EXHIBIT 10.1
RESIDUAL INTEREST IN SECURITIZATIONS REVOLVING CREDIT AND TERM LOAN
AGREEMENT dated as of April 30, 1998, by and among Consumer Portfolio Services,
Inc., a California corporation (the "Company"), and State Street Bank and Trust
-------
Company as agent and lender ("State Street"), The Structured Finance High Yield
------------
Fund, LLC as lender and The Prudential Insurance Company of America as lender.
Said lenders are sometimes herein collectively referred to as the "Lenders" and
-------
each individually a "Lender". State Street in its capacity as agent for the
------
Lenders hereunder is sometimes herein referred to as the "Agent". Certain other
-----
terms used herein are defined in Section 9.
---------
The Company, the Lenders and the Agent hereby agree as follows:
Section 1. Amount and Terms of the Credit.
------------------------------------------
1.1 Recitals; Commitments. The Company wishes to establish revolving credits
---------------------
with the Lenders in an aggregate principal amount at any one time outstanding
not in excess of Thirty Three Million Three Hundred Thirty Three Thousand Three
Hundred Thirty Three Dollars ($33,333,333), to expire April 30, 1999,
convertible into a term loan on said date or on such earlier date as may be
determined in accordance with Section 8.3 (as applicable, the "Conversion Date")
----------- ---------------
in an aggregate principal amount not in excess of the Available Line Commitment
(as hereinafter defined) on the Conversion Date.
Each Lender is severally willing to establish such a revolving credit and
to make such loans to the Company, subject to the terms and conditions hereafter
set forth, in the following maximum amounts at any one time outstanding set
forth opposite each Lender's name (each of such amounts being hereinafter called
each Lender's "Commitment", and collectively for all of the Lenders the "Total
---------- -----
Commitment") and in the respective percentages set forth opposite each Lender's
----------
name which shall be applicable to such credits and loans hereunder (hereinafter
such Lender's "Percentage"):
----------
Lender Commitment Percentage
------ -------------- ----------
State Street Bank $16,666,666.50 50.0%
and Trust Company
The Structured Finance $ 5,000,000.00 15.0%
High Yield Fund, LLC
The Prudential Insurance $11,666,666.50 35.0%
-------------- ------
Company of America
TOTAL $33,333,333.00 100.0%
============== ======
1.2 Revolving Credit Loans; Borrowing Base; Mechanics of Blocked Account;
--------------------------------------------------------------------------
Borrowing Base Report.
---------------------
(a) Establishment of Line of Credit. Subject to the terms and conditions
-------------------------------
hereof, and in reliance upon the representations and warranties contained
herein, each Lender hereby severally establishes a revolving credit facility
(collectively the "Line of Credit") convertible subject to the provisions of
--------------
Section 1.4 into a term loan in favor of the Company in the principal amount of
-----------
its Revolving Credit Loan outstanding as of the Conversion Date. Under the Line
of Credit, subject to the terms and conditions hereof, the Company may borrow
prior to the Conversion Date from time to time, from each Lender severally and
not jointly, an aggregate principal amount at any time not in excess of such
Lender's Percentage of the Available Line Commitment in effect on such date. As
used herein, the term "Available Line Commitment" shall mean, as of any date of
-------------------------
determination, the lesser of (i) the Total Commitment or (ii) the Borrowing
------
Base. As used herein, the term "Borrowing Base" shall mean, as of any date of
--------------
determination, an amount equal to the least of:
-----
(A) 80% of the Company's (and/or CPSRC's) interest in Investments in
Credit
Enhancements relating to Eligible Securitization Transactions
(without duplication); or
(B) 65% of the Lenders' Value Model; or
(C) 8% of the aggregate outstanding Certificate Balance relating to
Eligible Securitization Transactions;
in each instance as reported on the most recently submitted Borrowing Base
Report. Each such borrowing pursuant to the Line of Credit is herein called a
"Revolving Credit Loan" and such borrowings are collectively called the
---------------------
"Revolving Credit Loans".
----------------------
(b) Mechanics of Revolving Credit Loans. Each Revolving Credit Loan shall
-----------------------------------
be made by each Lender in such amount (not in excess of such Lender's
Commitment) as the Company shall request, provided that each borrowing shall be
in a minimum aggregate amount of $1,500,000 from all of the Lenders or such
lesser amount as may be equal to the then unused portion of the Available Line
Commitment. Requests for borrowings hereunder shall in each case be made pro
---
rata from each of the Lenders in accordance with their respective Percentages of
----
the Total Commitment. Revolving Credit Loans shall be effected by separate wire
transfers from the respective Lenders to the Operating Account referred to
below, and shall be made at such times before the Conversion Date as the Company
may request by three (3) Banking Days' prior notice (by 3:00 p.m. eastern
standard time) to each of the Lenders (the "Borrowing Request"), provided that
----------------- --------
the initial Revolving Credit Loans made in connection with the inclusion of any
subsequent securitization transaction within the Borrowing Base pursuant to
subsection 4.12 below shall be funded by the Lenders not less than three (3)
---------------
Banking Days after issuance by the Lenders to the Company of written
confirmation that such subsequent securitization transaction will be an Eligible
Securitization Transaction as contemplated by such subsection 4.12. All
---------------
Borrowing Requests shall be in writing, or by telephonic communication confirmed
by telecopy or other facsimile transmission on the same day as the telephone
request, and shall specify the proposed date, the amount of the Revolving Credit
Loans and the appropriate wiring instructions. Upon receipt of all Borrowing
Requests for Revolving Credit Loans hereunder, the Agent shall promptly notify
the other Lenders, specifying the proposed date and respective amounts thereof.
Each Lender shall make each Revolving Credit Loan hereunder on such proposed
date by delivering to the Company's account at Bank of America, ABA #000000000;
Account 14584-25131; Beneficiary: Consumer Portfolio Services; Attn: Xxx Stock;
Other Instructions: CPS Loan Disbursement Account (together with any successor
account from time to time designated by the Company, the "Operating Account")
-----------------
the amount thereof in immediately available funds by not later than 1:00 p.m.
Boston time on the date on which such Revolving Credit Loans are to be made.
(c) Mechanics of Blocked Account. Pursuant to the Eligible Securitization
----------------------------
Transaction Documents (including, but not limited to, the Irrevocable Payment
Directives), and the documents governing any additional Eligible Securitization
Transaction(s), the Company shall cause (i) the trustee, depository or paying
agent maintaining any Spread Account or other account from which Base Servicing
Fees relating to any transaction in the Company's aggregate servicing portfolio
are to be released to the Company to release such proceeds directly to the
Blocked Account and (ii) CPSRC to make any and all distributions and to pay any
dividends or other amounts of any kind or nature from time to time made or paid
from CPSRC to the Company to be paid directly to the Blocked Account. On or
prior to the earlier to occur of the Conversion Date or a Default or Event of
Default the Agent will, on the 15th day of each month, apply available funds on
deposit in the Blocked Account first, to the payment of the accrued but unpaid
interest on the Notes, and second, to the principal amount outstanding of the
Notes in sufficient amounts to keep the aggregate principal amount outstanding
under the Notes within the Borrowing Base. As soon as reasonably practicable,
but in any event no later than the Banking Day next succeeding the day on which
available funds on deposit in the Blocked Account are so applied by the Agent,
available funds remaining on deposit in the Blocked Account will be released to
the Operating Account or to such other accounts as may from time to time be
designated by the Company in writing. After the Conversion Date, available
funds on deposit in the Blocked Account will be applied by the Agent in
accordance with subsection 1.5 below. After the occurrence of an Event of
--------------
Default,
available funds on deposit in the Blocked Account will be applied by the Agent
in accordance with subsection 1.7 below.
--------------
(d) Reborrowings. During the period prior to the Conversion Date, the
------------
Company may, at its option, from time to time prepay all or any portion of the
Revolving Credit Loans made from time to time hereunder, without penalty or
premium (other than the LIBOR Premium, if applicable), subject to the provisions
of subsection 1.8, and the Company may reborrow from time to time hereunder
--------------
amounts so paid up to the amount of the Available Line Commitment in effect at
the time of reborrowing.
(e) Borrowing Base Reports. On the date of each Borrowing Request for a
----------------------
Revolving Credit Loan, and on the later of (i) the 12th business day of each
month and (ii) one business day prior to the 15th day of the month (whether
before or after the Conversion Date), or the next succeeding Banking Day if the
12th business day of any month is not a Banking Day (or after and during the
continuance of a Default, on such more frequent basis as the Majority Lenders
may from time to time specify by notice to the Company), the Company shall
deliver to the Lenders a Borrowing Base Report, substantially in the form of
Exhibit A hereto (the "Borrowing Base Report"), each such Borrowing Base Report
--------- ---------------------
to set forth in reasonable detail the information specified therein as of the
close of business on the immediately preceding month-end, and shall be signed by
the Chief Executive Officer, President, any Vice-President and/or Chief
Financial Officer of the Company. Such Borrowing Base Reports may be delivered
by overnight mail, courier, telex, telecopy or other facsimile transmission.
Each Borrowing Base Report will set forth, in such detail as the Lenders may
from time to time reasonably require, the Borrowing Base calculated in
accordance with subsection 1.2(a) above.
-----------------
1.3 Revolving Credit and Term Notes; Interest.
----------------------------------------------
(a) Form of Note. The Revolving Credit Loans made by each Lender pursuant
to this Section 1 shall not exceed such Lender's Commitment and shall be
---------
evidenced by a revolving credit and term promissory note of the Company in a
principal amount equal to such Lender's Commitment and in the form attached
hereto as Exhibit B. There shall be one (1) note payable to the order of each
---------
Lender (each such note being herein called a "Note" and all such notes being
----
herein collectively called the "Notes").
-----
(b) Interest Rate. Each Note shall bear interest (computed on the basis
of the actual number of days elapsed over a 360-day year) on the unpaid
principal amount thereof at a rate per annum determined as follows:
(i) the per annum rate for any portion of the outstanding principal
balance of the Notes which is not the subject of a LIBOR Option shall be
equal to the Prime Rate plus one percent (1%) (the "Applicable Prime
----------------
Rate"); and
----
(ii) the per annum rate for any LIBOR Portion shall be equal to the
LIBOR Rate plus 4% (the "Applicable LIBOR Rate").
---------------------
(c) Interest Payment Date. Interest on the Note shall be payable monthly
in arrears on the fifteenth day of each month (whether prior to or after the
Conversion Date), commencing on the first such date next succeeding the date of
issuance, and at maturity (whether by acceleration or otherwise) and subject to
the additional default rate provided for in subsection 1.10. Each change in the
---------------
rate of interest payable on any portion of the outstanding balance of the Notes
that is subject to the Applicable Prime Rate, shall take effect simultaneously
with the corresponding change in the Prime Rate. Notwithstanding anything
contained herein or in any other Loan Document to the contrary, in no event
shall the amount paid or agreed to be paid by the Company as interest on the
Notes exceed the highest lawful rate permissible under any law applicable
thereto.
1.4 Conversion of Revolving Credit Loans to Term Loans. Each Lender, severally
------------------------------------------------------
and not jointly, agrees that, upon the terms and subject to the Company's
compliance with all terms of this Agreement, provided that there shall occur no
--------
Default or Event of Default which has not been remedied or cured in accordance
with the terms
of Section 12 prior to such Conversion Date, the full outstanding principal
----------
balance of its Revolving Credit Loans (up to an amount equal to such Lender's
-----
Percentage of the Available Line Commitment), shall convert to a term loan on
the Conversion Date (each such term loan being called a "Term Loan", all such
---------
term loans being herein collectively called the "Term Loans", and the Term Loans
----------
and the Revolving Credit Loans being sometimes referred to collectively as the
"Loans" and each individually as a "Loan"). The Term Loan of each Lender shall
----- ----
be in a principal amount not exceeding such Lender's Percentage of the Available
Line Commitment on the Conversion Date, and the Term Loans shall be pro rata
--------
from each of the Lenders in accordance with their respective Percentages of the
Total Commitment.
1.5 Principal Amortization of the Notes After Conversion Date. In addition to
--------------------------------------------------------------
the Company's ongoing obligation to pay accrued interest on the Notes pursuant
to subsection 1.3, which obligation shall be satisfied to the extent of
--------------
available funds in the Blocked Account prior to application of such funds in
repayment of principal in the amounts set forth below in this subsection 1.5,
--------------
the Company shall repay the outstanding principal balance of the Notes as of the
Conversion Date in not more than forty-eight (48) consecutive monthly
installments, due and payable on the 15th day of each month (or the next
succeeding Banking Day, if the 15th day of any month is not a Banking Day)
commencing with the first such date next succeeding the Conversion Date, each
such monthly installment to be in an amount equal to the greater of (i) the
aggregate amount transferred or released to each of the Company's Eligible
Subsidiaries in connection with each Eligible Securitization Transaction
(whether from all Spread Accounts or otherwise) since the 15th day of the
previous month and (ii) one-forty-eighth of the outstanding principal balance of
the Notes on the Conversion Date.
1.6 Fees.
---------
(a) Commitment Fee. The Company shall pay each Lender a commitment fee (the
"Commitment Fee") for the period commencing on the Closing Date to and including
--------------
the Conversion Date, or the earlier date of termination of the Line of Credit
hereunder, equal to twenty-five one-hundredths of one percent (.25%) per annum
(computed on the basis of the actual number of days elapsed over a 360-day year)
of such Lender's Percentage of the average daily unused portion of the Total
Commitment. The Commitment Fee shall be paid quarterly in arrears on the last
day of each March, June, September and December of each year, commencing on the
first such date next succeeding the Closing Date, and on the Conversion Date or
earlier date of termination of the Line of Credit.
(b) Changes Affecting Commitment Fee. If any change in any requirement
imposed upon any Lender by any law of the United States of America, any state
thereof or by any regulation, order, interpretation, ruling or official
directive (whether or not having the force of law) of the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance Corporation or any
other board or governmental or administrative agency of the United States of
America shall impose, increase, modify or deem applicable any reserve, special
deposit, assessment or other requirement against the Commitment of such Lender
hereunder, and the result of the foregoing, in the reasonable determination of
such Lender, is to impose an increased cost on such Lender that is attributable
to the maintaining of the Commitment, then the Commitment Fee payable to such
Lender shall be increased on the same basis as such fees are increased for all
similar commitments maintained by such Lender, for so long as the increased cost
is imposed on such Lender, to the extent reasonably determined by such Lender to
be necessary to compensate such Lender for such increased cost. The
determination by such Lender of the amount of such cost, if done in good faith,
shall, in the absence of manifest error, be conclusive, and at the Company's
request such Lender shall demonstrate the basis for such determination.
1.7 Application of Funds Deposited Into Blocked Account After Event of Default.
------------------------------------------------------------------------------
From and after the occurrence of a Default or Event of Default, such
Default or Event of Default not having previously been remedied or cured in
accordance with Section 12 below, and without prejudice to any other rights or
----------
remedies of the Agent or the Lenders, all amounts paid into the Blocked Account
from whatever source shall be applied by the Agent as follows:
First, to the payment of the reasonable costs and expenses incurred by
-----
the Agent and the Lenders in connection with such Default or Event of
Default;
Second, to the payment in full of all accrued and unpaid interest due
------
and owing on the Notes;
Third, to the payment in full of all unpaid principal of the Notes;
-----
and
Fourth, to the payment in full of all other amounts owed by the
------
Borrower to the Agent or any Lender pursuant to any Loan Document.
