Exhibit 10.8
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT, dated as of April
18, 2006 (as amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms hereof, this "AGREEMENT"), is made among PAGE
FUNDING LLC, a Delaware limited liability company (the "ISSUER"), CONSUMER
PORTFOLIO SERVICES, INC., a California corporation ("CPS" or the "SERVICER"),
and UBS REAL ESTATE SECURITIES INC., a Delaware corporation, as Note Purchaser
(in such capacity, together with any successors in such capacity, the "NOTE
PURCHASER").
BACKGROUND
1. Pursuant to the Note Purchase Agreement dated as of June
30, 2004, as amended by Amendment No. 1 thereto dated as of June 29, 2005, and
Amendment No. 2 dated as of February 28, 2006 (the "ORIGINAL NOTE PURCHASE
AGREEMENT"), the Issuer sold its Variable Funding Note in the principal amount
of $100,000,000 (as amended and restated to the date hereof, the "ORIGINAL
NOTE") to the Note Purchaser and obtained the agreement of the Note Purchaser to
make loans from time to time (each, an "ADVANCE") for the purchase of Invested
Amounts, all of which Advances are evidenced by the Original Note.
2. Contemporaneously with the execution and delivery of this
Agreement, the Issuer, the Note Purchaser and Wells Fargo Bank, National
Association, a national banking association, as trustee (together with its
successors in trust thereunder as provided in the Indenture referred to below,
the "TRUSTEE"), are entering into the Amended and Restated Indenture, of even
date herewith (as the same may be further amended, supplemented, restated or
otherwise modified from time to time in accordance with the terms thereof, the
"INDENTURE"), pursuant to which the Issuer will issue its Third Amended and
Restated Variable Funding Notes, which amends and restates the Original Note (as
the same may be further amended, supplemented, restated or otherwise modified
from time to time in accordance with the terms thereof and of the Indenture, the
"NOTES").
3. The Issuer and the Note Purchaser desire to exchange the
Original Note for the Notes and contemporaneously therewith amend and restate
the Original Note Purchase Agreement upon the terms and conditions set forth
herein and in accordance with Section 9.01 of the Original Note Purchase
Agreement.
4. Now, therefore, in consideration of the premises and the
mutual covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
As used in this Agreement and unless the context requires a different
meaning, capitalized terms used but not defined herein (including the preamble
and the recitals hereto) shall have the meanings assigned to such terms in the
Second Amended and Restated Sale and Servicing Agreement dated as of April 18,
2006 (as the same may be further amended, supplemented, restated or otherwise
modified from time to time in accordance with the terms thereof, the "SALE AND
SERVICING AGREEMENT"), among the Issuer, as purchaser and issuer, CPS, as seller
and servicer (in such capacities, the "SELLER" and the "SERVICER,"
respectively), and the Trustee, as trustee and backup servicer, or the
Indenture, as applicable. The definitions of such terms are applicable to the
singular as well as the plural form of such terms and to the masculine as well
as the feminine and neuter genders of such terms:
1
ARTICLE II
PURCHASE AND SALE OF THE NOTES
SECTION 2.01 THE NOTE PURCHASE.
On the terms and conditions set forth in the Indenture, the Sale and
Servicing Agreement and this Agreement, and in reliance on the covenants,
representations and agreements set forth herein and therein, the Issuer shall
issue and cause the Trustee to authenticate and deliver to the Note Purchaser
the Notes on the Restatement Effective Date, and the Note Purchaser shall cancel
the Original Note and return it to the Issuer. The Notes shall be dated the
Restatement Effective Date, registered in the name of the Note Purchaser, and
duly authenticated in accordance with the provisions of the Indenture.
SECTION 2.02 ADVANCES.
Upon the Issuer's request, delivered in accordance with the provisions
of SECTION 2.03, subject to the satisfaction of all conditions precedent thereto
and to the terms and conditions of this Agreement and the other Basic Documents,
and in reliance upon the representations and warranties set forth herein and
therein, the Note Purchaser shall make Advances from time to time during the
Term; provided that no Advance shall be required or permitted to be made on any
date if, after giving effect to such Advance, (a) the Invested Amount would
exceed the Maximum Invested Amount or (b) a Borrowing Base Deficiency exists or
would exist. Subject to the terms and conditions of this Agreement and the
Indenture, the aggregate principal amount of the Notes outstanding may be
increased or decreased from time to time.
SECTION 2.03 ADVANCE PROCEDURES.
Whenever the Issuer wishes the Note Purchaser to make an Advance, the
Issuer shall (or shall cause the Servicer to) notify the Note Purchaser by
written notice, with an electronic copy of such notice sent to the Note
Purchaser, substantially in the form of EXHIBIT B hereto (each such request, an
"ADVANCE REQUEST"), delivered to the Note Purchaser no later than two Business
Days prior to the proposed Funding Date. Each such Advance Request shall be
irrevocable and shall in each case refer to this Agreement and specify the
aggregate amount of the requested Advance to be made on such date. The Note
Purchaser shall promptly thereafter (but in no event later than 11:00 a.m. New
York City time on the proposed Funding Date) notify the Issuer whether the Note
Purchaser has determined to make the requested Advance. On the Funding Date,
subject to the other conditions set forth herein, in the Indenture, and in the
Sale and Servicing Agreement, the Note Purchaser shall make available to the
Issuer the amount of such Advance by wire transfer in U.S. dollars of such
amount in same day funds to an account designated by CPS no later than 4:00 p.m.
(New York time) on the date of such Advance.
SECTION 2.04 THE NOTES.
On each date an Advance is made, increasing the outstanding principal
amount of the Notes, and on each date the outstanding principal amount of the
Notes is reduced, a duly authorized officer, employee or agent of the Note
Purchaser shall make appropriate notations in its books and records of the
amount of such Advance and the amount of such reduction, as applicable. The
Issuer hereby authorizes each duly authorized officer, employee and agent of the
Note Purchaser to make such notations on the books and records as aforesaid and
every such notation made in accordance with the foregoing authority shall be
PRIMA FACIE evidence of the accuracy of the information so recorded and shall be
binding on the Issuer absent manifest error; provided, however, that in the
event of a discrepancy between the books and records of the Note Purchaser and
the records maintained by the Trustee pursuant to the Indenture, such
discrepancy shall be resolved by the Note Purchaser and the Trustee.
2
SECTION 2.05 COMMITMENT TERM.
The "TERM" of the Commitment hereunder shall be for a period commencing
on the Original Closing Date and ending on the Facility Termination Date.
ARTICLE III
INTEREST AND FEES
SECTION 3.01 INTEREST.
Each Advance funded or maintained by the Note Purchaser during any
Interest Period shall bear interest at the Note Interest Rate.
(a) Interest on Advances shall be due and payable on each
Settlement Date in accordance with the provisions of the Sale and Servicing
Agreement.
(b) All computations of interest at the Note Interest Rate
shall be made on the basis of a year of 360 days and the actual number of days
elapsed. Whenever any payment of interest or principal in respect of any Advance
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day and such extension of time shall be included in
the computation of the amount of interest owed.
SECTION 3.02 FEES.
(a) The Issuer and the Servicer shall jointly and severally
pay or cause to be paid to the Note Purchaser's reasonable out-of-pocket
expenses, including its legal fees, in accordance with and subject to Section
8.05.
(b) On each Settlement Date on or prior to the Facility
Termination Date, the Issuer and the Servicer shall jointly and severally pay or
cause to be paid to the Note Purchaser a facility fee equal to the product of
(i) the product of (x) a fraction, the numerator of which is the actual number
of days elapsed in the related Interest Period and the denominator of which is
360 and (y) 0.25% and (ii) the excess of (x) the Maximum Invested Amount over
(y) the daily average outstanding Invested Amount (the "UNUSED FACILITY FEE")
during the related Interest Period.
SECTION 3.03 INCREASED COSTS, ETC.
The Issuer agrees to reimburse the Note Purchaser for an
increase in the cost of, or any reduction in the amount of any sum receivable by
the Note Purchaser, including reductions in the rate of return on the Note
Purchaser's capital, in respect of making, continuing or maintaining (or of its
obligation to make, continue or maintain) any Advances that arise in connection
with any change in, or the introduction, adoption, effectiveness, interpretation
reinterpretation or phase-in, in each case, after the date hereof, of any law or
regulation, directive, guideline, decision or request (whether or not having the
force of law) of any court, central bank, regulator or other Governmental
Authority, except for such changes with respect to increased capital costs and
taxes which are governed by SECTIONS 3.04 and 3.05, respectively. Each such
demand shall be provided to the Issuer in writing and shall state, in reasonable
detail, the reasons therefor and the additional amount required fully to
compensate the Note Purchaser for such increased cost or reduced amount or
return. Such additional amounts shall be payable by the Issuer to the Note
Purchaser within five (5) Business Days of its receipt of such notice, and such
notice shall, in the absence of manifest error, be conclusive and binding on the
Issuer.
3
SECTION 3.04 INCREASED CAPITAL COSTS.
If any change in, or the introduction, adoption, effectiveness,
interpretation or reinterpretation or phase-in, in each case after the date
hereof, of any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other Governmental Authority affects or would affect the amount of capital
required or reasonably expected to be maintained by the Note Purchaser or any
Person controlling the Note Purchaser and the Note Purchaser reasonably
determines that the rate of return on its or such controlling Person's capital
as a consequence of its commitment or the Advances made by the Note Purchaser is
reduced to a level below that which the Note Purchaser or such controlling
Person would have achieved but for the occurrence of any such circumstance,
then, in any such case after notice from time to time by the Note Purchaser to
the Issuer, the Issuer shall pay to the Note Purchaser an incremental commitment
fee sufficient to compensate the Note Purchaser or such controlling Person for
such reduction in rate of return. A statement of the Note Purchaser as to any
such additional amount or amounts (including calculations thereof in reasonable
detail), in the absence of manifest error, shall be conclusive and binding on
the Issuer; and PROVIDED, FURTHER, that the initial payment of such increased
commitment fee shall include a payment for accrued amounts due under this
SECTION 3.04 prior to such initial payment. In determining such additional
amount, the Note Purchaser may use any method of averaging and attribution that
it shall reasonably deem applicable so long as it applies such method to other
similar transactions.
SECTION 3.05 TAXES.
