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EXHIBIT 10.12
PLEDGE AGREEMENT
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This PLEDGE AGREEMENT, dated as of August 11, 2000, is between CENTRAL
FINANCIAL ACCEPTANCE CORPORATION, a Delaware corporation ("Pledgor"), and UNION
BANK OF CALIFORNIA, N.A., as agent (in such capacity, and together with its
successors, the "Agent") for the Lenders (as hereafter defined) under that
certain Credit Agreement, dated as of August 11, 2000 (as amended, restated,
modified, renewed, supplemented or extended from time to time, the "Credit
Agreement"), among Central Consumer Finance Company, a Delaware corporation
("Borrower"), and the lenders party thereto (collectively, "Lenders" and
individually, a "Lender"), and the Agent.
Recitals
A. Pledgor owns 100 shares (the "Pledged Collateral") of the common
stock of Central Consumer Finance Company, a Delaware corporation ("Issuer")
which constitute not less than 100.0 percent of the issued and fully diluted
equity voting stock of Issuer;
B. Pledgor has undertaken to grant to Secured Party a first priority
security interest in the Pledged Collateral and the other Collateral (as
hereinafter defined) as security for the Secured Obligations (as hereinafter
defined) in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises, and to induce Secured
Party to enter into and accept the Loan Documents (as hereinafter defined) and
to extend financial accommodations pursuant thereto, Pledgor hereby warrants and
represents to, and covenants and agrees with, Secured Party as follows:
1. Definitions and Construction.
(a) Definitions. As used in this Agreement:
"Agreement" means this Pledge Agreement, together with any and all
future additions, alterations, amendments, changes, extensions, modifications,
renewals, substitutions, or supplements hereto or hereof.
"Collateral" means the Pledged Collateral, the Future Rights and the
Proceeds, collectively.
"Default" has the meaning set forth in the Loan Documents.
"Future Rights" means all shares of, all securities convertible or
exchangeable into, and all warrants, options or other rights to purchase shares
of, stock of the Issuer (other than the Pledged Collateral) from time to time
held or acquired by Pledgor in any manner, and the certificates or instruments
representing such additional shares, convertible or exchangeable securities,
warrants and other rights and all dividends, cash, options, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares.
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"Holder" has the meaning set forth in Section 3 of this Agreement.
"Issuer" has the meaning set forth in the recitals to this Agreement
and shall also mean any successor thereto whether by merger or otherwise.
"Lien" means any lien, mortgage, pledge, assignment (including any
assignment of rights to receive payments of money), security interest, charge,
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, or any agreement to give
any security interest), and any agreement to give or refrain from giving a lien,
mortgage, pledge, assignment (including any assignment of rights to receive
payments of money), security interest, charge, or other encumbrance of any kind.
"Loan Documents" has the meaning set forth in the Credit Agreement.
"Permitted Dividends" means dividends permitted to be paid by Issuer
pursuant to Section 7.07 of the Credit Agreement.
"Person" means natural persons, corporations, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts, or
other organizations, irrespective of whether they are legal entities, and
governments and agencies and political subdivisions thereof.
"Pledged Collateral" has the meaning set forth in the recitals to
this Agreement and includes any security entitlements with respect thereto.
"Pledgor" has the meaning set forth in the introduction to this
Agreement.