The Agent's application of amounts paid into the Blocked Account in accordance
with this subsection 1.7 shall not affect, limit or impair in any manner the
--------------
rights and remedies of the Agent or the Lenders set forth in subsection 8.2
--------------
below.
1.8 Prepayment; Repayment of Outstanding Loans in Excess of Available Line
---------------------------------------------------------------------------
Commitment.
----------
(a) Voluntary Prepayment. On at least three (3) Banking Days' prior
written notice to each Lender, the Company may, at its option, prepay the Notes
after the Conversion Date in whole at any time or in part from time to time,
without a premium or penalty of any kind attributable to such prepayment. Any
optional prepayment of the Notes in part shall be in an aggregate principal
amount of not less than $300,000 to all of the Lenders. Any prepayment in full
of the Notes after the Conversion Date shall be made together with accrued
interest on the amount prepaid to the date of such prepayment and all other fees
and expenses due the Lenders, including, but not limited to, the LIBOR premium.
(b) Mandatory Prepayment. If at any time (whether prior to or after the
Conversion Date) the aggregate outstanding principal amount of the Loans exceeds
the Available Line Commitment, the Company will immediately repay the Notes,
without penalty or premium, in an amount necessary to cause the outstanding
principal amount of the Loans not to exceed the Available Line Commitment.
Except for payments made in accordance with subsection 1.5, prepayments of the
--------------
Notes after the Conversion Date will be applied in inverse order of maturity.
1.9 Security. The Notes and all other obligations of the Company hereunder
-------------
and/or under the other Loan Documents shall be secured by and entitled to the
benefits of the following (except to the extent that any thereof may be
expressly waived by the Majority Lenders):
(a) A Pledge and Security Agreement (the "Pledge and Security Agreement")
-----------------------------
for the ratable benefit of the Lenders pursuant to which the Company shall have
granted to the Agent a first priority perfected security interest in, lien on
and pledge of all tangible and intangible personal property and assets of the
Company of every kind and description including, without limitation, "investment
property", "accounts", "general intangibles", "chattel paper", "inventory" and
"equipment", as such terms are defined in any applicable Uniform Commercial
Code, one hundred percent (100%) of the issued and outstanding capital stock of
CPS Receivables Corp. ("CPSRC"), a California corporation, CPS Funding
-----
Corporation, a California corporation ("FundCo") and CPS Warehouse Corp.
------
("WareCo"), a Delaware corporation, together with any and all other right, title
------
and interest of the Company to receive dividends, distributions, advances, loans
or other payments of money in respect of (i) the Residual Interest in
Securitizations (including any and all rights to investment, interest or other
income on Investments in Credit Enhancements and any collection accounts to the
extent released therefrom), (ii) all Eligible Securitization Transaction
Documents, (iii) all Base Servicing Fees receivable from the Company's aggregate
servicing portfolio (the "Base Servicing Fees"), (iv) the CPSRC, FundCo or
-------------------
WareCo Stock and (v) any and all other agreements, documents and/or instruments
of the Company or to which the Company is a party, now existing or hereafter
arising in connection with any securitization transaction;
(b) For the Company's Irvine, California headquarters, and any other
location at which Collateral (as defined below) and/or records (to the extent
not also available at such Irvine, California headquarters) relating to the
---
Company's interests in any Eligible Securitization Transaction are maintained or
stored, a landlord's consent relating to the Agent's access to all such leased
premises;
(c) Mortgages on any real estate owned or acquired by the Company or any of
its Subsidiaries;
(d) An Intercreditor and Subordination Agreement (the "FSA Intercreditor
-----------------
Agreement") among the Company, the Agent, Norwest Bank Minnesota, National
---------
Association and Financial Security Assurance ("FSA");
---
(e) All of the Company's right, title and interest in all of its
securitization transactions, now existing or hereafter arising or entered into,
including but not limited to, Xxxxx Xxxxxxx Xxxxx 0000-0, Xxxxx Grantor Trust
1993-2, Xxxxx Grantor Trust 1993-4; Xxxxx Grantor Trust 1993-4, CPS Auto Grantor
Trust 1994-1, CPS Auto Grantor Trust 1994-2, CPS Auto Grantor Trust 1994-3, CPS
Auto Grantor Trust 1994-4, CPS Auto Grantor Trust 1995-1, CPS Auto Grantor Trust
1995-2, CPS Auto Grantor Trust 1995-3, CPS Auto Grantor Trust 1995-4, CPS Auto
Grantor Trust 1996-1, FASCO Auto Grantor Trust 1996-1, CPS Auto Grantor Trust
1996-2, CPS Auto Grantor Trust 1996-3, CPS Auto Grantor Trust 1997-1, CPS Auto
Grantor Trust 1997-2, CPS Auto Receivables Trust 1997-3, CPS Auto Receivables
Trust 1997-4, CPS Auto Receivables Trust 1997-5 and, CPS Grantor Trust 1998-1;
(f) A cash collateral account (the "Cash Collateral Account") on deposit
-----------------------
with State Street Bank and Trust Company provided by the Company for the benefit
of the Lenders, which will, at all times, have a cash balance equal to the
greater of (i) $1,000,000 and (ii) the Estimated Interest Payment; and
(g) Irrevocable payment directives (the "Irrevocable Payment Directives")
------------------------------
from the Company to (i) CPSRC authorizing CPSRC to pay any and all dividends
payable to CPS to the Blocked Account and (ii) to the spread account trustee or
other paying agent under each transaction in the Company's aggregate servicing
portfolio authorizing such spread account trustee or paying agent to pay all
Base Servicing Fees directly to the Blocked Account.
All of the agreements and instruments described in this subsection,
together with any and all other agreements and instruments heretofore or
hereafter securing the Notes and the Company's other obligations hereunder, are
sometimes hereinafter referred to collectively as the "Security Documents" and
------------------
each individually as a "Security Document". All of the real and personal
-----------------
property described in clauses (a), (b), (c), (d), (e), and (f) of this
subsection, together with any additions thereto or replacements or proceeds
thereof, and any other real or personal property hereafter securing the Notes,
are sometimes hereinafter referred to collectively as the "Collateral". The
----------
Company agrees to take such actions as may be necessary from time to time to
cause the Agent for the benefit of the Lenders to be secured by and entitled to
the benefits of the Security Documents as described in this subsection,
including, without limitation, the obtaining of consents of any third parties.
The Security Documents shall be satisfactory in form and substance to the
Lenders and their counsel.
1.10 Default Rate Of Interest. In the event of any Event of Default, including
-----------------------------
but not limited to the Company's failure to make any payment of principal of or
interest on any Note when due, whether at maturity or at a date fixed for the
payment of any installment or prepayment thereof or by declaration, acceleration
or otherwise, interest on the full outstanding balance of principal and (to the
extent permitted by law) interest on each Note shall, during the continuance of
such Event of Default, be payable on demand at a rate per annum equal to two
percent (2%) above the rate otherwise applicable to such Note hereunder.
1.11 Notations. Prior to any sale or other disposition of any Note by any
--------------
Lender, such Lender shall make a notation on such Note (or on a paper annexed
thereto) of the unpaid principal amount thereof at the time outstanding, the
last date to which interest has been paid thereon and the amount of unpaid
interest accrued
thereon to the date of such sale or disposition. Upon payment in full of the
principal of and interest on any Note, such Note shall be canceled and returned
to the Company, provided that no Note shall be canceled or returned so long as
--------
the Lenders shall be obligated to make Revolving Credit Loans hereunder.
1.12 Form and Terms of Payment. All payments by the Company of principal of or
------------------------------
interest on the Notes and of any fee due hereunder shall be made to the Agent
for the account of the Lenders (except for fees paid to the Agent solely for its
own account) at the address of the Agent hereinafter set forth in this Agreement
(or at such other address as the Agent shall have furnished to the Company in
writing) and shall be made in immediately available funds free of any
counterclaim, set-off or charge. The Company hereby authorizes the Agent to
charge the Company's Blocked Account, Operating Account or any other deposit
accounts from time to time maintained by the Company with the Agent for the
purpose of effecting such payments. If any payment of principal of or interest
on the Notes shall become due on a day which is not a Banking Day, such payment
may be made on the next succeeding Banking Day and such extension shall be
included in computing interest in connection with such payment.
1.13 Pro Rata Treatment. Each payment and prepayment of the principal of the
-----------------------
Notes shall be made pro rata among the Lenders based upon the respective unpaid
--------
principal amounts of the Notes at the time outstanding. Each permanent reduction
of the Total Commitment shall be made pro rata among the Lenders based upon the
--------
respective amount of each Lender's Percentage of the Total Commitment.
1.14 Capital Adequacy. If after the date of this Agreement, any Lender shall
---------------------
have reasonably determined that the adoption or implementation of any applicable
law, rule or regulation regarding capital requirements for the Lenders or any
Lender holding companies, or any change therein (including, without limitation,
any change according to a prescribed schedule of increasing requirements,
whether or not known on the date of this Agreement), or any change in the
interpretation or administration thereof by any governmental authority, central
Lender or comparable agency charged with the interpretation or administration
thereof, or compliance by such Lender with any request or directive of any such
Person regarding capital adequacy (whether or not having the force of law) has
the effect of reducing the return on such Lender's capital to a level below that
which such Lender could have achieved (taking into consideration such Lender's
policies with respect to capital adequacy immediately before such adoption,
implementation, change or compliance) but for such adoption, implementation,
change or compliance as a consequence of its Commitment to make Loans hereunder
by any amount reasonably deemed by such Lender to be material, the Company shall
pay to such Lender as an additional fee from time to time on demand such amount
as such Lender shall have reasonably determined to be necessary to compensate it
for such reduction. The determination by such Lender of such amount, if done on
the basis of any reasonable averaging and attribution methods, shall in the
absence of manifest error be conclusive, and at the Company's request, such
Lender shall demonstrate the basis of such determination.
1.15 Special Provisions Concerning Lenders' Value Model; Confidentiality . The
------------------------------------------------------------------------
Company and each of the Lenders (other than State Street) acknowledge and agree
with State Street that the Lenders' Value Model is proprietary information of
State Street. The Lenders shall hold all non-public information relating to the
Lenders' Value Model obtained by them under this Agreement in accordance with
their customary procedures for holding information of that nature. In order to
facilitate the Company's and each other Lender's calculation of the applicable
Borrowing Base under Section 1.2(a)(B) above, State Street has delivered to the
-----------------
Company and each other Lender the full text of the formulas used in the Lenders'
Value Model. The Company hereby covenants to and agrees with State Street that
(i) it will hold the Lenders' Value Model in confidence and not disclose or
deliver it in any form or variation to any third party, except those persons in
the Company's organization or its advisors, (provided that the Company's
--------
advisors shall agree in writing to hold the Lenders' Value Model in confidence
prior to its disclosure to such advisors) who need to know such information in
order to periodically calculate the Borrowing Base (the "Permitted Purpose"),
-----------------
unless such information becomes public knowledge or is otherwise required to be
disclosed by law, (ii) the Company shall use the Lenders' Value Model solely for
the Permitted Purpose and (iii) upon termination of this Agreement, the Company
will return the full text of the formulas used in the Lenders' Value Model to
State Street. Without limiting the
foregoing, the Company covenants to and agrees with State Street that it shall
not duplicate, copy or in any manner make extracts from the Lenders' Value
Model. THE COMPANY HEREBY AGREES TO INDEMNIFY STATE STREET FOR ANY AND ALL
DAMAGES, LOSSES, COSTS OR EXPENSES INCURRED BY STATE STREET BY REASON OF ITS
BREACH OF THE PROVISIONS OF THIS SUBSECTION 1.15.
---------------
Section 2. LIBOR Provisions.
----------------------------
2.1 Certain Definitions. As used herein, the following terms have the following
------------------------
respective meanings:
Banking Day: (i) when used with respect to any LIBOR provision, a day on
-----------
which dealings may be effected in deposits of U.S. dollars in the London
interbank foreign currency deposits market and on which banks may conduct
business in London, England, New York, New York and Boston, Massachusetts, and
(ii) when used with respect to the other provisions of this Agreement, any day
excluding Saturday and Sunday and excluding any other day which shall be in Xxx
Xxxx, Xxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx, a legal holiday or a day on which banking
institutions are authorized by law to close.
Board: the Board of Governors of the Federal Reserve System of the United
-----
States.
Legal Requirement: any requirement imposed upon any Lender by any law of
-----------------
the United States of America, any state thereof, or the United Kingdom or by any
regulation, order, interpretation, ruling or official directive (whether or not
having the force of law) of the Board, the Bank of England or any other board,
central bank or governmental or administrative agency, institution or authority
of the United States of America, the United Kingdom or any political subdivision
of either thereof.
LIBOR Option: the option granted pursuant to this Section 2 to have the
------------ ---------
interest on all or any portion of the principal amount of the Loans based on the
LIBOR Rate plus four percent (4%). Each Loan hereunder shall be subject to the
LIBOR Option provided that each condition set forth in Section 2.2 hereof is
-------- -----------
either satisfied or waived by the Lenders. In the event the conditions set
forth in Section 2.2 hereof are not satisfied or waived then the Loans requested
-----------
with such Borrowing Request shall be subject to the Applicable Prime Rate.
LIBOR Period: a period of 1 month, commencing on any Banking Day; provided
------------ --------
that no LIBOR Period with respect to any LIBOR Portion of the Term Loans shall
extend beyond the Maturity Date. If any LIBOR Period so selected would
otherwise end on a date which is not a Banking Day, such LIBOR Period shall
instead end on the next preceding or succeeding Banking Day as determined by the
Agent in accordance with the then current banking practice in London. Each
determination by the Agent of any LIBOR Period shall, in the absence of manifest
error, be conclusive, and at the Company's request the Agent shall demonstrate
the basis for such determination.
LIBOR Portion: all Loans requested hereunder shall be subject to the LIBOR
-------------
Option.
LIBOR Premium: with respect to the prepayment of any LIBOR-based Loans, an
-------------
amount equal to the product of (i) the excess, if any, of the original LIBOR
Rate on the amount so prepaid over the LIBOR Rate of interest on Eurodollar
deposits having a maturity date approximating the last Banking Day of the
applicable LIBOR Period, multiplied by (ii) the principal amount so prepaid,
multiplied by (iii) a fraction, the numerator of which is the number of days
remaining in the related LIBOR Period and the denominator of which is 360.
LIBOR Rate: with respect to any LIBOR Portion for the related LIBOR Period,
----------
an interest rate per annum equal to the product of (a) the Base LIBOR Rate (as
hereinafter defined) and (b) Statutory Reserves. For purposes of this
definition, the term "Base LIBOR Rate" shall mean the rate at which deposits of
U.S. dollars approximately equal in principal amount to the LIBOR Portion and
for a maturity equal to the applicable LIBOR Period are offered to the Lenders
in the London interbank foreign currency deposits market
at approximately 11:00 a.m., London time (or, if such rate is not then offered
to the Lender, at the rate at which deposits of U.S. dollars approximately equal
in principal amount to the LIBOR Portion and for a maturity equal to the
applicable LIBOR Period are offered on the Telerate (page 3750 or any successor
page), three (3) Banking Days prior to the commencement of such LIBOR Period,
for delivery on the first day of such LIBOR Period. Each determination by the
Lenders of any LIBOR Rate shall, in the absence of manifest error, be
conclusive, and, at the Borrower's request, the Lenders shall demonstrate the
basis for such determination.
