EXHIBIT 10.16
CPS CREDIT LINE NOTE
Not to Exceed
$25,000,000 August 8, 1997
For value received, CONSUMER PORTFOLIO SERVICES, INC. (the "Maker"), a
California corporation, promises to pay to the order of STANWICH FINANCIAL
SERVICES CORP. (the "Holder"), a Rhode Island corporation, the principal amount
of Twenty-five Million Dollars ($25,000,000) or, if less, the aggregate unpaid
principal amount of all loans and advances now or hereafter made by the Holder
to the Maker, as contemplated by Sections 1 and 2 of this Note, together with
interest thereon, in accordance with the provisions of this Note.
SECTION 1. INITIAL ADVANCE. On the date hereof the Holder has made an
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advance to the Maker under this Note in the amount of Twenty-five Million
Dollars ($25,000,000) (the "Initial Advance"). The Initial Advance was funded,
in accordance with the Maker's instructions, by wire transfer of the amount
thereof to the Maker's account by the Holder. The Maker acknowledges receipt of
the Initial Advance.
SECTION 2. FUTURE ADVANCES. The Maker acknowledges that, at the request
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of the Maker, the Holder may hereafter from time to time make additional
advances to the Maker under this Note (each a "Future Advance"); provided,
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however, that the Holder shall not be obligated to make any Future Advance after
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December 19, 1997 or at any time when the principal amount outstanding under
this Note is more than Twenty-two Million Five Hundred Thousand Dollars
($22,500,000); and provided, further, that the Holder shall not be obligated to
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make any Future Advance unless:
(i) the Maker shall have delivered to the Holder a request in writing
for such Future Advance (an "Advance Request"); and
(ii) the Advance Request specifies (A) the amount of the Future Advance
then being requested, which shall be Two Million Five Hundred
Thousand Dollars ($2,500,000) or an integral multiple thereof (but
no other amount), (B) the date proposed by the Maker for the making
of such Future Advance (the "Proposed Advance Date"), which shall be
not fewer than three (3) nor more than thirty (30) business days
after the date of the Advance Request and (C) that such Advance
Request is being made pursuant to this Note, which shall be
identified in such Advance Request as "that certain CPS Credit Line
Note dated August 8, 1997 in the principal amount not to exceed
$25,000,000"; and
(iii) the amount of such requested Future Advance is not greater than the
amount obtained by subtracting (A) the principal amount outstanding
under this Note on
the applicable Proposed Advance Date from (B) Twenty-five Million
Dollars ($25,000,000); and
(iv) no Event of Default (as such term is hereinafter defined) shall have
occurred on or prior to the Proposed Advanced Date and be continuing
on such date.
SECTION 3. PAYMENT OF PRINCIPAL. Subject to Section 8 of this Note, the
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principal of this Note shall be payable in full on December 31, 1997.
SECTION 4. INTEREST. The unpaid principal of this Note outstanding from
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time to time shall bear interest, beginning as of the date hereof, at an annual
rate of ten percent (10%), computed on the basis of a 365-day year and
continuing until the principal hereof is repaid in full. Interest shall be
payable monthly in arrears beginning August 31, 1997 and on the last day of
each succeeding month (each, an "Interest Payment Date") until the principal of
this Note is paid in full. If the principal of this Note is paid on other than
an Interest Payment Date, interest shall also be payable on the date of such
principal payment.
In no contingency or event whatsoever shall the interest payable to Holder
by Maker, howsoever characterized or computed, hereunder, exceed the highest
rate permissible under any law to which such interest is subject. There is no
intention that Holder shall contract for, charge or receive interest in excess
of the highest lawful rate, and, in the event it should be determined that any
excess has been charged or received then, ipso facto, such rate shall be reduced
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to the highest lawful rate so that no amounts shall be charged which are in
excess thereof. In the event that it should be determined that any excess over
such highest lawful rate has been charged or received, Holder, shall apply such
excess against the outstanding principal balance of this Note, and, to the
extent of any amounts remaining thereafter, shall refund such excess to Maker.
SECTION 5. PREPAYMENTS. The Maker may prepay the principal of this Note
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in whole or, from time to time, in part without penalty or premium; provided,
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however, that each partial prepayment shall be in the amount of Two Million Five
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Hundred Thousand Dollars ($2,500,000) or an integral multiple thereof; and
provided further that, if the Maker makes a prepayment of principal on any date,
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it shall also pay on the same date all accrued and unpaid interest hereunder to
such date. Any such prepayment of principal shall be without prejudice to the
right of the Maker, through a Future Advance, thereafter to reborrow all or a
portion of the amount so prepaid, subject to the provisions of Section 2 of this
Note.
SECTION 6. PLACE OF PAYMENTS. All payments of principal and interest
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under this Note shall be made to the order of Holder at the address specified in
Section 15(b) or, if the Holder so requests, by wire transfer of funds to the
Holder's account.
SECTION 7. MAKER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Maker
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represents, warrants and covenants to and with the Holder as follows:
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(a) The Maker is a corporation duly organized, validly existing and in
good standing under the laws of the State of California.
(b) The execution and delivery of this Note, and the performance by the
Maker of its obligations hereunder, have been (or will be by August 31, 1997)
duly authorized by all necessary corporate action on the part of the Maker.
(c) The Maker is a corporation organized for a profit and is engaged
primarily in commercial or nonconsumer pursuits.
(d) The funds received by the Maker from the Initial Advance and all
Future Advances, if any, will not be utilized for consumer purposes.
