or discharge of Hazardous Substances, including without limitation CERCLA, the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976, the Hazardous Materials Transportation Act, the Emergency Planning and Community Right to Know Act of 1986, the National Environmental Policy Act of 1975, the Oil Pollution Act of 1990, any similar or implementing state law, and in each case including all amendments thereto and all rules and regulations promulgated thereunder and permits issued in connection therewith.

“ EPA ” means the United States Environmental Protection Agency, or any successor thereto.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, all amendments thereto, and any successor statute of similar import, and regulations thereunder, in each case as in effect from time to time. References to sections of ERISA shall be construed to refer to any successor sections.

“ Event of Default ” has the meaning assigned to that term in Article 8 of this Agreement.

“ Fixed Rate ” has the meaning assigned to that term in Section 2.6(a) of this Agreement.

“ GAAP ” means generally accepted accounting principles in the United States applied on a consistent basis, in accordance with the Statement of Auditing Standards No. 69, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles in the Independent Auditor’s Report” (SAS 69) or superseding pronouncements, issued by the Auditing Standards Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or in such other statements by such other entity as Agent may reasonably approve, which are applicable in the circumstances as of the date in question.

 

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The requirement that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period, or, in the event of a material change in any accounting principle from that observed in any previous period (i) financial reports covering preceding periods during the term of this Agreement are restated to reflect such change and provide a consistent basis for comparison among periods and (ii) the financial covenants set forth in Section 6.4 shall be adjusted as determined by Agent to reflect similar performance standards as those measured by the existing covenants using the previously observed accounting principles.

“ General Intangibles ” has the meaning assigned to that term in Section 1.2(b).

“ Hazardous Substance ” means any toxic, reactive, corrosive, carcinogenic, flammable or hazardous pollutant or other substance, including without limitation petroleum and items defined in Environmental Control Statutes as “hazardous substances,” “hazardous wastes,” “pollutants” or “contaminants.”

“ Hedging Agreement ” means an agreement relating to any interest rate hedge, exchange, swap, cap, floor, collar, option, forward, cross right or obligation, or combination thereof or similar transaction, with respect to interest rate, foreign exchange, currency, commodity, credit or equity risk (including, without limitation, any ISDA Master Agreement), together with any related schedules and confirmations.

“ Intangible Assets ” means all assets of any Person which would be classified in accordance with GAAP as intangible assets, including without limitation (a) all franchises, licenses, permits, patents, applications, copyrights, trademarks, trade names, goodwill, experimental or organization expenses and other like intangibles, and (b) unamortized debt discount and expense and unamortized stock discount and expense.

“ Interest-Only Accounts ” means those Receivables on which collections are applied entirely to interest and expense charges, with no portion thereof being required to reduce the principal balance on the loan prior to the stated maturity of such accounts.

“ Interest Period ” has the meaning assigned to that term in Section 2.6(a) of this Agreement.

“ LIBOR Rate ” means the 30-Day London Interbank Offered Rate for any day as found in the Wall Street Journal, Interactive Edition, or any successor edition or publication.

“ Lien ” means any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, including without limitation any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security.

“ Loan ” means the aggregate principal amount advanced by Lenders to Borrowers pursuant to Section 2.1 of this Agreement, together with interest accrued thereon and fees and costs incurred in connection therewith.

“ Loan Availability ” means the amount available for Advances under this Agreement on any date as determined in accordance with the Availability Statement submitted to Agent on such date in accordance with Section 3.3.

 

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“ Local Authorities ” means individually and collectively the state and local governmental authorities which govern the business and operations owned or conducted by Borrowers or any of them.

“ Maturity Date ” means July 31, 2012, as such date may be extended from time to time in accordance with the provisions of Section 2.4 of this Agreement.

“ Maximum Principal Amount ” means $120,000,000.

“ Notes ” mean collectively, the promissory notes to this Agreement of Borrowers in favor of, each Lender in substantially the form of Exhibit E attached hereto and made part hereof, evidencing the joint and several obligation of Borrowers to repay the Loan, and any and all amendments, renewals, replacements or substitutions therefore, and each is referred to individually as a “Note.”