Statutory Reserves: a fraction (expressed as a decimal), the numerator of
------------------
which is the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including, without limitation, any
marginal, special, emergency or supplemental reserves), expressed as a decimal,
established by the Board and any other banking authority to which the Agent is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Board).
Such reserve percentages shall include, without limitation, those imposed under
such Regulation D. LIBOR Portions of the Loans shall be deemed to constitute
Eurocurrency Liabilities and as such shall be deemed to be subject to such
reserve requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to the Agent under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
Tax: in relation to any LIBOR-based Loans and the applicable LIBOR Rate,
---
any tax, levy, impost, duty, deduction, withholding or other charges of whatever
nature required by any Legal Requirement (i) to be paid by the Agent and/or (ii)
to be withheld or deducted from any payment otherwise required hereby to be made
by the Company to the Agent, provided that the term "Tax" shall not include any
-------- ---- ---
taxes imposed upon the net income of any Lender by the United States of America
or any political subdivision thereof.
2.2 Conditions for Basing Interest on the LIBOR Rate. Upon the condition that:
-----------------------------------------------------
(a) The Lenders and the Agent shall have received a Borrowing Request from
the Company, at least three (3) Banking Days prior to the first day of the LIBOR
Period requested indicating the requested LIBOR Portion;
(b) There shall have occurred no change in applicable law which would make
it unlawful for the Agent to obtain deposits of U.S. dollars in the London
interbank foreign currency deposits market;
(c) As of the date of the Borrowing Request and the first day of the LIBOR
Period, there shall exist no Default or Event of Default; and
(d) The Agent shall not have determined in good faith that it is unable to
determine the LIBOR Rate in respect of the requested LIBOR Period or that it is
unable to obtain deposits of U.S. dollars in the London interbank foreign
currency deposits market in the applicable amounts and for the requested LIBOR
Period; then interest on the LIBOR Portion requested during the LIBOR Period
requested will be based on the applicable LIBOR Rate. All Loans requested
hereunder shall be subject to the LIBOR Rate unless the conditions set forth in
this Section 2.2 are not satisfied or waived by the Lenders. In the event that
-----------
the conditions set forth herein or not satisfied or waived by the Lenders, the
Loans requested with such Borrowing Request shall be subject to the Applicable
Prime Rate.
2.3 Indemnification for Funding and Other Losses. Each Borrowing Request shall
------------------------------------------------
be irrevocable and binding on the Company. Without limiting the generality of
subsection 2.4, the Company hereby agrees to indemnify the Agent and each Lender
--------------
against any loss or expense incurred by the Agent or such Lender as a result of
any failure on the part of the Company to fulfill, on or before the date
specified in any Borrowing Request, the applicable conditions set forth in this
Agreement, including, without limitation, any loss (including loss of
anticipated profits) or expense incurred by reason of the liquidation of
redeployment of deposits or other funds
acquired by the Lender to fund or maintain the requested LIBOR Portion when
interest on such LIBOR Portion, as a result of such failure on the part of the
Company, is not based on the applicable LIBOR Rate for the requested LIBOR
Period.
2.4 Change in Applicable Laws, Regulations, etc. If any Legal Requirement shall
-----------------------------------------------
make it unlawful for the Agent to fund through the purchase of U.S. dollar
deposits any LIBOR Portion, or otherwise to give effect to its obligations as
contemplated hereby, or shall impose on any Lender any costs based on or
measured by the excess above a specified level of the amount of a category of
deposits or other liabilities of such Lender which includes deposits by
reference to which the LIBOR Rate is determined as provided herein or a category
of extensions of credit or other assets of such Lender which includes any LIBOR
Portion, or shall impose on any Lender any restrictions on the amount of such a
category of liabilities or assets which such Lender may hold, (i) the Agent by
notice thereof to the Company may terminate the LIBOR Option, (ii) any LIBOR
Portion subject thereto shall immediately bear interest thereafter at the rate
provided for (with respect to Loans not subject to a LIBOR Option) in subsection
----------
1.3, and (iii) the Company shall indemnify the Agent and the Lenders against any
---
loss, penalty or expense incurred by the Agent or any Lender by reason of the
liquidation or redeployment of deposits or other funds acquired by the Lender,
to fund or maintain such LIBOR Portion if and to the extent such loss, penalty
or expense is caused by the Company. A certificate of an officer of any Lender
setting forth the amount of such loss, penalty or expense, and the basis
therefor shall, in the absence of manifest error, be conclusive.
2.5 Taxes. It is the understanding of the Company and the Lenders that the
---------
Lenders shall receive payments of amounts of principal of and interest on the
Notes (including but not limited to interest with respect to the LIBOR Portions
from time to time subject to a LIBOR Option) free and clear of, and without
deduction for, any Taxes. If (i) any Lender shall be subject to any such Tax in
respect of any such LIBOR Portion or part thereof or (ii) the Company shall be
required to withhold or deduct any such Tax from any such amount, and (iii) such
Tax shall not have existed as of the date of the applicable LIBOR Request, the
LIBOR Rate applicable to such LIBOR Portion shall be adjusted by the Agent to
reflect all additional costs incurred by such Lender in connection with the
payment by such Lender or the withholding by the Company of such Tax and the
Company shall provide the Agent with a statement detailing the amount of any
such Tax actually paid by the Company. Determination by a Lender of the amount
of such costs shall, in the absence of manifest error, be conclusive, and at the
Company's request, such Lender shall demonstrate the basis of such
determination. If after any such adjustment, any part of any Tax paid by any
Lender is subsequently recovered by such Lender, such Lender shall reimburse the
Company to the extent of the amount so recovered. A certificate of an officer of
the Lender setting forth the amount of such recovery and the basis therefor
shall, in the absence of manifest error, be conclusive, and at the Company's
request, such Lender shall demonstrate the basis of such determination.
Section 2A. Use of Proceeds. The Company will use the proceeds of the Loans for
---------------------------
general corporate purposes for the Company, including, without limitation, the
initial funding of spread accounts for future securitizations. The Company will
not, and will not permit any Subsidiary to, directly or indirectly, use any part
of such proceeds (i) for the purpose of making any Restricted Payment other than
those permitted by Section 6.5 hereof, (ii) for the purpose of purchasing or
-----------
carrying any margin stock within the meaning of Regulation U (12 CFR Part 221)
of the Board of Governors of the Federal Reserve System, or (iii) for any other
purpose which would violate any provision of any other applicable statute,
regulation, order or restriction.
Section 3. Representations and Warranties.
------------------------------------------
In order to induce the Lenders to enter into this Agreement and to make the
Loans provided for hereunder, the Company makes the following representations
and warranties, which shall survive the execution and delivery hereof and of the
Notes, and which shall be deemed re-made by the Company each time the Company
submits a Borrowing Request to the Lenders.
3.1 Organization, Standing, etc. of the Company. The Company is a corporation
-----------------------------------------------
duly organized and validly
existing under the laws of the State of California, and has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and proposed to be conducted, to enter into this
Agreement, the Security Documents to which it is a party and all other documents
to be executed by it in connection with the transactions contemplated hereby, to
grant the Agent for the benefit of the Lenders a security interest in the
Collateral, to issue the Notes and to carry out the terms hereof and thereof.
3.2 Subsidiaries. Schedule 3.2 attached hereto correctly sets forth as to each
---------------- ------------
Subsidiary, its name, the jurisdiction of its incorporation, the number of
shares of its capital stock of each class outstanding and the number of such
outstanding shares owned by the Company and its Subsidiaries. Each such
Subsidiary is a corporation duly organized, validly existing and, if applicable,
in good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own and operate its properties,
to carry on its business as now conducted and now proposed to be conducted and
to enter into such of the Security Documents and Eligible Securitization
Transaction Documents as relate to it and all other documents, if any, to be
executed by it in connection with the transactions contemplated hereby. All of
the outstanding capital stock of each Subsidiary is validly issued, fully-paid
and nonassessable, and is owned by the Company or its Subsidiaries as specified
in Schedule 3.2, in each case free of any mortgage, pledge, lien, security
------------
interest, charge, option or other encumbrance.
3.3 Qualification. The Company and its Subsidiaries are duly qualified or
-----------------
licensed and in good standing as foreign corporations duly authorized to do
business in each jurisdiction in which the character of the properties owned or
the nature of the activities conducted makes such qualification or licensing
necessary.
3.4 Financial Information; Disclosure, etc. (a) The Company has furnished the
------------------------------------------
Lenders with the financial statements and other reports listed in Schedule 3.4
------------
hereto. Such financial statements have been prepared in accordance with GAAP
applied on a consistent basis and fairly present the financial position and
results of operations of the Company and the other Persons, if any, to which
they relate as of the dates and for the periods indicated. Since December 31,
1997, there has not been any material adverse change in the business,
operations, properties or financial position of the Company (or, of the other
Persons to which such financial statements purport to relate).
(b) Neither this Agreement nor any financial statements, reports or other
documents or certificates furnished to the Lenders by the Company in connection
with the transactions contemplated hereby contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements herein or therein contained not misleading, except to the extent that
such financial statements, reports or other documents or certificates expressly
relate to an earlier date or are affected by the consummation of the
transactions contemplated by this Agreement.
(c) None of the Loans will render the Company unable to pay its debts as
they become due; the Company is not contemplating either the filing of a
petition by it under any state or federal Bankruptcy or insolvency laws or the
liquidation of all or a major portion of its property; and the Company does not
have any knowledge of any person contemplating the filing of any such petition
against it. The Company (both before and after the making of the Loans, the
granting of security interests in favor of the Agent and the Lenders and the
consummation of the Related Events) is solvent (within the meaning of all
applicable fraudulent transfer or fraudulent conveyance statutes and acts, the
federal Bankruptcy code and all other applicable laws) on a going concern basis
and has assets having a fair value in excess of the amount required to pay its
probable liabilities on its existing debts (including the Loans and contingent
debts) as they become absolute and matured, and has, and will have, access to
adequate capital for the conduct of its business and the ability to pay its
debts from time to time incurred therewith as such debts mature.
(d) The Company has furnished to the Lenders the pro forma balance sheet
--- -----
(the "Closing Balance Sheet") of the Company projected as of the Closing Date
---------------------
and adjusted to give effect to the Related Events and the use of the proceeds of
the initial Loans. Such Closing Balance Sheet presents fully and fairly the pro
---
forma financial position of the Company as of the Closing Date, and properly
-----
gives effect to the application of the pro
---
forma adjustments described therein and contemplated herein. The Company does
-----
not have as of the Closing Date any material obligations, secured or unsecured
(whether accrued, contingent, or otherwise), which are not reflected in the
Closing Balance Sheet. The Company has also furnished to the Lenders the cash
flow projections of (i) the Company and (ii) the Company and its Subsidiaries
for the three (3) year period beginning on January 1, 1998 (taking into account
the Related Events and the use of the proceeds of the initial Loans) which are
attached to this Agreement as part of Schedule 3.4 (the "Projections"). The
------------ -----------
Projections were prepared based upon the best information and knowledge of the
Company (which information the Company believes was accurate and sufficient to
prepare the Projections and to rely thereon). To the extent the Projections are
based on assumptions, such assumptions are reasonable. Without limiting the
foregoing, the Projections demonstrate the ability of the Company to continue
its business as currently operated and proposed to be operated, and to meet all
of its obligations and liabilities on a current basis, taking into account (i)
all assumptions made, (ii) all known prospective business contingencies and off
balance sheet items, and (iii) the effect of this Agreement and the consummation
of the Related Events.
3.5 Licenses; Franchises, etc. Schedule 3.5 attached hereto accurately and
-----------------------------
completely lists all material authorizations, licenses, permits and franchises
of any public or governmental regulatory body granted or assigned to the Company
or any Subsidiary and the same constitute the only material authorizations,
licenses, permits and franchises of any public or governmental regulatory body
which are necessary for the conduct of the business of the Company and its
Subsidiaries as now conducted and proposed to be conducted (such material
authorizations, licenses, permits and franchises, together with any extensions
or renewals thereof, being herein sometimes referred to collectively as the
"Licenses"). All of such Licenses are validly issued and in full force and
--------
effect and the Company and its Subsidiaries have fulfilled and performed all of
their obligations with respect thereto and have full power and authority to
operate thereunder, except where the failure to obtain, maintain in effect or so
comply could not have a Material Adverse Effect.
3.6 Material Agreements. Schedule 3.6 attached hereto accurately and completely
----------------------- ------------
lists all material agreements including servicing agreements, sub-servicing
agreements, leases, pooling and servicing agreements, agreements with credit
enhancers, other agreements executed in connection with securitizations,
underwriting agreements, dealer affiliation agreements, employment agreements or
other agreements with management of the Company or any Subsidiary and all other
material agreements which, as of the Closing Date, will be in effect in
connection with the conduct of the business of the Company and its Subsidiaries.
Each of the Company and its Subsidiaries (as applicable) and, to the best of the
Company's knowledge, all third parties to such material agreements, are in
substantial compliance with the terms thereof, and no default or event of
default by the Company or, to the Company's knowledge, any other party thereto,
exists thereunder.
3.7 Tax Returns and Payments. The Company and its Subsidiaries have filed all
----------------------------
tax returns required by law to be filed and have paid all taxes, assessments and
other governmental charges levied upon any of their respective properties,
assets, income or franchises, other than those not yet delinquent and those, not
substantial in aggregate amount, being or about to be contested as provided in
subsection 5.4. The charges, accruals and reserves on the books of the Company
--------------
and its Subsidiaries in respect of their respective taxes are adequate in the
opinion of the Company, and the Company knows of no unpaid assessment for
additional taxes or of any basis therefor.
3.8 Indebtedness, Liens and Investments, etc. Schedule 3.8 attached hereto
-------------------------------------------- ------------
correctly describes, as of the date or dates indicated therein, (i) all
outstanding Indebtedness of the Company and its Subsidiaries in respect of
borrowed money, Capital Leases and the deferred purchase price of property; (ii)
all existing mortgages, liens and security interests in respect of any property
or assets of the Company or its Subsidiaries; (iii) all outstanding investments
(other than investments made under any pooling and servicing agreement or
insurance agreement with respect to any securitization transaction), loans
(other than Automobile Contracts) and advances of the Company and its
Subsidiaries; and (iv) all existing guarantees by the Company and its
Subsidiaries.
3.9 Title to Properties; Liens. The Company and its Subsidiaries have good and
------------------------------
marketable title to all of their
respective properties and assets, and none of such properties or assets is
subject to any mortgage, pledge, lien, security interest, charge or encumbrance
except the existing mortgages and security interests referred to in Schedule 3.8
------------
attached hereto and except minor liens and encumbrances which in the aggregate
are not substantial in amount, do not in any case materially detract from the
value of the property subject thereto or materially impair the operations of the
Company and its Subsidiaries and have not arisen otherwise than in the ordinary
course of business. The Company and its Subsidiaries enjoy quiet possession
under all leases to which they are parties as lessees, and all of such leases
are valid, subsisting and in full force and effect or will become effective on
the Closing Date. None of such leases contains any provision restricting the
incurrence of indebtedness by the lessee or any unusual or burdensome provision
materially adversely affecting the current and proposed operations of the
Company and its Subsidiaries.
