Exhibit 10.17
================================================================================
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
Dated as of May 11, 2004
By and among
ASTA FUNDING ACQUISITION II, LLC, PALISADES COLLECTION, L.L.C., ASTA FUNDING ACQUISITION I, LLC, PALISADES ACQUISITION IV, LLC, PALISADES ACQUISITION I, LLC, PALISADES ACQUISITION II, LLC, and CLIFFS PORTFOLIO ACQUISITION I, LLC
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO
FROM TIME TO TIME,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
ISRAEL DISCOUNT BANK OF NEW YORK
as Agent and Lender
================================================================================
TABLE OF CONTENTS
Page
----
1. AMOUNT AND TERMS OF CREDIT..............................................................................3
1.1 Credit Facilities..............................................................................3
1.2 Prepayments....................................................................................6
1.3 Use of Proceeds................................................................................7
1.4 Interest and Applicable Margins................................................................8
1.5 Cash Management Systems.......................................................................10
1.6 Fees..........................................................................................10
1.7 Receipt of Payments...........................................................................11
1.8 Application and Allocation of Payments........................................................11
1.9 Loan Account and Accounting...................................................................12
1.10 Indemnity.....................................................................................12
1.11 Access........................................................................................14
1.12 Taxes.........................................................................................14
1.13 Capital Adequacy; Increased Costs; Illegality.................................................16
1.14 Single Loan...................................................................................18
1.15 Security Interest.............................................................................18
1.16 No Obligations Outstanding....................................................................19
2. CONDITIONS PRECEDENT...................................................................................19
2.1 Conditions to the Initial Revolving Loan......................................................19
2.2 Further Conditions to Each Loan...............................................................21
3. REPRESENTATIONS AND WARRANTIES.........................................................................22
3.1 Corporate Existence; Compliance with Law......................................................22
3.2 Executive Offices, Collateral Locations, FEIN.................................................22
3.3 Corporate Power, Authorization, Enforceable Obligations.......................................22
3.4 Financial Statements and Projections..........................................................23
3.5 Material Adverse Effect.......................................................................23
3.6 Ownership of Property; Liens..................................................................24
3.7 Labor Matters.................................................................................24
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.....................24
-i-
TABLE OF CONTENTS
(continued)
Page
----
3.9 Government Regulation.........................................................................25
3.10 Margin Regulations............................................................................25
3.11 Taxes.........................................................................................25
3.12 ERISA.........................................................................................26
3.13 No Litigation.................................................................................27
3.14 Brokers.......................................................................................27
3.15 Intellectual Property.........................................................................27
3.16 Full Disclosure...............................................................................28
3.17 Environmental Matters.........................................................................28
3.18 Insurance.....................................................................................29
3.19 Deposit and Disbursement Accounts.............................................................29
3.20 Government Contracts..........................................................................29
3.21 Customer and Trade Relations..................................................................29
3.22 Agreements and Other Documents................................................................29
3.23 Solvency......................................................................................30
3.24 Restrictions on or Relating to Subsidiaries...................................................30
3.25 Disaster Recovery Plan........................................................................31
4. FINANCIAL STATEMENTS AND INFORMATION...................................................................31
4.1 Reports and Notices...........................................................................31
4.2 Communication with Accountants................................................................31
5. AFFIRMATIVE COVENANTS..................................................................................31
5.1 Maintenance of Existence and Conduct of Business..............................................31
5.2 Payment of Charges............................................................................31
5.3 Books and Records.............................................................................31
5.4 Insurance; Damage to or Destruction of Collateral.............................................31
5.5 Compliance with Laws..........................................................................34
5.6 Supplemental Disclosure.......................................................................34
5.7 Intellectual Property.........................................................................34
5.8 Environmental Matters.........................................................................34
-ii-
TABLE OF CONTENTS
(continued)
Page
----
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases.........35
5.10 ERISA.........................................................................................36
5.11 Servicing Agreements..........................................................................36
5.12 Inactive Subsidiaries.........................................................................39
5.13 Further Assurances............................................................................39
6. NEGATIVE COVENANTS.....................................................................................39
6.1 Mergers, Subsidiaries, Etc....................................................................39
6.2 Investments; Loans and Advances...............................................................40
6.3 Indebtedness..................................................................................40
6.4 Employee Loans and Affiliate Transactions.....................................................41
6.5 Capital Structure and Business................................................................42
6.6 Guaranteed Indebtedness.......................................................................43
6.7 Liens; Lien Release...........................................................................43
6.8 Sale of Stock and Assets......................................................................46
6.9 ERISA.........................................................................................47
6.10 Financial Covenants...........................................................................47
6.11 Hazardous Materials...........................................................................47
6.12 Sale-Leasebacks...............................................................................47