“ Obligations ” means (a) each and every draft, liability and obligation of every type and description which Borrowers may now or at any time hereafter owe to Agent and Lenders (whether such debt, liability or obligation now exists or is hereafter created or incurred, whether it arises in a transaction involving Agent and/or any Lender alone or in a transaction involving other creditors of Borrowers, or any of them, and whether it is direct or indirect, due or to become due, absolute or contingent, primary or secondary, liquidated or unliquidated, or sole, joint, several or joint and several), and including specifically, but not limited to, all indebtedness of Borrowers arising under this Agreement, the Notes, any fee letter, a Letter of Credit or any other loan or credit agreement between or among a Borrower or Borrowers and Agent and/or any Lender, whether now in effect or hereafter entered into and including, without limitation, all Loans and (b) payment or performance, as the case maybe, of all obligations of Borrowers with respect to Bank Products.

“ Participant ” has the meaning assigned to that term in Section 10.8 of this Agreement.

“ PBGC ” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“ Person ” means all natural persons, corporations, limited partnerships, general partnerships, joint stock companies, limited liability companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and federal and state governments and agencies or regulatory authorities and political subdivisions thereof, or any other entity.

“ Plan ” means any employee benefit plan subject to the provisions of Tide IV of ERISA which is maintained in whole or in part for employees of Borrowers or any Affiliate of Borrowers.

“ Property ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“ Real Estate Related Accounts ” means Receivables arising from loans (a) the proceeds of which are used to purchase or improve real property, or (b) collateralized or secured by an interest in real property; and shall include without limitation home equity accounts.

“ Receivables ” means all lien, title retention and security agreements, chattel mortgages, chattel paper, bailment leases, installment sale agreements, instruments, consumer finance paper and/or promissory notes securing and evidencing loans made, and/or time sale transactions acquired, by a Borrower.

 

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“ Replacement Lender ” has the meaning assigned to that term in Section 2.14 of this Agreement.

“ Reportable Event ” has the meaning assigned to that term in Section 4.13 of this Agreement.

“ Request for Advance ” means the certificate in the form of Exhibit A attached hereto and made part hereof to be delivered by Borrowers to Agent as a condition of each Advance pursuant to Section 2.7 hereof.

“ Required Lenders ” shall mean, at any time, Lenders which are then in compliance with their obligations hereunder and holding in the aggregate at least fifty one percent (51%) of (a) the Commitment Percentage (and participation interest) or (b) if this Agreement has been terminated, the outstanding Loans and participation interest; provided however that “Required Lenders” shall mean all Lenders if at such time there are fewer than three (3) Lenders.

“ Restricted Payments ” means payments by Borrowers, or any of them, which constitute (a) redemptions, repurchases, dividends or distributions of any kind with respect to a Borrower’s capital stock or any warrants, rights or options to purchase or otherwise acquire any shares of a Borrower’s capital stock or (b) payments of principal or interest on Subordinated Debt.

“ Schedule of Receivables and Assignment ” means a schedule in the form of Exhibit F attached hereto and made part hereof to be submitted by Borrowers to Agent pursuant to Section 2.1 and Section 3.3 hereof, describing the Receivables assigned and pledged to Agent, for the benefit of Lenders, on the date hereof and thereafter for the period to which such schedule relates and confirming the assignment and pledge of such Receivables.

“ Senior Debt ” means all indebtedness and liabilities (including accounts payable) of Borrowers, or any of them, not expressed to be subordinated or junior to any other indebtedness of Borrowers, or any of them.

“ Subordinated Debt ” means any indebtedness of Borrowers for borrowed money and which shall contain provisions subordinating the payment of such indebtedness and the liens and security interests securing such indebtedness to Senior Debt, in form, substance and extent acceptable to Agent, in its sole discretion.

“ Subordination Agreement ” means, individually, and “ Subordination Agreements ” means, collectively, the Subordination Agreements substantially in the form of Exhibit G attached hereto and made part hereof, as the same may be amended, modified, restated or extended from time to time.

“ Subsidiary ” of any entity means any corporation, limited liability company, partnership or other legal entity of which such entity directly or indirectly owns or controls at least a majority of the outstanding stock or other equity interest having general voting power. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract, or otherwise.