All payments by the Issuer of principal of, and interest on, the Notes
and all other amounts payable hereunder (including fees) shall be made free and
clear of and without deduction for any present or future income, excise, stamp
or franchise taxes and other taxes, fees, duties, withholdings or other charges
of any nature whatsoever imposed by any taxing authority, but excluding in the
case of the Note Purchaser, taxes imposed on or measured by its overall net
income, overall receipts or overall assets and franchise taxes imposed on it by
the jurisdiction in which the Note Purchaser is organized or is operating or any
political subdivision thereof (such non-excluded items being called "TAXES"). In
the event that any withholding or deduction from any payment to be made by the
Issuer hereunder is required in respect of any Taxes pursuant to any applicable
law, rule or regulation, then the Issuer will:
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Note Purchaser or its agent an
official receipt or other documentation evidencing such payment to such
authority; and
(c) pay to the Note Purchaser or its agent such additional
amount or amounts as is necessary to ensure that the net amount actually
received by the Note Purchaser will equal the full amount the Note Purchaser
would have received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Note
Purchaser with respect to any payment received by the Note Purchaser or its
agent, the Note Purchaser or such agent may pay such Taxes and the Issuer will
promptly upon receipt of prior written notice stating the amount of such Taxes
pay such additional amounts (including any penalties, interest or expenses) as
is necessary in order that the net amount received by such person after the
payment of such Taxes (including any Taxes on such additional amount) shall
equal the amount the Note Purchaser would have received had not such Taxes been
asserted. The Note Purchaser shall make all reasonable efforts to avoid the
imposition of any Taxes that would give rise to an additional payment under this
SECTION 3.05.
4
If the Issuer fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to the Note Purchaser or its
agent the required receipts or other required documentary evidence, the Issuer
shall indemnify the Note Purchaser and its agent, if any, for any incremental
Taxes, interest or penalties that may become payable by the Note Purchaser or
its agent as a result of any such failure. For purposes of this SECTION 3.05, a
distribution hereunder by the agent for the Note Purchaser shall be deemed a
payment by the Issuer.
Upon the request of the Issuer, the Note Purchaser, if it is
organized under the laws of a jurisdiction other than the United States, shall,
prior to the initial due date of any payments hereunder and to the extent
permissible under then current law, execute and deliver to the Issuer on or
about the first scheduled payment date in each calendar year thereafter, one or
more (as the Issuer may reasonably request) United States Internal Revenue
Service Forms W-8ECI or Forms W-8BEN or such other forms or documents (or
successor forms or documents), appropriately completed, as may be applicable to
establish the extent, if any, to which a payment to the Note Purchaser is exempt
from withholding or deduction of Taxes. The Issuer shall not, however, be
required to pay any increased amount under this SECTION 3.05 to the Note
Purchaser if the Note Purchaser fails to comply with the requirements set forth
in this paragraph.
SECTION 3.06 MARK-TO-MARKET ADJUSTMENTS.
(a) In the event that a Borrowing Base Deficiency exists on
any date of determination as determined by the Note Purchaser in its sole
discretion, the Issuer shall on the same Business Day of the receipt of notice
from the Note Purchaser (or if notice is received after 10:01 a.m. New York
time, then on the next Business Day), prepay the Invested Amount by an amount
equal to such Borrowing Base Deficiency by paying such amount to or at the
direction of the Note Purchaser (the "MARGIN CALL"). If a Borrowing Base
Deficiency is not fully paid by the Issuer pursuant to the immediately preceding
sentence, then (i) on any Funding Date, the Note Purchaser shall net and set-off
the amount of any outstanding Borrowing Base Deficiency against the amount of
the Advance to be made on such Funding Date and (ii) on each Settlement Date as
of which any portion of such Borrowing Base Deficiency shall remain outstanding,
any amount otherwise payable to the Issuer on such Settlement Date pursuant to
Section 5.7(a)(viii) of the Sale and Servicing Agreement shall instead be
deposited to the Note Distribution Account pursuant to Section 5.7(a)(iv) of the
Sale and Servicing Agreement, to the extent of such unpaid Borrowing Base
Deficiency, for payment to the Note Purchaser on such Settlement Date as a
prepayment of the Invested Amount.
(b) The Servicer, the Seller and the Issuer shall cooperate
with the Note Purchaser and will execute and deliver, or cause to be executed
and delivered, all such documents that may be reasonably necessary to calculate
the Market Value, and will take all such other actions, as Note Purchaser may
reasonably request from time to time in order to calculate the Market Value. On
the 11th and 25th day of each month during the Term (or if such day is not a
Business Day, on the immediately succeeding Business Day), the Note Purchaser
shall advise the Servicer of the Market Value, as calculated by the Note
Purchaser in its sole discretion.
SECTION 3.07 ILLEGALITY; SUBSTITUTED INTEREST RATES.
Notwithstanding any other provisions herein, (a) if any Requirement of
Law or any change therein or in the interpretation or application thereof shall
make it unlawful for the Note Purchaser to make or maintain any Notes at the
LIBOR rate as contemplated by this Agreement, or (b) in the event that the Note
Purchaser shall have determined (which determination shall be conclusive and
binding upon the Issuer) that by reason of circumstances affecting the LIBOR
5
interbank market neither adequate nor reasonable means exist for ascertaining
the LIBOR rate, or (c) the Note Purchaser shall have determined (which
determination shall be conclusive and binding on the Issuer) that the applicable
LIBOR rate will not adequately and fairly reflect the cost to the Note Purchaser
of maintaining or funding the Notes based on such applicable LIBOR rate
(provided that the parties hereto acknowledge and agree that the Note Purchaser
shall only make such determination if the published LIBOR rate used by the Note
Purchaser does not accurately reflect the actual LIBOR rate), (x) the obligation
of the Note Purchaser to make or maintain the Notes at the LIBOR rate shall
forthwith be suspended and the Note Purchaser shall promptly notify the Issuer
thereof (by telephone confirmed in writing) and (y) each Note then outstanding,
if any, shall, from and including the date that is forty-five (45) days after
the Issuer's receipt of notice from the Note Purchaser of the occurrence of any
condition set forth in clauses (a), (b) or (c), or at such earlier date as may
be required by law, until payment in full thereof, bear interest at the rate per
annum equal to the greater of (i) the Prime Rate and (ii) the rate of interest
(including the Applicable Margin) in effect on the date immediately preceding
the date any event described in clause (a), (b) or (c) occurred (calculated on
the basis of the actual number of days elapsed in a year of 360 days). If
subsequent to such suspension of the obligation of the Note Purchaser to make or
maintain the Notes at the LIBOR rate it becomes lawful for the Note Purchaser to
make or maintain the Notes at the LIBOR rate, or the circumstances described in
clause (b) or (c) above no longer exist, the Note Purchaser shall so notify the
Issuer and its obligation to do so shall be reinstated effective as of the date
it becomes lawful for the Note Purchaser to make or maintain the Notes at the
LIBOR rate or the circumstances described in clause (b) or (c) above no longer
exist.
ARTICLE IV
OTHER PAYMENT TERMS
SECTION 4.01 TIME AND METHOD OF PAYMENT.
All amounts payable to the Note Purchaser hereunder or with respect to
the Notes shall be made by wire transfer of immediately available funds in
Dollars not later than 5:00 p.m., New York City time, on the date due. Any funds
received after that time will be deemed to have been received on the next
Business Day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF THE ISSUER.
The Issuer makes the following representations and warranties, on which
the Note Purchaser relies in purchasing the Notes and in making each Advance,
and on which the Trustee relies in receiving a security interest in the
Receivables and the other Collateral related thereto under the Indenture. Such
representations are made as of the Restatement Effective Date and as of each
Funding Date after the Restatement Effective Date, and shall survive the
issuance of the Notes, the making of each Advance and the grant of a security
interest in the Receivables and the other Collateral related thereto to the
Trustee under the Indenture.
(a) SALE AND SERVICING AGREEMENT. Each of the representations
and warranties of the Purchaser set forth in Section 7.1 of the Sale and
Servicing Agreement is true and correct.
(b) OTHER OBLIGATIONS. The Issuer is not in default in the
performance, observance or fulfillment of any obligation, covenant or condition
in any of the Basic Documents to which it is a party or in any other agreement
or instrument to which it is a party or by which it is bound.
6
(c) NO PUBLIC OFFERING OF THE NOTES. Neither the Issuer nor,
to the best of the Issuer's knowledge after due inquiry, anyone acting on the
Issuer's behalf, has offered, pledged, sold or otherwise disposed of any Note or
any interest therein or solicited any offer to buy or accept a transfer, pledge
or other disposition of any Note or any interest therein or otherwise approached
or negotiated with respect to any Note or any interest therein, with any person
in any manner, or made any general solicitation by means of general advertising
or in any other manner, or taken any other action, which would constitute a
public distribution of the Notes under the Securities Act, or which would render
the disposition of any Note a violation of Section 5 of the Securities Act or
any State securities laws, or require registration or qualification pursuant
thereto.
(d) NO REGISTRATION UNDER THE SECURITIES ACT. Assuming the
Note Purchaser is not purchasing the Notes with a view toward further
distribution and that the Note Purchaser has not engaged in any general
solicitation or general advertising within the meaning of the Securities Act,
the offer and sale of the Notes in the manner contemplated by this Agreement is
a transaction exempt from the registration requirements of the Securities Act,
and the Indenture is not required to be qualified under the Trust Indenture Act.
(e) REGULATIONS T, U AND X. No proceeds of any Advance will be
used, directly or indirectly, by the Issuer for the purpose of purchasing or
carrying any Margin Stock (as defined in Regulation U of the Board of Governors
of the Federal Reserve System) or for the purpose of reducing or retiring any
indebtedness that was originally incurred to purchase or carry Margin Stock or
for any other purpose which might cause any Advance to be a "purpose credit"
within the meaning of Regulation U. Neither the making of any Advance hereunder,
nor the use of the proceeds thereof, will violate or otherwise conflict with the
provisions of Regulations T, U or X of the Board of Governors of the Federal
Reserve System.
(f) INVESTMENT COMPANY STATUS. The Issuer is not, nor will the
consummation of the transactions contemplated by the Basic Documents cause the
Issuer to be, an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company," as such
terms are defined in the Investment Company Act of 1940, as amended (the
"INVESTMENT COMPANY ACT"), or a company "controlled" by an investment company
within the meaning of the Investment Company Act. The consummation of the
transactions contemplated by the Basic Documents will not violate any provision
of the Investment Company Act or any rule, regulation or order issued by the
Securities and Exchange Commission thereunder. The Issuer is not subject to
regulation under any applicable law (other than Regulation X of the Board of
Governors of the Federal Reserve System) that limits its ability to incur
Indebtedness.