"Proceeds" means all proceeds of the Pledged Collateral, the Future
Rights and in any event shall include, but not be limited to, any and all (i)
rights, benefits, distributions, premiums, profits, dividends, interest, cash,
instruments, documents of title, accounts, inventory, equipment, general
intangibles, deposit accounts, chattel paper and other property from time to
time received, receivable, or otherwise distributed in respect of or in exchange
for, or as a replacement of or a substitution for, any of the Pledged
Collateral, Future Rights or Proceeds (including without limitation, any cash,
stock or other securities or instruments issued after any recapitalization,
readjustment, reclassification, merger or consolidation with respect to Issuer
and any claims against securities intermediaries under Division 8 of the UCC or
otherwise), (ii) "proceeds" as that term is used in Division 9 of the UCC, (iii)
proceeds of any insurance, indemnity, warranty or guarantee (including, without
limitation, guarantees of delivery) payable to Secured Party or to Pledgor from
time to time with respect to any of the Collateral, (iv) payments (in any form
whatsoever) made or due and payable to Pledgor from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral, and (v) other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Secured Obligations" means (a) the "Obligations" as defined in the
Credit Agreement and includes all obligations, liabilities and indebtedness of
every kind and character,
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whether now existing or hereafter arising, whether absolute or contingent, and
whether direct or indirect, arising directly or indirectly under or pursuant to
any one or more of the Loan Documents, whether for principal, interest
(including, without limitation, interest that, but for the filing of a petition
in bankruptcy, would accrue on such obligations, liabilities or indebtedness),
fees (including, without limitation, reasonable attorneys' fees of outside
counsel and the reasonable allocated fees of internal counsel) or expenses, (b)
all obligations, liabilities and indebtedness of Issuer to Union Bank of
California, N.A. of every kind and character, whether now existing or hereafter
arising, whether absolute or contingent, and whether direct or indirect, arising
directly or indirectly under or pursuant to any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Issuer's exposure to fluctuations in
interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices, whether for principal, interest (including,
without limitation, interest that, but for the filing of a petition in
bankruptcy, would accrue on such obligations, liabilities or indebtedness), fees
(including, without limitation, reasonable attorneys' fees of outside counsel
and the reasonable allocated fees of internal counsel) or expenses, and (c) all
obligations, liabilities and indebtedness of Issuer to Union Bank of California,
N.A. of every kind and character, whether now existing or hereafter arising,
whether absolute or contingent, and whether direct or indirect, arising directly
or indirectly under or pursuant to any cash management or related services
including the automatic clearing house transfer of funds by the Bank for the
account of Issuer pursuant to agreement or overdrafts, whether for principal,
interest (including, without limitation, interest that, but for the filing of a
petition in bankruptcy, would accrue on such obligations, liabilities or
indebtedness), fees (including, without limitation, reasonable attorneys' fees
of outside counsel and the reasonable allocated fees of internal counsel) or
expenses.
"Secured Party" means the Agent in its capacity as secured party
hereunder.
"Securities Act" has the meaning set forth in Section 9(c) of this
Agreement.
"UCC" means the California Uniform Commercial Code, as amended from
time to time.
Capitalized terms used herein and not otherwise defined, has the
meaning set forth in the Credit Agreement.
(b) Construction.
(i) Unless the context of this Agreement clearly requires otherwise,
the plural includes the singular, the singular includes the
plural, the part includes the whole, "including" is not limiting,
and "or" has the inclusive meaning of the phrase "and/or." The
words "hereof," "herein," "hereby," "hereunder," and other similar
terms in this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement.
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(ii) Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Secured Party, or Pledgor,
whether under any rule of construction or otherwise. On the
contrary, this Agreement has been reviewed by each of the parties
and their counsel and shall be construed and interpreted according
to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
2. Pledge. As security for the prompt payment and performance of the
Secured Obligations in full when due, whether at stated maturity, by
acceleration or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of Title 11 of the United
States Code), Pledgor hereby delivers, pledges, and grants to Secured Party a
continuing first priority security interest in the Pledged Collateral, the
Future Rights and the Proceeds. The Pledgor does not, by entering into this
Agreement, assume any personal liability in respect of the Secured Obligations
and the sole recourse against Pledgor with respect to the Secured Obligations
shall be foreclosure upon the Collateral as herein provided.
3. Delivery and Registration of Collateral.
(a) All certificates or instruments representing or evidencing the
Pledged Collateral or Future Rights shall be promptly delivered by
Pledgor to Secured Party or Secured Party's designee pursuant
hereto at a location designated by Secured Party and shall be held
by or on behalf of Secured Party pursuant hereto, and shall be in
suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Secured Party.
(b) Secured Party shall have the right, at any time in its discretion
and without notice to Pledgor, to transfer to or to register on
the books of Issuer (or of any other Person maintaining records
with respect to the Collateral) in the name of Secured Party or
any of its nominees any or all of the Collateral. In addition,
Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral
for certificates or instruments of smaller or larger
denominations.
