exv10w20



 


Exhibit 10.20


BUSINESS LOAN AGREEMENT















	 	 	 	 	 	 	 
	Borrower:
	 	Portfolio Recovery Associates, Inc.

120 Corporate Boulevard, Suite 100

Norfolk, VA 23502
	 	Lender:
	 	RBC CENTURA BANK

Twin Oaks

Lending Service Center

5700 Lake Wright Dr, Ste#400

Norfolk, VA 23502

















THIS BUSINESS LOAN AGREEMENT dated January 8, 2004, is made and executed
between Portfolio Recovery Associates, Inc. (“Borrower’) and RBC CENTURA BANK
(“Lender”) on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement (“Loan”). Borrower
understands and agrees that: (A) in granting, renewing, or extending any Loan,
Lender is relying upon Borrower’s representations, warranties, and agreements
as set forth in this Agreement; (B) the granting, renewing, or extending of
any Loan by Lender at all times shall be subject to Lender’s sole judgment and
discretion; and (C) all such Loans shall be and remain subject to the terms
and conditions of this Agreement.



TERM. This Agreement shall be effective as of January 8, 2004, and shall
continue in full force and effect until such time as all of Borrower’s Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys’ fees, and other fees and charges, or until such time as
the parties may agree in writing to terminate this Agreement.



CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to
the fulfillment to Lender’s satisfaction of all of the conditions set forth in
this Agreement and in the Related Documents.




Loan Documents. Borrower shall provide to Lender the following documents for
the Loan: (1) the Note; (2) Security Agreements granting to Lender security
interests in the Collateral; (3) financing statements and all other
documents perfecting Lender’s Security Interests; (4) evidence of insurance
as required below; (5) guaranties; (6) together with all such Related
Documents as Lender may require for the Loan; all in form and substance
satisfactory to Lender and Lender’s counsel.




Borrower’s Authorization. Borrower shall have provided in form and substance
satisfactory to Lender properly certified resolutions, duly authorizing the
execution and delivery of this Agreement, the Note and the Related
Documents. In addition, Borrower shall have provided such other resolutions,
authorizations, documents and instruments as Lender or its counsel, may
require.




Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.




Representations and Warranties. The representations and warranties set forth
in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.




No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement or
under any Related Document.



REPRESENTATIONS AND
WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:




Organization. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing under
and by virtue of the laws of the State of Delaware. Borrower is duly
authorized to transact business in the Commonwealth of Virginia and all
other states in which Borrower is doing business, having obtained all
necessary filings, governmental licenses and approvals for each state in
which Borrower is doing business. Specifically, Borrower is, and at all
times shall be, duly qualified as a foreign corporation in all states in
which the failure to so qualify would have a material adverse effect on its
business or financial condition. Borrower has the full power and authority
to own its properties and to transact the business in which it is presently
engaged or presently proposes to engage. Borrower maintains an office at 120
Corporate Boulevard. Suite 100, Norfolk, VA 23502. Unless Borrower has
designated otherwise in writing, the principal office is the office at which
Borrower keeps its books and records including its records concerning the
Collateral. Borrower will notify Lender prior to any change in the location
of Borrower’s state of organization or any change in Borrower’s name.
Borrower shall do all things necessary to preserve and to keep in full force
and effect its existence, rights and privileges, and shall comply with all
regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to Borrower
and Borrower’s business activities.




Assumed Business Names. Borrower has filed or recorded all documents or
filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list
of all assumed business names under which Borrower does business: None.




Authorization.
Borrower’s execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a violation
of, or constitute a default under (1) any provision of (a) Borrower’s
articles of incorporation or organization, or bylaws, or (b) any agreement
or other instrument binding upon Borrower or (2) any law, governmental
regulation, court decree, or order applicable to Borrower or to Borrower’s
properties.




Financial Information. Each of Borrower’s financial statements supplied to
Lender truly and completely disclosed Borrower’s financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower’s financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.




Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.




Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower’s financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower’s properties are titled in Borrower’s legal
name, and Borrower has not used or filed a financing statement under any
other name for at least the last five (5) years.