(g) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other documents
furnished by or on behalf of the Issuer to the Seller, the Servicer, the Note
Purchaser, the Trustee or the Backup Servicer in connection with any particular
Advance or the negotiation, preparation, delivery or performance of this
Agreement, the Notes, the Indenture, the Sale and Servicing Agreement and the
other Basic Documents or included herein or therein or delivered pursuant hereto
or thereto, taken as a whole, are true and correct (or, in the case of
projections, are based on good faith reasonable estimates) on the date as of
which such information is stated or certified and do not and will not contain an
untrue statement of a material fact, or omit to state any material fact
necessary to make the statements herein or therein contained, in the light of
the circumstances under which they were made, not misleading. All such financial
statements fairly present the financial condition of the Issuer as of the date
specified therein (subject to normal year-end audit adjustments) all in
accordance with GAAP. On such date, the Issuer had no material contingent
liabilities, liabilities for taxes, or unusual or anticipated losses from any
unfavorable commitments, except as referred to or reflected in such financial
statements as of such date. There is no fact known to the Issuer, after due
inquiry, that would have a Material Adverse Effect and that has not been
disclosed herein, in the other Basic Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Note Purchaser for use in connection with the transactions contemplated
hereby or thereby.
7
(h) COLLATERAL SECURITY.
(i) The Issuer (i) owns and will own, and has and
will have good title to each item that it pledges as Collateral, free
and clear of any and all Liens (including, without limitation, any tax
liens), other than Liens created in favor of the Trustee pursuant to
the Indenture and (ii) has not and will not have assigned to any person
any of its right, title or interest in any item it pledges as
Collateral immediately prior to such pledge. No security agreement,
financing statement or other public notice similar in effect with
respect to all or any part of the Collateral is or will be on file or
of record in any public office or authorized by the Issuer, except such
as have been or may hereinafter be filed pursuant to the Basic
Documents and except such as shall be terminated as to the Collateral
no later than concurrently with the pledge of such Collateral to the
Trustee under the Indenture.
(ii) The Indenture is effective to create, as
collateral security for the Notes, a valid and enforceable Lien on the
Collateral in favor of the Trustee.
(iii) Upon filing of the financing statement
delivered to the Note Purchaser and the Trustee by the Issuer on or
prior to the Restatement Effective Date with the Secretary of State of
the State of Delaware (which financing statement is in proper form for
filing in such jurisdiction and accurately describes the Collateral),
the Lien created pursuant to the Indenture will constitute a perfected
security interest in the Collateral in favor of the Trustee, which Lien
will be prior to all other Liens of all other Persons that may be
perfected by filing a financing statement under Article 9 of the
Uniform Commercial Code and which Lien is enforceable as such as
against all other Persons.
(iv) Upon delivery of Contracts evidencing the
Receivables to the Trustee in accordance with Section 2.1(a) of the
Sale and Servicing Agreement, the Lien created pursuant to the
Indenture will constitute a perfected security interest in such
Contracts in favor of the Trustee, which Lien will be prior to all
other Liens of all other Persons that may be perfected by possession of
such Contracts under Article 9 of the Uniform Commercial Code and which
Lien is enforceable as such as against all other Persons.
(i) NO FUNDING TERMINATION EVENT. No Funding Termination
Event, or event which, with the giving of notice or the passage of time or both
would constitute a Funding Termination Event, has occurred and is continuing.
(j) OWNERSHIP OF PROPERTIES. The Issuer has good and
marketable title to any and all of its properties and assets, subject only to a
Lien under the Indenture.
(k) LEGAL COUNSEL, ETC. The Issuer has consulted with its own
legal counsel and independent accountants to the extent it has deemed necessary
regarding the tax, accounting and regulatory consequences of the transactions
contemplated by this Agreement and the other Basic Documents, and the Issuer is
not participating in such transactions in reliance on any representations of the
Note Purchaser or its Affiliates, or its counsel, with respect to tax,
accounting, regulatory or any other matters.
(l) BASIC DOCUMENTS. The Issuer has furnished to the Note
Purchaser true, accurate and (except as otherwise consented by the Note
Purchaser) complete copies of all other Basic Documents to which it is a party
as of the Restatement Effective Date, all of which Basic Documents are in full
force and effect as of the Restatement Effective Date and no terms of any such
agreements or documents have been amended, modified or otherwise waived as of
such date. No party to any Basic Document is in default under any of its
obligations thereunder.
8
(m) ELIGIBLE RECEIVABLES. All of the Receivables included in
the Borrowing Base are Eligible Receivables.
(n) NO FRAUDULENT CONVEYANCE. As of the Restatement Effective
Date and immediately after giving effect to each Advance, the fair value of the
assets of the Issuer is greater than the fair value of its liabilities
(including, without limitation, contingent liabilities of the Issuer), and the
Issuer is and will be solvent, does and will pay its debts as they mature and
does not and will not have an unreasonably small capital to engage in the
business in which it is engaged and proposes to engage. The Issuer does not
intend to incur, or believe that it has incurred, debts beyond its ability to
pay such debts as they mature. The Issuer is not in default under any material
obligation to pay money to any Person. The Issuer is not contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation proceedings
or the appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Issuer or any of its assets. The Issuer is not
transferring any Collateral with any intent to hinder, delay or defraud any of
its creditors. The Issuer will not use the proceeds from the transactions
contemplated by this Agreement or any other Basic Document to give any
preference to any creditor or class of creditors. The Issuer has given fair
consideration and reasonably equivalent value in exchange for the sale of the
Receivables by CPS under the Sale and Servicing Agreement.
(o) NO OTHER BUSINESS. The Issuer engages in no business
activities other than the purchase of the Receivables and the Other Conveyed
Property, pledging the Receivables and the other Collateral to the Trustee under
the Indenture, transferring Receivables and the Other Conveyed Property in
connection with securitizations and in connection with whole-loan sales, issuing
the Notes and other activities relating to the foregoing to the extent permitted
by the organizational documents of the Issuer as in effect on the date hereof,
or as amended with the prior written consent of Note Purchaser. Without
limitation of the foregoing, the Issuer is not an issuer of securities other
than the Notes or a borrower under any loan or financing agreement, facility or
other arrangement other than the facility established pursuant to this Agreement
and the other Basic Documents.
(p) NOTES ENTITLED TO BENEFIT OF THE INDENTURE. The Notes
purchased by the Note Purchaser hereunder will be entitled to the benefit of the
security provided in the Indenture.
(q) NO INDEBTEDNESS. The Issuer has no Indebtedness, other
than Indebtedness incurred under (or contemplated by) the terms of the Notes,
the Indenture, the Sale and Servicing Agreement and this Agreement.
(r) ERISA. The Issuer does not maintain any Plans, and the
Issuer agrees to notify the Note Purchaser in advance of forming any Plans.
Neither the Issuer nor any Affiliate of the Issuer (other than MFN under the MFN
Financial Corporation Pension Plan and CPS under its defined contribution
(401(k)) plan) has any obligations or liabilities with respect to any Plans or
Multiemployer Plans, nor have any such Persons had any obligations or
liabilities with respect to any such Plans during the five year period prior to
the date this representation is made or deemed made. The Issuer will give notice
to the Note Purchaser if at any time it or any Affiliate has any obligations or
liabilities with respect to any Plan or Multiemployer Plan. All Plans maintained
by the Issuer or any Affiliate are in substantial compliance with all applicable
laws (including ERISA). The Issuer is not an employer under any Multiemployer
Plan.
9
SECTION 5.02 REPRESENTATIONS AND WARRANTIES OF CPS.
CPS makes the following representations and warranties, on which the
Issuer relies in purchasing the Receivables and the Other Conveyed Property
related thereto, and on which the Note Purchaser relies in purchasing the Notes.
Such representations and warranties are made as of the Restatement Effective
Date and as of each Funding Date after the Restatement Effective Date, and shall
survive the sale by CPS to the Issuer of the Receivables and the Other Conveyed
Property related thereto under the Sale and Servicing Agreement, the issuance of
the Notes, the purchase of each Advance and the grant of a security interest in
the Receivables and the other Collateral related thereto by the Issuer to the
Trustee under the Indenture.
(a) SALE AND SERVICING AGREEMENT. Each of the representations,
warranties and covenants of the Seller and the Servicer in the Sale and
Servicing Agreement is true and correct.
(b) INVESTMENT COMPANY STATUS. CPS is not, nor will the
consummation of the transactions contemplated by the Basic Documents cause CPS
to be, an "investment company" or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are defined
in the Investment Company Act or a company "controlled by" an investment company
within the meaning of the Investment Company Act. The consummation of the
transactions contemplated by this Agreement and each other Basic Document to
which CPS is a party will not violate any provision of such Act or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
CPS is not subject to regulation under any applicable law (other than Regulation
X of the Board of Governors of the Federal Reserve System) that limits its
ability to incur Indebtedness.
(c) NO MATERIAL ADVERSE EFFECT; NO DEFAULT. (i) CPS is not a
party to any indenture, loan or credit agreement or any lease or other agreement
or instrument or subject to any charter or corporate restriction that could
have, and no provision of applicable law or governmental regulation has had or
would have a Material Adverse Effect and (ii) CPS is not in default under or
with respect to any contract, agreement, lease or other instrument to which CPS
is a party and which is material to CPS's condition (financial or otherwise),
business, operations or properties, and CPS has not delivered or received any
notice of default thereunder, other than such defaults as have been waived.
(d) REPRESENTATIONS AND WARRANTIES OF CPS UNDER BASIC
DOCUMENTS. Each representation and warranty made by it in each Basic Document to
which it is a party (including any representation and warranties made by it as
Servicer) is true and correct as of the date originally made, as of the
Restatement Effective Date and as of and after giving effect to the making of
each Advance as if made on and as of the making of each Advance as if set forth
in full herein.
(e) NO PUBLIC OFFERING OF NOTES. Neither the Servicer nor, to
the best of the Servicer's knowledge after due inquiry, anyone acting on the
Servicer's behalf, has offered, transferred, pledged, sold or otherwise disposed
of any Note or any interest therein, or solicited any offer to buy or accept a
transfer, pledge or other disposition of any Note or any interest therein or
otherwise approached or negotiated, with respect to any Note or any interest
therein, with any person in any manner, or made any general solicitation by
means of general advertising or in any other manner, or taken any other action,
which would constitute a public distribution of the Notes under the Securities
Act, or which would render the disposition of any Note a violation of Section 5
of the Securities Act or any state securities laws, or require registration or
qualification pursuant thereto.