(c) If at any time and from time to time any Collateral (including but
not limited to any certificate or instrument representing or
evidencing any Collateral) is uncertificated or in the possession
or control of a Person (including a securities intermediary) other
than Secured Party or Pledgor (a "Holder"), then Pledgor shall
immediately, at Secured Party's option, either cause such
Collateral to be delivered into Secured Party's possession, or
take all other steps necessary to perfect the security interest of
Secured Party in such Collateral and to cause Secured Party to
have "control" of the Collateral consisting of securities,
security entitlements, or other financial assets within the
meaning of Section 8106 of the UCC or other applicable law
governing the perfection of Secured Party's security interest in
the Collateral in the possession of such Holder. Each such
notification/instruction and acknowledgement shall be in form and
substance satisfactory to Secured Party.
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(d) Except to the extent Pledgor is entitled to receive and retain the
Permitted Dividends pursuant to Section 5(a) hereof, any and all
Collateral (including without limitation dividends, interest and
other cash distributions) at any time received or held by Pledgor
shall be so received or held as trustee for Secured Party, shall
be segregated from other funds and property of Pledgor and shall
be forthwith delivered to Secured Party in the same form as so
received or held (with any necessary endorsements).
(e) If at any time and from time to time any Collateral consists of an
uncertificated security or a security in book entry form, then
Pledgor shall immediately cause such Collateral to be registered
or entered, as the case may be, in the name of Secured Party, or
otherwise cause Secured Party's security interest thereon to be
perfected in accordance with applicable law.
4. Secured Party's Duties. The powers conferred on Secured Party
hereunder are solely to permit it to perfect and protect its interest in the
Collateral and shall not impose on it any duty or undertaking to exercise such
powers. Except as provided by Section 9207 of the UCC, Secured Party shall have
no duty as to the Collateral, and without limiting the generality of the
foregoing, Secured Party shall not have any responsibility for (i) ascertaining
or taking action or exercising rights with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not Secured Party has or is deemed to have knowledge of such matters,
or (ii) taking any steps to preserve rights against any parties with respect to
any Collateral or (iii) selling or otherwise disposing of any Collateral if it
threatens to decline, or is declining, in value. Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which Secured Party, its nominee, or other holder of
the Collateral on behalf of Secured Party, as the case may be, accords its own
property.
5. Voting Rights and Dividends.
(a) So long as no Event of Default shall have occurred and is
continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Collateral or any part thereof
for any purpose not inconsistent with the terms of the Loan
Documents; provided, however, that Pledgor shall not exercise or
refrain from exercising any such right if, in Secured Party's
judgment, such action would have a material adverse effect on the
value of the Collateral or any part thereof, and provided,
further, that Pledgor shall give Secured Party at least five days'
written notice of the manner in which it intends to exercise, or
the reasons for refraining from exercising, any such right;
(ii) Pledgor shall be entitled to receive and utilize the Permitted
Dividends for any purpose not inconsistent with the Loan
Documents; and
(iii) Secured Party shall execute and deliver (or cause to be executed
and delivered) to Pledgor all such proxies and other instruments
as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise the voting and other rights which it is
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entitled to exercise pursuant to paragraph (i) above and to
receive the Permitted Dividends which it is authorized to receive
and utilize pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of a Default all
rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant
to Section 5(a) and to receive the Permitted Dividends which it
would otherwise be authorized to receive and retain pursuant to
Section 5(a) shall cease, and all such rights shall thereupon
become vested in Secured Party, who shall thereupon have the sole
right to exercise such voting or other consensual rights and to
receive and hold as Collateral such Permitted Dividends. Pledgor
shall execute and deliver (or cause to be executed and delivered)
to Secured Party all such proxies and other instruments as Secured
Party may reasonably request for the purpose of enabling Secured
Party to exercise the voting and other rights which it is entitled
to exercise pursuant to this subparagraph (b).
