ESCROW, SERVICING AND CONSIGNMENT SALES AGREEMENT

1.

Delivery of Escrow Documents.  The parties hereto hereby acknowledge and agree that, on or before the Escrow Closing Date, the Buyer/Borrower, Seller, Administrative Agent, Servicer and Guarantors (as applicable) have executed and delivered the Purchase Agreement, the Loan Agreement and the additional Sale Documents and Loan Documents described on Exhibit A hereto (each dated as of the Escrow Closing Date, collectively, the “Escrow Documents”) to the Seller to be held in escrow pursuant to the terms hereof, and that, in consideration of the mutual promises and covenants contained herein, Seller shall hold the Escrow Documents in escrow and release the Escrow Documents from escrow in accordance with and subject to the terms and conditions

 

hereof.  Until such time as the Escrow Documents are released in accordance with Section 3 of this Article I, the Escrow Documents shall not be binding against any party hereto. The parties hereto acknowledge and agree that the Custodial Agreement between Administrative Agent and Buyer/Borrower is in full force and effect, and is not subject to the escrow arrangements set forth herein.  

2.

Delivery of Cash Purchase Price; Term Loan A and Term Loan B Payments.   The Seller hereby acknowledges and agrees that, on or before the Escrow Closing Date, the Buyer/Borrower has transferred to Seller an amount equal to the Cash Purchase Price.  Buyer/Borrower hereby acknowledges and agrees that it shall (i) on or before the thirtieth (45^th) day following the date hereof, pay an amount equal to $1,036,000 (the “TL-A Payment”) to the Portfolio Collection Account, and (ii) on or before the seventy-fifth (90^th) day following the date hereof, pay an amount equal to $1,000,000 (the “TL-B Payment”) to the Portfolio Collection Account, in each case, to the extent the neither the Escrow Release or Escrow Termination shall have occurred as of such date.

3.

Notification of Receipt of Required Permits; Distribution and Release of the Escrow Documents.  Buyer/Borrower shall promptly notify Administrative Agent of its receipt of any of the Required Permits, and provide copies of same to Administrative Agent for review.   The parties hereby direct the Seller to hold the Escrow Documents until such time as Administrative Agent shall have notified the Seller in writing (with copies to be delivered to Buyer/Borrower and AUA), to release the Escrow Documents (a “Release Notice”), which Release Notice the Administrative Agent shall provide promptly following Administrative Agent’s receipt of (i) a landlord’s waiver and consent, in form and substance reasonably satisfactory to Administrative Agent, with respect to the Servicer Location and AUP’s principal executive office (provided, that to the extent Buyer/Borrower is unable to obtain either such landlord’s waiver and consent after exercising commercially reasonable efforts to obtain same, delivery of such landlord’s waivers and consents shall not be a condition to Administrative Agent’s required delivery of a Release Notice hereunder (or otherwise constitute one of the Release Conditions as defined below)) and (ii) either (A) evidence reasonably acceptable to Administrative Agent of the Buyer/Borrower’s receipt of each the Required Permits or (B) a fully executed Consignment Agreement and evidence reasonable acceptable to Administrative Agent of the Buyer/Borrower’s receipt of the Finance License (the foregoing conditions, collectively, the “Release Conditions”).  For the purposes hereof, the term “Consignment Agreement” shall mean a consignment agreement between Buyer/Borrower and AUF, pursuant to which Buyer/Borrower shall consign motor vehicle inventory owned by the Buyer/Borrower to AUF for retail sale, and the terms of which consignment agreement shall expressly provide, amongst other things, (w) that there shall be no fee payable to AUF in respect of such consignment arrangement, (x) title to the consigned motor vehicle inventory shall not pass to AUF and shall remain vested in Buyer/Borrower, (y) all proceeds received from the sale of consigned inventory shall be for the benefit of and held in trust for Buyer/Borrower (including without limitation any down payments or loans to purchaser, which loans shall be originated in the name of Buyer/Borrower), and (z)  AUF shall acknowledge that it is aware that such consigned vehicles are subject to a lien in favor of Administrative Agent and that rights of Administrative Agent with

 

respect to such consigned vehicles take precedence over AUF’s rights in such consigned vehicles.   Each of the parties hereto hereby irrevocably acknowledge and agree that, contemporaneous with the release of the Escrow Documents by Seller in accordance with the preceding sentence (the “Escrow Release”), (i) the signatures of such party to the Escrow Documents to which such party shall automatically be released and effective, and (ii) such Escrow Documents shall be deemed to have been executed and delivered and to have entered into full force and effect as of the Escrow Closing Date.