(f) REGULATIONS T, U AND X. No proceeds of any sale hereunder
will be used, directly or indirectly, by CPS for the purpose of purchasing or
carrying any Margin Stock (as defined in Regulation U of the Board of Governors
of the Federal Reserve System) or for the purpose of reducing or retiring any
indebtedness that was originally incurred to purchase or carry Margin Stock or
for any other purpose which might cause any sale hereunder to be a "purpose
credit" within the meaning of Regulation U. Neither the making of any Advance
hereunder, nor the use of the proceeds thereof, will violate or otherwise
conflict with the provisions of Regulations T, U or X of the Board of Governors
of the Federal Reserve System.
10
(g) SECURITY INTEREST. Notwithstanding the intent of the
parties set forth in Section 2.2 of the Sale and Servicing Agreement, the Sale
and Servicing Agreement is effective to create valid and enforceable Liens on
the Receivables and the Other Conveyed Property in favor of the Issuer. Upon
filing of the financing statement delivered to the Note Purchaser and the
Trustee by CPS on or prior to the Restatement Effective Date in each
jurisdiction (including, without limitation, the State of California) in which
required by applicable law (which financing statement is in proper form for
filing in each such jurisdiction and accurately describes the Collateral), the
Lien created pursuant to the Sale and Servicing Agreement will constitute a
first priority perfected security interest in the Receivables and the Other
Conveyed Property in favor of the Purchaser, which Lien will be prior to all
other Liens and which Lien is enforceable as such as against all Persons. From
the Original Closing Date to the Restatement Effective Date, the Trustee for the
benefit of the Noteholders and Note Purchaser has maintained a continuous first
priority perfected security interest in all of the Issuer's right, title and
interest in, to and under the Receivables and the Other Conveyed Property (as
such terms were defined during the period from the Original Closing Date to the
Restatement Effective Date).
(h) FULL DISCLOSURE. The information, reports, financial
statements, exhibits, schedules, officer's certificates and other documents
furnished by or on behalf of CPS, the Servicer, the Seller or any of their
respective Affiliates to the Issuer, the Purchaser, the Note Purchaser, the
Trustee or the Backup Servicer in connection with any particular Advance or the
negotiation, preparation, delivery or performance of this Agreement, the Notes
and the other Basic Documents or included herein or therein or delivered
pursuant hereto or thereto, taken as a whole, are true and correct in every
material respect (or, in the case of projections, are based on good faith
reasonable estimates) on the date as of which such information is stated or
certified and do not and will not contain an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements herein
or therein contained, in the light of the circumstances under which they were
made, not misleading. All such financial statements fairly present the financial
condition of CPS or such Affiliates as of the date specified therein (subject to
normal year-end audit adjustments) all in accordance with GAAP. On such date,
neither CPS nor any of its Affiliates had any material contingent liabilities,
liabilities for taxes, or unusual or anticipated losses from any unfavorable
commitments, except as referred to or reflected in such financial statements as
of such date. There is no fact known to CPS or any of its Affiliates, after due
inquiry, that would have a Material Adverse Effect and that has not been
disclosed herein, in the other Basic Documents or in a report, financial
statement, exhibit, schedule, disclosure letter or other writing furnished to
the Note Purchaser for use in connection with the transactions contemplated
hereby or thereby.
(i) ERISA. Neither CPS nor any of its Affiliates maintain any
Plans (other than CPS's defined contribution (401(k)) plan and the MFN Financial
Corporation Pension Plan), and CPS agrees to notify the Note Purchaser in
advance of forming any Plans. Neither CPS nor any of its Affiliates has any
obligations or liabilities with respect to any Plans or Multiemployer Plans
(other than CPS's defined contribution (401(k)) plan and the MFN Financial
Corporation Pension Plan), nor have any such Persons had any obligations or
liabilities with respect to any such Plans during the five year period prior to
the date this representation is made or deemed made. CPS will give notice to the
Note Purchaser if at any time it or any Affiliate has any obligations or
liabilities with respect to any Plan or Multiemployer Plan. All Plans maintained
by CPS or any of its Affiliates are in substantial compliance with all
applicable laws (including ERISA). CPS is not an employer under any
Multiemployer Plan.
11
(j) BORROWING BASE CERTIFICATE. The information set forth in
the Borrowing Base Certificate is true and correct in all material respects.
(k) INSURANCE. During the Term, CPS shall maintain such
insurance as is generally acceptable to prudent institutional investors and
usual and customary for similar companies in its industry.
SECTION 5.03 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE NOTE
PURCHASER.
The Note Purchaser hereby covenants to the Issuer and the Servicer that
it will perform the obligations required of it under the Basic Documents in
accordance with the terms of the Basic Documents. In addition, the Note
Purchaser represents and warrants to the Issuer and the Servicer, as of the date
hereof (or as of a subsequent date on which a successor or assignee of the Note
Purchaser shall become a party hereto, in which case such successor or assignee
hereby represents and warrants to the Issuer and the Servicer), that:
(a) it has had an opportunity to discuss the Issuer's and the
Servicer's business, management and financial affairs, and the terms and
conditions of the transactions contemplated by the Basic Documents, with the
Issuer and the Servicer and their respective representatives;
(b) it is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act and has
sufficient knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of investing in, and is able and
prepared to bear the economic risk of investing in, the Notes;
(c) it is purchasing the Notes for its own account, or for the
account of one or more "accredited investors" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that meet
the criteria described in SUBSECTION (b) and for which it is acting with
complete investment discretion, for investment purposes only and not with a view
to distribution, subject, nevertheless, to the understanding that the
disposition of its property shall at all times be and remain within its control;
(d) it understands that the Notes have not been and will not
be registered or qualified under the Securities Act or any applicable state
securities laws or the securities laws of any other jurisdiction and are being
offered only in a transaction not involving any public offering within the
meaning of the Securities Act and may not be resold or otherwise transferred
unless so registered or qualified or unless an exemption from registration or
qualification is available, that the Issuer is not required to register the
Notes, and that any transfer must comply with provisions of Section 2.5 of the
Indenture and SECTION 8.03(b) hereof;
(e) it understands that the Notes will bear the legend set out
in the form of Note attached as EXHIBIT A to the Indenture and be subject to the
restrictions on transfer described in such legend;
(f) it will comply with all applicable federal and state
securities laws in connection with any subsequent resale of the Notes;
(g) it understands that the Notes may be offered, resold,
pledged or otherwise transferred, with prior written notice to the Issuer, only
(A) to the Issuer, (B) in a transaction meeting the requirements of Rule 144A
under the Securities Act, (C) outside the United States to a foreign person in a
transaction meeting the requirements of Regulation S under the Securities Act,
or (D) in a transaction complying with or exempt from the registration
requirements of the Securities Act and in accordance with any applicable
securities laws of any state of the United States or any other jurisdiction;
12
(h) if it desires to offer, sell or otherwise transfer, pledge
or hypothecate the Notes as described in clause (B), (C) or (D) of the preceding
paragraph, the transferee of the Notes will be required to deliver a certificate
and may under certain circumstances be required to deliver an opinion of
counsel, in each case, as described in the Indenture, reasonably satisfactory in
form and substance to the Trustee, that an exemption from the registration
requirements of the Securities Act applies to such offer, sale, transfer or
hypothecation. The Note Purchaser understands that the registrar and transfer
agent for the Notes will not be required to accept for registration of transfer
the Notes acquired by it unless the terms and conditions of Sections 2.4 and 2.5
of the Indenture have been satisfied;
(i) it will obtain from any purchaser of the Notes
substantially the same representations and warranties contained in the foregoing
paragraphs; and
(j) this Agreement has been duly and validly authorized,
executed and delivered by the Note Purchaser and constitutes a legal, valid,
binding obligation of the Note Purchaser, enforceable against the Note Purchaser
in accordance with its terms except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
ARTICLE VI
CONDITIONS
SECTION 6.01 CONDITIONS PRECEDENT TO CLOSING.
The Note Purchaser will have no obligation to consummate the
transactions contemplated by this Agreement unless:
(a) each of the Basic Documents shall be in full force and
effect and all consents, waivers and approvals necessary for the consummation of
the transactions contemplated by the Basic Documents shall have been obtained
and shall be in full force and effect;
(b) all conditions to the issuance of the Notes under the
Indenture and under SECTION 2.1(b) of the Sale and Servicing Agreement shall
have been satisfied and all conditions to each Advance, including the initial
Advance, set forth under SECTION 6.02 hereof have been satisfied;
(c) the Note Purchaser shall have received a duly executed,
authorized and authenticated Note registered in its name and stating that the
principal amount thereof shall not exceed the Maximum Invested Amount;
(d) the Issuer shall have paid all fees required to be paid by
it on or prior to the Restatement Effective Date, including all fees required
under Section 8.05(a) hereof;
(e) the Notes purchased by the Note Purchaser hereunder shall
be entitled to the benefit of the security provided in the Indenture and shall
constitute the legal, valid and binding agreement of the Issuer, enforceable
against the Issuer in accordance with its terms except as enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law;
13
(f) no Material Adverse Change shall have occurred with
respect to CPS or the Issuer since December 31, 2005;
(g) the Note Purchaser shall have received:
(i) a duly executed and delivered original
counterpart of each Basic Document (other than any Basic Document that
contemplates delivery on a date after the Restatement Effective Date),
each such document being in full force and effect;
(ii) certified copies of charter documents and each
amendment thereto, and resolutions of the Board of Directors or other
governing authority of each of the Issuer and the Servicer authorizing
or ratifying the execution, delivery and performance of all Basic
Documents to which it is a party, certified by the Secretary or an
Assistant Secretary of each of the Issuer and the Servicer as of the
Restatement Effective Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked
or rescinded as of the date of such certificate;
(iii) a certificate of the Secretary or an Assistant
Secretary of the Issuer and the Servicer, as applicable, certifying the
names and the signatures of its officer or officers authorized to sign
all transaction documents to which it is a party;
(iv) a certificate of a senior officer of CPS to the
effect that the representations and warranties of the Seller and the
Servicer in this Agreement and the other Basic Documents to which
either of them is a party are true and correct as of the Restatement
Effective Date, and that the Seller and the Servicer have complied in
all material respects with all agreements and satisfied all conditions
on their part to be performed or satisfied at or prior to the
Restatement Effective Date;
(v) a certificate of a senior officer of the Issuer
to the effect that the representations and warranties of the Issuer and
the Purchaser in this Agreement and the other Basic Documents to which
either of them is a party are true and correct as of the Restatement
Effective Date and that the Issuer and the Purchaser have complied in
all material respects with all agreements and satisfied all conditions
on their part to be performed or satisfied at or prior to the
Restatement Effective Date;
(vi) legal opinions (including opinions relating to
true sale, non-consolidation, UCC, enforceability and corporate
matters) in form and substance satisfactory to the Note Purchaser,
which legal opinions may be "bring-down" letters of legal opinions
delivered by counsel to the Issuer, the Purchaser, the Servicer and the
Seller on the Original Closing Date;
(vii) evidence satisfactory to the Note Purchaser of
completion of all necessary UCC filings and search reports;
(viii) payment of Note Purchaser's reasonable
out-of-pocket fees and expenses in accordance with SECTION 3.01(c)
hereof;
(ix) copies of certificates or other evidence from
the Secretary of State or other appropriate authority of the States of
Delaware and California, evidencing the good standing of the Issuer and
the Servicer in the States of Delaware and California, in each case,
dated no earlier than 15 days prior to the Restatement Effective Date;
and
14
(x) such other documents, opinions and information as
the Note Purchaser may reasonably request.