3.10 Litigation, etc. There is no action, proceeding or investigation pending
--------------------
or threatened (or any basis therefor known to the Company) which questions the
validity of this Agreement, the Notes, the Security Documents or the other
documents executed in connection herewith or any of the Related Events, or any
action taken or to be taken pursuant hereto or thereto, or which might
reasonably be expected to result, either in any case or in the aggregate, in any
material adverse change in the business operations, affairs or condition of the
Company or any Subsidiary or any of their respective properties or in any
material liability on the part of the Company or any Subsidiary.
3.11 Authorization; Compliance with Other Instruments. The execution, delivery
-----------------------------------------------------
and performance of this Agreement, the Notes and the Security Documents, and all
documents and agreements executed by the Company in connection with the Related
Events have been duly authorized by all necessary corporate action on the part
of the Company and its Subsidiaries, will not result in any violation of or be
in conflict with or constitute a default under any term of the charter or by-
laws of the Company or any Subsidiary, or of any agreement (including but not
limited to any agreement executed in connection with any Eligible Securitization
Transaction), instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to the Company or any Subsidiary, or result in the
creation of any mortgage, lien, charge or encumbrance upon any of the properties
or assets of the Company or any Subsidiary pursuant to any such term (except
pursuant to the Security Documents). This Agreement, the Notes, the Security
Documents and each of the other Loan Documents are valid, binding and
enforceable obligations of the Company. No consent of stockholders of the
Company is necessary in order to authorize the execution, delivery or
performance of this Agreement, the Security Documents, the issuance of the Notes
or any other agreement executed in connection with any of the Related Events.
Neither the Company nor any Subsidiary is in violation of any term of its
charter or by-laws, or of any material term of any agreement (including but not
limited to any agreement executed in connection with any Eligible Securitization
Transaction) or instrument to which it is a party, or, to the best of the
Company's knowledge, of any judgment, decree, order, statute, rule or
governmental regulation applicable to it which might reasonably be expected to
have a Material Adverse Effect.
3.12 Credit Trigger Events and Insurance Events of Default. Without limiting
----------------------------------------------------------
the scope of subsection 3.11, no Credit Trigger has occurred under any agreement
---------------
executed in connection with any Eligible Securitization Transaction nor has any
Insurance Event of Default occurred.
3.13 Governmental and Other Third Party Consents. Except for such filings and
------------------------------------------------
notices as have already been made or are being made prior to the Closing Date
pursuant to the Security Documents, none of the Company, any Subsidiary, any
shareholder of the Company or any other Subsidiary or Affiliate which is a party
to any of the Security Documents is required to obtain any order, consent,
approval or authorization of (collectively, the "Consents"), or required to make
--------
any declaration or filing (other than the filing of a Form 8-k) with, (i) any
governmental unit or other regulatory authority (including but not limited to
the SEC) or (ii) any trustee, credit enhancer, rating agency or other party to
any Eligible Securitization Transaction, in connection with the execution and
delivery of this Agreement and the issuance and delivery of the Notes pursuant
hereto, or in connection with the execution and delivery of the Security
Documents and the granting of the security interests in the Collateral pursuant
thereto, or for the purpose of maintaining in full force and effect each of the
Licenses. Schedule 3.13 attached hereto accurately describes all of the Consents
-------------
which have been or prior to
the Closing Date will be obtained and in full force and effect. The time within
which any administrative or judicial appeal, reconsideration, rehearing or other
review of any Consent may be taken or instituted has lapsed, and no such appeal,
reconsideration or rehearing or other review has been taken or instituted.
3.14 Regulation U, etc. Except as set forth on Schedule 3.14, neither the
---------------------- -------------
Company nor any Subsidiary owns or has any present intention of acquiring any
"margin stock" within the meaning of Regulation U (12 CFR Part 221) of the Board
------------
of Governors of the Federal Reserve System (herein called "margin stock"). None
------------
of the proceeds of the Loans will be used, directly or indirectly, by the
Company or any Subsidiary for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry, any margin stock or for any other purpose which might
constitute the transactions contemplated hereby a "purpose credit" within the
--------------
meaning of said Regulation U, or cause this Agreement to violate Regulation U,
Regulation T, Regulation X, or any other regulation of the Board of Governors of
the Federal Reserve System or the Securities Exchange Act of 1934. If requested
by any Lenders, the Company will promptly furnish such Lenders with a statement
in conformity with the requirements of Federal Reserve Form U-1 referred to in
said Regulation U.
3.15 Employee Retirement Income Security Act of 1974. Schedule 3.15 attached
---------------------------------------------------- -------------
hereto sets forth a true and complete list of all employee benefit plans and
arrangements of the Company and its Subsidiaries, including, without limitation,
all pension, profit sharing or similar plans providing for a program of deferred
compensation to any employee or any plan subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The terms
-----
used in this subsection 3.15 and in subsection 5.1 and subsection 6.10 of this
--------------- -------------- ---------------
Agreement shall have the meanings assigned thereto in the applicable provisions
of ERISA and the Internal Revenue Code of 1986, as amended (the "Code"), and the
----
term "Affiliated Company" shall mean the Company and all corporations,
------------------
partnerships, trades or businesses (whether or not incorporated) which
constitute a controlled group of corporations with the Company, a group of
affiliated service group or other affiliated group, within the meaning of
Section 414(b), Section 414(c), Section 414(m) or Section 414(o), respectively,
of the Code, or Section 4001 of ERISA. The Company and each employee benefit
plan sponsored by an Affiliated Company and, to the best of the Company's
knowledge, each multiemployer plan (as defined in Section 4001(a)(3) of ERISA)
to which any Affiliated Company makes contributions, are in material compliance
with applicable provisions of ERISA and the Code. No Affiliated Company has
incurred any material liability to the Pension Benefit Guaranty Corporation
("PBGC") or any employee benefit plan on account of any failure to meet the
----
contribution requirements of any such plan, minimum funding requirements or
prohibited transactions under ERISA or the Code, termination of a single
employer plan, partial or complete withdrawal from a multiemployer plan, or the
insolvency, reorganization or termination of any multiemployer plan, and no
event has occurred or conditions exist which present a material risk that any
Affiliated Company will incur any material liability on account of any of the
foregoing circumstances. The consummation of the transactions contemplated by
this Agreement will not result in any prohibited transaction under ERISA or the
Code for which an exemption is not available.
3.16 Ownership of Company; Outstanding Options or Warrants. Schedule 3.16
---------------------------------------------------------- -------------
attached hereto correctly sets forth, as of the Closing Date, the number of
shares of the Company's capital stock of each class authorized and the number
thereof outstanding. All of said outstanding shares are validly issued, fully
paid and nonassessable. There are no outstanding rights, options, warrants or
agreements for the purchase from, or sale or issuance by, the Company or any
Subsidiary of any of its capital stock or any securities convertible into or
exchangeable for such stock and neither the Company nor any Subsidiary is
obligated in any manner to issue any additional shares of capital stock, except
as may be set forth on Schedule 3.16 hereto. All of the Company's and each
-------------
Subsidiary's capital stock was issued in compliance with all applicable
securities laws.
3.17 Environmental Matters. Neither the Company nor any Subsidiary has ever
--------------------------
caused or permitted any Hazardous Material to be disposed of on or under any
real property owned, leased or operated by the Company and/or any Subsidiary and
no such real property has ever been used (by the Company and/or any Subsidiary
or, to the Company's knowledge, by any other Person) as (i) a disposal site or
permanent storage site for any Hazardous Material or (ii) a temporary storage
site for any Hazardous Material. The Company has been issued
and is in compliance with all material permits, licenses, approvals and other
authorizations relating to environmental matters and necessary or desirable for
its business, and has filed all notifications and reports relating to chemical
substances, air emissions, underground storage tanks, effluent discharges and
Hazardous Material waste storage, treatment and disposal required in connection
with the operation of its businesses, the failure to have or comply with which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect. All Hazardous Materials used or generated by the
Company or any Subsidiary or any business merged into or otherwise acquired by
the Company or any Subsidiary have been generated, accumulated, stored,
transported, treated, recycled and disposed of in compliance with all applicable
laws and regulations, the violation of which has any reasonable likelihood of
having a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has any liabilities with respect to Hazardous Materials, and to the
knowledge of the Company, no facts or circumstances exist which could give rise
to liabilities with respect to the violation (whether by the Company or any
other Person) of any Environmental Law and/or Hazardous Materials, which could
have any Material Adverse Effect.
3.18 Patents, Trademarks, Intellectual Property. As of the Closing Date,
-----------------------------------------------
Schedule 3.18 attached hereto is a true, correct and complete list of all
-------------
material Proprietary Rights of the Company. The Company owns or otherwise has
rights to all such Proprietary Rights as indicated in such Schedule 3.18 and
-------------
such Proprietary Rights are adequate for the conduct of its business as now
conducted and now proposed to be conducted, without any known conflict with the
rights or claimed rights of others.
3.19 Chief Executive Offices Principal Place of Business; Real Property Owned or
--------------------------------------------------------------------------------
Leased. The chief executive office and principal place of business of the
------
Company is, and at all times prior to the date hereof has been, located at 2
Xxx, Xxxxxx, XX 00000. The Company shall not make any change in the locations of
its chief executive office or any of the Collateral without giving the Agent at
least thirty (30) days prior written notice thereof. Schedule 3.19 attached
-------------
hereto lists all real property owned or leased by the Company or any Subsidiary.
3.20 Names. The exact legal name of the Company is Consumer Portfolio Services,
----------
Inc. During the last five years ending on the date hereof, the Company has not
conducted any business under any other name (including any trade or assumed
name).
3.21 Securities Laws. The Company is not a "holding company" or a "subsidiary
-------------------- --------------- ----------
company" of a "holding company", or an "affiliate" of a "holding company" or of
------- --------------- --------- ---------------
a "subsidiary company" of a "holding company", as such terms are defined in the
------------------ ---------------
Public Utility Holding Company Act of 1935. The Company is not an "investment
----------
company" or a company "controlled" by an "investment company" within the meaning
------- ---------- ------------------
of the Investment Company Act of 1940.
3.22 Security Documents. The representations and warranties of the Company
-----------------------
contained in the Security Documents to which it is a party are true and correct
in all material respects, and the Company is in compliance in all material
respects with the terms of the Security Documents.
3.23 Depository and Other Accounts. Schedule 3.23 attached hereto lists all
---------------------------------- -------------
Lenders and other financial institutions and depositories at which the Company
maintains (or has caused to be maintained) or will maintain deposit accounts,
spread accounts, yield supplement reserve accounts, operating accounts, trust
accounts, trust receivable accounts or other accounts of any kind or nature into
which funds of the Company (including funds in which the Company maintains a
contingent or residual interest) are from time to time deposited, and such
Schedule 3.23 correctly identifies the name and address of each depository, the
-------------
name in which each account is held, the purpose of the account and the complete
account number. The Company will from time to time notify the Lenders and
supplement such Schedule 3.23 as new accounts are established. The Company
-------------
hereby authorizes the Agent to attach such supplements to Schedule 3.23 from
time to time delivered by the Company to Schedule 3.23 attached hereto.
-------------
3.24 Tax Status of Eligible Securitization Transactions. None of the trusts
-------------------------------------------------------
created in connection with the Eligible Securitization Transactions are
classified as an association taxable as a corporation for federal income
taxes or is otherwise taxed as a separate entity for federal income tax
purposes.
3.25 Burdensome Obligations; Future Expenditures. Neither the Company nor any of
------------------------------------------------
its Subsidiaries is party to or bound by any agreement (including but not
limited to the Material Agreements listed on Schedule 3.6 attached hereto),
------------
instrument, deed or lease or is subject to any charter, by-law or other
restriction, commitment or requirement which, in the opinion of the management
of such Person, is so unusual or burdensome as in the foreseeable future to have
or cause or create a material risk of having or causing a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries anticipate that the
future expenditures, if any, by the Company and its Subsidiaries needed to meet
the provisions of any federal, state or foreign governmental statutes, orders,
rules or regulations will be so burdensome as to have or cause, or create a
material risk of having or causing, a Material Adverse Change.
3.26 Insurance Policies. As of the Closing Date, Schedule 3.26 lists all
----------------------- -------------
insurance policies of any kind or nature maintained by or on behalf of the
Company, as well as a summary of the principal terms of such insurance. All such
insurance policies, together with any insurance policies obtained by the Company
after the Closing Date, are in full force and effect and provide coverage of
such risks and in such amounts as is customarily maintained for businesses of
the scope and size of the Company.
3.27 Employment and Labor Agreements. As of the Closing Date, Schedule 3.27
------------------------------------ -------------
accurately and completely describes each employment agreement, agreement for the
payment of deferred compensation, severance or so-called change in control
agreement covering officers, managers or other Affiliates of the Company, as
well as all collective bargaining agreements or other labor agreements covering
any employees of the Company. A true and correct copy of each such agreement has
been furnished to the Agent.
3.28 FSA Indebtedness and Liabilities. As of the Closing Date, none of the
-------------------------------------
Company, CPSRC or any trust maintained in connection with any Eligible
Securitization Transaction existing as of the Closing Date has any Indebtedness
or obligation or liability for the payment of money of any kind or nature
(whether matured or unmatured or contingent or non-contingent) to FSA or any
Affiliate of FSA pursuant to any agreement to which FSA is a party other than
Indebtedness, obligations and liabilities (whether matured or unmatured or
contingent or non-contingent) in connection with securitization transactions
(including, without limitation, Eligible Securitization Transactions) of the
type which the Company believes are customary in securitization transactions
insured by FSA, the assets of which consist of sub-prime automobile finance
receivables. During the term of this Agreement, neither the Company nor CPSRC
will have at any time any Indebtedness or obligation or liability for the
payment of money of any kind or nature (whether matured or unmatured or
contingent or non-contingent) to FSA or any Affiliate of FSA pursuant to any
agreement to which FSA is a party other than Indebtedness, obligations and
liabilities (whether matured or unmatured or contingent or non-contingent) in
connection with securitization transactions (including, without limitation,
Eligible Securitization Transactions) of the type which the Company believes are
customary in securitization transactions insured by FSA, the assets of which
consist of sub-prime automobile finance receivables.
3.29 Charges to Net Interest Receivable . Neither the Company nor any of its
---------------------------------------
Subsidiaries has taken or is required by the terms of SFAS 125 to take any
charge to any portion of Net Interest Receivable.
3.30 Year 2000. The Company shall conduct a review of its business systems,
--------------
including its computer systems, and query its vendors and third party payors as
to their progress in identifying and addressing problems that their computer
systems may face in correctly interrelating and processing data as the year 2000
approaches and is reached.
A. Section 4. Conditions Precedent to Closing Date and all Subsequent Loans;
-------------------------------------------------------------------------
Conditions to Lending.