6. Representations, Warranties and Covenants. Pledgor represents,
warrants, and covenants that:
(a) The Pledged Collateral have been duly authorized and validly
issued and are fully paid and nonassessable;
(b) Pledgor is and will be the sole legal and beneficial owner of the
Collateral (including the Pledged Collateral and all other
Collateral acquired by Pledgor after the date hereof) free and
clear of any adverse claim, Lien or other right, title or interest
of any party except for the first priority security interest
created in favor of Secured Party pursuant to and in accordance
with this Agreement;
(c) This Agreement, and the delivery to Secured Party of the Pledged
Collateral (or the delivery to all Holders of the Pledged
Collateral of the notification/instruction referred to in Section
3 of this Agreement), creates a valid, perfected, and first
priority security interest in the Collateral in favor of Secured
Party securing payment of the Secured Obligations, and all actions
necessary or desirable to achieve such perfection have been duly
taken;
(d) No consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing, or
declaration with any governmental authority or regulatory body,
foreign or domestic, or of, to, or with any other Person, is or
will be required either (i) for the grant by Pledgor of the
security interest granted hereby or for the execution, delivery,
or performance of this Agreement by Pledgor, or (ii) for the
exercise by Secured Party of the voting or other rights provided
for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement (except as may be required in
connection with a disposition of the Collateral by laws affecting
the offering and sale of securities generally including the
Securities Act);
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(e) Pledgor has taken all steps it deems necessary or appropriate to
be informed on a continuing basis of changes or potential changes
affecting the Collateral (including rights of conversion and
exchange, rights to subscribe, payment of dividends,
reorganizations or recapitalizations, tender offers and voting
rights), and Pledgor agrees that it will at all times keep Secured
Party informed of any such changes or potential changes and that
Secured Party shall have no responsibility or liability for
informing Pledgor of any such changes or potential changes or for
taking any action or omitting to take any action with respect
thereto;
(f) The Pledged Collateral constitute at least the percentage of all
fully diluted issued and outstanding shares of stock of Issuer set
forth in the recitals to this Agreement;
(g) There are no presently existing Future Rights or Proceeds;
(h) Pledgor has full power and lawful authority to enter into this
Agreement and to sell, assign and transfer the Collateral to
Secured Party and to grant to Secured Party a first priority
security interest therein as herein provided, all of which have
been duly authorized by all necessary corporate action;
(i) The execution and delivery and the performance hereof are not in
violation or contravention of, and do not constitute a default
under, any corporate articles, charter or by-law provision of
Pledgor or of any indenture, agreement, undertaking, judgment,
injunction, order, decree, or other instrument or judicial or
administrative directive to which Pledgor is a party or by which
Pledgor or its property are bound, or will result in any Lien
(other than the security interest hereunder) on any assets or
property of Pledgor;
(j) This Agreement constitutes the legal, valid and binding obligation
of Pledgor enforceable in accordance with its terms, subject, as
to enforcement only, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(k) Any officer, agent or representative acting for or on behalf of
Pledgor in connection with this Agreement or any aspect hereof, or
entering into or executing this Agreement on behalf of Pledgor,
has been duly authorized so to do, and is fully empowered to act
for and represent Pledgor in connection with this Agreement and
all matters related thereto or in connection therewith; and
(l) Neither the pledge of the Collateral pursuant to this Agreement
nor the extensions of credit contemplated by the Loan Documents
violates Regulation U of the Board of Governors of the Federal
Reserve System.
7. Further Assurances.
(a) At any time and from time to time, Pledgor will promptly execute
and deliver all further instruments and documents, and take all
further action that may be necessary
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and desirable, or that Secured Party may request, in order to
perfect and protect any security interest granted or purported to
be granted hereby or enable Secured Party to exercise and enforce
its rights and remedies hereunder with respect to any Collateral.
(b) Pledgor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the
signature of Pledgor where permitted by law. A carbon,
photographic or other reproduction of this Agreement, or any
financing statement covering the Collateral, or any part thereof,
shall be sufficient as a financing statement where permitted by
law.
(c) Pledgor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.
(d) Pledgor will not sell, offer to sell, transfer, assign,
hypothecate or otherwise dispose of any Collateral (including
Proceeds), or any part thereof or interest therein, unless (i)
such transfer does not result in a Change of Control (as defined
in the Credit Agreement), (ii) such transfer is made expressly
subject to the security interest hereunder and the transferee
agrees to be bound by the provisions of this Agreement pursuant to
documentation in form and substance satisfactory to Agent, (iii)
the legal status, powers and authority of the transferee are
established to the satisfaction of Agent, and (iv) Agent receives
evidence (which shall include an opinion of Pledgor's counsel if
requested by Agent) that such transfer does not in any way alter
or impair Agent's security interest in, or right to dispose of,
the Collateral.
(e) Pledgor will defend the Collateral against all claims and demands
of all persons or entities at any time claiming any interest or
Lien therein adverse to Secured Party.