4.

Effect of Escrow Release, Consummation of the Purchase and deemed making of the Initial Loans.   Upon the release of the Escrow Documents in connection with the Escrow Release, and without any further act or agreement of the parties, the parties acknowledge and agree that (i) the Purchase shall automatically be consummated according to the terms of the Purchase Agreement (with such Purchase being deemed to have been made and effective as of the Escrow Closing Date), (ii) the Initial Loans shall be automatically made by the Lenders to Seller (at the direction of and on behalf of the Borrower) pursuant to the terms of the Loan Agreement (with such Initial Loans being deemed to have been made and effective as of (and interest accruing from) the Escrow Closing Date.  Any proceeds of the Loans collected by Seller pursuant to the terms of Article II hereof from the Escrow Closing Date through the date of the Escrow Release (the “Escrow Release Date”) shall be deemed to have been received by Administrative Agent and applied to the Initial Loans in accordance with the terms of Section 3.6 of the Loan Agreement, and any proceeds of Servicer Loans received by Seller pursuant to the terms of Article III hereof from the Escrow Closing Date through the date of the Escrow Release (the “Escrow Release Date”) shall be deemed to have been received by Administrative Agent and applied to the Initial Loans in accordance with the terms of Section 3.6 of the Loan Agreement.  Any Servicer Loan and Servicer Loan Documents originated by Servicer pursuant to the sale of Consigned Inventory pursuant to Article III hereof shall automatically be deemed transferred to Buyer/Borrower, and Servicer and/or Buyer/Borrower shall executed such bills of sale or other documentation as Administrative Agent shall reasonably request to evidence such sale.  The obligation of Seller under this Agreement to pay any Sale Fees, Labor Costs or other expense reimbursements payable to Servicer hereunder (other than Parts Costs) shall be deemed void and of no force or effect, provided, however, that all such obligations of Seller and Administrative Agent under the Escrow Documents shall survive the Escrow Release and remain in full force and effect.

5.

Termination of Escrow Prior to Escrow Release.  In the event that the Release Conditions are not satisfied on or before August 19, 2007 (as such date may be extended by the written agreement of Seller, Administrative Agent and Buyer/Borrower, the “Outside Date”), the Seller shall have the option to, by written notice to Administrative Agent, Buyer/Borrower and AUA (a “Termination Notice”), terminate the escrow arrangements set forth in this Article I (an “Escrow Termination”), after which the signature pages of the parties to the Escrow Documents shall promptly be returned by Seller to the applicable parties or destroyed by the Seller, and such signature pages and the Escrow Documents themselves shall be of no force or effect.  In the Event of an Escrow Termination, Seller shall promptly pay to Buyer/Borrower an amount equal to the Cash

 

Down Payment and the amounts TL-A Payment and TL-B Payments paid to the Portfolio Collection Account (if any) to Buyer/Borrower, provided that Seller shall not be obligated to make such payment in the event that the Release Conditions are not satisfied due to (i) the applicable Texas licensing authority having rejected Buyer/Borrower’s application for a Finance License at a time when such applicable Texas licensing authority is issuing such Finance Licenses to any other applicable or (ii) the Buyer/Borrower shall have failed to deliver a fully executed Consignment Agreement.

6.

Efforts to Obtain Required Permits. The Buyer/Borrower agrees to use its commercially reasonable efforts to obtain the Required Permits.  Notwithstanding the occurrence of an Escrow Release pursuant to Section 3 above prior to the Buyer/Borrower’s receipt of Dealer License, the Buyer/Borrower hereby agrees to continue to use its commercially reasonable efforts to obtain the Dealer License (which agreement shall expressly survive the occurrence of the Escrow Release).

1.