---------------------
The obligation of each Lender to make any Loan hereunder is subject to the
following conditions:
4.1 Fees and Expenses of Lenders. The Company shall have paid in full all costs
--------------------------------
and expenses (including
reasonable attorneys' fees) incurred by or on behalf of the Agent in connection
with this Agreement through the Closing Date.
4.2 Forms of Legal Opinions; Execution of Loan Documents; No Material Adverse
-------------------------------------------------------------------------
Effect.
------
(a) The Company's counsel shall have delivered the form of legal opinion
to be attached hereto as Exhibit C.
---------
(b) This Agreement, the Security Agreement, the Notes, the Intercreditor
Agreements, the Eligible Securitization Transaction Documents, and such other
Security Documents, instruments, schedules or certificates as shall be
designated by the Agent shall have been executed by the Company and the other
parties thereto and delivered to the Agent.
(c) Since December 31, 1997 there shall have occurred no Event or
Condition which could have a Material Adverse Effect.
(d) The Agent shall have received such other documents as it may
reasonably have requested at any time at or prior to the Closing Date.
4.3 Opinions and Certificates. On and as of the Closing Date the Lenders shall
-------------------------
have received:
(a) (i) Satisfactory evidence of the filing of such financing
statements as the Agent shall deem necessary or advisable, (ii) physical
possession of all Pledged Collateral (as such term is defined in the Pledge and
Security Agreement), and (iii) the favorable opinion of counsel for the Company,
dated as of the Closing Date and in such form(s) as the Lenders and their
counsel may reasonably request.
(b) Copies of each legal opinion delivered on behalf of the Company and
its Subsidiaries in connection with the Eligible Securitization Transactions in
form and substance satisfactory to the Lenders and their counsel. Without
limiting the foregoing, the Agent and the Lenders shall have received legal
opinions (or bring downs of previously delivered legal opinions, with
appropriate reliance letters) concerning the tax status, non-consolidation and
true sale aspects of each of the Eligible Securitization Transactions.
(c) A certificate, dated as of such date, signed by a principal officer
of the Company, certifying that the conditions precedent specified in this
Section 4 have been fulfilled.
---------
(d) All other information and documents which the Lenders or their
counsel may reasonably have requested in connection with the transactions
contemplated by this Agreement and the Related Events, such information and
documents where appropriate to be certified by the proper Company officers or
governmental authorities.
(e) A completed Borrowing Base Report, showing minimum availability
(after giving effect to the Related Events) under the Borrowing Base of an
amount equal to or greater than the Revolving Credit Loans requested on the
Closing Date.
(f) The Closing Balance Sheet, Solvency Certificates from the Company,
ARC, CPSRC, WareCo and FundCo and the Projections.
(g) An officer's certificate, dated as of such date, as to the absence of
(i) any Default, (ii) any Event of Default, (iii) any Credit Trigger and (iv)
any event or condition which could have a Material Adverse Effect.
(h) On the Closing Date only, a Compliance Certificate, which shall
thereafter be delivered in accordance with subsection 5.1(b).
(i) A certificate from the President of the Company indicating that the
Company has made the Irrevocable Payment Directives.
(j) A fully executed FSA Intercreditor Agreement.
4.4 No Default; Representations and Warranties, etc. On the Closing Date and
-----------------------------------------------
on the date of each Loan hereunder and on the Conversion Date: (i) the
representations and warranties of the Company contained in Section 3 of this
---------
Agreement shall be true on and as of such dates as if they had been made on such
dates (except to the extent that such representations and warranties expressly
relate to an earlier date or are affected by the consummation of transactions
permitted under this Agreement); (ii) the Company shall be in compliance in all
material respects with all of the terms and provisions set forth herein on its
part to be observed or performed on or prior to such dates; (iii) after giving
effect to the Loans to be made on such dates, no Default or Event of Default,
shall have occurred and be continuing; (iv) since the date of this Agreement,
there shall have been no material adverse change in the assets or liabilities or
in the financial or other condition of the Company or any Subsidiary; and (v)
the Company shall not have knowledge of a decrease in the Available Line
Commitment since the date of the most recently submitted Borrowing Base Report.
Each request for a Loan hereunder shall constitute a representation and warranty
by the Company to the Lenders that all of the conditions specified in this
subsection 4.3 have been satisfied in all material respects as of the date of
--------------
each such Loan.
4.5 Security Documents. On or prior to the Closing Date, the Agent and each of
-----------------------
the Lenders shall have received (i) counterpart originals of the Loan Agreement,
Security Documents and such other Loan Documents as may be designated by any
Lender, together with any other documents required or contemplated by the terms
thereof, (ii) evidence that the various security interests and liens provided
for in the Security Documents have been duly perfected and recorded and that the
Agent on behalf of the Lenders has a first priority security interest in the
Collateral and (iii) executed copies of the Eligible Securitization Transaction
Documents referred to in subsection 5.7.
--------------
4.6 Insurance. The Company shall have provided to the Lenders evidence of
--------------
insurance coverage in compliance with '5.3.
---
4.7 Related Events. Prior to the first Revolving Credit Loan hereunder, the
-------------------
Related Events shall have been consummated in a manner satisfactory to the
Lenders and their counsel.
4.8 Proceedings and Documents. All corporate and other proceedings in
------------------------------
connection with the transactions contemplated hereby (including but not limited
to the Related Events) and all documents and instruments incident hereto
(including but not limited to the Accountants' letter provided for in subsection
----------
5.8 and any other agreement or instruments to be delivered pursuant to the terms
---
of this Agreement) and thereto shall be satisfactory in form and substance to
the Lenders and their counsel.
4.9 Final Forms of Eligible Securitization Transaction Documents . The Lenders
-----------------------------------------------------------------
shall have received, reviewed and confirmed that the forms of Eligible
Securitization Transaction Documents to be executed by all parties thereto are
acceptable in form and substance to the Lenders.
4.10 Establishment of Cash Collateral Account. The Company shall have
---------------------------------------------
established and funded the Cash Collateral Account in accordance with the terms
of Section 5.11.
------------
B. Section 4. Special Provisions Concerning Subsequent Eligible Securitization
---------------------------------------------------------------------------
Transactions.
------------
4.12 Subsequent Securitization Transactions. The Company has requested that the
-------------------------------------------
Lenders consider including all future securitization transactions (collectively
the "Subsequent Securitization Transactions") within the
--------------------------------------
definition of Eligible Securitization Transactions, thereby enabling the Company
to include the Residual Interest in Securitizations attributable to such
Subsequent Securitization Transaction within the Borrowing Base. The Lenders
hereby agree with the Company to review the Required Information submitted by
the Company in connection with all Subsequent Securitization Transactions
proposed by the Company for inclusion within the Borrowing Base. The Company
shall pay all reasonable attorney's fees incurred by the Lenders in connection
with such review. Such Subsequent Securitization Transactions will become
Eligible Securitization Transactions (and, accordingly, be included within the
Borrowing Base) if all Lenders, in their sole discretion, are satisfied with the
size, asset type and quality, business and legal terms and structure,
documentation and legal opinions relating to and issued in connection with such
Subsequent Securitization Transaction. Upon written notification from the
Lenders (such notice to be issued within ten (10) Banking Days of confirmed
receipt of all Required Information) to the Company that the Lenders are willing
to include a Subsequent Securitization Transaction within the definition of
Eligible Securitization Transactions for purposes of this Agreement (and the
Borrowing Base), the Company will execute or cause to be executed all such
documentation (including but not limited to amendments to this Agreement, the
Security Agreement and such other Security Documents as may be required by the
Lenders and any and all amendments to any agreements executed or to be executed
in connection with such Subsequent Securitization Transactions) as may be
designated by the Lenders. The Lenders shall have no obligation to include any
Subsequent Securitization Transaction in the Borrowing Base until all such
documentation shall have been fully executed and, if necessary, recorded or
filed. The Company will pay all costs and expenses (including reasonable
attorney's fees) incurred by the Lenders in connection with the inclusion of
Subsequent Securitization Transactions within the Borrowing Base. The Company
shall be deemed to have complied with this subsection 4.12 with respect to any
---------------
Subsequent Securitization Transaction which becomes a Rejected Transaction.
Section 5. Affirmative Covenants.
--------------------------------
So long as any of the Loans shall remain available to the Company, and
until the principal of and interest on the Notes and all fees due hereunder and
all of the Company's obligations to the Lenders shall have been paid in full,
the Company agrees that:
5.1 Financial Statements, etc. The Company will furnish or cause to be
-----------------------------
furnished to each Lender:
(a) Within 90 days after the end of each fiscal year of the Company, (i)
the audited consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such year, and (ii) the related audited
consolidated and consolidating statements of income and surplus and cash flows
for such year, setting forth in comparative form with respect to such
consolidated financial statements figures for the previous fiscal year, all in
reasonable detail, together with the opinion thereon of independent public
accountants selected by the Company and satisfactory to the Lenders, which
opinion shall be in a form generally recognized as unqualified and shall state
that such financial statements have been prepared in accordance with GAAP
applied on a basis consistent with that of the preceding fiscal year (except for
changes, if any, which shall be specified and approved in such opinion) and that
the audit by such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards related to
reporting, provided that such accountants' certification may be limited to the
--------
consolidated financial statements in which case the consolidating financial
statements shall be signed by the Chief Financial Officer of the Company;
(b) (w) within 45 days after the end of each of the first three quarterly
accounting periods in each fiscal year of the Company, (i) the unaudited
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such period, and (ii) the related unaudited consolidated and consolidating
statements of income and surplus and cash flows for such period and for the
period from the beginning of the current fiscal year to the end of such period,
all in reasonable detail and signed by a principal officer of the Company; (x)
no later than the ninth business day of every month, a compliance certificate
substantially in the form of Exhibit D attached hereto (the "Compliance
--------- ----------
Certificate") signed by a principal officer of the Company and certifying that
-----------
no event or condition which constitutes a Default or Event of Default or Credit
Trigger exists, and demonstrating the calculations used to determine compliance
with the financial covenants listed in such Compliance Certificate; (y) no later
than the seventh (7th) business day of every month, a Pool Summary report
substantially in the form attached hereto as Exhibit F (the "Pool Summary
--------- ------------
Report") and (z) within 30 days after the end of each month, a copy of the
------
Company's monthly financial statement package for the immediately preceding
month, such monthly financial statement package to contain statistical
information on the financial performance of all securitization transactions
including, but not limited to, the Eligible Securitization Transactions, and to
be substantially in the form currently produced by the Company, with such
changes as are reasonably satisfactory to the Lenders;
(c) Together with the financial statements delivered pursuant to
subparagraph (a) above, a statement signed by the accountants who have reported
on the same to the effect that in connection with their examination of such
financial statements they have reviewed the provisions of this Agreement and
have no knowledge of any event or condition which constitutes a Default or Event
of Default or, if they have such knowledge, specifying the nature and period of
existence thereof, provided, however, that in issuing such statement, such
--------
independent accountants shall not be required to go beyond normal auditing
procedures conducted in connection with their opinion referred to above;
(d) Promptly upon it becoming available, a copy of the Company's annual
USAP Audit;
(e) Promptly upon their becoming available, copies of all 10-Ks and 10-Qs
and other periodic or special reports filed by the Company or any Subsidiary, or
by any party in connection with any Eligible Securitization Transaction, with
the SEC, or any such periodic or special reports filed with any other federal,
state or local governmental agency or authority, if such other reports indicate
any material change in the business, operations, affairs or conditions of the
Company or any Subsidiary or if copies thereof are requested by any Lender, and
copies of any material notices and other material communications from the SEC or
from any other federal, state or local governmental agency or authority which
specifically relate to the Company or any Subsidiary;
(f) Forthwith upon any officer of the Company obtaining knowledge of any
condition or event which constitutes a Default or Event of Default or Credit
Trigger or which, after notice or lapse of time or both, would constitute a
Credit Trigger, a certificate signed by such officer specifying in reasonable
detail the nature and period of existence thereof and what action the Company
has taken or proposes to take with respect thereto;
(g) Promptly upon receipt thereof, copies of all audit reports and
management letters, if any, submitted to the Company by independent public
accountants in connection with each interim or special audit of the books of the
Company made by such accountants and, upon request by any Lender, copies of all
financial statements, reports, notices and proxy statements, if any, sent by the
Company to its shareholders;
(h) Immediately, notice of: (i) the institution or commencement of any
action, suit, proceeding or investigation by or against or affecting the Company
or any of its assets which, if determined adversely to the Company, could have a
Material Adverse Effect; (ii) any litigation or proceeding instituted by or
against the Company, or any judgment, award, decree, order or determination
relating to any litigation or proceeding involving the Company which could have
a Material Adverse Effect; (iii) the imposition or creation of any lien against
any asset of the Company except those in favor of the Agent for the benefit of
the Lenders and those permitted by this Agreement; (iv) any reportable event
under ERISA, together with a statement of the Company's chief executive officer,
chief financial officer and/or controller as to the details thereof and a copy
of its notice thereof to the PBGC; (v) any known release or threat of release of
Hazardous Materials on or onto any site owned or operated by the Company or the
incurrence of any expense or loss in connection therewith or upon the Company's
obtaining knowledge of any investigation, action or the incurrence of any
expense or loss by any governmental authority in connection with the containment
or removal of any Hazardous Materials for which expense or loss the Company may
be liable or potentially responsible;
(i) Within 10 days after the end of each month (or the next succeeding
Banking Day if the tenth day of any month is not a Banking Day), the servicer
report for each Eligible Securitization Transaction, together with the Borrowing
Base Report described in subsection 1.2(d) above; and
-----------------
(j) Immediately upon receipt or issuance by the Company, CPSRC, copies of
all reports, covenant compliance certificates, budgets, projections, requests
for waivers, notices of default, requests for amendments or other material
correspondence issued in connection with or relating to the Subordinated
Agreements, and, to the extent not inconsistent with any confidentiality
provisions, any agreement to which FSA or any Affiliate of FSA is a party and
any other agreement to which the Company or CPSRC is now or hereafter a party
relating to Indebtedness for borrowed money.
In addition to the financial information described above, the Company will
also furnish or cause to be furnished or made available to each Lender, (i) the
Borrowing Base Report at the times required under subsection 1.2(e), (ii) upon
-----------------
request of the Agent, the electronic records and computer tapes maintained by
the Company summarizing the characteristics and distribution of the Automobile
Contracts comprising the and (iii) such other information regarding the
business, affairs and condition of the Company and its Subsidiaries, the
Collateral, cash payments made by the Company or its Subsidiaries in respect of
taxes and the scheduled amortization of the Residual Interest in
Securitizations, as such Lender may from time to time reasonably request. The
Company will permit each Lender to inspect and audit the books and records and
any of the properties or assets of the Company and its Subsidiaries, not more
than once per year prior to the occurrence of a Default or Event of Default or
Credit Trigger, at the Lenders' expense, and after any such occurrence, at such
times as any Lender may from time to time request, each such inspection to be at
the Company's expense.