(f) Pledgor will comply in all material respects with all laws, rules
and regulations relating to, and shall pay prior to delinquency
all license fees, registration fees, taxes and assessments, and
all other charges, (including, without limitation,
non-governmental levies or assessments that may be levied upon, or
assessed against, or that may become security interests, Liens or
other encumbrances) on, the ownership or possession of any part of
the Collateral, or that create or may create a Lien upon any part
of the Collateral; provided, however, that Pledgor shall not be
required to comply with any such law, rule or regulation, or to
pay any such tax, fee, assessment or other charge, the validity of
which is being contested by Pledgor in good faith by appropriate
proceedings promptly instituted and diligently conducted, so long
as neither the value nor the title of any material part of the
Collateral, nor the security interest of Secured Party therein,
will be materially impaired by the failure of Pledgor either to
comply with any such law, rule or regulation, or to pay any such
tax, fee, assessment or other charge, during the period of such
contest.
(g) To the extent it may lawfully do so, Pledgor shall use its best
efforts to prevent Issuer from issuing Future Rights or Proceeds,
except for the declaration of the Permitted
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Dividends, and to the extent such Future Rights or Proceeds are
pledged to Secured Party.
(h) Upon receipt by Pledgor of any notice, report or other
communication from Issuer or any Holder relating to all or any
part of the Collateral, Pledgor shall immediately deliver such
notice, report or other communication to Secured Party.
8. Consent and Waiver. Pledgor's duty to perform and observe the
agreements and covenants on its part contained herein shall be absolute and
unconditional. Pledgor hereby consents that, from time to time, prior to or
following the occurrence of a Default, with or without notice to or assent from
Pledgor, any other security at any time held by or available to Secured Party
for any of the Secured Obligations or any other security at any time held by or
available to Secured Party of any other Person secondarily or otherwise liable
for any of the Secured Obligations, may be exchanged, surrendered, or released
and any of the Secured Obligations may be changed, altered, renewed, extended,
continued, surrendered, compromised, waived or released, in whole or in part, as
Secured Party may see fit, and Pledgor shall remain bound under this Agreement
notwithstanding any such exchange, surrender, or release, or any such change,
alteration, renewal, extension, continuance, surrender, compromise, waiver,
release, or inaction, or extension of further credit. Pledgor hereby waives (a)
the right, if any, to require Secured Party to proceed against any Person liable
for the payment of any of the Secured Obligations as a condition to proceeding
hereunder; and (b) the right, if any, to require Secured Party to marshal,
foreclose upon, sell, or otherwise realize upon or collect or apply any
particular portion of the Collateral or any other property, real or personal,
securing any of the Secured Obligations, as a condition to proceeding hereunder.
Secured Party may, at its election, exercise or decline or fail to exercise any
right or remedy it may have against Borrower or any security held by Secured
Party, including without limitation the right to foreclose upon any such
security by judicial or nonjudicial sale, without affecting or impairing in any
way the liability of Pledgor hereunder. Pledgor unconditionally and irrevocably
waives any rights and defenses that Pledgor may have because any of the Secured
Obligations are secured by real property, including but not limited to, any
rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California
Code of Civil Procedure. Pledgor waives any defense arising by reason of any
disability or other defense of Borrower or by reason of the cessation from any
cause whatsoever of the liability of Borrower. Pledgor waives any setoff,
defense or counterclaim that Borrower may have against Secured Party. Pledgor
waives any defense arising out of the absence, impairment or loss of any right
of reimbursement or subrogation or any other rights against Borrower. Until all
of the amounts that Borrower owes to Secured Party have been paid in full,
Pledgor shall have no right of subrogation or reimbursement for claims arising
out of or in connection with this Agreement, contribution or other rights
against Borrower, and Pledgor waives any right to enforce any remedy that
Secured Party now has or may hereafter have against Borrower. Pledgor waives all
rights to participate in any security now or hereafter held by Secured Party.
Pledgor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Agreement and of the existence, creation, or incurring of
new or additional indebtedness. Pledgor assumes the responsibility for being and
keeping itself informed of the financial condition of Borrower and of all other
circumstances bearing upon the risk of nonpayment of any indebtedness or
nonperformance of any obligation
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of Borrower, warrants to Secured Party that it will keep so informed, and agrees
that absent a request for particular information by Pledgor, Secured Party shall
have no duty to advise Pledgor of information known to Secured Party regarding
such condition or any such circumstances. Pledgor waives any rights and defenses
that are or may become available to it by reason of Sections 2787 to 2855,
inclusive of the California Civil Code.