Designation of the Servicer.  Seller hereby appoints the Servicer as its agent to service the Loans and enforce its respective rights in and under such Loans and any collateral security therefor until the Seller delivers a Termination Notice.  Servicer hereby accepts such appointment and agrees to perform the duties and obligations with respect thereto as set forth herein.  The parties hereto acknowledge that Servicer, as the ‘servicer’ of the Loans under this Agreement, possesses only such rights with respect to the enforcement of rights and remedies with respect to the Loans and collateral security therefor as are possessed by Seller.  Upon the Servicer’s receipt of a Termination Notice from the Seller, Servicer agrees that it will terminate its activities as ‘servicer’ of the Loans hereunder in a manner that the Seller reasonably believes will facilitate the transition of the performance of such activities to such successor ‘servicer’ as Seller may select, and the Servicer shall use its reasonable efforts to assist the Seller in transitioning such ‘servicing’ arrangements to such successor ‘servicer’.

2.

Duties of the Servicer.  The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect on the Loans from time to time, all in accordance with (i) applicable laws, Servicer’s (a) Underwriting Guidelines and (b) Collections and Account Liquidations Policies and Procedures Manual (in each case, as delivered by Servicer to Seller prior to the date hereof) and (iii) Seller and Seller Agent’s reasonable directions to Servicer from time to time  (the preceding clauses (ii) and (iii), collectively, the “Credit and Collection Policy”).  Without limiting the foregoing, the duties of the Servicer shall include the following:

3.

Authorization of the Servicer.

4.

Collection of Payments.

5.

Autostar.  In connection with its servicing of the Loans hereunder, Servicer shall utilize an Autostar Solutions, Inc., a Texas corporation ("Autostar") software based internet based payment system that includes Accountmate functionality, and Servicer shall grant (or cause any applicable affiliate license holder to grant) to Seller full access rights to such software and payment system, including but not limited to passwords and login information.  Servicer shall (or shall cause any applicable affiliated license holder to) authorize and instruct Autostar to provide Seller, at its request, with all back-up materials and information for such payment system.  Servicer shall send Seller copies of (and Autostar back-up reports with respect to) any of Texas Motor Vehicle Seller-Financed Sales Tax and/or Surcharge Reports within two (2) Business Days of its filing and payment of same.  In the event that Autostar becomes unable to provide such service to Servicer, Servicer will immediately obtain another such internet-based payment service that provides equivalent software and access rights to Servicer, and Seller as provided  by Autostar, including but not limited to full access rights to Seller and back-up materials and information as requested by Seller.

6.

Realization upon Loan Collateral in respect of defaulted Loans.  Subject to the terms of the Credit and Collection Policy, the Servicer will use reasonable efforts to foreclose upon or repossess, as applicable, or otherwise comparably convert the ownership of any Loan Collateral relating to a defaulted Loan as to which no satisfactory arrangements can be made for collection of delinquent payments.  The Servicer will comply with the Credit and Collection Policy and applicable Law in realizing upon such Loan Collateral, which practices and procedures may include reasonable efforts to enforce all obligations of Obligors foreclosed upon, repossessing and causing the sale of such Loan Collateral at public or private sale in circumstances other than those described in the preceding sentence (including, without limitation, sale of such Loan Collateral as “Repossessed Inventory” pursuant to Article III hereof).  Without limiting the generality of the foregoing, unless the Seller has specifically given instruction to the contrary, the Servicer may not cause the sale of any such Loan Collateral for a purchase price less than eighty percent (80%) of the then current Black Book retail value thereof, provided, that in the event the such Loan Collateral requires repair work which would cost (based on Parts Costs and Labor Costs in accordance with the repair cost calculations set forth in Section 7 below) in excess of 25% of the then current Black Book wholesale value thereof, Seller

 

shall, upon the request of Servicer, shall determine an alterative minimum applicable purchase price with respect to such vehicle and/or authorize Servicer to make applicable repairs to such Vehicle (with such repairs to be at Seller’s expense and authorized and paid for in accordance with the provisions of Section 7 below).  In any case in which any such Loan Collateral has suffered damage, the Servicer will not expend funds in connection with any repair or toward the foreclosure or repossession of such Loan Collateral unless it reasonably determines that such repair and/or foreclosure or repossession will increase the sale price thereof by an amount greater than the amount of such expenses and such repair is approved by Seller in accordance with Section 7 below.  The Servicer will remit to the Portfolio Collection Account any amounts received in connection with the sale or disposition of Loan Collateral relating to a defaulted Loan.  The Servicer shall notify the Servicer of the need for any expenditure of funds under this section for the purpose of repairing Loan Collateral, and if such expenditure is approved by Seller, shall be entitled to receive reimbursement for its costs and expenses relating to any such actions.