5.2 Legal Existence; Franchises; Compliance with Laws. The Company will, and
-----------------------------------------------------
will cause each Subsidiary to: maintain its corporate existence and business;
maintain all properties which are reasonably necessary for the conduct of such
business, now or hereafter owned, in good repair, working order and condition;
take all actions necessary to maintain and keep in full force and effect its
rights and franchises, including the Licenses; and, except as otherwise provided
herein, comply with all applicable statutes, rules, regulations and orders of,
and all applicable restrictions imposed by, all governmental authorities in
respect of the conduct of its business and the ownership of its properties in
States in which the Company desires to continue business operations; provided
--------
that (i) nothing in this subsection 5.2 shall be interpreted to restrict or in
--------------
any manner affect the Company's or any Subsidiary's ability to elect to
discontinue any line of business or to discontinue doing business in any State
if the Company or such Subsidiary deems such discontinuance to be in its or
their best interests, (ii) neither the Company nor any Subsidiary shall be
required by reason of this subsection to comply therewith at any time while the
Company or such Subsidiary shall be contesting its obligations to do so in good
faith by appropriate proceedings promptly initiated and diligently conducted,
and if it shall have set aside on its books such reserves, if any, with respect
thereto as are required by GAAP and deemed adequate by the Company and its
independent public accountants. The Company will not, and will not allow any
Subsidiary to, amend the terms of its charter.
5.3 Insurance.
--------------
(a) Business Interruption Insurance. Each of the Company and its
Subsidiaries shall maintain with financially sound and reputable insurers
insurance related to interruption of business, either for loss of revenues or
for extra expense, in the manner customary for businesses of similar size
engaged in similar activities.
(b) Property Insurance. Each of the Company and its Subsidiaries shall
keep its assets which are of an insurable character insured by financially sound
and reputable insurers against theft and fraud and against loss or damage by
fire, explosion and hazards insured against by extended coverage to the extent,
in amounts and with deductibles at least as favorable as those generally
maintained by businesses of similar size engaged in similar activities.
(c) Liability Insurance. Each of the Company and its Subsidiaries shall
maintain with financially sound and reputable insurers insurance against
liability for hazards, risks and liability to persons and property, including
errors and omission insurance, to the extent, in amounts and with deductibles at
least as favorable as those generally maintained by businesses of similar size
engaged in similar activities.
(d) Requirements; Proceeds. Each insurance policy maintained pursuant to
this subsection 5.3 pertaining to any of the Collateral or pursuant to
--------------
subsection 5.11 below shall: (i) name the Agent as an additional insured and
---------------
loss payee pursuant to a so-called "standard mortgagee clause" and provide that
-------------------------
all proceeds shall be payable to the Agent; (ii) provide that no action of the
Company shall void such policy as to the Agent; and (iii) provide that the Agent
shall be notified of any proposed cancellation of such policy at least thirty
(30) days in advance of such proposed cancellation. Copies of all such policies
shall be delivered to the Agent upon request. In the event of a casualty loss,
the Company may apply the proceeds of any insurance to the restoration or
replacement of the property or asset which was the subject of such loss,
provided that (A) the Company shall have demonstrated to the reasonable
--------
satisfaction of the Lenders that such property or asset will be restored to
substantially its previous condition or will be replaced by a substantially
identical property or asset, and (B) the Agent shall have received, if requested
by it, a favorable opinion from counsel for the Company, satisfactory in scope
and form to the Agent (on behalf of the Lenders), as to the Lenders' having a
prior security interest in and valid first lien on such restored or replaced
property or asset. As further assurance for the payment and performance of the
Loans and all other obligations hereunder, the Company hereby assigns to the
Agents for the benefit of the Lenders all sums, including any returned or
unearned premiums, which may become payable under any policy of insurance in
respect of the Collateral and the Company hereby directs each insurer issuing
any such policy to make such payment of such sums directly to the Agent. No loss
or claim in excess of $250,000 shall be settled without the prior written
consent of the Agent.
5.4 Payment of Taxes. The Company will, and will cause each Subsidiary to, pay
--------------------
and discharge promptly as they become due and payable all taxes, assessments and
other governmental charges or levies imposed upon it or its income or upon any
of its properties or assets, or upon any part thereof, as well as all lawful
claims of any kind (including claims for labor, materials and supplies) which,
if unpaid, might by law become a lien or a charge upon its property; provided
--------
that neither the Company nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
promptly initiated and diligently conducted and if the Company or such
Subsidiary, as the case may be, shall have set aside on its books such reserves,
if any, with respect thereto as are required by GAAP and deemed appropriate by
the Company and its independent public accountants.
5.5 Payment of Other Indebtedness, etc. Except as to matters being contested in
--------------------------------------
good faith and by appropriate proceedings, and subject to the provisions of
subsection 6.5 (Restricted Payments) and subsection 6.12 (Observance of
-------------- ---------------
Subordination Provisions) hereof, the Company will, and will cause each
Subsidiary to, pay promptly when due, or in conformance with customary trade
terms, all other Indebtedness and obligations incident to the conduct of its
business, except where the failure to do so would not result in a Material
Adverse Effect.
5.6 Further Assurances. From time to time hereafter, the Company will execute
----------------------
and deliver, or will cause to be executed and delivered, such additional
instruments, certificates or documents, and will take all such actions, as the
Agent may reasonably request, for the purposes of implementing or effectuating
the provisions of this Agreement, the Security Documents or the Notes, or of
more fully perfecting or renewing the rights of the Agent and the Lenders with
respect to the Collateral pursuant hereto or thereto. Upon the exercise by the
Lenders (or the Agent on their behalf) of any power, right, privilege or remedy
pursuant to this Agreement or the Security Documents which requires any consent,
approval, registration, qualification or authorization of any governmental
authority or instrumentality, the Company will execute and deliver, or will
cause the execution and delivery of, all applications, certifications,
instruments and other documents and papers that the Agent or the Lenders may be
required to obtain for such governmental consent, approval, registration,
qualification or authorization. In the event the Company or any Subsidiary shall
at any time or from time to time lease any additional real property, the Company
will, if any Collateral is to be located at such premises and not available at
the Company's Irvine, California headquarters, promptly execute and deliver, and
cause to be executed and delivered by the Company's landlord, to the Lenders (or
the Agent on their behalf) a landlord's consent relating to the Agent's access
to the real property leased by the Company, regardless of any rental payment
default by the Company or any of its Subsidiaries.
5.7 Maintenance of Blocked Account; Eligible Securitization Transaction
-----------------------------------------------------------------------
Documents; Agreement to Hold in Trust. As of the Closing Date, the Company will
-------------------------------------
(i) establish a blocked account arrangement (the "Blocked Account") with the
---------------
Agent and (ii) execute and cause to be executed by all necessary parties all
such agreements or instruments as may be deemed necessary by the Lenders or the
trustee or paying agent under each Eligible Securitization Transaction so as to
ensure that such trustee or paying agent is directed to make payments due the
Company, directly to the Blocked Account. All agreements, documents or
instruments now or hereafter necessary to ensure that the Collateral and all
proceeds thereof will be deposited directly into the Blocked Account, and to
otherwise give effect to the transactions contemplated by this Agreement,
including but not limited to, the Irrevocable Payment Directives, are referred
to herein collectively as the "Eligible Securitization Transaction Documents".
---------------------------------------------
To the extent that notwithstanding the Eligible Securitization Transaction
Documents, the Company, CPSRC receives any amounts attributable to any Eligible
Securitization Transaction which should, in accordance with Section 1.2(c), have
been deposited in the Blocked Account, the Company will, and will cause CPSRC
to, hold the same in trust for the Lenders immediately upon receipt thereof, and
deliver the same to the Agent in the form received, together with the Company's
or CPSRC's (as the case may be) endorsement thereon where necessary to permit
collection thereof for deposit into the Blocked Account.
5.8 Communication with Accountants. The Company authorizes the Lenders to
----------------------------------
communicate directly with the Company's independent certified public accountants
and authorizes those accountants to disclose to the Lenders any and all
financial statements and other supporting financial documents and schedules.
5.9 Performance of Servicing Duties; Clean-Up Calls. The Company shall, and
---------------------------------------------------
shall cause Xxxxx Receivables Corp. ("ARC") and CPSRC to, comply in all material
---
respects with the provisions of its charter documents and by-laws and with the
terms of the pooling and servicing agreements and other Eligible Securitization
Documents relating to each Eligible Securitization Transaction, and perform the
duties of servicer in compliance with the terms thereof. To the extent the
Company, ARC or CPSRC has or shall have the right or ability to make a
"clean-up" call under any Eligible Securitization Transaction, the Company, ARC
--------
or CPSRC will not take any such action if, after giving effect thereto, the
aggregate outstanding principal balance of the Loans would exceed the Borrowing
Base unless, simultaneously with the purchase pursuant to such "clean-up" call,
--------
the Company pays down the outstanding Loans to an amount less than or equal to
the Available Line Commitment after giving effect to such "clean-up" call.
--------
5.10 Management. Schedule 5.10 attached hereto sets forth the names and titles
--------------- -------------
of each officer and director of the Company. The Company will notify the Agent
in writing of any change in or addition to such officers and directors of the
Company.
5.11 Funding of Cash Collateral Account. On the last business day of each
---------------------------------------
month, the Company shall cause the balance of the Cash Collateral Account to be
equal to at least the greater of (i) $1,000,000 and (ii) the "Estimated Interest
------------------
Payment". For purposes of this Agreement, the Estimated Interest Payment shall
-------
equal the product of six times (6x) the balance of the Loans outstanding as of
the immediately preceding month-end and the then-applicable interest rate for
Prime-based Loans.
5.12 Covenant to Secure Loans Equally. The Company covenants that if it shall
-------------------------------------
create or assume any Lien upon its property or assets, whether now owned or
hereafter acquired, other than Liens permitted by the provisions of Section 6.2
-----------
(unless prior written consent to the creation or assumption thereof shall have
been obtained), it will make or cause to be made effective provisions whereby
the Loans will be secured by such
Lien equally and ratably with any and all other Indebtedness thereby secured so
long as any such other Indebtedness shall be so secured; provided that the
--------
creation and maintenance of such equal and ratable Lien shall not in any way
limit or modify the right of the Lenders to enforce the provisions of, and
declare a Default or Event of Default under, Section 6.2.
-----------
Section 6. Negative Covenants.
------------------------------
So long as any of the Loans shall remain available to the Company, and
until the principal of and interest on the Notes and all fees due hereunder and
all of the Company's obligations to the Lenders shall have been paid in full,
the Company agrees that:
6.1 Indebtedness. The Company will not, and will not permit any Subsidiary to,
----------------
create, incur, assume or become or remain liable in respect of any Indebtedness,
except:
(a) Indebtedness to the Lenders hereunder;
(b) (i) Current liabilities of the Company (other than for borrowed
money) incurred in the ordinary course of its business and in accordance with
customary trade practices and (ii) deferred taxes which, in accordance with
GAAP, are shown as a liability on the Company's balance sheet;
(c) Existing Indebtedness of the Company or any Subsidiary referred to in
Schedule 3.8 attached hereto, in not more than the respective unpaid principal
------------
amounts thereof specified in such Schedule;
(d) Indebtedness incurred by the Company and/or any Subsidiary relating
to the Company's and/or the Subsidiary's warehousing financing lines of credit
with (i) Variable Funding Capital Corporation, (ii) Redwood Receivables
Corporation or (iii) future warehousing lenders, in connection with warehousing
the Automobile Contracts in the ordinary course of business;
(e) Unsecured Subordinated Debt;
(f) Indebtedness arising from now existing or hereafter arising Capital
Leases in an aggregate amount not to exceed $5,000,000;
(g) Indebtedness incurred in connection with the acquisition of a
building currently under construction (the "New Building"), located at Xxxxx
------------
Parkway and Laguna Canyon Road in Irvine, California and comprising
approximately 115,000 square feet of rentable area, provided that such
--------
Indebtedness shall not exceed the lesser of (i) 85% of the New Building's
appraised value and (ii) $25,000,000; provided further that the Lenders shall
--------
hold a second priority mortgage on the New Building, which mortgage shall be
subordinate only to the lien relating to the financing thereof;
(h) Indebtedness of the Company or any Subsidiary secured as permitted
by, and subject to the proviso to, subparagraph (c) of subsection 6.2;
--------------
(i) Non-recourse Indebtedness of the Company using only the assets
relating to a Rejected Transaction as collateral; and
(j) Other unsecured Indebtedness which in the aggregate shall not exceed
$4,000,000.
6.2 Liens, etc. The Company will not, and will not permit any Subsidiary to,
--------------
directly or indirectly, create, incur, assume or suffer to exist, any mortgage,
lien, charge or encumbrance on, or security interest in, or pledge of, or
conditional sale or other title retention agreement (including any Capital
Lease) with respect to, any real or personal property (tangible or intangible,
now existing or hereafter acquired) including but not limited to the Collateral,
except:
(a) Any lien securing Indebtedness to the Lenders;
(b) Liens for taxes not yet delinquent or being contested in good faith
as provided in subsection 5.4; mechanics', workmen's, materialmen's or other
--------------
like liens arising in the ordinary course of business in respect of obligations
which are not yet due or which are being contested in good faith (as to which
adequate reserves have been established on the Company's books); and other liens
or encumbrances incidental to the conduct of the business of the Company or any
Subsidiary or to the ownership of their respective properties or assets, which
were not incurred in connection with the purchase of property, borrowing of
money or the obtaining of credit and which do not detract from the value of the
properties or assets of the Company and its Subsidiaries or affect the use
thereof in the operation of their business;
(c) Financing statements filed by FSA against any Subsidiary in
connection with any securitization transaction;
(d) Purchase money mortgages, liens and other security interests,
including Capital Leases, created in respect of property acquired by the Company
after the date hereof or existing in respect of property so acquired prior to
the date hereof, provided that (i) each such lien shall at all times be confined
--------
solely to the item of property so acquired, and (ii) the aggregate principal
amount of indebtedness secured by all such liens (whether incurred prior to or
after the Closing Date) shall at no time exceed $5,000,000;
(e) Liens granted by the Company or any of its Subsidiaries on the
Automobile Contracts to secure the Indebtedness described in subsection 6.1(d);
-----------------
(f) Lien on the New Building relating to the financing thereof;
(g) Liens in an amount not to exceed $1,000,000 securing the Indebtedness
described in subsection 6.3(e) below, provided that such liens are at all times
--------
limited solely to cash collateral posted by the Company to secure such
Indebtedness; and
(h) Liens on assets relating to Rejected Transactions securing
Indebtedness described in subsection 6.1(i) provided that such Indebtedness
--------------------------
shall not exceed the lesser of (x) 80% of the Company's Investment in Credit
Enhancements relating to such Rejected Transactions and (y) 8% of the aggregate
outstanding Certificate Balance related to such Rejected Transactions, in each
instance as reported on the most recently submitted Borrowing Base Certificate.