9. Remedies Upon Default.
(a) Upon the occurrence of a Default, Secured Party may exercise in
respect to the Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the UCC,
and Secured Party may also without notice (except as specified
below) sell the Collateral or any part thereof in one or more
blocks at public or private sale, at any exchange, broker's board
or at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such
price or prices and upon such other terms as Secured Party may
deem commercially reasonable, irrespective of the impact of any
such sales on the market price of the Collateral. To the maximum
extent permitted by applicable law, Secured Party may be the
purchaser of any or all of the Collateral at any such sale and
shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion
of the Collateral sold at any such public sale, to use and apply
all or any part of the Secured Obligations as a credit on account
of the purchase price of any Collateral payable by Secured Party
at such sale. Each purchaser at any such sale shall acquire the
property sold absolutely free from any claim or right on the part
of Pledgor. Pledgor agrees that, to the extent notice of sale
shall be required by law, at least five days' notice to Pledgor of
the time and place of any public sale or the time after which a
private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and
place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising because the price at which
any Collateral may have been sold at such a private sale was less
than the price that might have been obtained at a public sale,
even if Secured Party accepts the first offer received and does
not offer such Collateral to more than one of offeree.
(b) Pledgor hereby agrees that any sale or other disposition of the
Collateral conducted in conformity with reasonable commercial
practices of major banks, insurance companies, or other financial
institutions in the City and County of San Francisco, California,
in disposing of property similar to the Collateral shall be deemed
to be commercially reasonable.
(c) Pledgor hereby acknowledges that the sale by Secured Party of any
Collateral pursuant to the terms hereof in compliance with the
Securities Act of 1933 as now in effect or as hereafter amended,
or any similar statute hereafter adopted with similar
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purpose or effect (the "Securities Act"), as well as applicable
Blue Sky or other state securities laws may require strict
limitations as to the manner in which Secured Party or any
subsequent transferee of the Collateral may dispose thereof.
Pledgor acknowledges and agrees that in order to protect Secured
Party's interest it may be necessary to sell the Collateral at a
price less than the maximum price attainable if a sale were
delayed or were made in another manner, such as a public offering
under the Securities Act. Pledgor has no objection to sale in such
a manner and agrees that Secured Party shall have no obligation to
obtain the maximum possible price for the Collateral. Without
limiting the generality of the foregoing, Pledgor agrees that,
upon the occurrence and during the continuation of a Default,
Secured Party may, subject to applicable law, from time to time
attempt to sell all or any part of the Collateral by a private
placement, restricting the bidders and prospective purchasers to
those who will represent and agree that they are purchasing for
investment only and not for distribution. In so doing, Secured
Party may solicit offers to buy the Collateral or any part thereof
for cash, from a limited number of investors deemed by Secured
Party, in its reasonable judgment, to be institutional investors
or other responsible parties who might be interested in purchasing
the Collateral. If Secured Party shall solicit such offers, then
the acceptance by Secured Party of one of the offers shall be
deemed to be a commercially reasonable method of disposition of
the Collateral.
(d) If Secured Party shall determine to exercise its right to sell all
or any of the Collateral pursuant to this Section, Pledgor agrees
that upon request of Secured Party, Pledgor will, at its own
expense:
(i) use its best efforts to execute and deliver, and cause Issuer and
the directors and officers thereof to execute and deliver, all
such instruments and documents, and to do or cause to be done all
such other acts and things, as may be necessary or, in the opinion
of Secured Party, advisable to register such Collateral under the
provisions of the Securities Act, and to cause the registration
statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto
and to the related prospectuses which, in the opinion of Secured
Party, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Collateral under the state
securities laws or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Collateral, as
requested by Secured Party;
(iii) cause Issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the
provisions of Section 11(a) of the Securities Act; and
(iv) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof
valid and binding and in compliance with applicable law.