 

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“ Tangible Net Worth ” means, at any date, the amount of the capital stock liability of Borrowers on a consolidated basis (but excluding the effect of intercompany transactions) plus (or minus in the case of a deficit) its capital surplus and earned surplus minus, to the extent not otherwise excluded (i) the cost of treasury shares; (ii) the amount equal to the value shown on its books of Intangible Assets, including the excess paid for assets acquired over their respective book values on the books of the corporation from which acquired; (iii) investments in and loans to any Subsidiary or Affiliate or to any shareholder, director or employee of Borrowers, any Subsidiary or any Affiliate, and (iv) any deficits from the amount required as an Allowance for Loan Losses under Section 6.4(c) hereof and, to the extent there is not an excess reserve, the amount of any accounts to be charged off, that have not been charged off, in Section 6.4(e) hereof.

“ Termination Date ” means the earlier of (a) the Maturity Date; or (b) the date on which the Commitments are terminated and the Loan becomes due and payable pursuant to Section 9.1.

“ Total Liabilities ” means all liabilities of Borrowers, as determined in accordance with GAAP.

“ UCC ” means the Uniform Commercial Code as in effect in the State of Iowa from time to time.

“ WFPC Affiliate ” means in relation to Agent, any entity controlled, directly or indirectly, by Agent, any entity that controls, directly or indirectly, Agent or any entity directly or indirectly under common control with Agent. For this purpose, “control” of any entity means ownership of a majority of the voting power of the entity.

Section 1.2 Rules of Construction .

(a) Accounting Term . Except as otherwise provided herein, financial and accounting terms used in the foregoing definitions or elsewhere in this Agreement shall be defined in accordance with GAAP.

(b) Uniform Commercial Code . Except as otherwise provided herein, terms used in the foregoing definitions or elsewhere in this Agreement that are defined in the Uniform Commercial Code, including without limitation, “ Accounts ”, “ Documents ”, “ Instruments ”, “General Intangibles ”, and “ Chattel Paper ” shall have the respective meanings given to such terms in the Uniform Commercial Code as in effect in the State of Iowa from time to time.

ARTICLE 2

THE REVOLVING CREDIT FACILITY

Section 2.1 The Loan . Until the Termination Date Borrowers may request Lenders to make Advances to Borrowers and subject to the terms and conditions of this Agreement each Lender severally agrees to lend such Lender’s Commitment Percentage of each requested Advance up to such Lender’s Commitment. The aggregate unpaid principal amount at any one time outstanding of all Advances shall not exceed the lesser of the Maximum Principal Amount or the Borrowing Base in effect as of the date of determination.

(a) Agent shall establish on its books an account in the name of Borrowers (the “Borrowers’ Loan Account”). A debit balance in Borrowers’ Loan Account shall reflect the amount of Borrowers’ indebtedness to Agent and Lenders from time to time by reason of Advances and other appropriate charges (including, without limitation, interest charges) hereunder. At least once each month, Agent shall provide to Borrowers a statement of Borrowers’ Loan Account which statement shall be considered correct and accepted by Borrowers and conclusively binding upon Borrowers unless Borrowers notify Agent to the contrary within 30 days of Agent’s providing such statement to Borrowers.

 

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(b) Borrowers shall prepare a completed Availability Statement as of each month end and forward such statement to Agent by the 20th day of the following month.

(c) Each Advance made hereunder shall, in accordance with GAAP, be entered as a debit to Borrowers’ Loan Account, and shall be in a principal amount which, when aggregated with all other Advances then outstanding, shall not exceed the lesser of the then effective Borrowing Base or Maximum Principal Amount.

(d) The Loan shall be due and payable on the Termination Date. Upon the occurrence of an Event of Default, Agent shall have rights and remedies available to it under Article 9 of this Agreement.

(e) Agent has the right at any time, and from time to time, in its reasonable credit judgment (but without any obligation) to set aside reasonable reserves against the Borrowing Base in such amounts as it may deem appropriate.

Section 2.2 The Notes . The indebtedness of Borrowers to each Lender hereunder shall be evidenced by a separate Note executed by Borrowers in favor of such Lender in the principal amount equal to each such Lender’s Commitment Percentage of the Maximum Principal Amount, which shall be substantially in the form of Exhibit E attached hereto and made part hereof, dated the same date as this Agreement. The principal amount of the Notes will be the Maximum Principal Amount; provided, however, that notwithstanding the face amount of the Notes, Borrowers’ liability under the Notes shall be limited at all times to the actual indebtedness (principal, interest and fees) then outstanding and owing by Borrowers to Agent and Lenders hereunder.