6.3 Loans, Guarantees and Investments. The Company will not, and will not
-------------------------------------
permit any Subsidiary to, make or permit to remain outstanding any loan or
advance to, or guarantee or endorse (except as a result of endorsing negotiable
instruments for deposit or collection in the ordinary course of business) or
otherwise assume or agree to purchase or otherwise remain liable with respect to
any obligation of, or enter into any indemnification agreement or make or own
any investment in, or acquire (except in the ordinary course of business) the
properties or assets of, any Person, except:
------
(a) Extensions of credit by the Company in connection with the Company's
automobile finance business in accordance with existing and customary trade
practices, including direct lending and bulk purchases of up to $30,000,000 of
portfolios of Automobile Contracts;
(b) The outstanding investments, loans and advances, if any, and the
presently existing guarantees, if any, referred to in Schedule 3.8 attached
------------
hereto;
(c) Cash Equivalents;
(d) Capital Expenditures, to the extent permitted by subsection 6.6;
--------------
(e) Loans, advances and investments in an aggregate amount not exceed
$1,000,000 necessary or appropriate for the hedging of interest rate risks on
loans held for sale by the Company or its Subsidiaries in the ordinary course of
business; and
(f) Indemnification Agreements in favor of Credit Enhancers or underwriters
executed in connection with securitization transactions, or indemnifications
contained in agreements entered into in the ordinary course of the Company's
business and otherwise permitted under this Agreement.
6.4 Collection Policies and Procedures. The Company will not implement any
---------------------------------------
material change in its collection policies and procedures without first
delivering written notice of such change and the reason therefor to the Lenders.
6.5 Restricted Payments. The Company will not, and will not permit any
------------------------
Subsidiary to, directly or indirectly declare, order, pay or make any Restricted
Payment or set aside any sum or property therefor if at the time of such
proposed action or immediately after giving effect thereto, any Default or Event
of Default exists, and unless expressly permitted by this subsection 6.5.
--- --------------
As used herein, the term "Restricted Payments" means (i) any dividend or
-------------------
other distribution, direct or indirect, on or on account of any shares of any
class of stock of the Company now or hereafter outstanding (other than dividends
payable exclusively in shares of the Company's preferred stock); (ii) any
redemption, purchase or other acquisition, direct or indirect, of any shares of
any class of stock of the Company now or hereafter outstanding or of any
warrants or rights to purchase any such stock (including, without limitation,
the repurchase of any such stock or warrant or any refund of the purchase price
thereof in connection with the exercise by the holder thereof of any right of
rescission or similar remedies with respect thereto); and (iii) any payment in
respect of Subordinated Debt.
Subject to the foregoing, the Company may: (a) from time to time make
Restricted Payments in the amount of scheduled (but not accelerated) payments
---
due the Subordinated Lenders under the Subordinated Agreements.
6.6 Capital Expenditures. The Company will not make, or permit any Subsidiary
-------------------------
to make, any Capital Expenditure during any fiscal year of the Company which
exceeds $1,000,000 with respect to any particular project or $3,000,000 in the
aggregate.
6.7 Subsidiaries, Mergers, Acquisitions and Consolidations; Changes in
-----------------------------------------------------------------------
Business. The Company will not, and will not permit any Subsidiary to, without
--------
thirty (30) days prior written notice to the Lenders, create any additional
Subsidiaries (provided, that the Company may from time to time create wholly-
--------
owned, so-called Bankruptcy remote special purpose Subsidiaries for the sole
purpose of entering into subsequent securitization transactions), or enter into
any merger, acquisition or consolidation (or any agreement relating to any
merger, acquisition or consolidation) if the cost to the Company associated with
such merger, acquisition or consolidation or the capital investment of the
Company in such Subsidiaries created after the date of this Agreement exceeds
thirty percent (30%) of its Net Worth. The Company and its Subsidiaries shall
not, without the Lenders' consent, engage in any business other than automobile
finance, mortgage finance, credit card finance, insurance and insurance finance.
6.8 Sale of Assets. The Company will not, and will not permit any Subsidiary
-------------------
to, sell, lease or otherwise dispose of any of its properties or assets if the
aggregate fair market value of the assets that have been sold, leased or
disposed of from the date of this Agreement through the date thereof is greater
than or equal to fifteen percent (15%) of the Company's Net Worth, except for
------
(a) bona fide sales of Automobile Contracts for fair value in the ordinary
---- ----
course of business to a wholly-owned Subsidiary of the Company in connection
with any warehouse credit facility, (b) bona fide cash sales of Automobile
---- ----
Contracts originated as permitted by this Agreement, for fair value in the
ordinary course of business in connection with securitization transactions and
provided that proceeds of any such sales are used by the Company to repay any
--------
related loans under the
applicable warehouse credit facility, if any, to the extent required thereby,
(c) bona fide sales of repossessed automobiles, and (d) sales or other
---- ----
dispositions in the ordinary course of business of obsolete or unusable property
or assets (it being understood that Automobile Contracts and related receivables
are excluded from this clause (d)) in each instance, without the prior written
consent of the Majority Lenders, such consent not to be unreasonably withheld.
6.9 Compliance with ERISA. The Company will make, and will cause all
--------------------------
Affiliated Companies to make, all payments or contributions to employee benefit
plans required under the terms thereof and in accordance with applicable minimum
funding requirements of ERISA and the Code and applicable collective bargaining
agreements. The Company will cause all employee benefit plans sponsored by any
Affiliated Company to be maintained in material compliance with ERISA and the
Code. The Company will not engage, and will not permit or suffer any Affiliated
Company or any Person entitled to indemnification or reimbursement from the
Company or any Affiliated Company to engage, in any prohibited transaction for
which an exemption is not available. No Affiliated Company will terminate, or
permit the PBGC to terminate, any employee benefit plan or withdraw from any
multiemployer plan, in any manner which could result in material liability of
any Affiliated Company.
6.10 Transactions with Affiliates. The Company will not, and will not permit
---------------------------------
any Subsidiary to, directly or indirectly, enter into any lease or other
transaction with any shareholder or with any Affiliate of the Company or such
shareholder, on terms that are less favorable to the Company or such Subsidiary
than those which might be obtained at the time from Persons who are not such a
shareholder or Affiliate. The Company shall not make any advance to any
shareholder.
6.11 Observance of Subordination Provisions, etc. The Company will not make, or
------------------------------------------------
cause or permit to be made, any payments in respect of any Subordinated Debt, in
contravention of the subordination provisions contained in the evidence of such
Subordinated Debt or in contravention of any written agreement pertaining
thereto, nor will the Company (a) amend, modify or change in any manner any of
such subordination provisions without the prior written consent of the Majority
Lenders or (b) amend, modify or change in any manner adverse to the interests of
the Lenders any of the other provisions set forth in the agreements under which
such Subordinated Debt is outstanding or contained in the instruments or
agreements evidencing or relating to such Subordinated Debt.
6.12 Environmental Liabilities. The Company will not, and will not permit any
------------------------------
Subsidiary to, violate any Environmental Laws or other requirement of law, rule
or regulation regarding Hazardous Materials; and, without limiting the
foregoing, the Company will not and will not permit any Subsidiary or any other
Person to, dispose of any Hazardous Material into or onto, or (except in
accordance with applicable law) from, any real property owned, leased or
operated by the Company or any Subsidiary or in which the Company or any
Subsidiary holds, directly or indirectly, any legal or beneficial interest or
estate, nor allow any lien imposed pursuant to any law, regulation or order
relating to Hazardous Materials or the disposal thereof to be imposed or to
remain on such real property, except for liens being contested in good faith by
appropriate proceedings and for which adequate reserves have been established
and are being maintained on the books of the Company and its Subsidiaries.
6.13 Fiscal Year. The Company will not change its fiscal year end from December
----------------
31 without prior written notice to the Agent.
6.14 Amendments to Eligible Securitization Transaction Documents. The Company
----------------------------------------------------------------
will not, and will not permit ARC, CPSRC or any other Subsidiary to amend,
modify or change (or consent to any such amendment, modification or change) in
any manner adverse to the interests of the Lenders any of the provisions set
forth in the Eligible Securitization Transaction Documents without the prior
written consent of the Lenders. Without limiting the foregoing, the Company will
not consent or agree, without the Lenders' consent, to any increase in the
amount on deposit in any Spread Account so as to maintain the rating of the
related securitization transaction.
6.15 Back-Up Servicer. The Company shall not change its back-up servicer from
---------------------
Norwest Bank Minnesota, National Association without the written consent of the
Lenders.
6.16 Balance of Outstanding Loans. At no time shall the aggregate balance of
---------------------------------
all Loans outstanding hereunder exceed eighty-five percent (85%) of the
aggregate cash balance in Investments in Credit Enhancements relating to
Eligible Securitization Transactions.
Section 7. Financial Covenants. So long as any of the Loans shall remain
-------------------------------
available to the Company, and until the principal of and interest on the Notes
and all fees and other amounts due hereunder and all of the Company's
obligations to the Lenders shall have been paid in full, the Company agrees as
follows. (For purposes of this Section 7, all references to the Company shall
---------
refer collectively to the Company and the Consolidated Subsidiaries.)
7.1 Total Senior Liabilities to Capital Funds Ratio. The Company will not on
----------------------------------------------------
the last day of any month permit the ratio of (a) its Total Senior Liabilities
to (b) its Capital Funds, to be greater than 3.5:1.0.
7.2 Minimum Cash Balance. Without giving credit to the cash balance in the
-------------------------
Cash Collateral Account, the Company will maintain a minimum balance of
unrestricted cash, Cash Equivalents and/or availability under the Available Line
Commitment on the last day of each month during the term of this Agreement of at
least $500,000.
7.3 Minimum Net Worth. The Company will not permit its Net Worth as of the last
----------------------
day of the fiscal quarter of the Company ending December 31, 1997 to be less
than $80,000,000. The Company will not permit its Net Worth as of the last day
of any fiscal quarter of the Company ending after December 31, 1997 to be less
than an amount equal to (x) $80,000,000 plus, (y) on a cumulative basis, an
----
amount equal to fifty percent (50%) of the Company's positive Net Income during
each such fiscal quarter ending after December 31, 1997. The minimum Net Worth
covenant amount shall never decrease, regardless of whether the Company shall
have negative Net Income during any fiscal quarter.
7.4 Minimum Subordinated Debt Plus Net Worth. The Company will not permit (i)
---------------------------------------------
as of the last day of the fiscal quarter ending December 31, 1997 the principal
amount of Subordinated Debt plus the Company's Net Worth to be less than
----
$135,000,000. The Company will not permit the principal amount of Subordinated
Debt plus the Company's Net Worth, as of the last day of any fiscal quarter
----
ending after December 31, 1997, to be less than an amount equal to (x)
$135,000,000 plus, (y) on a cumulative basis, an amount equal to fifty percent
----
(50%) of the Company's positive Net Income during each fiscal quarter ending
after December 31, 1997. The minimum Subordinated Debt plus Net Worth covenant
amount shall never decrease, regardless of whether the Company shall have
negative Net Income during any fiscal quarter.
7.5 Limitation on Quarterly Losses. The Company will not permit its Net Income
-----------------------------------
to be less than $0.00 for any two fiscal quarters during any rolling period of
four consecutive fiscal quarters of the Company.
7.6 Minimum Servicing Balance. The Company shall at all times maintain a
------------------------------
Minimum Servicing Balance of at least $700,000,000.
Section 8. Defaults; Credit Triggers; Remedies.
-----------------------------------------------
8.1 Events of Default; Acceleration. If any of the following events (each an
------------------------------------
"Event of Default") shall occur:
----------------
(a) The Company shall default in the payment of principal of or interest on
any Note or any other fee due hereunder when the same becomes due and payable,
whether at maturity or at a date fixed for the payment of any installment or
prepayment thereof or otherwise; provided that in the case of a payment due
--------
pursuant to subsection 1.8(b), the Company shall make such payment within two
-----------------
(2) Banking Days after becoming aware that the outstanding principal amount of
the Loans exceeds the Available Line Commitment;
or
(b) The Company shall default in the performance of or compliance with any
term contained in Section 6 (and such default shall continue for five (5)
--------
business days) or Section 7; or
---------
(c) The Company shall default in the performance of or compliance with any
material term contained herein other than those referred to above in this
Section 8 and such default shall not have been remedied within 30 days after
---------
written notice thereof shall have been given to the Company by the Agent (on the
Lenders' behalf); or
(d) The Company, any Subsidiary or any shareholder of the Company which is
a party to any of the Security Documents shall default in the performance of or
compliance with any term contained in the Security Documents or in the
performance of or compliance with any term contained in any other written
agreement with the Lenders or the Agent on the Lenders' behalf, and such default
shall continue for more than the grace period, if any, specified therein and
shall not have been waived pursuant thereto; or
(e) Any representation or warranty made by the Company herein or pursuant
hereto shall prove to have been false or incorrect in any material respect when
made; or
(f) The Company or any Subsidiary shall default in any payment due on any
Indebtedness in respect of borrowed money, any Capital Lease or the deferred
purchase price of property with a principal balance, lease balance or purchase
price (as the case may be) in excess of $1,000,000 outstanding as of the date of
such default, and such default shall continue for more than the grace period, if
any, applicable thereto, or in the performance of or compliance with any term of
any evidence of such Indebtedness or of any mortgage, indenture or other
agreement relating thereto, and any such default shall continue for more than
the grace period, if any, specified therein and shall not have been waived
pursuant thereto; or
(g) The Company shall discontinue its business or the Company or any
Subsidiary shall make an assignment for the benefit of creditors, or shall fail
generally to pay its debts as such debts become due, or shall apply for or
consent to the appointment of or taking possession by a trustee, receiver or
liquidator (or other similar official) of the Company or such Subsidiary or any
substantial part of the property of the Company or such Subsidiary, or shall
commence a case or have an order for relief entered against it under the federal
Bankruptcy laws, as now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar law, or if the Company
or any Subsidiary shall take any action to dissolve or liquidate the Company or
such Subsidiary; or
(h) If, within 60 days after the commencement against the Company or any
Subsidiary of a case under the federal Bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state Bankruptcy, insolvency or
other similar law, such case shall have been consented to or shall not have been
dismissed or all orders or proceedings thereunder affecting the operations or
the business of the Company and such Subsidiary stayed, or if the stay of any
such order or proceeding shall thereafter be set aside, or if within 60 days
after the entry of a decree appointing a trustee, receiver or liquidator (or
other similar official) of the Company or any Subsidiary or any substantial part
of the property of the Company or such Subsidiary, such appointment shall not
have been vacated; or
(i) A final judgment (which, with other outstanding final judgments against
the Company and its Subsidiaries, exceeds insurance coverage, if any,
acknowledged in writing by the insurer by an aggregate of $250,000) shall be
rendered against the Company or any Subsidiary and if, within 60 days after
entry thereof, such judgment shall not have been discharged or execution thereof
stayed pending appeal, or if, within 60 days after the expiration of any such
stay, such judgment shall not have been discharged, or if any such judgment
shall not be discharged forthwith upon the commencement of proceedings to
foreclose any lien, attachment or charge which may attach as security therefor
and before any of the property or assets of the Company or any Subsidiary shall
have been seized in satisfaction thereof; or
(j) If (i) the Company is replaced as servicer of any Eligible
Securitization Transaction, or any other event or condition occurs or exists
which in the Lenders' reasonable judgment impairs or creates a material risk of
impairment of the Company's legal right to receive payments in respect of the
Collateral, or (ii) the Company ceases to own 100% of the capital stock of
CPSRC, FundCo or WareCo or (iii) if the Company or any Subsidiary loses, fails
to keep in force, suffers the termination or revocation of or terminates,
forfeits or suffers an amendment to any License which could have a Material
Adverse Effect on the operations of the Company or such Subsidiary; or
(k) If Xxxxxxx X. Xxxxxxx, Xx. ceases to be and perform the duties of Chief
Executive Officer and President of the Company, and is not replaced by a Chief
Executive Officer and/or President acceptable in the reasonable discretion of
the Board of Directors of the Company within sixty (60) days; or
(l) Without limiting any provision set forth above in this subsection 8.1,
--------------
if the Company, ARC or CPSRC shall fail to perform or observe any of its
obligations under any of the Loan Documents or the Eligible Securitization
Transaction Documents, and such failure could reasonably be expected to have a
Material Adverse Effect on the Company or CPSRC, or if the validity of this
Agreement, the Notes, any Security Document or other Loan Document, or of any
Eligible Securitization Transaction Document, or the Subordinated Agreements
shall be challenged or disaffirmed by any party hereto or thereto, or shall in
any manner cease to be in full force and effect (other than pursuant to its
expiration or termination in accordance with its terms), or if any notice of
default shall be issued hereunder or thereunder by any party hereto or thereto;
then, and in any such event, and at any time thereafter, either or both of the
following actions may be taken: the Majority Lenders may by written notice to
the Company, (i) declare the principal of and accrued interest in respect of the
Notes to be forthwith due and payable, whereupon the principal of and accrued
interest in respect of the Notes shall become forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company, and/or (ii) terminate the Total
Commitment, whereupon the Total Commitment of the Lenders (and the Commitment of
each individual Lender) to make Loans hereunder shall forthwith terminate
without any other notice of any kind; provided that, in the case of an Event of
--------
Default arising by reason of the occurrence of any event described in
subsections 8.1(g) or 8.1(h), such actions shall be deemed to have been
----------------------------
automatically taken by the Lenders and all obligations of the Company to the
Lenders shall forthwith automatically become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Company. Without limiting any provision of this
Agreement or any Security Document, a Default or Event of Default hereunder
shall also constitute a Default or Event of Default under each Security
Document.