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Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Secured Party by reason of the
failure by Pledgor to perform any of the covenants contained in this Section
9(d) and, consequently, agrees that, if Pledgor shall fail to perform any such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Collateral (not in excess of the aggregate amount of
the Secured Obligations) on the date Secured Party shall demand compliance with
this Section, to be held by Secured Party as additional Collateral securing the
Secured Obligations. Nothing in this Section 9(d) shall in any way alter the
rights of Secured Party under Section 9(c). Pledgor acknowledges that there is
no adequate remedy at law for failure by it to comply with the provisions of
this Section and that such failure would not be adequately compensable in
damages, and therefore agrees that its agreements contained in this Section 9
may be specifically enforced.
(e) PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW
(i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR
TO THE TIME THE SECURED PARTY TAKES POSSESSION OF OR DISPOSES OF
ALL OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION 9,
(ii) ALL RIGHTS OF REDEMPTION, STAY AND/OR APPRAISAL THAT IT NOW
HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR
STATUTE NOW EXISTING OR HEREAFTER ENACTED, AND (iii) EXCEPT AS SET
FORTH IN SECTION 9(a), ANY REQUIREMENT OF NOTICE, DEMAND OR
ADVERTISEMENT FOR SALE.
10. Application of Proceeds. After and during the continuance of a
Default, any cash held by Secured Party as Collateral and all cash Proceeds
received by Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral pursuant to the exercise by
Secured Party of its remedies as a secured creditor hereunder shall be applied
from time to time by Secured Party as follows:
First: To the payment of the costs and expenses of such sale,
collection or other realization, and all expenses, liabilities and advances made
or incurred by Secured Party in connection therewith and in connection with this
Agreement, including without limitation, reasonable attorneys' fees;
Second: After payment in full of the amounts specified in the
preceding subparagraph, to the payment of the Secured Obligations in the order,
if any, specified in the Loan Documents; and
Third: After payment in full of the amounts specified in the
preceding subparagraphs, to the payment to whomsoever may be lawfully entitled
to receive the same, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such Proceeds.
11. Expenses. All obligations of Pledgor hereunder shall be performed by
Pledgor at Pledgor's sole cost and expense, and Pledgor shall indemnify and hold
Secured Party harmless from any and all such costs and expenses as provided in
Section 20 hereof. The amount of any and all expenses, including the reasonable
fees and expenses of its counsel (including, without
14
limitation, reasonable allocated fees and expenses of its internal counsel) and
any experts and agents, and out-of-pocket expenses of its officers and
employees, which Secured Party may at any time incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Secured Party
hereunder, or (iv) the failure by Pledgor to perform or observe any of the
provisions hereof, or (v) the preparation, negotiation, delivery and execution
of this Agreement including any amendments or modifications hereto, shall become
part of the Secured Obligations and shall be payable from the proceeds of the
Collateral.
12. Secured Party May Perform. If Pledgor fails to perform any agreement
contained herein, Secured Party may itself perform, or cause performance of,
such agreement, and the expenses of Secured Party incurred in connection
therewith shall be payable by Pledgor under Section 11 hereof.
13. Secured Party as Pledgor's Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor or
otherwise, from time to time at Secured Party's discretion to take any action
and to execute any instrument which Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation: (a) to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest payment or other distribution in
respect of the Collateral or any part thereof to the extent permitted hereunder
and to give full discharge for the same and to execute and file governmental
notifications and reporting forms, (b) to issue any notifications/instructions
Secured Party deems necessary pursuant to Section 3 of this Agreement, or (c) to
arrange for the transfer of the Collateral on the books of Issuer or any other
Person to the name of Secured Party or to the name of Secured Party's nominee.
14. Notices. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement shall be in writing and either
personally served or sent by certified mail, return receipt requested, postage
prepaid, to Pledgor or to Secured Party, as the case may be, at the address set
forth below its signature on the execution page hereof. The parties hereto may
change the address at which they are to receive notices hereunder, by notice in
the foregoing manner given to the other parties. All notices or demands sent in
accordance with this Section shall be deemed received on the earlier of the date
of actual receipt or five (5) days after the deposit thereof in the mail with
postage prepaid.