Section 2.3 Method of Payment . Borrowers shall make all payments of principal and interest on the Notes in lawful money of the United States of America and in funds immediately available by wire transfer, to Agent at its address referred to in Section 10.3 of this Agreement or at such other address as Agent otherwise directs. Whenever any payment is due on a day, which is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and interest shall be paid for such extended time. As soon as practicable after Agent receives payment from Borrowers, but in no event later than one (1) Business Day after such payment has been made, subject to Section 2.7, Agent will cause to be distributed like funds relating to the payment of principal, interest or fees (other than amounts payable to Agent to reimburse Agent for fees and expenses payable solely to it pursuant to the terms of this Agreement) or expenses payable to Agent and Lenders in accordance with the terms of this Agreement, and in like funds relating to the payment of any such other amounts payable to Lenders. Borrowers’ obligations to Lenders with respect to such payments shall be discharged by making such payments to Agent pursuant to this Section 2.3 or, if not timely paid or any Event of Default or Default then exists, may be added to the principal amount of the Loans outstanding.

 

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Section 2.4 Extension and Adjustment of Maturity Date . Upon the mutual agreement of all parties to this agreement, the Maturity Date may be extended. Any extension to the Maturity Date shall be in writing and executed by the authorized representatives of each party.

Section 2.5 Use of Proceeds . Advances shall be used to finance Borrowers’ portfolios of Consumer Purpose Loans which constitute Eligible Receivables and for other lawful corporate purposes except as limited under this Agreement.

Section 2.6 Interest .

(a) In the absence of an Event of Default or Default hereunder, and prior to the Termination Date, the outstanding balance of the Loans will bear interest at an annual rate at all times equal to the LIBOR Rate plus 175 basis points; provided, however, if borrowings from Lenders are in an amount less than $75,000,000, then, the Loans shall bear interest at an annual rate at all times equal to the LIBOR Rate plus 180 basis points; provided further that, Agent shall be entitled to retain, solely for its own account, and not remit to Lenders from such monthly interest payment an interest payment in an amount equal to interest on the outstanding balance of the Loan at an annual rate at all times equal to 10 basis points. So long as no Event of Default or Default is outstanding, Borrowers may elect to have all or a portion of the outstanding Obligations bear interest at a fixed rate of interest determined by Agent and approved in writing by all Lenders (“Fixed Rate”) for a 6 month, 12 month, 18 month or 24 month period (each an “Interest Period”); provided, no Interest Period shall be for a period beyond the Termination Date and no more than six (6) portions of the Obligations may bear interest at a Fixed Rate at any one time. Borrowers shall notify Agent in writing at least 2 Business Days prior to the date Borrowers request the Fixed Rate to be applicable, in the form of a Request for Advance, specifying the date and amount (in a minimum amount of at least $1,000,000 and in $1,000,000 increments) of each such election and Agent shall provide the Fixed Rate then applicable. If accepted by Borrowers in writing, the Fixed Rate shall be applicable to the portion of the Obligations so identified in the Request for Advance until the expiration of the selected Interest Period. Upon the expiration of the Interest Period the portion of the Obligations accruing interest at the Fixed Rate shall bear interest at the per annum rate of interest set forth in the first sentence of this Section 2.6(a). In addition to the fee described in Section 2.8(a), if any portion of the Loan bearing interest at a Fixed Rate is repaid for any reason prior to the expiration of the applicable Interest Period or if an Interest Period is terminated by Agent following the acceleration of the Obligations upon the occurrence of an Event of Default, Borrowers shall pay an additional sum equal to actual damages incurred by Agent and Lenders in connection with such prepayment.

(b) Interest shall be payable monthly in arrears on the first day of each month commencing on the first such date after the first Advance under the Loan and continuing until the Commitments are terminated and the Obligations are indefeasibly paid in full. Interest as provided hereunder will be calculated on the basis of a 360 day year and the actual number of days elapsed. The rate of interest provided for hereunder is subject to increase or decrease when and as the LIBOR Rate increases or decreases in an amount corresponding to the change in the LIBOR Rate. Any such change in the interest rate hereunder shall take effect the first day of the month following a change in the LIBOR Rate.