6.13 Cancellation of Indebtedness..................................................................47
6.14 Restricted Payments...........................................................................47
6.15 Change of Corporate Name or Location; Change of Fiscal Year...................................47
6.16 No Impairment of Intercompany Transfers.......................................................48
6.17 No Speculative Transactions...................................................................48
6.18 Leases; Real Estate Purchases.................................................................48
6.19 Changes Relating to Subordinated Debt; Material Contracts.....................................48
6.20 Credit Parties Other than Borrowers...........................................................49
6.21 Adverse Transactions..........................................................................49
6.22 Disaster Recovery Plan........................................................................49
-iii-
TABLE OF CONTENTS
(continued)
Page
----
6.23 Limitation on Collection Fees.................................................................49
6.24 No Amendment to Servicing Agreements..........................................................49
7. TERM...................................................................................................49
7.1 Termination...................................................................................50
7.2 Survival of Obligations Upon Termination of Financing Arrangements............................50
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES.................................................................50
8.1 Events of Default.............................................................................50
8.2 Remedies......................................................................................52
8.3 Waivers by Credit Parties.....................................................................53
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT....................................................53
9.1 Assignment and Participations.................................................................53
9.2 Appointment of Agent..........................................................................55
9.3 Agent's Reliance, Etc.........................................................................56
9.4 IDB and Affiliates............................................................................57
9.5 [Omitted].....................................................................................57
9.6 Indemnification...............................................................................57
9.7 Successor Agent...............................................................................57
9.8 Setoff and Sharing of Payments................................................................58
9.9 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert......................59
10. SUCCESSORS AND ASSIGNS.................................................................................61
10.1 Successors and Assigns........................................................................62
11. MISCELLANEOUS..........................................................................................62
11.1 Complete Agreement; Modification of Agreement.................................................62
11.2 Amendments and Waivers........................................................................62
11.3 Fees and Expenses.............................................................................65
11.4 No Waiver.....................................................................................66
11.5 Remedies......................................................................................67
11.6 Severability..................................................................................67
-iv-
TABLE OF CONTENTS
(continued)
Page
----
11.7 Conflict of Terms.............................................................................67
11.8 Confidentiality...............................................................................67
11.9 GOVERNING LAW.................................................................................68
11.10 Notices.......................................................................................68
11.11 Section Titles................................................................................69
11.12 Counterparts..................................................................................69
11.13 WAIVER OF JURY TRIAL..........................................................................69
11.14 Press Releases and Related Matters............................................................69
11.15 Reinstatement.................................................................................70
11.16 Advice of Counsel.............................................................................70
11.17 No Strict Construction........................................................................70
11.18 Agent for Service.............................................................................70
12. CROSS-GUARANTY; SUBORDINATION..........................................................................70
12.1 Cross-Guaranty................................................................................70
12.2 Waivers by Borrowers..........................................................................71
12.3 Benefit of Guaranty...........................................................................71
12.4 Subordination of Subrogation, Etc.............................................................71
12.5 Election of Remedies..........................................................................72
12.6 Limitation....................................................................................72
12.7 Contribution with Respect to Guaranty Obligations.............................................72
12.8 Liability Cumulative..........................................................................73
12.9 Subordination.................................................................................73
-v-
TABLE OF CONTENTS
(continued)
Page
----
BASE OF APPENDICES
15.1 Annex A (Recitals) - Definitions 15.2 Annex C (Section 1.8) - Cash Management System 15.3 Annex D (Section 2.1(a)) - Closing Checklist 15.4 Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting 15.5 Annex F (Section 4.1(b)) - Collateral Reports 15.6 Annex G (Section 6.10) - Financial Covenants 15.7 Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information 15.8 Annex I (Section 11.10) - Notice Addresses 15.9 Annex J (from Annex A 15.10 Commitments definition)- Commitments as of Closing Date 15.11 Annex L (Section 11.2(b)(ii)) - Counterpart to Third Amended and Restated Loan and
Security Agreement 15.12 Schedule 1.1 - Agent's Representatives 15.13 Schedule 1.1(b) - Ratable Shares of each Borrower
THIRD AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement") is executed and entered into as of May 11, 2004 (and shall be effective as of the Effective Date) by and among ASTA FUNDING ACQUISITION II, LLC, a Delaware limited liability company, PALISADES COLLECTION, L.L.C., a Delaware limited liability company, ASTA FUNDING ACQUISITION I, LLC, a Delaware limited liability company, PALISADES ACQUISITION I, LLC, a Delaware limited liability company, PALISADES ACQUISITION II, LLC, a Delaware limited liability company, PALISADES ACQUISITION IV, LLC, a Delaware limited liability company, and CLIFFS PORTFOLIO ACQUISITION I, LLC, a Delaware limited liability company, (sometimes collectively referred to herein as "Borrowers" and individually as a "Borrower"); ASTA FUNDING, INC., a Delaware corporation ("Asta Funding"); and COMPUTER FINANCE, LLC, a Delaware limited liability company ("Computer Finance") and ASTAFUNDING.COM, LLC ("AstaFunding.Com"), and ASTA COMMERCIAL, LLC ("Asta Commercial")(Asta Funding, Computer Finance, AstaFunding.Com, and Asta Commercial shall be referred to collectively as "Guarantor"); and ISRAEL DISCOUNT BANK OF NEW YORK, a New York banking corporation (individually, "IDB" or "Agent") for itself, as a lender, and as agent for the other lenders signatory hereto (collectively referred to herein as "Lenders") from time to time.