(e) Upon Holder's request after each Future Advance, if any, the Maker
will execute and deliver to the Holder a receipt of the proceeds thereof, in
form and substance satisfactory to the Holder.
SECTION 8. DEFAULT; ACCELERATION. As used in this Note, the term "Event of
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Default" means the occurrence of any of the following events:
(i) the failure of the Maker to pay any installment of interest under
this Note when due or within ten (10) business days after notice
from the Holder of such failure to pay; or
(ii) the filing by or against the Maker of any petition for
adjudication, arrangement, reorganization or the like under any
bankruptcy or insolvency law (which petition, in the case of an
involuntary proceeding, is not dismissed within 30 days of its
filing); or
(iii) the making by the Maker of an assignment for the benefit of its
creditors; or
(iv) the appointment of a receiver for any part of the property of the
Maker; or
(v) the acceleration of the payment of any indebtedness of the Maker
for borrowed money to a date prior to the date of the scheduled
maturity thereof as a result of the occurrence of a default or
event of default under the loan or financing agreements or
instruments pursuant to which such indebtedness was incurred;
provided; however, that if such acceleration is rescinded by the
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applicable lender within 30 days after the date thereof, the same
shall not constitute an Event of Default; or
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(vi) the Maker's breach or failure to perform any covenant or agreement
made by it in this Note, which breach or failure is not cured (if
curable) within 30 days after notice thereof given by the Holder to
the Maker; or
(vii) the breach of or inaccurracy in any representation or warranty made
or given by the Maker in this Note; or
(viii) the dissolution of the Maker; or
(ix) the sale of all or substanitally all of its assets of the Maker
other than in the ordinary course of business; or
(x) the merger or consolidation of the Maker with or into another
corporation or entity in a transaction in which the Maker is not the
surviving corporation;
If an Event of Default occurs, then, in such case, the entire indebtedness
and accrued interest thereon outstanding under this Note, at the Holder's
option, shall accelerate and become immediately due and payable without notice,
presentment, demand or any other formalities, all of which, to the extent
permitted by applicable law, the Maker hereby expressly waives.
SECTION 9. COST OF COLLECTION. The Maker shall reimburse the Holder for
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all reasonable costs and expenses, including the reasonable fees and
disbursements of the Holder's attorneys, which may be incurred by the Holder in
collecting any amounts due hereunder.
SECTION 10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon receipt
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by the Maker of evidence reasonably satisfactory to the Maker of the loss,
theft, destruction or mutilation of this Note, and of indemnity or security
reasonably satisfactory to the Maker, and upon reimbursement to the Maker of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Note, if mutilated, the Maker will make and deliver a new note of like
tenor in lieu of this Note. Any note made and delivered in accordance with the
provision of this paragraph shall be dated as of the date to which interest has
been paid on this Note, or if no interest has theretofore been paid on this
Note, then dated the date hereof.
SECTION 11. GOVERNING LAW. This Note shall be construed in accordance
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with and governed by the laws of the State of Connecticut (in which state this
Note has been delivered and accepted), without regard to principles of
conflicts of laws.
SECTION 12. SUCCESSORS AND ASSIGNS. All the covenants, stipulations,
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promises and agreements contained in this Note by or on behalf of the Maker or
the Holder and all rights of the Maker or the Holder contained in this Note
shall bind or inure to their respective successors, assigns, heirs and personal
representatives, whether so expressed or not.
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SECTION 13. CUMULATIVE REMEDIES. No course of dealing, or any delay or
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omission of the Holder to exercise any right or power hereunder (including,
without limitation, any right or power arising from any default or failure of
performance of the Maker), shall exhaust, impair, waive or otherwise prejudice
any such right or power or prevent its exercise. Every right and remedy given
to the Holder hereunder, by any and all agreements executed and delivered in
connection herewith or by law may be exercised from time to time as often as the
Holder may deem expedient. No waiver by the Holder of any such default, whether
such waiver be full or partial, shall extend to or be taken to affect any
subsequent default, or to impair the rights resulting therefrom except as may be
otherwise expressly provided herein. No remedy hereunder is intended to be
exclusive of any other remedy but each and every remedy shall be cumulative and
in addition to any and every other remedy given hereunder or otherwise existing.
SECTION 14. HEADINGS. The headings of the paragraphs of this Note are
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inserted for convenience only and shall not be deemed to constitute a part
hereof.
SECTION 15. NOTICES. All notices, requests, demands and other
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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 Maker:
Consumer Portfolio Services, Inc.
#2 Ada
Irvine, CA 92718
Attention: President
(b) If to Holder:
Stanwich Financial Services Corp.
c/o Stanwich Partners, Inc.
62 Southfield Avenue
Stamford, CT 06902
Attention: President
Any of the foregoing parties by notice in writing mailed to the other parties
may change the name and address to which notices, requests, demands and other
communications to it or him shall be mailed.
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SECTION 16. LOAN CLOSING FEES. The Maker hereby agrees to pay to the
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Holder, in addition to principal and interest hereunder, a loan closing fee in
the amount of Two Hundred Fifty Thousand Dollars ($250,000). Such fee shall be
payable on or before August 22, 1997.
IN WITNESS WHEREOF, the Maker has signed this Note by a duly authorized
officer and dated it as of the day and year first above written.
CONSUMER PORTFOLIO SERVICES, INC
By: _____________________________________
Name: Jeffrey P. Fritz
Title: Senior Vice President
Accepted by
STANWICH FINANCIAL SERVICES CORP.
By: ___________________________________
Charles E. Bradley
President
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