7.

Warranty Claims; Repair of Loan Collateral.    Seller acknowledges that certain of the automobiles and lights trucks constituting Loan Collateral (such vehicles, the “Warranty Vehicles”) were sold be a prior owner of the Loans with certain limited service contracts covering the repair of certain components of such vehicles (the “Service Contracts”).  Seller agrees that, to the extent any Obligor owning a Warranty Vehicle makes demand for performance under an applicable Service Contract, then, subject to the terms, conditions and procedures set forth hereof, Servicer shall perform (or cause to be performed) required repair work thereon and Seller shall, subject to the terms, conditions and procedures set forth herein, reimburse Servicer for its actual costs and expenses in respect of any such repair work undertaken by Servicer on such Warranty Vehicles under such Service Contract (“Warranty Repairs”) as follows:

8.

Maintenance of Insurance Policies.  With respect to each Loan, the Servicer shall use its best efforts to cause each Obligor required to do so pursuant to the underlying consumer loan documents applicable to such Loan to maintain in respect of the related Loan Collateral all insurance coverage as is required under the related consumer loan documents.  If an Obligor fails to maintain such insurance, the Servicer shall (to the extent available at commercially reasonable terms as reasonably determined by the Servicer, which shall be entitled to rely on insurance consultants in making such determination) obtain such insurance (which may be through a master or single interest policy) and the cost (including any deductible relating to such insurance and any out-of-pocket cost incurred by the Servicer in obtaining advice of insurance consultants) of such insurance (or in the case of a master or single interest policy, the incremental cost

 

(including any deductible relating to such insurance) of such insurance relating to the specific Loan Collateral), shall be paid by the Servicer and shall be reimbursable to the Servicer by Seller.  All Insurance Policies maintained by the Servicer in connection with the Loans and Loan Collateral shall contain “standard” mortgagee / loss payable clause, with loss payable to the Seller.  Notwithstanding the foregoing, the Servicer agrees to deposit into the Portfolio Collection Account, within one (1) Business Day of its receipt thereof, any amounts collected by the Servicer under any such policies (other than amounts to be applied to the restoration or repair of the related Loan Collateral).

9.

Audits; Books and Records and Inspections.  Periodically at the discretion of the Seller, the Seller may review the Servicer’s collection and administration of the Loans in order to assess compliance by the Servicer with the Credit and Collection Policy, as well as with this Agreement and may conduct an audit of the Loans and Loan Collateral in conjunction with such a review.  Such review shall be reasonable in scope and shall be completed in a reasonable period of time.  To the extent that the Seller requires access to the Servicer’s books and records, the Servicer shall arrange such access with the upon reasonable prior written notice, and Seller shall be permitted to make extractions or copies the Servicer’s books, records, journals, orders, receipts, or other correspondence.  Without limiting the foregoing, from time to time on request of the Seller and at Seller’s expense, the Servicer shall permit, and shall arrange with the Seller to permit certified public accountants or other independent auditors acceptable to the Seller to conduct, at the Servicer’s expense, a review of the Servicer's books and records and all other documentation regarding the Loans.  Seller, by or through any of its officers, agents, employees, attorneys or accountants, shall have the right to enter any of Servicer or AUA’s officers and other locations, upon reasonable prior written notice, to inspect the Loans, Loan Collateral, Consigned Inventory (as hereinafter defined) and otherwise inspect Servicer and AUA’s operations.

10.

Payment of Certain Expenses by Servicer.  The Servicer will be required to pay all expenses incurred by it in connection with its servicing activities under this Agreement, including fees and disbursements of its independent accountants, taxes imposed on the Servicer, and expenses incurred by the Servicer in connection with payments and reports pursuant to this Agreement.

11.

Servicing Reports.  By no later than 12:00 noon on the last Business Day of each calendar week, the Servicer will provide to the Seller, a statement determined as of the First Business Day of such calendar week (a “Servicing Report”), signed by a responsible officer of the Servicer including (i) an detailed aging report of the Loans, (ii) a detailed payment summary in respect of payments collected on the Loans during the preceding calendar week, (iii) the outstanding principal and accrued by unpaid interest on each Loan, (iv) a report of all sales tax obligations incurred and sales tax returns required to be filed in connection with Loan payments received during the preceding week (which sales tax report shall be in form and substance and include such information as Seller shall reasonably require) and (v) a reconciliation to the immediately preceding Servicing Report, and shall be in form and substance reasonably satisfactory to Seller.  