SECTION 6.02 CONDITIONS TO EACH ADVANCE.
The obligation of the Note Purchaser to fund any Advance on any day
shall be subject to the conditions precedent that on the date of such Advance,
before and after giving effect thereto and to the application of any proceeds
therefrom, the following statements shall be true:
(a) no Funding Termination Event shall have occurred and be
continuing;
(b) the Facility Termination Date shall not have occurred and
will not occur as a result of making such Advance and no default under or breach
of the Sale and Servicing Agreement or any other Basic Document exists or will
exist;
(c) no later than one (1) Business Day prior to the requested
Funding Date, the Note Purchaser shall have received a properly completed
Borrowing Base Certificate from the Servicer in the form of EXHIBIT A hereto;
(d) no later than one (1) Business Day prior to the requested
Funding Date, the Note Purchaser shall have received a properly completed and
executed Advance Request, together with timely receipt of each other item
required pursuant to SECTION 2.03 hereof;
(e) the Servicer shall have delivered to the Note Purchaser
the Servicer's Certificate for the immediately preceding Accrual Period pursuant
to Section 4.9 of the Sale and Servicing Agreement;
(f) such Advance is in an amount not less than $2,000,000;
(g) such Advance shall not cause there to be more than two
Advances in a calendar week;
(h) after giving effect to such Advance, the Invested Amount
of the Notes will not exceed the Maximum Invested Amount;
(i) the representations and warranties made by the Servicer,
the Seller, the Purchaser and the Issuer in the Basic Documents are true and
correct as of the date of such requested Advance, with the same effect as though
made on the date of such Advance, and the Note Purchaser shall have received (I)
a certificate from the Servicer and the Seller to such effect with respect to
its representations and warranties and that the Servicer and the Seller have
complied in all material respects with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to the related
Funding Date, and (II) a certificate from the Issuer and the Purchaser to such
effect with respect to its representations and warranties and that the Issuer
and the Purchaser have complied in all material respects with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to the related Funding Date, which certifications, in each case, may be included
in the related Advance Request
(j) the Trustee shall (in accordance with the procedures
contemplated in SECTION 3.4 of the Sale and Servicing Agreement) have confirmed
receipt of the related Receivable File for each Eligible Receivable included in
the Borrowing Base calculation and shall have delivered to the Note Purchaser,
with a copy to the Noteholders, (1) a Trust Receipt with respect to the
Receivable Files related to the Related Receivables to be purchased on such
Funding Date; or (2) if requested by the Note Purchaser, an aggregate Trust
Receipt with respect to the Receivable Files for all of the Receivables;
15
(k) after giving effect to such Advance, there shall be no
Borrowing Base Deficiency;
(l) all limitations and conditions specified in SECTION 2.02
of this Agreement and in SECTION 2.1(b) of the Sale and Servicing Agreement
shall have been satisfied with respect to the making of such Advance;
(m) after giving effect to such Advance, no Material Adverse
Change with respect to CPS or the Issuer shall have occurred and there shall
have been no Material Adverse Effect;
(n) neither the Issuer nor the Servicer shall have breached
any of its covenants under the Basic Documents in any material respect;
(o) the Issuer shall have provided the Note Purchaser with all
other information that the Note Purchaser may reasonably require, if the Note
Purchaser shall have given the Issuer reasonable advance notice of such
requirements;
(p) all amounts due and owing to the Note Purchaser under this
Agreement and/or any of the other Basic Documents shall have been paid in full;
(q) after giving effect to such Advance and the application of
proceeds therefrom, no Default or Event of Default shall have occurred and be
continuing on and as of the requested Funding Date;
(r) if any TFC Receivables are being purchased in connection
with such Advance, no TFC Funding Termination Event shall have occurred; and
(s) on and as of the requested Funding Date, each of the
representations and warranties set forth in Section 3.1 of the Sale and
Servicing Agreement is true and correct for all Related Receivables being
pledged by the Issuer to the Trustee for the benefit of the Noteholders and the
Note Purchaser under the Indenture on such date and each Related Receivable is
an Eligible Receivable. No such Related Receivable was originated in any
jurisdiction in which the Seller is required to be licensed in order to own such
Related Receivable unless the Seller has obtained such license prior to owning
such Related Receivable. With respect to each such Related Receivable, the
applicable Dealer has either been paid or received credit from Seller for all
proceeds from the sale of such Related Receivable to the Seller.
The giving of any notice pursuant to SECTION 2.03 shall
constitute a representation and warranty by the Issuer and the Servicer that all
conditions precedent to such Advance have been satisfied.
ARTICLE VII
COVENANTS
SECTION 7.01 AFFIRMATIVE COVENANTS.
Until the Facility Termination Date:
(b) NOTICE OF DEFAULTS, OTHER FUNDING TERMINATION EVENTS,
LITIGATION, ADVERSE JUDGMENTS, ETC. CPS or the Issuer, as applicable, shall give
notice to Note Purchaser promptly:
16
(i) upon CPS or the Issuer, as the case may be,
becoming aware of, and in any event within three (3) Business Days
after, the occurrence of any Event of Default or Default or any event
of default or default under any other Basic Document or any other
material agreement of CPS;
(ii) upon CPS or the Issuer, as the case may be,
becoming aware of, and in any event within three (3) Business Days
after, the occurrence of any Funding Termination Event,
(iii) upon, and in any event within three (3)
Business Days after, service of process on CPS or the Issuer, as the
case may be, or any agent thereof for service of process, in respect of
any legal or arbitrable proceedings affecting CPS or the Issuer (x)
that questions or challenges the validity or enforceability of any of
the Basic Documents, (y) in which the amount in controversy exceeds
$1,000,000 or (z) that, if adversely determined, would cause a Material
Adverse Effect;
(iv) upon, and in any event within three (3) Business
Days after, CPS or the Issuer, as the case may be, becoming aware of
any event or change in circumstances that could have a Material Adverse
Effect, constitute a Material Adverse Change or cause an Event of
Default; and
(v) upon, and in any event within three (3) Business
Days after, CPS or the Issuer, as the case may be, becoming aware of
entry of a judgment or decree in respect of CPS or the Issuer, its
respective assets or any of the Collateral in an amount in excess of
$1,000,000.
Each notice pursuant to this subsection (a) shall be accompanied by a
statement of an officer of CPS or the Issuer, as applicable, setting
forth details of the occurrence referred to therein and stating what
action CPS and the Issuer, as the case may be, have taken or propose to
take with respect thereto.
(c) TAXES. Each of CPS and the Issuer shall pay and discharge
all taxes and governmental charges upon it or against any of its properties or
assets or its income prior to the date after which penalties attach for failure
to pay, except to the extent that CPS or the Issuer, as applicable, shall be
contesting in good faith in appropriate proceedings its obligation to pay such
taxes or charges, adequate reserves having been set aside for the payment
thereof in accordance with GAAP.
(d) CONTINUITY OF BUSINESS AND COMPLIANCE WITH AGREEMENT AND
LAW. Each of CPS and the Issuer shall:
(i) preserve and maintain its legal existence;
(ii) comply with the requirements of all applicable
laws, rules, regulations and orders of governmental authorities and
other Requirements of Law (including, without limitation, Consumer Laws
and all environmental laws);
(iii) keep adequate records and books of account, in
which complete entries will be made in accordance with GAAP
consistently applied;
(iv) not move its chief executive office or chief
operating office from the addresses referred to herein or change its
jurisdiction of organization unless it shall have provided the Note
Purchaser 30 days prior written notice of such change;
17
(v) pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or
profits or on any of its property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained;
and
(vi) continue in business in a prudent, reasonable
and lawful manner with all licenses, rights, permits, franchises and
qualifications necessary to perform its respective obligations under
this Agreement, the Sale and Servicing Agreement, the Notes and the
other Basic Documents.
(e) OWNERSHIP OF THE ISSUER. CPS shall own beneficially and of
record 100% of the membership interests in the Issuer free and clear of all
Liens other than the Lien created pursuant to the Pledge Agreement.
(f) BORROWING BASE CERTIFICATES. The Issuer shall deliver to
the Note Purchaser, together with each Advance Request, a Borrowing Base
Certificate.
(g) COLLATERAL STATEMENTS. The Issuer will furnish or cause to
be furnished to the Note Purchaser from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as Note Purchaser may reasonably request, all in
reasonable detail, including without limitation each statement, certificate and
report required to be delivered to the Trustee or the Noteholders under any
Basic Document.
(h) ACTIONS TO ENFORCE RIGHTS UNDER CONTRACTS. CPS and the
Issuer shall take such reasonable and lawful actions as the Note Purchaser shall
request to enforce Note Purchaser's rights under the Collateral, and, following
the occurrence of an Event of Default, shall take such reasonable and lawful
actions as are necessary to enable Note Purchaser to exercise such rights in
Note Purchaser's own name.
(i) HEDGING STRATEGY. The Issuer shall implement and maintain
a hedging strategy that is reasonably acceptable to the Note Purchaser;
PROVIDED, THAT, for purposes of this subparagraph (h), a hedging strategy
consisting of the Seller sponsoring one or more securitizations of pools of
Receivables at least every 120 days during the term of the Notes shall be deemed
acceptable to the Note Purchaser.