(c) Notwithstanding the foregoing, upon the occurrence and during the continuance of an Event of Default or Default hereunder, including after maturity and before and after judgment, Borrowers hereby agree to pay to Lenders interest on the outstanding principal balance of the Loan and any other obligations and, to the extent permitted by law, overdue interest with respect thereto, at the rate of 2.50% per annum above the rate otherwise applicable to the Loan.

 

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Section 2.7 Advances .

(a) Borrower Agent shall notify Agent in writing not later than 1:00 p.m., Philadelphia, time, on the date of each requested Advance, specifying the date, amount and purpose of the Advance. Such notice shall be in the form of the Request for Advance attached hereto and made part hereof as Exhibit A , shall be certified by the President or Treasurer (or such other authorized Person as Borrower Agent directs from time to time) of Borrower Agent and shall contain the following information and representations, which shall be deemed affirmed and true and correct as of the date of the requested Advance:

(i) the aggregate amount of the requested Advance, which shall be in multiples of $5,000 but not less than the lesser of $5,000 or the unborrowed balance of the Borrowing Base;

(ii) confirmation of Borrowers’ compliance with Sections 2.l(c), 6.4 and 7.1 through 7.12 both immediately prior to and after making such Advance; and

(iii) statements that the representations and warranties set forth in Article 4 are true and correct as of the date of the Advance; no Event of Default or Default has occurred and is then continuing; and that there has been no material adverse change in Borrowers’ financial condition, operations or business since the date of the monthly and audited annual financial statements most recently delivered by Borrowers to Agent pursuant to Sections 5.1(I) or 6.2 of this Agreement.

(b) Agent shall give to each Lender prompt notice (but in no event later than 1:00 P.M., Philadelphia time on the date of Agent’s receipt of notice from Borrowers) of each Request for Advance by facsimile. No later than 2:00 P.M., Philadelphia time on the date on which an Advance is requested to be made pursuant to the applicable Request for Advance, each Lender will make available to Agent at the address of Agent set forth on Schedule I, in immediately available funds, its Commitment Percentage of such Advance requested to be made. Unless Agent shall have been notified by any Lender prior to the date of Advance that such Lender does not intend to make available to Agent its portion of the Advance to be made on such date, Agent may assume that such Lender will make such amount available to Agent as required above and Agent may, in reliance upon such assumption, make available the amount of the Advance to be provided by such Lender. Upon fulfillment of the conditions set forth in Sections 2.7(a) and 5.2 for such Advance, and as soon as practicable after receipt of funds from Lenders (but in any event not later than 2:00 P.M., Philadelphia time) Agent will make such funds as have been received from Lenders available to Borrowers at the account specified by Borrowers in such Request for Advance.

(c) Because Borrowers anticipate requesting Advances on a daily basis and repaying the Advances on a daily basis through Collections, resulting in the amount of outstanding Advances fluctuating from day to day, in order to administer the Loan in an efficient manner and to minimize the transfer of funds between Agent and Lenders, Lenders hereby instruct Agent, and Agent may (in its sole discretion, without any obligation) (i) make available, on behalf of Lenders, the full amount of all Advances requested by Borrowers, not to exceed $5,000,000.00 in the aggregate at any one time outstanding, without giving each Lender prior notice of the proposed Advance, of such

 