 

The Seller may, at its option, cause an amount equal to applicable sales tax payment obligations incurred in connection with the receipt of Loan payments remitted to Servicer (to such deposit account as Servicer may designate from time to time), which amounts  shall be held in trust by Servicer for the benefit of Seller and promptly paid over to the applicable taxing authority. The failure of Servicer to promptly remit any such amounts to the applicable taxing authority shall be breach of this Agreement.

12.

Financial Statements.  The Servicer shall deliver to the Seller, (i) within twenty (20) days after the end of each fiscal month, the consolidated and consolidating unaudited financial statements of the AUA and its subsidiaries for such fiscal month (including a balance sheet, statement of income, retained earnings and cash flows), certified by a responsible officer of the Servicer as complete and correct and prepared in accordance with GAAP, consistently applied.

13.

Additional Information.  Promptly upon request by Seller, the Servicer shall provide to the Seller, for each Loan, the name and number of the related Obligor, collection status, loan status, the date of each scheduled payment and the outstanding principal balance, and such other items as may reasonably be expected in connection with the transactions contemplated by this Agreement.

14.

Resignation of the Servicer.  The Servicer may not resign from the obligations and duties hereby imposed on it except upon the Servicer’s and Seller’s reasonable determination that (i) the performance of its duties hereunder is or becomes impermissible under applicable law and (ii) there is no reasonable action that the Servicer could take to make the performance of its duties hereunder permissible under applicable law.  No such resignation shall become effective until the Seller has appointed a successor servicer and such successor servicer shall have assumed all of the Servicer’s servicing obligations in respect of the Loans.

1.

Seller hereby agrees to consign to Servicer for sale, and Servicer hereby agrees to accept from Seller on consignment in accordance with the terms hereof, the Motor Vehicle Inventory together with any automobile or light truck repossessed by Seller pursuant to the Seller’s exercise of remedies in respect of Loans pursuant to Article II hereof (such repossessed vehicles, “Repossessed Inventory”, Repossessed Vehicles and Motor Vehicle Inventory, collectively, “Consigned Inventory”).  Servicer acknowledges and agrees that, except as expressly set forth in this Article III, all right, title and interest on the Consigned Inventory shall remain with Seller, and that Servicer shall mark its books and records accordingly to reflect that fact that such Consigned Inventory is the property of the Seller and not Servicer.  Servicer further authorizes Seller to filing such uniform commercial code financing statements in such filing offices as Seller shall deem appropriate to evidence such consignment arrangement.  Although Servicer and Seller acknowledge that all right, title and interest in the Consigned Inventory shall remain with Seller during the term of the consignment arrangement evidenced hereto, Servicer shall have the right to sell items of Consigned Inventory to Servicer’s consumer customers free

 

and clear of any right, title, interest, lien or encumbrance of Seller, provided that such sale conforms to the following terms and conditions:

2.

Any sale of Consigned Inventory by Servicer shall be made for Cash, or a combination of Cash and the making by Servicer of a retain installment loan (a “Servicer Loan”) by Servicer to the applicable purchaser, which Servicer Loan must satisfy the following conditions:

3.

Servicer shall, within five (5) Business Day’s of the sale of Consigned Inventory financed by Servicer pursuant to a Servicer Loan, deliver the originally executed Servicer Loan Documents to the Existing Custodian (as defined in the Purchase Agreement) for the benefit of Seller, and shall deliver the original Auto Title in respect of such sold Consigned Inventory (such Auto Title naming the purchaser as the owner and Servicer as the Lienholder) within five (5) Business Days of Servicer’s receipt of such Auto Title from the Texas Department of Transportation.  Servicer acknowledges and agrees that Servicer shall not permit any of the Loans, Consigned Inventory, Down Payments, Servicer Loan Documents or any proceeds of the foregoing to be subject to any lien or security interest other than the lien and security interest of Seller provided for herein.

4.

Servicer shall, within one (1) Business Day of its receipt of any payment in respect of (i) the sale of Motor Vehicle Inventory or (ii) any Servicer Loan, deposit such payment, in the form received, to the Portfolio Collection Account.