(j) MONTHLY SERVICER'S CERTIFICATE. The Issuer shall, or shall
cause the Servicer (so long as CPS is Servicer) to, deliver to Note Purchaser,
the Trustee and the Backup Servicer, no later than 12:00 noon, New York City
time, on each Determination Date, in a computer-readable format reasonably
acceptable to each such Person, a Servicer's Certificate executed by a
Responsible Officer or agent of Servicer containing all information required to
be included in such Servicer's Certificate under Section 4.9 of the Sale and
Servicing Agreement and related monthly data. The Issuer shall, or shall cause
the Servicer (so long as the CPS is Servicer) to, deliver to Note Purchaser, the
Trustee and the Backup Servicer a hard copy of any such Servicer's Certificate
upon request of such Person.
(k) SEPARATE EXISTENCE; NO COMMINGLING. During each Term, the
Issuer shall limit its activities to such activities as are incident to and
necessary or convenient to accomplish the following purposes: (i) to acquire,
own, hold, pledge, finance and otherwise deal with Receivables to be pledged to
the Trustee for the benefit of the Note Purchaser and the Noteholders pursuant
to the Indenture and (ii) to sell, securitize or otherwise liquidate all or any
portion of such Receivables in accordance with the provisions of the Basic
Documents. In addition, during the Term, the Issuer shall observe and comply
with the applicable legal requirements for the recognition of the Issuer as a
legal entity separate and apart from its Affiliates, including without
limitation, those requirements set forth in Section 9(b)(iv) of the Issuer's
18
Limited Liability Company Agreement. Without limiting the foregoing, the Issuer
shall, and CPS shall cause itself and any other Affiliates of the Issuer to,
maintain the truth and accuracy of all facts assumed by Andrews Kurth LLP in the
true sale and non consolidation opinions of Andrews Kurth LLP; provided that in
the event that any request is made for the Note Purchaser to consent to or
approve any matter that, if effectuated or consummated, would result in a change
to the continuing truth and accuracy of any of the factual assumptions in the
true sale or non consolidation opinions of Andrews Kurth LLP, such request shall
be accompanied by an opinion of Andrews Kurth LLP, or such other counsel as may
be reasonably satisfactory to the Note Purchaser, that the conclusions set forth
in the true sale and non consolidation opinions of Andrews Kurth LLP will be
unaffected by such change.
(l) OTHER LIENS OR INTERESTS. Except for the conveyances under
the Sale and Servicing Agreement, CPS shall not sell, pledge, assign or transfer
to any other Person, or grant, create, incur, assume or suffer to exist any lien
on or any interest in, the Receivables or the Other Conveyed Property. Except
for the pledge pursuant to the Indenture, the Issuer shall not sell, pledge,
assign or transfer to any other Person, or grant, create, incur, assume or
suffer to exist any lien on or any interest in, the Receivables and the other
Collateral. CPS and the Issuer shall, at their own expense, defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on, in or to the Collateral, other than the
security interests created under the Sale and Servicing Agreement and the
Indenture, respectively, and CPS and the Issuer will defend the right, title and
interest of the Note Purchaser in and to any of the Collateral against the
claims and demands of all Persons whomsoever.
(m) BOOKS AND RECORDS; OTHER INFORMATION.
(i) Each of CPS and the Issuer shall maintain
accounts and records as to each Receivable accurately and in sufficient
detail to permit the reader thereof to know at any time the status of
such Receivable, including payments and recoveries made and payments
owing (and the nature of each). CPS shall maintain accurate and
complete books and records with respect to the Receivables and the
Other Conveyed Property and with respect to CPS's business. The Issuer
shall maintain accurate and complete books and records with respect to
the Collateral and the Issuer's business. All accounting books and
records shall be maintained in accordance with GAAP.
(ii) CPS and the Issuer shall, and shall cause each
of their respective Affiliates to, permit any representative of the
Note Purchaser to visit and inspect any of the properties of the Issuer
and such Affiliates and to examine the books and records of CPS or the
Issuer and such Affiliates, as applicable, and to make copies and take
extracts therefrom, and to discuss the business, operations,
properties, condition (financial or otherwise) or prospects of CPS or
the Issuer and each such Affiliate, as applicable, or any of the
Collateral with the officers and independent public accountants thereof
and as often as the Note Purchaser may reasonably request, and so long
as no Default or Event of Default shall have occurred and be
continuing, all at such reasonable times during normal business hours
upon reasonable written notice; provided that, after a Default or Event
of Default shall have occurred and be continuing, the Note Purchaser
shall make such inspections, examine such documents, make such copies,
take such extracts and conduct such discussions at such times as it may
determine in its sole discretion during CPS's and the Issuer's normal
business hours.
(iii) Each of CPS and the Issuer shall promptly
provide to the Note Purchaser all information regarding its respective
operations and practices and the Collateral as the Note Purchaser shall
reasonably request.
19
(iv) CPS shall maintain its computer systems so that,
from and after the time of each sale of Receivables under the Sale and
Servicing Agreement to the Issuer, CPS's master computer records
(including any back-up archives) that refer to a Receivable shall
indicate clearly that such Receivable has been sold by CPS to the
Issuer and that such Receivable has been pledged by the Issuer to the
Trustee. Indication of the Trustee's interest in such Receivable shall
be deleted from or modified on CPS's computer systems when, and only
when, the Receivable shall have been released from the Lien of the
Indenture in accordance with the terms of the Indenture, and indication
of the Issuer's interest in such Receivable shall be deleted from or
modified on CPS's computer systems when, and only when, the Receivable
shall have been paid in full or repurchased from the Issuer by CPS.
(v) Upon request, CPS shall furnish to the Note
Purchaser, within five (5) Business Days, (x) a list of all Receivables
(by contract number and name of Obligor) then owned by the Issuer,
together with a reconciliation of such list to the Schedule of
Receivables, and (y) such other information as the Note Purchaser may
reasonably request.
(vi) If at any time CPS shall propose to sell, grant
a security interest in, or otherwise transfer any interest in any
automobile, van, sport utility vehicle or light duty truck receivables
(other than the Receivables) to any prospective purchaser, lender, or
other transferee, and if CPS shall give to such prospective purchaser,
lender or other transferee computer tapes, records, or print-outs
(including any restored from back-up archives, collectively "data
records") that refer in any manner whatsoever to any Receivable, such
data records shall indicate clearly that such Receivable has been sold
by CPS to the Issuer and pledged by the Issuer to Trustee unless such
Receivable shall have been released from the Lien of the Indenture in
accordance with the terms of the Indenture and shall have been paid in
full or repurchased from the Issuer by CPS.
(n) FULFILLMENT OF OBLIGATIONS. Each of CPS and the Issuer
shall pay and perform, as and when due, all of its obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of CPS or the Issuer, as
applicable.
(o) COMPLIANCE WITH LAWS, ETC. Each of CPS and the Issuer
shall, and CPS shall cause each of its Subsidiaries to, comply (i) in all
material respects with all Requirements of Law and any change therein or in the
application, administration or interpretation thereof (including, without
limitation any request, directive, guideline or policy, whether or not having
the force of law) by any Governmental Authority charged with the administration
or interpretation thereof; and (ii) with all indentures, mortgages, deeds of
trust, agreements, or other instruments or contractual obligations to which it
is a party, including without limitation, each Basic Document to which it is a
party, or by which it or any of its properties may be bound or affected, or
which may affect the Receivables.
(p) COMPLIANCE WITH BASIC DOCUMENTS. CPS, in its capacity as
Seller and Servicer, or otherwise, shall comply with each of its covenants
contained in the Basic Documents.
(q) FINANCING STATEMENTS. At the request of the Note
Purchaser, CPS and the Issuer shall file such financing statements as the Note
Purchaser determines may be required by law to perfect, maintain and protect the
interest of the Note Purchaser in the Collateral and the proceeds thereof.
(r) PAYMENT OF FEES AND EXPENSES. CPS and the Issuer shall pay
to the Note Purchaser, on demand, any and all fees, costs or expenses that the
Note Purchaser pays to a bank or other similar institution arising out of or in
connection with the return of payments from CPS or the Issuer deposited for
collection by the Note Purchaser.
20
(s) FINANCIAL STATEMENTS AND ACCESS TO RECORDS. CPS shall
provide the Note Purchaser with quarterly unaudited financial statements within
sixty (60) days of the end of each of CPS's first three fiscal quarters, and CPS
will provide the Note Purchaser with audited financial statements within one
hundred twenty (120) days of each of CPS's fiscal year-end audited by a
nationally recognized independent certified public accounting firm. Upon request
of the Note Purchaser, CPS shall provide the Note Purchaser with unaudited
monthly financial statements. CPS shall deliver to the Note Purchaser with each
financial statement a certificate by CPS's chief financial officer, certifying
that such financial statements are complete and correct in all material respects
and that, except as noted in such certificate, such chief financial officer has
no knowledge of any Default, Event of Default, Funding Termination Event or
Servicer Termination Event. Notwithstanding the foregoing, CPS shall have no
obligation to deliver any of the foregoing financial statements to the Note
Purchaser for so long as CPS is subject to, and in compliance with, the
reporting requirements under Section 13(a) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). In connection with each report filed by
CPS under Section 13(a) of the Exchange Act during the Term, CPS shall be deemed
to have represented and warranted to the Note Purchaser that, as of the related
filing date, the financial statements contained in such report are complete and
correct in all material respects and that, unless otherwise specified in such
report, CPS has no knowledge of any Default, Event of Default, Funding
Termination Event or Servicer Termination Event as of such filing date.
(t) LITIGATION MATTERS. CPS shall notify the Note Purchaser in
writing, promptly upon its learning thereof, of any litigation, arbitration or
administrative proceeding which may reasonably be expected to have a Material
Adverse Effect or result in a Material Adverse Change.
(u) NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE. CPS and the
Issuer shall provide the Note Purchaser with not less than thirty (30) days
prior written notice of any change in the chief executive office or jurisdiction
of incorporation or organization of CPS or the Issuer to permit the Note
Purchaser to make any additional filings necessary to continue the Note
Purchaser's perfected security interest in the Collateral.
(v) CONSOLIDATED TOTAL ADJUSTED EQUITY. CPS shall maintain
minimum Consolidated Total Adjusted Equity of $60,000,000 as of the end of each
fiscal quarter.