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Lender’s Commitment Percentage thereof and the other matters covered by the Request for Advance and (ii) if Agent has made any such amounts available as provided in clause (i), upon repayment of Loans by Borrowers, first apply such amounts repaid directly to the amounts made available by Agent in accordance with clause (i) and not yet settled as described below. If Agent makes an Advance on behalf of Lenders, as provided in the immediately preceding sentence, the amount of outstanding Loans and each Lenders Commitment Percentage thereof shall be computed weekly rather than daily and shall be adjusted upward or downward on the basis of the amount of outstanding Loans as of 5:00 P.M., Philadelphia time on the Business Day immediately preceding the date of each computation; provided , however , that Agent retains the absolute right at any time or from time to time to make the afore-described adjustments at intervals more frequent than weekly. Agent shall deliver to each of Lenders at the end of each week, or such lesser period or periods as Agent shall determine, a summary statement of the amount of outstanding Loans for such period (such week or lesser period or periods being hereafter referred to as a “Settlement Period”). If the summary statement is sent by Agent and received by Lenders prior to 12:00 Noon, Philadelphia time on any Business Day each Lender shall make the transfers described in the next succeeding sentence no later than 3:00 P.M., Philadelphia time on the day such summary statement was sent; and if such summary statement is sent by Agent and received by Lenders after 12:00 Noon, Philadelphia time on any Business Day, each Lender shall make such transfers no later than 3:00 P.M., Philadelphia time on the next succeeding Business Day. If in any Settlement Period, the amount of a Lender’s Commitment Percentage of the Loans is in excess of the amount of Loans actually funded by such Lender, such Lender shall forthwith (but in no event later than the time set forth in the next preceding sentence) transfer to Agent by wire transfer in immediately available funds the amount of such excess; and, on the other hand, if the amount of a Lender’s Commitment Percentage of the Loans in any Settlement Period is less than the amount of Loans actually funded by such Lender, Agent shall forthwith transfer to such Lender by wire transfer in immediately available funds the amount of such difference. The obligation of each of Lenders to transfer such funds shall be irrevocable and unconditional, without recourse to or warranty by Agent and made without setoff or deduction of any kind. Each of Agent and Lenders agree to mark their respective books and records at the end of each Settlement Period to show at all times the dollar amount of their respective Commitment Percentages of the outstanding Loans. Because Agent on behalf of Lenders may be advancing and/or may be repaid Loans prior to the time when Lenders will actually advance and/or be repaid Loans, interest with respect to Loans shall be allocated by Agent to each Lender (including Agent) in accordance with the amount of Loans actually advanced by and repaid to each Lender (including Agent) during each Settlement Period and shall accrue from and including the date such Advance is made by Agent to but excluding the date such Loans are repaid by Borrower in accordance with Section 2.3 or actually settled by the applicable Lender as described in this Section 2.7(c). All such Advances made by Agent on behalf of Lenders hereunder shall bear interest at the interest rate applicable hereunder for Advances.

(d) If the amounts described in subsection (b) or (c) of this Section 2.7 are not in fact made available to Agent by a Lender (such Lender being hereinafter referred to as a “Defaulting Lender”) and Agent has made such amount available to Borrowers, Agent shall be entitled to recover such corresponding amount on demand from such Defaulting Lender. If such Defaulting Lender does not pay such corresponding amount forthwith upon Agent’s demand therefor, Agent shall promptly notify Borrowers and Borrowers shall immediately (but in no event later than two (2) Business Days after such demand) pay such corresponding amount to Agent. Agent shall also be entitled to recover (i) from such Defaulting Lender and Borrowers, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by Agent to Borrowers to the date such corresponding amount is recovered by Agent, at a rate per annum equal to either (A) if paid

 

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by such Defaulting Lender, the overnight federal funds rate or (B) if paid by Borrowers, the then applicable rate of interest, calculated in accordance with Section 2.6, and (ii) from such Defaulting Lender, an amount equal to any costs (including reasonable legal expenses) and losses incurred as a result of the failure of such Defaulting Lender to provide such amount as provided in this Agreement. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights which Borrowers may have against any Lender as a result of any default by such Lender hereunder, including, without limitation, the right of Borrowers to seek reimbursement from any Defaulting Lender for any amounts paid by Borrowers under clause (ii) above on account of such Defaulting Lender’s default.

(e) The failure of any Lender to make its portion of the Advance to be made by it as part of any Advance shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Advance. The amounts payable by each Lender shall be a separate and independent obligation.

(f) Each Lender shall be entitled to earn interest at the then applicable rate of interest, calculated in accordance with Section 2.6, on outstanding Loans which it has funded to Agent from the date such Lender funded such Advance to, but excluding, the date on which such Lender is repaid with respect to the Loan.

(g) Notwithstanding the obligation of Borrowers to send written confirmation of a Request for Advance, in the event that Agent agrees to accept a Request for Advance made by telephone, such telephonic request shall be binding on Borrowers whether or not written confirmation is sent by Borrowers or requested by Agent. Agent may act prior to the receipt of any requested written confirmation, without any liability whatsoever, based upon telephonic notice believed by Agent in good faith to be from a Borrowers or their agents. Agent’s records of the terms of any telephonic requests for Advances shall be conclusive on Borrowers in the absence of gross negligence or willful misconduct on the part of Agent in connection therewith.

