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Exhibit 10.10
CREDIT SUPPORT AGREEMENT
This Agreement dated as of October 23, 1995 is between
DeVlieg-Bullard, Inc. ("DBI") and CPS Holdings, Inc. (the "Company"), both
Delaware corporations.
WHEREAS, on or about May 25, 1994, DBI incurred certain indebtedness
(the "Subordinated Indebtedness") under certain Debentures in the aggregate
principal amount of $12,000,000 (the "Debentures") issued to Allied Investment
Corp. ("AIC"), Allied Investment Corp. II ("AIC II"), Allied Capital
Corporation II ("ACC II" and, together with AIC and AIC II, the "Allied
Companies"), Banc One Capital Partners Corporation ("Banc One") and PNC Capital
Corp. ("PNC" and together with the Allied Companies and Banc One, the "Original
Subordinated Creditors"); and
WHEREAS, DBI and the Original Subordinated Creditors propose to amend
certain terms and provisions of the Subordinated Indebtedness and/or the
Debentures and/or the agreements, instruments and documents relating thereto
(the "Related Documents"); and
WHEREAS, Charles E. Bradley, Sr. ("Bradley") and John G. Poole
("Poole" and, together with Bradley, the "Affiliates") are directors and
stockholders of the Company and of DBI; and
WHEREAS, in connection with the transactions referred to above, at
the request of DBI, the Affiliates propose to purchase the Debentures issued to
the Allied Companies (the "Allied Debentures") or to make loans to DBI to
enable DBI to prepay the Allied Debentures (the "Affiliate Loans"); and
WHEREAS, DBI and the Affiliates have requested that the Company make a
pledge (the "Pledge") of up to 600,000 shares (the "Company's CPS Shares") of
the Common Stock of Consumer Portfolio Services, Inc. ("CPS") to one or more of
the Original Subordinated Creditors and/or to the Affiliates (collectively, the
"Pledgees") to secure all or a portion of the obligations of DBI under the
Subordinated Indebtedness and/or the Debentures and/or the Related Documents
and/or the Affiliate Loans (collectively, the "DBI Obligations"); and
WHEREAS, DBI has agreed to pay the Company a credit support fee for
making the Pledge as provided for herein; and
WHEREAS, the Company is expected to merge with and into CPS on or
before November 15, 1995 (the "Merger"); and
WHEREAS, in the Merger Bradley will receive more than 600,000 shares
of the Common Stock of CPS ("Bradley's CPS Shares"); and
WHEREAS, Bradley and the Company have entered into a certain Credit
Support Substitution and Indemnity Agreement (the "Substitution and Indemnity
Agreement") dated as of October 14, 1995 pursuant to which, among other
things, Bradley has agreed, promptly after
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consummation of the Merger, to substitute 600,000 of Bradley's CPS Shares
and/or to cause others to substitute CPS shares for the Company's CPS Shares
under the Pledge and to cause the Company's CPS Shares to be released from the
Pledge.
NOW THEREFORE, the parties hereby agree as follows:
1. DBI shall pay the Company a fee (the "Fee") for making the
Pledge at the rate of $90,000 per year for so long as the Pledge is in effect.
The fee shall be payable in monthly installments of $7,500 in arrears on the
15th day of each calendar month beginning November 15, 1995. If the Pledge is
in effect for only part of a period, the Fee allocable to such period shall be
prorated.
2. If, as contemplated by the Substitution and Indemnity
Agreement, Bradley and/or one or more other persons or entities (collectively,
the "Substitute Pledgors") pledge shares of CPS common stock and/or other
collateral to secure the DBI Obligations (the"Substitute Pledge") in
substitution for and replacement of the Pledge, then, in such case the
following provisions shall apply:
(a) The Fee shall be payable to the Company for the period to
the date on which the Substitute Pledge is made and the Pledge is
released (the "Substitute Date"), but not thereafter.
(b) From and after the Substitute Date, DBI shall pay a fee
(the "Substitute Fee") to the Substitute Pledgors for making the
Substitute Pledge at the rate of $90,000 per year for so long as the
Substitute Pledge is in effect. The Substitute Fee shall be payable in
arrears in monthly installments of $7,500 on the 15th day of each
calendar month beginning on the first day after the Substitute Date
which is the 15th day of a calendar month. If the Substitute Pledge
is in effect for only part of a period, the Substitute Fee allocable
to such period shall be prorated.
3. All notices, requests, demands and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed by first class, registered or certified mail,
return receipt requested, postage and registry fees prepaid, and addressed as
follows:
(a) If to DBI:
DeVlieg-Bullard, Inc.
One Gorham Island
Westport, CT 06880
Attention: Chief Financial Officer
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(b) If to the Company:
CPS Holdings, Inc.
c/o Stanwich Partners, Inc.
One Stamford Landing
62 Southfield Avenue
Stamford, CT 06905
Attention: President
(c) If to Bradley:
c/o Stanwich Partners, Inc.
One Stamford Landing
62 Southfield Avenue
Stamford, CT 06905
(d) If to any other Substitute Pledgor:
At the address to be provided
in writing to DBI by such Substitute Pledgor.
Addresses may be changed by notice in writing signed by the party
changing such party's address and such notice shall be effective only upon
receipt by the other parties.
4. The Substitute Pledgors are intended to be third-party
beneficiaries of this Agreement.
5. This Agreement (i) contains the entire understanding of the
parties with respect to the subject matter hereof; (ii) supersedes all prior
agreements and understandings if any, with respect to such subject matter;
(iii) may be amended only in writing signed by DBI and, prior to the Substitute
Date, by the Company or, from and after the Substitute Date, by the Substitute
Pledgors; (iv) shall inure to the benefit of and be binding upon DBI, the
Company, the Substitute Pledgors and their respective successors, assigns,
personal representatives and heirs; (v) shall be governed and construed in
accordance with the laws of the State of Connecticut without regard to
principles of conflicts of laws; and (vi) may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
taken further shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written,
CPS HOLDINGS, INC. DEVLIEG-BULLARD, INC.
By: /s/ John G. Poole By: /s/ W. O. Thomas
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Name: John G. Poole Name: William O. Thomas
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Title: Vice President Title: President
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