Hazardous Substances. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that (1) During the period of
Borrower’s ownership of Borrower’s Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance by any person on, under, about or from
any of the Collateral. (2) Borrower has no knowledge of, or reason to
believe that there has been (a) any breach or violation of any Environmental
Laws; (b) any use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance on, under, about or
from the Collateral by any prior owners or occupants or any of the
Collateral; or (c) any actual or threatened litigation or claims of any kind
by any person relating to such matters. (3) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the Collateral shall
use, generate, manufacture, store, treat, dispose of or release any
Hazardous Substance on, under, about or from any of the Collateral; and any
such activity shall be conducted in compliance with all applicable federal,
state, and local laws, regulations, and ordinances, including without
limitation all Environmental Laws. Borrower authorizes Lender and its agents
to enter upon the Collateral to make such inspections and tests as Lender
may deem appropriate to determine compliance of the Collateral with this
section of the Agreement. Any inspections or tests made by Lender shall be
at Borrower’s expense and for Lender’s purposes only and shall not be
construed to create any responsibility or liability on the part of Lender to
Borrower or to any other person. The representations and warranties
contained herein are based on Borrower’s due diligence in investigating the
Collateral for hazardous waste and Hazardous Substances. Borrower
hereby (1) releases and waives any future claims against Lender
for indemnity or
contribution in the event Borrower becomes liable for cleanup or other costs
under any such laws, and (2) agrees to indemnity and hold harmless Lender
against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any
use, generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the Collateral. The provisions
of this section of the Agreement, including the obligation to indemnify,
shall survive the payment of the Indebtedness and the termination,
expiration or satisfaction of this Agreement and shall not be affected by
Lender’s acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.




Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower’s financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing.




Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns
and reports that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and fur which adequate reserves have been
provided.








 



BUSINESS LOAN AGREEMENT

(Continued)




Page 2















Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower’s Loan and Note, that would be prior or
that may in any way be superior to Lender’s Security Interests and rights
in and to such Collateral.




Binding
Effect. This Agreement, the Note, all Security Agreements if any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.



AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:




Notices of Claims and Litigation. Promptly inform Lender in writing of
(1) all material adverse changes in Borrower’s financial condition, and
(2) all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.




Financial Records. Maintain its books and records in accordance with
GAAP, applied on a consistent basis, and permit Lender to examine end
audit Borrower’s books and records at all reasonable times.




Financial
Statements. Furnish Lender with the following:




Annual Statements. As soon as available, but in no event later than
one-hundred-twenty (120) days after the end of each fiscal year,
Borrower’s balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender.




Interim Statements. As soon as available, but in no event later than
15 days after the end of each month, Borrower’s balance sheet and
profit and loss statement for the period ended, prepared by Borrower
in form satisfactory to Lender.


Additional
Requirements.




Annual Statements of Guarantors. As soon as available, but in no event
later than one-hundred-twenty (120) days after the end of each fiscal
year, Guarantors’ balance sheet and income statement for the year
ended, compiled by a certified public accountant satisfactory to
Lender.




Interim Statements of Guarantors. As soon as available, but in no
event later than 15 days after the end of each month, Guarantors’
balance sheet and profit and loss statement for the period ended,
prepared by Guarantors in a form satisfactory to Lender.




All financial
reports required to be provided under this Agreement shall
be prepared in accordance with GAAP, applied on a consistent basis, and
certified by Borrower as being true and correct.




Additional Information. Furnish such additional information
and statements, as Lender may request from time to time.



Financial
Covenants and Ratios. Comply with the following
covenants and ratios:




Minimum Income and Cash flow Requirements. Other Cash Flow requirements are as
follow:




Debt Coverage Ratio. Borrower must maintain a Debt Coverage Ratio
greater than 8.0:1.0. Debt Coverage Ratio is defined as Earnings
before Interest, Taxes, Depreciation, Amortization Expense and
payments applied to principal of the purchase price of Asset Pools
divided by Current Portion Long-Term Debt plus Current Portion
Capital Leases on a rolling 12-month plus Interest Expense.