BACKGROUND
A. Asta Funding Acquisition II, LLC and Palisades Collection, L.L.C., Asta Funding and IDB are parties to a Second Amended and Restated Loan and Security Agreement dated as of January 28, 2003, as amended (the "Original Restated Agreement") pursuant to which Lender established a $35,000,000 Line of Credit (the "Original Line of Credit") for the purpose of financing the acquisition of portfolios of consumer loans and/or receivables, which Original Line of Credit was secured by certain assets of the Original Borrowers and the Original Guarantors. As of the date of this Agreement the outstanding principal obligations of the Original Borrowers under the Original Line of Credit are $12,151,147.73 (the "Existing Debt").
B. The Original Borrowers have requested that Lenders amend and restate the Original Restated Agreement and Original Line of Credit so as to have available a revolving line of credit on the terms and conditions set forth herein, in an amount not to exceed $60,000,000 at any one time outstanding, but in no event shall the outstanding Advances (including, any Advance then being requested) exceed the then effective Borrowing Base (the "New Line of Credit"). This Agreement is an amendment and restatement of the terms and conditions of the lending relationship between the parties as previously set forth in the Original Restated Agreement and any amendments or supplements thereto, and is not a new loan agreement. The execution and delivery of this Agreement and the Loan Documents shall not in any circumstances be deemed to have terminated, released, extinguished or discharged the Existing Debt, the Obligations of any Guarantor or the Collateral therefor, all of which Existing Debt, Obligations and Collateral shall continue under and be governed by this Agreement and the Loan Documents.
4
C. Lenders have agreed to establish the New Line of Credit for the purpose of making Advances to permit the Borrowers and any Affiliate to acquire Portfolios on the terms and conditions of this Agreement, as amended from time to time.
D. This Background is incorporated and made a part of this Agreement.
NOW THEREFORE, in consideration of Lenders' financing of the acquisition of Portfolios, and in further consideration of the inducement to Lenders to make Advances to, and to otherwise extend credit to the Borrowers, the parties hereto agree to amend and restate the Original Restated Loan Agreement in its entirety as follows:
RECITALS
WHEREAS, Borrowers have requested that Lenders extend a revolving credit facility to Borrowers of Sixty Million Dollars ($60,000,000) in the aggregate for the purpose of refinancing certain indebtedness of Borrowers and to provide (a) from Tranche A for the acquisition of Portfolios, and (b) from Tranche B for working capital financing for Borrowers and funds for other general corporate purposes of Borrowers; and for these purposes, Lenders are willing to make certain loans and other extensions of credit to Borrowers of up to such amount upon the terms and conditions set forth herein; and
WHEREAS, Borrowers have agreed to secure all of their obligations under the Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon all of their existing and after-acquired personal and real property and Palisades will pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of Cliffs; and
WHEREAS, Asta Funding is willing to guarantee all of the obligations of Borrowers to Agent and Lenders under the Loan Documents and have agreed to secure all of its obligations by granting to Agent, for the benefit of Agent and Lenders, a security interest in and lien upon substantially all of its existing and after-acquired personal property and to pledge to Agent, for the benefit of Agent and Lenders, all of the Stock of the Borrowers, except Cliffs; and
WHEREAS, capitalized terms used in this Agreement shall have the meanings ascribed to them in Annex A and, for purposes of this Agreement and the other Loan Documents, the rules of construction set forth in Annex A shall govern. All Annexes and other attachments (collectively, "Appendices") hereto, or expressly identified to this Agreement, are incorporated herein by reference, and taken together with this Agreement, shall constitute but a single agreement. These Recitals shall be construed as part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and for other good and valuable consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities.
5
(a) Revolving Credit Facility.
(i) Tranche A.
(A) Subject to the terms and conditions hereof, each Revolving Lender agrees to make available to Borrowers from time to time until the Commitment Termination Date its Pro Rata Share of advances for the purchase of Portfolios (each, a "Tranche A Advance"). The Pro Rata Share of the Revolving Loan of any Revolving Lender shall not at any time exceed its separate Revolving Loan Commitment. The obligations of each Revolving Lender hereunder shall be several and not joint. Until the Commitment Termination Date, Borrowers may borrow, repay and reborrow under this Section 1.1(a); provided that the amount of any Tranche A Advance to be made at any time shall not exceed Tranche A Borrowing Availability at such time. Each Tranche A Advance shall be made on notice by Borrower Representative on behalf of the applicable Borrower to one of the representatives of Agent identified in Schedule 1.1 at the address specified therein. Any such notice must be given no later than (1) 1 ...
*End of Preview*
Click the 'Add to Cart' button to download the complete and formatted agreement.