5.

In consideration for Servicer’s sale of Consigned Inventory hereunder, Seller agrees to pay Servicer a consignment sale fee (a “Sale Fee”) equal to $1 for each item of Consigned Inventory sold by Servicer pursuant to the terms hereof.  The aggregate amount of all Sale Fees shall be paid by Seller to Servicer on the Escrow Termination upon Seller’s receipt of the balance of the aggregate Inventory Purchase Prices for all sold Consigned Inventory in accordance with Section 6 below.

6.

Upon the Servicer’s sale of Consigned Inventory, Servicer shall pay the Inventory Purchase Price therefor to Seller as follows:

7.

The Servicer will be required to pay all expenses incurred by it in connection with its consignment sale activities under this Agreement, including fees and disbursements of its independent accountants, taxes imposed on the Servicer, and expenses incurred by the Servicer in connection with payments and reports pursuant to this Agreement.  Notwithstanding the foregoing, the Servicer shall file all applicable tax returns and other necessary documentation to cause any sales taxes due in respect of the sale of Consigned Inventory to be paid in accordance with applicable provisions of Texas law.  Contemporaneous with the delivery of the Servicing Reports required to be delivered to Seller pursuant to Article II hereunder, Servicer shall provide Seller with a report of all sales tax obligations incurred and sales tax returns required to be filed in connection with the sale of Consigned Inventory since the date of the previous Servicing Report, which report shall be in form and substance and include such information as Seller shall reasonably require.  The Seller may, at its option, cause an amount equal to applicable sales tax payment obligations incurred in connection with the sale of consigned inventory to be remitted to Servicer (to such deposit account as Servicer may designate from time to time), which amounts shall be held in trust by Servicer for the benefit of Seller and promptly paid over to the applicable taxing authority.  The failure of Servicer to promptly remit any such amounts to the applicable taxing authority shall be breach of this Agreement.

8.

On the Escrow Closing Date, Seller shall provide Servicer with access to remove the Motor Vehicle Inventory from Tex Star Motors, in Houston, Texas (the current location of the Motor Vehicle Inventory, the “Existing Location”).  Seller shall be responsible for providing Servicer with access to the Motor Vehicle Inventory on the Existing Location, however, Servicer acknowledges and agrees that it shall be solely responsible, at its own cost and expense, to arrange for the physical transfer and removal of the Motor Vehicle Inventory from the Existing Location to Servicer’s retail premises located at 5715 North Freeway, Houston, Texas  77076 (the “Servicer Location”).  If the Servicer is unable to move any of the Motor Vehicle Inventory because the party(ies) in possession of such Motor Vehicle Inventory refuses to relinquish possession, Seller may take such legal and other action as Seller deems appropriate to secure Servicer access to such Motor Vehicle Inventory, provided, Seller shall have no liability to Servicer as a result of its failure to provide such access.  Notwithstanding the foregoing, the Servicer shall have no obligation hereunder to accept on consignment (and the Buyer/Borrower shall have no

9.

Seller shall maintain the Motor Vehicle Inventory at the Servicer Location, however, Seller understands and acknowledges that Servicer may need to allow prospective buyers to test drive and otherwise inspect the Motor Vehicle Inventory, which test drives and inspects may result on the Motor Vehicle Inventory being removed from the Servicer Location on a temporary basis.  Servicer agrees to indemnify and hold harmless Seller and its affiliates from any claims arising Servicer permitting any prospective customer to test drive and/or inspect any Motor Vehicle Inventory.

10.

Servicer acknowledges and agrees that Servicer shall be required to maintain (i) liability insurance coverage in respect of the Motor Vehicle Inventory in an amount not less than required by applicable law, which liability insurance coverage shall name Seller as an “additional insured”, and (ii) property insurance coverage in respect of the Motor Vehicle Inventory in an amount not less than the applicable Black Book retail value of the Motor Vehicle, which property insurance coverage shall name Seller as “loss payee”.  Servicer agrees to hold Seller harmless from any damage to Motor Vehicle Inventory occurring during the period such Motor Vehicle Inventory is consigned to Servicer.

11.

Servicer shall, at Servicer’s costs and expense, cause each item of Consigned Inventory received by Servicer to be equipped with a starter interrupt / GPS tracking device of the type currently being used by Servicer prior to such item of Consigned Inventory being sold by Servicer.