Tangible
Net Worth Requirements. Other Net Worth requirements are as
follows:




Net Income. Borrower must maintain a net income of $1.00 or greater
per quarter. Net Income is defined as total revenues less total
expense.




Debt /Tangible Net Worth Ratio. Borrower must maintain a Debt
/Tangible Net Worth not in excess of 0.400 to 1.000. The ratio “Debt /
Tangible Net Worth” means Borrower’s Total Liabilities divided by
Borrower’s Tangible Net Worth. This leverage ratio will be evaluated
as of month-end.



Other
Requirements.




Borrower must
obtain prior bank approval for any acquisitions using
funded debt, as further defined in the Loan and Security Agreement
dated November 28, 2003.




Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph shall be
made in accordance with generally accepted accounting principles,
applied on a consistent basis, as being true and correct.




Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower’s properties and operations, in form, amounts, coverages and
with insurance companies acceptable to Lender. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without
at least ten (10) days prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in
favor
of Lender will not be impaired in any way by any act, omission or default
of Borrower or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such lender’s loss payable or
other endorsements as Lender may require.




Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (1) the
name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (8) the expiration date of the policy. In addition,
upon request of Lender (however not more often than annually), Borrower
will have an independent appraiser satisfactory to Lender determine, as
applicable, the actual cash value or replacement cost of any Collateral.
The cost of such appraisal shall be paid by Borrower.




Guaranties. Prior to disbursement of any Loan proceeds, furnish executed
guaranties of the Loans in favor of Lender, executed by the guarantors
named below, on Lender’s forms, and in the amounts and under the
conditions set forth in those guaranties.



	 	 	 	 
	 	Names of Guarantors	 	Amounts
	 	Portfolio
Recovery Associates,

LLC PRA Holding I. LLC

PRA Receivables Management,
LLC



	 	Unlimited

Unlimited

Unlimited








Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.




Loan Proceeds. Use all Loan proceeds solely for Borrower’s business
operations, unless specifically consented to the contrary by Lender in
writing.




Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind
and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims
that, if unpaid, might become a lien or charge upon any of Borrower’s
properties, income, or profits.




Performance. Perform and comply, in a timely manner, with all terms,
conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower
and Lender. Borrower shall nobly Lender immediately in writing of any
default in connection with any agreement.




Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of
any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.




Environmental Studies. Promptly conduct and complete, at Borrower’s
expense, all such investigations, studies, samplings and testings as may
be requested by Lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic
or a hazardous substance under applicable federal, state, or local law,
rule, regulation, order or directive, at or affecting any property or any
facility owned, leased or used by Borrower.




Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower’s
properties, businesses and operations, and to the use or occupancy of the
Collateral, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance,








 



BUSINESS LOAN AGREEMENT

(Continued)




Page 3
















or regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prier to doing so and so long as, in Lender’s sole opinion, Lender’s
interests in the Collateral are not jeopardized. Lender may require
Borrower to post adequate security or a surety bond, satisfactory to
Lender, to protect Lender’s interest.




Inspection. Permit employees or agents of Lender at any reasonable time
to inspect any and all Collateral for the Loan or Loans and Borrower’s
other properties and to examine or audit Borrower’s books, accounts, and
records and to make copies and memoranda of Borrower’s books, accounts,
and records. If Borrower now or at any time hereafter maintains any
records (including without limitation computer generated records and
computer software programs for the generation of such records) in the
possession of a third party, Borrower, upon request of Lender, shall
notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower’s expense.




Compliance Certificates. Unless waived in writing by Lender, provide
Lender at least annually, with a certificate executed by Borrower’s chief
financial officer, or other officer or person acceptable to Lender,
certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and
further certifying that, as of the date of the certificate, no Event of
Default exists under this Agreement.




Environmental Compliance and Reports. Borrower shall comply in all
respects with any and all Environmental Laws; not cause or permit to
exist, as a result of an intentional or unintentional action or omission
on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may
result to the environment, unless such environmental activity is pursuant
to and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities; shall
furnish to Lender promptly and in any event within thirty (30) days after
receipt thereof a copy of any notice, summons, lien, citation, directive,
letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or
omission on Borrower’s part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.