(h) Nothing contained in this Section 2.7 or otherwise in this Agreement shall impair or limit any claim of Borrowers against a Defaulting Lender (including, without limitation, expenses incurred by Borrowers by reason of any such default) who breaches its commitment to fund Advances hereunder.

(i) Each request for an Advance pursuant to this Section 2.7 shall be irrevocable and binding on Borrowers.

Section 2.8 Prepayment .

(a) Optional Prepayments . Borrowers may prepay the Loan from rime to time, in full or in part not to exceed $5,000,000 without notice, and, in part, in excess of $5,000,000 upon 7 Business Day’s prior notice to Agent without premium or penalty, provided that (i) in the event Borrowers repay the Loan in full prior to the date which is one (l) year before the Maturity Date, Borrower shall pay a sum equal to 0.25% of the Commitment as a prepayment fee; (ii) prepayments shall be in a minimum amount of $10,000 and $10,000 increments in excess thereof; and (iii) partial prepayments prior to the Termination Date shall not reduce Lenders’ Commitments under this Agreement and may be reborrowed, subject to the terms and conditions hereof for borrowing, and

 

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partial prepayments will be applied first to accrued interest and fees and then to outstanding Advances. Each Borrower acknowledges that the above described fee is an estimate of Lenders’ damages in the event of early termination and is not a penalty. In the event of termination of the credit facility established pursuant to this Agreement, all of the Obligations shall be immediately due and payable upon the termination date stated in any notice of termination. All undertakings, agreements, covenants, warranties and representations of Borrowers contained in the Credit Documents shall survive any such termination, and Agent shall retain its liens in the Collateral and all of its rights and remedies under the Credit Documents notwithstanding such termination until Borrowers have paid the Obligations to Agent and Lenders, in full, in immediately available funds, together with the applicable termination fee, if any. Notwithstanding anything to the contrary contained herein, Borrowers shall not be obligated to pay the above described prepayment fee if Borrowers repay the Loan in full as a result of WFPC making a demand for payment under Section 2.10 hereof and Borrowers have not exercised their rights under Section 2.14 hereof as a result of such demand.

(b) Mandatory Prepayments . In the event that amounts outstanding hereunder at any time exceed the Borrowing Base (whether established by an Availability Statement or otherwise) Borrowers shall pay to Agent immediately and without demand or notice of any kind required, the amount by which Borrowers’ indebtedness hereunder exceeds the Borrowing Base then applicable, together with all accrued interest on the amount so paid and any fees and costs incurred in connection therewith.

Section 2.9 Fees . Borrowers shall pay to Agent, at Agent’s offices, the following:

(a) Administrative Fee . A non-refundable administrative fee of $2,000 shall be due and payable monthly solely for the account of Agent in arrears on the first day of each month commencing on the first such date after the funding of this Agreement and continuing until the Commitments are terminated and the Obligations are indefeasibly paid in full, in which event a monthly installment of the administrative fee shall be paid on the date of such termination.

Section 2.10 Regulatory Changes in Capital Requirements . If any Lender shall have determined that the adoption or the effectiveness after the date hereof of any law, rule, regulation or guideline regarding capital adequacy, or any change in any of the foregoing or in the interpretation or administration of any of the foregoing by any governmental authority, central lender or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender (or any lending office of such Lender) or such Lender’s holding company with any industry wide request or directive regarding capital adequacy (whether or not having die force of law) of any such authority, central lender or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, to a level below that which such Lender or its holding company could have achieved on the portion of the Loans made by such Lender pursuant hereto but for such adoption, change or compliance (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time Borrowers shall pay to such Lender on demand such additional amount or amounts as will compensate such Lender or its holding company for any such reduction suffered together with interest on each such amount from the date demanded until payment in full thereof at the rate provided in Section 2.6 with respect to amounts not paid when due. Agent will notify Borrowers of any event occurring after the date of this Agreement that will entitle a Lender to compensation pursuant to this Section 2.10 as promptly as practicable after it obtains knowledge thereof and determines to request such compensation.