1.

As security for the due and punctual performance of any and all of Buyer/Borrower and, Servicer’s obligations to Seller and Administrative Agent hereunder, including without limitation, the Inventory Purchase Price Obligation, each of Buyer/Borrower, Servicer, AUA (each a “Secured Obligor” and collectively, the “Secured Obligors”) hereby jointly and severally guaranty the obligations of each such Secured Obligor to Seller and Administrative Agent hereunder, and each Secured Obligor hereby pledges, assigns and grant to Seller, for the benefit of itself, and Administrative Agent, for the benefit of itself and the Lenders, a first priority continuing security interest in, and a lien on, the Loans, the Consigned Inventory, the Servicer Loans, the Servicer Loan Documents (and each Auto Title related to each Servicer Loan and all other agreements, documents and instruments related thereto), the Down Payments and all additions thereto and any proceeds thereof (collectively, the “Collateral”).  The security interest of Seller and Administrative Agent shall at all times be valid, perfected and enforceable by Seller

2.

Each Secured Obligor hereby confirms and agrees that each of Seller and the Administrative Agent (or any designee thereof), following an default by any Secured Obligor or Guarantor of the payment or performance of its obligations hereunder (including, without limitation, any servicing obligation under Article II hereof or any consignment sale obligation under Article III hereof), or the breach of any of its representations or warranties hereunder (an “Event of Default”), shall, at its option, have the sole right to enforce Servicer’s rights and remedies under each Servicer Loan Document, but without any obligation on the part of the Seller or Administrative Agent or any of their respective affiliates to perform any of the obligations of Servicer under any such Servicer Loan Document.

3.

Each Secured Obligor Borrower hereby authorizes Seller and Administrative Agent to file UCC-1 Financing Statements with respect to the Collateral, and any amendments or continuations relating thereto, which UCC-1 Financing Statements may describe the Collateral as “all present and future assets of the Debtor” or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform Commercial Code.  The Secured Obligors shall not allow any financing statement or notice of assignment of any Collateral, other than those filed in favor of Seller and Administrative Agent to be on file in any public office covering any Collateral, proceeds thereof or other matters subject to the security interest granted to Seller and Administrative Agent hereunder.

4.

Secured Obligors hereby agree to deliver to Seller and Administrative Agent, at such places as Seller and Administrative Agent may reasonably designate, (i) schedules executed by Secured Obligors listing the Servicer Loans and fully and correctly specifying in adequate detail the aggregate unmatured unpaid face amount of each Servicer Loan and the amount of the deferred installments thereof falling due each month and (ii) schedules executed by the Secured Obligors listing the Consigned Inventory and specifying in adequate detail the current NADA trade in value with respect thereto.  These schedules shall be in form and tenor satisfactory to or supplied by Seller.

5.

Secured Obligors shall, from time to time, at their cost and expense, promptly execute and deliver all further instruments, documents and notices and take all further action that may be necessary, or that Seller or Administrative Agent may reasonably request in order to create, perfect and protect the liens of Seller and Administrative Agent in the Collateral, or to enable Seller and Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral, including, without limitation, (i) delivering to Seller (for the benefit of itself and Administrative Agent) all original instruments, certificated securities and other assets, perfection of a lien with respect to which may be perfected by possession under applicable law, together with any assignments separate from certificates and allonges ancillary thereto and (iii) providing Administrative Agent with “control” (as such term is defined in any applicable uniform commercial code) over any Collateral, a lien with respect to which may be perfected by

6.

If any Event of Default shall occur and be continuing, Seller and/or Administrative Agent may protect and enforce their rights hereunder by any appropriate proceedings, including proceedings for specific performance of any covenant or agreement contained herein and the following rights and remedies:

1.

Notices.  All notices, demands, requests and other written communications hereunder shall be deemed to have been properly given:  (i) upon personal delivery; (ii) on the third Business Day following the day sent, if sent by registered or certified mail; (iii) on the next Business Day following the day sent, if sent by overnight express courier; or (iv) on the day sent or if such day is not a Business Day on the next Business Day after the day sent if sent by telecopy providing the receiving party has acknowledged receipt by return telecopy, in each case, to each party hereto at its address and/or

2.