Additional Assurances. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and other
agreements as Lender or its attorneys may reasonably request to evidence
and secure the Loans and to perfect all Security Interests.




LENDER’S EXPENDITURES. If any action or proceeding is commenced that would
materially effect Lender’s interest in the Collateral or if Borrower fails
to comply with any provision of this Agreement or any Related Documents,
including but not limited to Borrower’s failure to discharge or pay when due
any amounts Borrower is required to discharge or pay under this Agreement or
any Related Documents, Lender on Borrower’s behalf may (but shall not be
obligated to) take any action that Lender deems appropriate, including but
not limited to discharging or paying all taxes, liens, security interests,
encumbrances and other claims, at any time levied or placed on any
Collateral and paying all costs for insuring, maintaining and preserving any
Collateral. All such expenditures incurred or paid by Lender for such
purposes will then bear interest at the rate charged under the Note from the
date incurred or paid by Lender to the date of repayment by Borrower. All
such expenses will become a part of the Indebtedness and, at Lender’s
option, will (A) be payable on demand; (B) be added to the balance of the
Note and be apportioned among and be payable with any installment payments
to become due during either (1) the term of any applicable insurance policy;
or (2) the remaining term of the Note; or (C) be treated as a balloon
payment which will be due and payable at the Note’s maturity.




NEGATIVE
COVENANTS. Borrower covenants and agrees with Lender that while
this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:




Indebtedness
and Liens. (1) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower’s assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrower’s accounts, except to Lender.




Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (2) cease operations, liquidate, merge, transfer, acquire or
consolidate with any other entity, change its name, dissolve or transfer
or sell Collateral out of the ordinary course of business, or (3) pay any
dividends on Borrower’s stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only
so long as no Event of Default has occurred and is continuing or would
result from the payment of dividends, if Borrower is a “Subchapter S
Corporation” (as defined in the Internal Revenue Code of 1986, as
amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the
shareholders to pay income taxes and make estimated income tax payments
to satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S Corporation
because of their ownership of shares of Borrower’s stock, or
purchase or retire any
of Borrower’s outstanding shares or alter or amend Borrower’s capital
structure.




Loans,
Acquisitions and Guaranties. (1) Loan, invest in or advance money
or assets to any other person, enterprise or entity, (2) purchase, create
or acquire any interest in any other enterprise or entity, or (3) incur
any obligation as surety or guarantor other than in the ordinary course
of business.




Agreements.
Borrower will not enter into any agreement containing any
provisions which would be violated or breached by the performance of
Borrower’s obligations under this Agreement or in connection herewith.




CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds
if: (A) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that
Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor
dies, becomes incompetent or becomes insolvent, files a petition in
bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower’s financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral
securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts
to limit, modify or revoke such Guarantor’s guaranty of the Loan or any
other loan with Lender; or (E) Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred.




RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
a right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
sums owing on the Indebtedness against any and all such accounts, and, at
Lender’s option, to administratively freeze all such accounts to allow
Lender to protect Lender’s charge and setoff rights provided in this
paragraph.




DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:




Payment Default. Borrower fails to make any payment when due under the Loan.




Other
Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.




Default in Favor of Third Parties. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or
person that may materially affect any of Borrower’s or any Grantor’s
property or Borrower’s or any Grantor’s ability to repay the Loans or
perform their respective obligations under this Agreement or any of the
Related Documents.




False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower’s behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter.




Insolvency. The dissolution or termination of Borrower’s existence as a
going business, or a trustee or receiver is appointed for Borrower or for
all or a substantial portion of the assets of Borrower, or Borrower makes
a general assignment for the benefit of Borrower’s creditors, or Borrower
files for bankruptcy, or an involuntary bankruptcy petition is filed
against Borrower and such involuntary petition remains undismissed for
sixty (60) days.




Defective
Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.




Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan. This
includes a garnishment of any of Borrower’s accounts, including deposit
accounts, with lender. However, this Event of Default shall not apply
if
there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate








 



BUSINESS LOAN AGREEMENT

(Continued)




Page 4















reserve or bond for the dispute.




Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. In the event of a
death, Lender, at its option, may, but shall not be required to, permit
the Guarantor’s estate to assume unconditionally the obligations arising
under the guaranty in a manner satisfactory to Lender, and, in doing so,
cure any Event of Default.




Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.




Adverse Change. A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment or performance of
the Loan is impaired.




Insecurity. Lender in good faith believes itself insecure.




Right to Cure. If any default, other than a default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (1) cure the default within
fifteen ((15)
days; or (2) if the cure requires more than fifteen 115) days, immediately
initiate steps which Lender deems in Lender’s sole discretion to
be
sufficient to cure the default and thereafter continue and complete all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.




EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make further Loan Advances or disbursements), and, at Lender’s
option, all sums owing in connection with the Loans, including all
principal, interest, and all other fees, costs and charges, if any, will
become immediately due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type
described in the “Insolvency” subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights
and remedies provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender’s rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall
not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of
any Grantor shall not affect Lender’s right to declare a default and to
exercise its rights end remedies.




MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:




Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.




Attorneys’ Fees; Expenses. Borrower agrees that if Lender hires an
attorney to help enforce this Agreement, Borrower will pay, subject to any
limits under applicable law, Lender’s attorneys’ fees and all of Lender’s
other collection expenses, whether or not there is a lawsuit and including
without limitation additional legal expenses for bankruptcy proceedings.




Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.




Consent to Loan Participation. Borrower agrees and consents to Lender’s
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower’s obligation under
the Loan irrespective of the failure or insolvency of any holder of any
interest in the Loan. Borrower further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against Lender.




Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the Commonwealth of
Virginia. This Agreement has been accepted by Lender in the Commonwealth
of Virginia.




Choice of
Venue. If there is a lawsuit, Borrower agrees upon Lender’s
request to submit to the jurisdiction of the applicable courts for the
City of Norfolk, Commonwealth of Virginia.




No Waiver
by Lender. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender’s right otherwise to demand strict compliance with
that provision or any other provision of this Agreement. No prior waiver
by Lender, nor any course of dealing between Lender and Borrower, or
between Lender and any Grantor, shall constitute a waiver of any of
Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to
any future transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.




Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, if hand
delivered, when actually received by telefacsimile (unless otherwise
required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first
class, certified or registered mail postage prepaid, directed to the
addresses shown near the beginning of this Agreement. Any party may change
its address for notices under this Agreement by giving formal written
notice to the other parties, specifying that the purpose of the notice is
to change the party’s address. For notice purposes, Borrower agrees to
keep Lender informed at all times of Borrower’s current address. Unless
otherwise provided or required by law, it there is more than one Borrower,
any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.




Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified,
it shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.




Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word “Borrower”
as used in this Agreement shall include all of Borrower’s subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower’s subsidiaries or
affiliates.




Successors and Assigns. All covenants and agreements by or on behalf of
Borrower contained in this Agreement or any Related Documents shall bind
Borrower’s successors and assigns and shall inure to the benefit of Lender
and its successors and assigns. Borrower shall not, however, have the
right to assign Borrower’s rights under this Agreement or any interest
therein, without the prior written consent of Lender.




Survival of Representations and Warranties. Borrower understands and
agrees that in making the Loan, Lender is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in arty
certificate or other instrument delivered by Borrower to Lender under this
Agreement or the Related Documents. Borrower further agrees that
regardless of any investigation made by Lender, all such representations,
warranties and covenants will survive the making of the Loan and delivery
to Lender of the Related Documents, shall be continuing in nature, and
shall remain in full force and effect until such time as Borrower’s
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.



Time is of
the Essence. Time is of the essence in the performance of this
Agreement.