15. Choice of Law and Venue; Waiver of Jury Trial. THE VALIDITY OF THIS
AGREEMENT, ITS CONSTRUCTION, INTERPRETATION AND ENFORCEMENT, AND THE RIGHTS OF
THE PARTIES HERETO, SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW, EXCEPT ONLY TO THE EXTENT THAT THE EXISTENCE,
PERFECTION OR ENFORCEMENT OF THE SECURITY INTEREST HEREUNDER IN RESPECT OF ANY
PART OF THE COLLATERAL AS TO ANY PERSON WHO IS NOT A PARTY TO, AND IS
15
NOT OTHERWISE BOUND BY, THIS AGREEMENT IS GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THAT STATE OF CALIFORNIA. TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE
PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT SHALL BE TRIED AND DETERMINED ONLY IN THE STATE AND FEDERAL COURTS
LOCATED IN THE CITY AND COUNTY OF SAN FRANCISCO, STATE OF CALIFORNIA OR, AT THE
SOLE OPTION OF SECURED PARTY, AND SO LONG AS SECURED PARTY MAINTAINS THE
COLLATERAL IN THE STATE OF CALIFORNIA, IN ANY OTHER COURT IN WHICH SECURED PARTY
SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY. TO THE EXTENT THEY MAY LAWFULLY DO
SO, SECURED PARTY AND PLEDGOR EACH WAIVE THE RIGHT TO A TRIAL BY JURY AND ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION.
16. Effectiveness. This Agreement shall be binding and deemed effective
when executed by Pledgor and accepted and executed by Secured Party.
17. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of Pledgor, and Secured Party;
provided, however, that, except in connection with a transfer permitted by
Section 7(d) hereof, Pledgor may not assign this Agreement or any rights
hereunder without Secured Party's prior written consent and any prohibited
assignment shall be absolutely void. No consent by Secured Party to an
assignment shall release Pledgor from its obligations hereunder. Secured Party
may assign its rights and duties hereunder in accordance with the Loan
Documents.
18. Section Headings. The subject headings and the sections and
subsections of this Agreement and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each section of this Agreement applies equally to this entire
Agreement.
19. No Implied Waiver; Cumulative Rights. No failure on the part of
Secured Party to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Secured Party of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein
provided are to the fullest extent permitted by law cumulative and are not
exclusive of any remedies provided by law.
20. Indemnification. Pledgor hereby agrees to indemnify Secured Party
for any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including, without
limitation, reasonable fees and expenses of its counsel and reasonable allocated
fees and expenses of internal counsel) of any kind and nature whatsoever which
may be imposed on, incurred by or asserted against Secured Party in any way
relating to or arising out of this Agreement; Provided, however, that Pledgor
shall not be liable for any of
16
the foregoing to the extent they arise from the gross negligence or willful
misconduct of Secured Party. The provisions set forth in this Section shall
survive the payment of the Secured Obligations and the termination of this
Agreement.
21. Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
22. Entire Agreement. This Agreement constitutes the entire agreement
between Pledgor and Secured Party pertaining to the subject matter contained
herein. No waiver of any provision of this Agreement, nor any consent to any
departure by Pledgor herefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party, and no amendment to any
provisions of this Agreement shall be effective unless the same shall be in
writing and signed by both Pledgor and Secured Party, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
23. Termination. This Agreement shall create a continuing security
interest in the Collateral and shall remain in full force and effect until
indefeasible payment and performance in full of the Secured Obligations,
whereupon the security interests granted hereby shall automatically terminate
and all rights to such portion of the Collateral that has not been sold or
otherwise applied pursuant hereto shall revert to Pledgor or other party then
thereto entitled. Upon any such termination, Secured Party will, at Pledgor's
expense, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination.
24. Counterparts and Duplicates. This Agreement may be signed in any
number of counterparts or duplicates, each of which shall be an original, and
all of which taken together shall constitute the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
PLEDGOR: CENTRAL FINANCIAL ACCEPTANCE CORPORATION
By: /S/
----------------------------------------
Name: Howard Weitzman
Title: Chief Financial Officer
Address for Notices:
Attn: Gary Cypres
5480 East Ferguson Drive
Commerce, CA 90022
Telephone: 323.720.8608
Facsimile: 323.720.8729
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SECURED PARTY: UNION BANK OF CALIFORNIA, N.A., as
Agent
By: /S/
----------------------------------------
Name: Robert C. Nagel
Title: President
Address for Notices:
Attn: Robert C. Nagel
350 California Street, 6th Floor
San Francisco, CA 94104
Telephone: 415.705.7189
Facsimile: 415.705.5093