This Agreement is for the exclusive benefit of the parties hereto and their respective successors hereunder, and shall not be deemed to give, either express or implied, any legal or equitable right, remedy, or claim to any other entity or person whatsoever.

3.

If at any time Seller is served with any judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process which in any way affects the Escrow Documents, Seller is authorized to comply therewith in any manner as it or its legal counsel of its own choosing deems appropriate; and if Seller complies with any such judicial or administrative order, judgment, decree, writ or other form of judicial or administrative process, Seller shall not be liable to any of the parties hereto or to any other person or entity even though such order, judgment, decree, writ or process may be subsequently modified or vacated or otherwise determined to have been without legal force or effect.

4.

Each of the parties hereto hereby irrevocably appoints Seller as escrow agent to perform the escrow duties set forth by the terms of this Agreement.  Upon an Escrow Termination and the return or destruction of the signature pages of the parties in accordance with Section 5 of Article I hereof, Seller shall have no further duties, responsibilities or obligations hereunder with respect to the Escrow Documents.

5.

EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT IT HAS BEEN (OR HAS HAD THE OPPORTUNITY TO BE) REPRESENTED AND ADVISED BY INDEPENDENT LEGAL COUNSEL WITH RESPECT TO THE NEGOTIATION, EXECUTION AND ACCEPTANCE OF THIS AGREEMENT AND THE TRANSACTIONS GOVERNED BY THIS AGREEMENT AND HAVE RELIED UPON (OR HAVE HAD THE OPPORTUNITY TO RELY UPON) THE ADVICE OF ITS INDEPENDENT LEGAL COUNSEL IN AGREEING TO THE TERMS AND CONDITIONS HEREIN AND IN EXECUTING AND DELIVERING THIS AGREEMENT, AND THAT THEY HAVE FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT AS THE PRODUCT OF ARMS' LENGTH NEGOTIATIONS.

6.

This Agreement shall be interpreted, construed, enforced and administered in accordance with the internal substantive laws (and not the choice of law rules) of the State of Illinois.  Each of the parties hereto hereby submits to the personal jurisdiction of and each agrees that all proceedings relating hereto shall be brought in courts located within the County of Cook, State of Illinois, or elsewhere as Seller select.  Each of the parties hereto hereby waives the right to trial by jury and to assert counterclaims in any such proceedings.  To the extent that in any jurisdiction any party hereto may be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (whether before or after judgment) or other legal process, each hereby irrevocably agrees not to claim, and hereby waives, such immunity.  Each party hereto waives personal service of process and consents to service of process by certified or registered mail, return receipt requested, directed to it at

7.

Except as otherwise permitted herein, this Agreement may be modified only by a written amendment signed by all the parties hereto, and no waiver of any provision hereof shall be effective unless expressed in a writing signed by the party to be charged.

8.

The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver of any such right or remedy shall not preclude or inhibit the exercise of any additional rights or remedies.  The waiver of any right or remedy hereunder shall not preclude the subsequent exercise of such right or remedy.

9.

Each party hereto hereby represents and warrants (a) that this Agreement has been duly authorized, executed and delivered on its behalf and constitutes its legal, valid and binding obligation and (b) that the execution, delivery and performance of this Agreement by such party do not and will not violate any applicable law or regulation.

10.

The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect the validity, legality or enforceability of any other provision; and if any provision is held to be enforceable as a matter of law, the other provisions shall not be affected thereby and shall remain in full force and effect.

11.

This Agreement shall constitute the entire agreement of the parties with respect to the subject matter and supersedes all prior oral or written agreements in regard thereto.

12.

The headings contained in this Agreement are for convenience of reference only and shall have no effect on the interpretation or operation hereof.

13.

The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

14.

This Agreement may be executed by each of the parties hereto in any number of counterparts, each of which counterpart, when so executed and delivered, shall be deemed to be an original and all such counterparts shall together constitute one and the same agreement.  Signatures delivered by facsimile and/or other similar electronically transmitted format shall bind the parties hereto as though such signatures were original.

15.

Each of Borrower and each Guarantor shall from time to time execute and deliver, and shall cause each of its subsidiaries to execute and deliver, all such amendments, supplements and other modifications hereto and to the other Loan Documents and all such financing statements or continuation statements, instruments of further assurance and any other instruments, and shall take such other actions, as Administrative Agent reasonably requests and deems necessary or advisable in furtherance of the agreements contained herein.