(w) MAXIMUM LEVERAGE RATIO. CPS shall maintain a maximum
leverage ratio (total liabilities less all non-recourse debt/Consolidated Total
Adjusted Equity) of less than six times as of the end of each fiscal quarter.
(x) LIQUIDITY. CPS shall maintain cash and cash equivalents of
at least $8.5 million as of the end of each calendar month.
(y) DEPOSIT ACCOUNT. All distributions made by the Issuer to
CPS in respect of CPS's equity interest in the Issuer shall be deposited
directly into the Deposit Account.
SECTION 7.02 NEGATIVE COVENANTS.
Until the Facility Termination Date:
(a) ADVERSE TRANSACTIONS. Neither CPS nor the Issuer shall
enter into any transaction that adversely affects the Collateral, the Note
Purchaser's rights under this Agreement, the Notes or any other Basic Document,
the Issuer's interest in the Receivables and the Other Conveyed Property
pursuant to the Sale and Servicing Agreement, the Trustee's security interest in
the Collateral pursuant to the Indenture, or that could reasonably be expected
to result in a Material Adverse Change with respect to the Issuer or CPS or a
Material Adverse Event.
(b) GUARANTEES. The Issuer shall not guarantee or otherwise in
any way become liable with respect to the obligations or liabilities of any
other Person.
21
(c) DIVIDENDS. The Issuer shall not declare or pay any
dividends except (i) to the extent of funds legally available therefor from
payments received by the Issuer pursuant to Section 5.7(a) of the Sale and
Servicing Agreement, or (ii) pursuant to Section 5.10 of the Sale and Servicing
Agreement. Notwithstanding the foregoing, the Issuer shall not declare or pay
any dividends on any date as of which a Default or an Event of Default shall
have occurred and is continuing.
(d) INVESTMENTS. The Issuer shall not make any investment in
any Person through the direct or indirect holding of securities or otherwise,
other than in the ordinary course of business or in connection with the future
securitization of Receivables.
(e) CHANGES IN CAPITAL STRUCTURE OR BUSINESS OBJECTIVES OF THE
ISSUER. The Issuer shall not do any of the following if it will adversely affect
the payment or performance of, or the Issuer's ability to pay and/or perform,
its obligations to the Note Purchaser with respect to this Agreement or any
other Basic Document to which it is a party, or the Notes, or if it could
reasonably be expected to result in a Material Adverse Change with respect to
the Issuer or CPS or a Material Adverse Event: (i) cancel any of the membership
interests in the Issuer, (ii) make any change in the capital structure of the
Issuer, or (iii) make any material change in any of its business objectives,
purposes or operations that would adversely affect the payment or performance
of, or the Issuer's ability to pay and/or perform, its obligations to Note
Purchaser with respect to this Agreement or any other Basic Document to which it
is a party, or the Notes.
(f) ASSET SALES. The Issuer will not sell any Receivables or
other Collateral related thereto if, following such sale, the Invested Amount
would exceed the Borrowing Base after giving effect to the application of
proceeds of such sale; PROVIDED that in the event that the Issuer or CPS shall
intend to sell any Receivables in a whole-loan transfer to any third party, the
Issuer or CPS shall inform Note Purchaser of such prospective sale and Note
Purchaser shall be permitted to bid on such Receivables in the same bidding
process as that in which any third party is permitted to bid on such
Receivables.
(g) NO LIENS ON EQUITY INTERESTS IN THE ISSUER. CPS shall not
grant or otherwise create any Lien on the membership interests in the Issuer (or
any other equity interest in the Issuer), except pursuant to the Pledge
Agreement, without the prior written consent of the Note Purchaser.
(h) NO INDEBTEDNESS. The Issuer will not at any time incur any
Indebtedness, other than Indebtedness incurred under (or contemplated by) the
terms of the Notes, the Indenture, the Sale and Servicing Agreement and this
Agreement, which consent is deemed given with respect to the security interest
created by the Pledge Agreement.
(i) NO OTHER BUSINESS. The Issuer will not at any time engage
in any other business activities than the purchase of the Receivables and the
Other Conveyed Property, pledging the Receivables and the other Collateral to
the Trustee under the Indenture, transferring the Receivables and the Other
Conveyed Property in connection with securitizations and in connection with
whole-loan sales, issuing the Notes and other activities relating to the
foregoing to the extent permitted by the organizational documents of the Issuer
as in effect on the date hereof, or as amended with the prior written consent of
the Note Purchaser. Without limitation of the foregoing, the Issuer will not at
any time be an issuer of securities other than the Notes or a borrower under any
loan or financing agreement, facility or other arrangement other than the
facility established pursuant to this Agreement and the other Basic Documents.
(j) NO AMENDMENT TO ISSUER'S OPERATING AGREEMENT OR ANY BASIC
DOCUMENT WITHOUT CONSENT. Neither the Limited Liability Company Agreement of the
Issuer, nor any Basic Document, shall be amended, supplemented or otherwise
modified without the prior written consent of the Note Purchaser.
22
(k) TRANSACTIONS WITH AFFILIATES. The Issuer shall not enter
into, or be a party to, any transaction with any of its Affiliates, except in
accordance with the requirements set forth in Section 9(b)(iv) of its Limited
Liability Company Agreement.
(l) NONPETITION. Notwithstanding any prior termination of this
Agreement, neither the Servicer nor the Seller will, prior to the date that is
one year and one day after the day upon which the outstanding principal amount
of the Notes has been reduced to zero and all Secured Obligations have been paid
in full, acquiesce, petition or otherwise invoke or cause the Issuer to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(m) PROTECTION OF TITLE TO COLLATERAL. None of the Seller, the
Servicer, the Purchaser or the Issuer shall change its name, identity,
jurisdiction of organization, form of organization or corporate structure in any
manner that would, could or might make any financing statement or continuation
statement filed with respect to the Collateral seriously misleading within the
meaning of Section 9-506(a) of the UCC, unless it shall have given the Note
Purchaser at least 30 days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01 AMENDMENTS.
No amendment to or waiver of any provision of this Agreement, nor
consent to any departure by the Servicer, the Issuer or the Note Purchaser
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Servicer, the Issuer and the Note Purchaser.
SECTION 8.02 NO WAIVER; REMEDIES.
Any waiver, consent or approval given by any party hereto shall be
effective only in the specific instance and for the specific purpose for which
given, and no waiver by a party of any breach or default under this Agreement or
any other Basic Document shall be deemed a waiver of any other breach or
default. No failure on the part of any party hereto to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder, or any abandonment or
discontinuation of steps to enforce the right, power or privilege, preclude any
other or further exercise thereof or the exercise of any other right. No notice
to or demand on any party hereto in any case shall entitle such party to any
other or further notice or demand in the same, similar or other circumstances.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 8.03
BINDING ON SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon, and inure to the
benefit of, the Issuer, the Purchaser, the Seller, the Servicer, the Note
Purchaser and their respective successors and assigns; PROVIDED, HOWEVER, that,
except as otherwise provided by Section 4.18 of the Sale and Servicing
Agreement, none of the Issuer, the Purchaser, the Seller or the Servicer may
assign its rights or obligations hereunder or in connection herewith or any
23
interest herein (voluntarily, by operation of law or otherwise) without the
prior written consent of the Note Purchaser. Nothing expressed herein is
intended or shall be construed to give any Person other than the Persons
referred to in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement.
(b) The Note Purchaser may at any time grant a security
interest in and Lien on all of its interests under this Agreement, the Notes and
all Basic Documents to any Person who, at any time now or in the future,
provides program liquidity or credit enhancement, including without limitation,
a surety bond or financial guaranty insurance policy for the benefit of the Note
Purchaser. The Note Purchaser may assign its Commitment or all of its interest
under the Notes, this Agreement and the other Basic Documents to (i) any
Affiliate of the Note Purchaser at any time (ii) to any other Person at any time
that a Default has occurred and is continuing and (iii) at any other time with
the prior written consent of the Issuer; PROVIDED, HOWEVER, that any assignment
of the Note Purchaser's interest in the Notes shall only require prior written
notice to the Issuer. Notwithstanding the foregoing, it is understood and agreed
by the Issuer that the Notes may be sold, transferred or pledged without the
consent of the Issuer in compliance with, and as provided for under, SECTION
5.03(g). Notwithstanding any other provisions set forth in this Agreement, the
Note Purchaser may at any time create a security interest in all of its rights
under this Agreement, the Notes and the other Basic Documents in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
(c) If, on or after the date of this Agreement, the Note
Purchaser reasonably determines that the adoption of any applicable law, rule or
regulation, or any change in any applicable law, rule or regulation or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Note Purchaser with any request or
directive issued on or after the date of this Agreement (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
made or would be likely to make it unlawful for the Note Purchaser to make or
maintain the Advances, hold the Notes or otherwise to perform the transactions
contemplated to be performed by it pursuant to this Agreement and those
contemplated to be performed by it pursuant to the Basic Documents to which the
Note Purchaser is a party, then (i) the Note Purchaser shall so notify the
Issuer; (ii) the obligation of the Note Purchaser to make Advances from time to
time as contemplated hereunder shall be suspended; and (iii) the Note Purchaser
may assign its rights and obligations hereunder and under the Basic Documents,
the Notes and its interests therein pursuant to SECTION 8.03(b); provided that a
Funding Termination Event shall occur if the Issuer or the Servicer fails to
accept the proposed assignee chosen by the Note Purchaser.
SECTION 8.04 TERMINATION; SURVIVAL OF AGREEMENT.
The obligations and responsibilities of the Note Purchaser created
hereby shall terminate on the Facility Termination Date. All covenants,
agreements, representations and warranties made herein and in the Notes
delivered pursuant hereto shall survive the making and the repayment of the
Advances and the execution and delivery of this Agreement and the Notes and
shall continue in full force and effect until all interest and principal on the
Notes and other amounts owed hereunder and under the Basic Documents have been
paid in full and the commitment of the Note Purchaser hereunder has been
terminated. In addition, the obligations of the Issuer and the Note Purchaser
under SECTIONS 3.03, 3.04, 3.05 and 8.05, 8.11, 8.12 and 8.13 shall survive the
termination of this Agreement.
SECTION 8.05
PAYMENT OF COSTS AND EXPENSES; INDEMNIFICATION.
(a) PAYMENT OF COSTS AND EXPENSES.