 

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Section 2.11 Sharing of Payments . If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff or otherwise) on account of the Loans made by it in excess of its pro rata share of such payment as provided for in this Agreement, such Lender shall forthwith purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment accruing to all Lenders in accordance with their respective ratable shares as provided for in this Agreement; provided , however , that if all or any portion of such excess is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and each such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (a) the amount of such Lender’s required repayment to (b) the total amount so recovered from the purchasing Lender) or any interest or other amount paid or payable by the purchasing Lender in respect to the total amount so recovered. Borrowers agree that any Lender so purchasing a participation from another Lender pursuant to this Section 2.11 may, to the fullest extent permitted bylaw, exercise all of its rights of payment (including, the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of Borrowers in the amount of such participation.

Section 2.12 Pro Rata Treatment . Each payment or prepayment of principal of the Loan, and each payment of interest on the Loans, actually received by Agent shall be allocated pro rata among Lenders in accordance with the respective principal amounts of their outstanding Loans.

Section 2.13 Existing Indebtedness . Borrowers acknowledge and confirm that as of the date hereof, Borrowers are indebted to WFPC, without defense, set-off or counter-claim under the Existing Loan Documents (“Existing Indebtedness”) in the amount of $              . This Agreement amends and restates the Existing Loan Agreement and the Existing Indebtedness shall be deemed to constitute an Advance by Lenders hereunder. The execution and delivery of this Agreement and the other Credit Documents, however, does not evidence or represent a refinancing, repayment, accord and/or satisfaction or novation of the Existing Indebtedness. All of Lenders’ obligations to Borrowers with respect to Advances to be made concurrently herewith or hereafter the date hereof are set forth in this Agreement. All liens and security interests previously granted to Agent, pursuant to the Existing Credit Documents are acknowledged and reconfirmed and remain in full force and effect and are not intended to be released, replaced or impaired.

Section 2.14 Replacement of a Lender . If Borrowers become obligated to pay additional amounts to any Lender pursuant to Section 2.10 or as the result of any Defaulting Lender’s failure to pay such amounts to Agent pursuant to Section 2.7, then Borrowers may within 30 days thereafter designate another bank that is acceptable to Agent in its reasonable discretion (such other bank being called a “Replacement Lender”) to purchase the Loans of such Lender and such Lender’s rights hereunder, without recourse to or warranty by, or expense to, such Lender, for a purchase price equal to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid interest on such Loans and all accrued but unpaid fees owed to such Lender and any other amounts payable to such Lender under this Agreement, and to assume all the obligations of such Lender hereunder, and, upon such purchase and assumption (pursuant to an Assignment and Acceptance), such Lender shall no longer be a party hereto or have any rights hereunder (other than rights with respect to indemnities and similar rights applicable to such Lender prior to the date of such purchase and assumption) and shall be relieved from all obligations to Borrower hereunder, and the Replacement Lender shall succeed to the rights and obligations of such Lender hereunder.

 

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ARTICLE 3

SECURITY

Section 3.1 Security Interest . To secure the payment and performance of the Obligations, each Borrower hereby grants to Agent, for the ratable benefit of Lenders, a continuing general lien on and a continuing security interest in all of the Collateral, wherever located, whether now owned or hereafter acquired, existing or created, together with all replacements and substitutions therefor, and the cash and non-cash proceeds thereof. The Liens and security interests of Agent in the Collateral shall be first and prior perfected Liens and security interests and may be retained by Agent until all of the Obligations have been indefeasibly satisfied in full and the Commitments have expired or otherwise been terminated.

Section 3.2 Financing Statements . Agent is hereby authorized by each Borrower to file any financing statements covering the Collateral or an amendment that adds collateral covered by the financing statement or an amendment that adds a debtor to a financing statement, in each case whether or not a Borrower’s signature appears thereon. Borrowers agree to comply with the requirements of all state and federal laws and requests of Agent in order for Agent to have and maintain a valid and perfected first security interest in the Collateral.

Section 3.3 Documents to be Delivered to Agent . Concurrently with the execution and delivery of this Agreement and, thereafter, by the 20th day of each month for the prior month and at any other time as Agent may require, Borrowers shall deliver to Age