DEFINITIONS. The following capitalized words and terms shall have the
following meanings when used in this Agreement. Unless specifically stated to
the contrary, all references to dollar amounts shall mean amounts in lawful
money of the United States of America. Words and terms used in the singular
shall include the plural, and the plural shall include the singular, as the
context may require. Words and terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Uniform Commercial
Code. Accounting words and terms not otherwise defined in this Agreement
shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:








 



BUSINESS LOAN AGREEMENT

(Continued)




Page 5














Advance. The word “Advance” means a disbursement of Loan funds made, or
to be made, to Borrower or on Borrower’s behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.




Agreement. The word “Agreement” means this Business Loan Agreement, as
this Business Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this Business
Loan Agreement from time to time.


Borrower. The word “Borrower” means Portfolio Recovery Associates, Inc.
and includes all co-signers and co-makers signing the Note.




Collateral. The word “Collateral” means all property and assets granted
as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the
future, and whether granted in the form of a security interest,
mortgage, collateral mortgage, deed of trust, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust,
factor’s lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.




Environmental Laws. The words “Environmental Laws” mean any and all
state, federal and local statutes, regulations and ordinances relating
to the protection of human health or the environment, including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
(“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986,
Pub). L. No. 99-499 (“SARA”), the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801, et seq., the. Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state
or federal laws, rules, or regulations adopted pursuant thereto.




Event of Default. The words “Event of Default” mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.

GAAP. The word “GAAP” means generally accepted accounting principles.




Grantor.
The word “Grantor” means each and all of the persons or
entities granting a Security Interest in any Collateral for the Loan,
and their personal representatives, successors and assigns.



Guarantor. The word “Guarantor” means any guarantor, surety, or
accommodation party of any or all of the Loan.




Guaranty. The word “Guaranty” means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the
Note.




Hazardous Substances. The words “Hazardous Substances” mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled. The words “Hazardous Substances” are used in their very
broadest sense and include without limitation any and all hazardous or
toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term “Hazardous Substances” also includes,
without limitation, petroleum and petroleum by-products or any fraction
thereof and asbestos.




Indebtedness. The word “Indebtedness” means the indebtedness evidenced
by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.




Lender.
The word “Lender” means RBC CENTURA BANK, its successors and
assigns.




Loan. The word “Loan” means any and all loans and financial
accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those
loans and financial accommodations described herein or described on any
exhibit or schedule attached to this Agreement from time to time.




Note. The word “Note” means the Note executed by Portfolio Recovery
Associates, Inc. in the principal amount of $750,000.00 dated January 8,
2004, together with all modifications of and renewals, replacements, and
substitutions for the note or credit agreement.




Permitted Liens. The words “Permitted Liens” mean (1) liens and security
interests securing Indebtedness owed by Borrower to Lender; (2) liens
for taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled “Indebtedness and Liens”; (5) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (6) those liens
and security interests which in the aggregate constitute an immaterial
and insignificant monetary amount with respect to the net value of
Borrower’s assets.




Related Documents. The words “Related Documents” mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Loan.




Security Agreement. The words “Security Agreement” mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.




Security Interest. The words “Security Interest” mean, without
limitation, any and all types of collateral security, present and
future, whether in the form of a lien, charge, encumbrance, mortgage,
deed of trust, security deed, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor’s lien,
equipment trust, conditional sale, trust receipt, lien or title
retention contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever whether created by
law, contract, or otherwise.




BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED JANUARY 8. 2004.




THIS AGREEMENT IS GIVEN UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT
IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT
ACCORDING TO LAW.




BORROWER:

   


	 	 	 	 	 	 	 
	 	PORTFOLIO RECOVERY ASSOCIATES, INC.	 	 
	 
	 	By:
	 	 	 	(Seal)
	 	 
	 	 	 	 
	 	 
	 	Kevin P. Stevenson, Executive Vice Pres./CFO of

Portfolio Recovery Associates, Inc.	 	 
	 
	 	LENDER:	 	 
	 
	 
	 	RBC CENTURA BANK	 	 
	 
	 	By:
	 	 	 	(Seal)
	 	 
	 	 	 	 
	 	 
	 	Authorized Signer