24
(i) The Issuer agrees to pay on demand the reasonable
expenses of the Note Purchaser (including the reasonable out-of-pocket
and legal expenses of the Note Purchaser, if any) in connection with:
(A) the negotiation, preparation, execution,
delivery and administration of this Agreement and of each
other Basic Document, including schedules and exhibits, and
any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Basic Document as
may from time to time hereafter be proposed, whether or not
the transactions contemplated hereby or thereby are
consummated, and
(B) the consummation of the transactions
contemplated by this Agreement and the other Basic Documents.
(ii) The Issuer and the Servicer further jointly and
severally agree to (A) pay upon demand all reasonable costs and
out-of-pocket expenses incurred by the Note Purchaser as a consequence
of, or in connection with, the enforcement of this Agreement or any of
the other Basic Documents and any stamp, documentary or other taxes
which may be payable by the Note Purchaser in connection with the
execution or delivery of this Agreement, any Advance hereunder, or the
issuance of the Notes or any other Basic Documents; and (B) hold and
save the Note Purchaser harmless from all liability for any breach by
the Issuer of its obligations under this Agreement. The Issuer and
Servicer also further jointly and severally agree to reimburse the Note
Purchaser upon demand for all reasonable out-of-pocket and legal
expenses incurred by the Note Purchaser in connection with the
negotiation of any restructuring or "work-out," whether or not
consummated, of the Basic Documents.
(b) INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Note Purchaser, the Issuer and the Servicer,
jointly and severally, hereby indemnify and hold the Note Purchaser and each of
its officers, directors, employees and agents (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all actions, causes of action,
suits, losses, costs, liabilities and damages, and reasonable expenses incurred
in connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought and including,
without limitation, any liability in connection with the offering and sale of
the Notes), including reasonable attorneys' fees and disbursements
(collectively, the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified
Parties or any of them (whether in prosecuting or defending against such
actions, suits or claims) as a result of, or arising out of, or relating to:
(i) any transaction financed or to be financed in
whole or in part (including, without limitation, any Receivable
constituting part of the Collateral), directly or indirectly, with the
proceeds of any Advance including, without limitation, any claim, suit
or action related to such transaction, which claim is based on a
violation of Consumer Laws or any applicable vicarious liability
statutes, or the use or operation of any Financed Vehicle by any
Person; or
(ii) this Agreement or any other Basic Document, or
the entering into and performance of this Agreement or any other Basic
Document by any of the Indemnified Parties,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence, bad faith or willful misconduct and, with respect to the Servicer,
excluding any Indemnified Liabilities that would constitute recourse to the
Servicer for loss by reason of the bankruptcy, insolvency (or other credit
condition) of, or credit related default by, the related Obligor on any
25
Receivable not arising from a claim by the related Obligor that any part of the
debt evidenced by the Receivables is not due as a result of wrongful action by
any Person, such as a breach of Consumer Laws. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Issuer and the
Servicer hereby jointly and severally agree to make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. The indemnity set forth in this SECTION
8.05(B) shall in no event include indemnification for any Taxes (which
indemnification is provided in SECTION 3.05). Upon the written request of the
Note Purchaser pursuant to this Section 8.05(b), the Issuer and the Servicer
shall promptly reimburse the Note Purchaser for the amount of any such
Indemnified Liabilities incurred by the Note Purchaser.
SECTION 8.06 CHARACTERIZATION AS BASIC DOCUMENT; ENTIRE AGREEMENT.
This Agreement shall be deemed to be a Basic Document for all purposes
of the Indenture and the other Basic Documents. This Agreement, together with
the Indenture, the Sale and Servicing Agreement, the documents delivered
pursuant to SECTION 6.01 and the other Basic Documents, including the exhibits
and schedules thereto, contains a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
shall constitute the entire agreement among the parties hereto with respect to
the subject matter hereof, superseding all previous oral statements and other
writings with respect thereto.
SECTION 8.07 NOTICES.
All notices, amendments, waivers, consents and other communications
provided to any party hereto under this Agreement shall be in writing and
addressed, delivered or transmitted to such party at its address or facsimile
number set forth below its signature hereto or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed given
when received; any notice, if transmitted by facsimile, shall be deemed given
when transmitted and accompanied by a telephonic confirmation of receipt.
SECTION 8.08 SEVERABILITY OF PROVISIONS.
Any covenant, provision, agreement or term of this Agreement that is
prohibited or is held to be void or unenforceable in any jurisdiction shall, as
to that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement.
SECTION 8.09 TAX CHARACTERIZATION.
Each party to this Agreement (a) acknowledges that it is the intent of
the parties to this Agreement that, for accounting purposes and for all Federal,
State and local income and franchise tax purposes, the Notes will be treated as
evidence of indebtedness issued by the Issuer, (b) agrees to treat the Notes for
all such purposes as indebtedness and (c) agrees that the provisions of the
Basic Documents shall be construed to further these intentions.
SECTION 8.10 FULL RECOURSE TO ISSUER.
The obligations of the Issuer under this Agreement and the other Basic
Documents shall be full recourse obligations of the Issuer. Notwithstanding the
foregoing, no recourse shall be had for the payment of any amount owing in
respect of this Agreement, including the payment of any fee hereunder or any
other obligation or claim arising out of or based upon this Agreement, against
any certificateholder, member, employee, officer, manager, director, affiliate
or trustee of the Issuer; PROVIDED, HOWEVER, nothing in this SECTION 8.10 shall
relieve any of the foregoing Persons from any liability that any such Person may
otherwise have as expressly set forth in any Basic Document or for its gross
negligence, bad faith or willful misconduct. Nothing contained in this Section
shall limit or be deemed to limit any obligations of the Issuer, the Purchaser,
the Seller or the Servicer hereunder or under any other Basic Document, which
obligations are full recourse obligations of the Issuer, the Purchaser, the
Seller and the Servicer, respectively.
26
SECTION 8.11 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS CONFLICT OF
LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 8.12 JURISDICTION.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OF THE PARTIES HEREUNDER
WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR (TO THE EXTENT
PERMITTED BY LAW) FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW
YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, ALL PARTIES HEREUNDER
ACCEPT FOR THEMSELVES AND IN CONNECTION WITH THEIR PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT.
SECTION 8.13 WAIVER OF JURY TRIAL.
ALL PARTIES HEREUNDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE
PURCHASE AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE PARTIES IN CONNECTION HEREWITH OR
THEREWITH. ALL PARTIES ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND
SIGNIFICANT CONSIDERATION FOR THIS PROVISION AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT.
SECTION 8.14 COUNTERPARTS.
This Agreement may be executed in any number of counterparts (which may
include facsimile) and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, and all of
which together shall constitute one and the same instrument.
SECTION 8.15 SET-OFF
(a) The obligations of the Issuer, the Purchaser, the Seller
and the Servicer hereunder are absolute and unconditional and each of the
Issuer, the Purchaser, the Seller and the Servicer expressly waives any and all
rights of set-off, abatement, diminution or deduction that the Issuer, the
Purchaser, the Seller or the Servicer may otherwise at any time have under
applicable law.
(b) In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of such rights, during the
continuance of any Event of Default hereunder:
27
(i) the Note Purchaser is hereby authorized at any
time and from time to time, without notice to the Purchaser or the
Issuer, such notice being hereby expressly waived, to set-off any
obligation owing by the Note Purchaser or any of its Affiliates to the
Purchaser or the Issuer, or against any funds or other property of the
Purchaser or the Issuer, held by or otherwise in the possession of the
Note Purchaser or any of its Affiliates, the respective obligations of
the Purchaser and the Issuer to the Note Purchaser under this Agreement
and the other Basic Documents and irrespective of whether or not the
Note Purchaser shall have made any demand hereunder or thereunder; and
(ii) the Note Purchaser is hereby authorized at any
time and from time to time, without notice to the Seller or the
Servicer, such notice being hereby expressly waived, to set-off any
obligation owing by the Note Purchaser or any of its Affiliates to the
Seller or the Servicer, or against any funds or other property of the
Seller or the Servicer held by or otherwise in the possession of the
Note Purchaser or any of its Affiliates, the respective obligations of
the Seller and the Servicer to the Note Purchaser under this Agreement
and the other Basic Documents and irrespective of whether or not the
Note Purchaser shall have made any demand hereunder or thereunder.
SECTION 8.16 NONPETITION COVENANTS.
Notwithstanding any prior termination of this Agreement, the Servicer
and the Seller shall not, prior to the date that is one year and one day after
the day upon which the outstanding principal amount of the Notes has been
reduced to zero and all Secured Obligations have been paid in full, acquiesce,
petition or otherwise invoke or cause the Purchaser or the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Purchaser or the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Purchaser of the Issuer or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Purchaser or the Issuer.
SECTION 8.17 SERVICER REFERENCES.
All references to the Servicer herein shall apply to CPS, in its
capacity as the initial Servicer, and not to a successor Servicer.
SECTION 8.18 NO NOVATION.
It is expressly understood and agreed by the parties hereto that the
amendment and restatement of this Agreement is in no way intended to and shall
not be deemed to constitute a novation or repayment of the outstanding Advances
and the other obligations and liabilities existing under the Original Basic
Documents and the security interest of the Trustee in the Collateral for the
benefit of the Noteholders and the Note Purchaser shall remain in full force and
effect after giving effect to the amendment and restatement of this Agreement.
SECTION 8.19 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES
UNDER ORIGINAL NOTE PURCHASE AGREEMENT.
The representations, warranties and indemnity obligations of the
Issuer, the Purchaser, the Servicer, the Seller and CPS made in the Original
Note Purchase Agreement and each other Basic Document prior to the Restatement
Effective Date shall survive the Restatement Effective Date and the execution
and delivery of this Agreement, and each such representation and warranty so
made is true and correct as of the date originally made and as of the date
hereof.
28
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers and delivered as
of the day and year first above written.
PAGE FUNDING LLC
By:__________________________________
Name:________________________________
Title:_______________________________
Address: 16355 Laguna Canyon Road
Irvine, California 92618
CONSUMER PORTFOLIO SERVICES, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
Address: 16355 Laguna Canyon Road
Irvine, California 92618
Attention: Mark Creatura
Telephone: (949) 785-6691
Facsimile: (888) 577-7923
UBS REAL ESTATE SECURITIES INC., AS NOTE
PURCHASER
By:__________________________________
Name:________________________________
Title:_______________________________
By:__________________________________
Name:________________________________
Title:_______________________________
Address: 1285 Avenue of the Americas
11th Floor
New York, New York 10019
Attention: Prakash Wadhwani
Telephone: (212) 713-3983
Facsimile: (212) 713-7999
29