8.2 Remedies on Default, etc. In case any one or more Events of Default shall
-----------------------------
occur and be continuing, the Agent and the Lenders may proceed to protect and
enforce their rights by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Note or Security Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law. In case of a default in the
payment of any principal of or interest on any Note, or in the payment of any
fee due hereunder, the Company will pay to the Lenders such further amount as
shall be sufficient to cover the cost and expense of collection, including,
without limitation, reasonable attorneys' fees, expenses and disbursements. No
course of dealing and no delay on the part of the Agent or the Lenders in
exercising any right shall operate as a waiver thereof or otherwise prejudice
the rights of the Agent or the Lenders. No right conferred hereby or by any Note
or Security Document upon the Lenders shall be exclusive of any other right
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise.
8.3 Credit Triggers. If any of the following events (each a "Credit Trigger")
-------------------- --------------
shall occur with respect to (i) any Eligible Securitization Transaction (for
subsections (a), (b) and (d) hereof), or (ii) the Borrower's entire servicing
portfolio (for subsections (c), (e) and (f) hereof:
(a) The Cumulative Net Loss Rate and the Cumulative Default Rate for each
Eligible Securitization Transaction which is currently in the month listed at
left may not exceed the Cumulative Net Loss Rate or Cumulative Default Rate as
set forth below:
---------------------------------------------------------------------
Number of Months Since Closing of Cumulative Net Cumulative
Eligible Securitization Transaction Loss Rate Default Rate
----------------------------------- -------------- ------------
1-6 3.5% 7.0%
---------------------------------------------------------------------
7-9 4.5% 9.0%
---------------------------------------------------------------------
10-12 6.0% 12.0%
---------------------------------------------------------------------
13-15 8.0% 16.0%
---------------------------------------------------------------------
16-18 9.0% 18.0%
---------------------------------------------------------------------
19-21 10.0% 20.0%
---------------------------------------------------------------------
22-24 11.0% 21.5%
---------------------------------------------------------------------
25-27 11.5% 22.5%
---------------------------------------------------------------------
28-30 12.0% 24.0%
---------------------------------------------------------------------
31-33 12.5% 25.0%
---------------------------------------------------------------------
34-36 13.0% 26.0%
---------------------------------------------------------------------
37-42 13.5% 28.0%
---------------------------------------------------------------------
43-45 14.0% 29.0%
---------------------------------------------------------------------
46-maturity 14.5% 30.0%
---------------------------------------------------------------------
or
(b) There shall occur any Insurance Agreement Event of Default (or other
event or condition, however defined, which has a substantially similar meaning
to the term "Insurance Agreement Event of Default" as defined in each of the
------------------------------------
Insurance and Indemnity Agreements among the Company, CPSRC and FSA as in effect
on the date hereof), under any agreement between the Company and any Credit
Enhancer, or any Default or Event of Default, under and as defined in any
Eligible Securitization Transaction Document; or
(c) Amount in Repossession. The amount attributable to repossessed
automobiles (where such repossessions were by or at the Company's direction)
exceeds five percent (5%) of the aggregate Gross Principal Balance; or
(d) Average 30-Day Delinquencies. For each Eligible Securitization
Transaction, the average of the previous three month end dollar amounts of (x)
Thirty (30) Day Delinquencies divided by (y) the principal amount of notes or
----------
certificates issued in connection with such Eligible Securitization Transaction
and outstanding on the last day of each month exceeds nine and one-half percent
(92%), provided that the amount attributable to repossessed automobiles shall
--------
not be included in the numerator or the denominator of such calculation; or
(e) The number of accounts with respect to which the Company grants a
deferral or extension in any month exceeds two percent (2%) of the aggregate
number of the contracts in the servicing portfolio as of that month's end; or
(f) The cumulative number of accounts with respect to which the Company
grants a deferral or extension exceeds eighteen percent (18%) of the contracts
in the Company's aggregate servicing portfolio; then, without notice to the
Company or any other required action or notice by the Lenders, (i) the
obligations of the Lenders to make Revolving Credit Loans shall immediately
terminate and (ii) at the election of the Majority Lenders, the date of
occurrence of the Credit Trigger shall be deemed the Conversion Date for all
purposes of this Agreement and the Security Documents, and the outstanding
principal balance of the Notes shall immediately begin amortizing in accordance
with the applicable provisions of this Agreement. The Company shall immediately
repay the Loans in an amount sufficient to cause the outstanding balance of the
Loans not to exceed the Available Line Commitment.
Section 9. Definitions; Certain Rules of Construction. Certain capitalized
------------------------------------------------------
terms are used in this Agreement and in the other Loan Documents with the
specific meanings defined below in this section 9. Except as otherwise
---------
explicitly specified to the contrary or unless the context clearly requires
otherwise, (a) the capitalized term "Section" refers to section of this
-------
Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
-------
Agreement, (c) refers to a particular section included in subsections thereof,
(d) the word "including" shall be construed as "including without limitation",
--------- ----------------------------
(e) accounting terms not otherwise defined herein have the meaning provided
under GAAP, (f) terms defined in the UCC and not otherwise defined herein have
the meaning provided under the UCC, (g) references to particular statute or
regulation include all rules and regulations thereunder and any successor
statute, regulation or rules, in each case as from time to time in effect and
(h) references to a particular Person include such Person's successors and
assigns to the extent not prohibited by this Agreement and the other Loan
Documents.
Affiliate: as applied to any Person, a spouse or relative of such
---------
Person, any member, director or officer of such Person, any corporation,
association, firm or other entity of which such Person is a member, director or
officer, and any other Person directly or indirectly controlling, controlled by
or under direct or indirect common control with such Person.
Affiliated Company: the meaning specified in subsection 3.15.
------------------ ---------------
Agent: the meaning specified at the beginning of this Agreement.
-----
Agreed Upon Accounting Procedures: shall mean the accounting
---------------------------------
methodology employed by the Company in connection with the Company's audited
financial statements for the fiscal year of the Company ended December 31, 1997.
Applicable LIBOR Rate: the meaning specified in subsection 1.3.
--------------------- --------------
Applicable Prime Rate: the meaning specified in subsection 1.3.
--------------------- --------------
ARC: the meaning specified in subsection 5.9.
--- --------------
Assignment and Acceptance: the meaning specified in subsection 14.12.
------------------------- ----------------
Automobile Contracts: installment sale contracts and security
--------------------
interests, secured by automobiles, light trucks and vans.
Available Line Commitment: the meaning specified in subsection 1.2.
------------------------- --------------
Banking Day: any day, excluding Saturday and Sunday and excluding any
-----------
other day which shall be in Boston, Massachusetts, a legal holiday or a day on
which Banking institutions are authorized by law to close.
Base Servicing Fees: the two percent (2%) servicing fee paid to the
-------------------
Company in connection with and under the terms of the applicable indenture,
pooling and servicing agreement or other agreement executed in connection with
any transaction.
Blocked Account: the meaning specified in subsection 5.7.
--------------- --------------
Borrowing Base: the meaning specified in subsection 1.2.
-------------- --------------
Borrowing Base Report: the meaning specified in subsection 1.2.
--------------------- --------------
Borrowing Request: the meaning specified in subsection 1.2(b).
----------------- -----------------
Capital Expenditure: any payment made directly or indirectly for the
-------------------
purpose of acquiring or constructing fixed assets, real property or equipment
which in accordance with GAAP would be added as a debit to the fixed asset
account of the Person making such expenditure, including without limitation,
amounts paid or payable under any conditional sale or other title retention
agreement or under any lease or other periodic payment arrangement which is of
such a nature that payment obligations of the lessee or obligor thereunder would
be required by GAAP to be capitalized and shown as liabilities on the balance
sheet of such lessee or obligor.
Capital Funds: shall mean the sum of the Company's Net Worth plus the
-------------
aggregate balance of all Subordinated Debt (including accrued but unpaid
interest).
Capital Lease: any lease of property (real, personal or mixed) which,
-------------
in accordance with GAAP, should be capitalized on the lessee's balance sheet or
for which the amount of the asset and liability thereunder as if so capitalized
should be disclosed in a note to such balance sheet.
Cash Collateral Account: the meaning specified in subsection 1.9.
----------------------- --------------
Cash Equivalents: (a) negotiable certificates of deposit, time
----------------
deposits (including sweep accounts), demand deposits and Lenders' acceptances
having a maturity of nine months or less and issued by any United States
financial institution having capital and surplus and undivided profits
aggregating at least $100,000,000 and rated Prime-1 by Xxxxx'x Investors
Service, Inc. or A-1 by Standard & Poor's Ratings Group or issued by the Agent;
(b) corporate obligations having a maturity of nine months or less and rated
Prime-1 by xxxxx'x Investors Service, Inc. or A-1 by Standard & Poor's Ratings
Group or issued by the Agent; (c) any direct obligation of the United States of
America or any agency or instrumentality thereof, or of any state or
municipality thereof, (i) which has a remaining maturity at the time of purchase
of not more than one year or which is subject to a repurchase agreement with any
Lender (or any other financial institution referred to in clause (a) above)
exercisable within one year from the time of purchase and (ii) which, in the
case of obligations of any state or municipality, is rated AA or better by
Xxxxx'x Investors Services, Inc. or AA or better by Standard & Poor's Ratings
Group; and (d) any mutual fund or other pooled investment vehicle rated AA or
better by Xxxxx'x Investors Service, Inc. or AA or better by Standard & Poor's
Ratings Group which invests principally in obligations described above.
Certificate Balance: when used in connection with an Eligible
-------------------
Securitization Transaction, shall mean the aggregate outstanding balance of
notes or certificates issued by a special purpose, wholly owned, bankruptcy-
remote subsidiary of the Company, relating to such Eligible Securitization
Transactions (except with respect to FASCO Auto Trust 1996-1 and CPS Grantor
Trust 1998-1 in which case it shall mean notes or certificates issued through
FASCO Auto Trust 1996-1 and CPS Grantor Trust 1998-1) and when used in
connection with Rejected Transactions, shall mean the aggregate outstanding
balance of notes or certificates issued by a special purpose, wholly owned,
bankruptcy-remote subsidiary of the Company relating to such Rejected
Transactions.
Closing Balance Sheet: the meaning specified in subsection 3.4.
--------------------- --------------
Closing Date: shall mean April 30, 1998.
------------
Code: the meaning specified in subsection 3.15.
---- ---------------
Collateral: the meaning specified in subsection 1.9.
---------- --------------
Collection Account: shall mean each account maintained by the trustee
------------------
or the servicer under the to accumulate principal and interest payment
received from the underlying obligations on the Automobile Contracts relating to
the.
Commitment: the meaning specified in subsection 1.1.
---------- --------------
Commitment Fee: the meaning specified in subsection 1.6.
-------------- --------------
Company: the meaning specified at the beginning of this Agreement.
-------
Compliance Certificate: the meaning specified in subsection 5.1.
----------------------
Consents: the meaning specified in subsection 3.13.
-------- ---------------
Consolidated Subsidiaries: shall mean collectively, FundCo, WareCo,
-------------------------
CPSRC and ARC.
Conversion Date: the meaning specified in subsection 1.1.
--------------- --------------
CPSRC: the meaning specified in subsection 1.9.
----- --------------
Credit Enhancer: as of the Closing Date, means FSA, and after the
---------------
Closing Date shall mean FSA and/or any other entity which is not an Affiliate of
the Company that issues any surety bond, letter of credit or other credit
enhancement in connection with any securitization transaction in which the
Company (or an Eligible Subsidiary of the Company) is the issuer.
Credit Trigger: the meaning specified in subsection 8.3.
-------------- --------------
Cumulative Default Rate: shall have the meaning specified in the
-----------------------
Master Spread Account Agreement between the Company and FSA in the form attached
hereto as Exhibit G, without giving effect to any amendment or modification
---------
thereof.
Cumulative Net Loss Rate: shall have the meaning specified in the
------------------------
Master Spread Account Agreement between the Company and FSA in the form attached
hereto as Exhibit G without giving effect to any amendment or modification
---------
thereof.
Default: any event or condition which, with the giving of notice or
-------
the expiration of any applicable grace period, or both, would constitute an
Event of Default.
Eligible Assignee: Any of (a) a commercial Lender organized under the
-----------------
laws of the United States, or any state thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (b) a savings and loan
association or savings Lender organized under the laws of the United States, or
any state thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with GAAP; (c) a commercial Lender
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
----
political subdivision of any such country, and having total assets in excess of
$1,000,000,000, provided that such Lender is acting through a branch or agency
located in
the country in which it is organized or another country which is also a member
of the OECD; (d) any Affiliate of The Prudential Insurance Company of America;
(e) the central Lender of any country which is a member of the OECD; and (f) if,
a Default, Event of Default or Credit Trigger has occurred and is continuing,
any other Lender, insurance company, commercial finance company or other
financial institution or other Person approved by the Agent, such approval not
to be unreasonably withheld.
Eligible Securitization Transactions: shall mean, collectively, CPS
------------------------------------
Auto Grantor Trust 1995-3, CPS Auto Grantor Trust 1995-4, CPS Auto Grantor Trust
1996-1, FASCO Auto Grantor Trust 1996-1, CPS Auto Grantor Trust 1996-2, CPS Auto
Grantor Trust 1996-3, CPS Auto Grantor Trust 1997-1, CPS Auto Grantor Trust
1997-2, CPS Auto Receivables Trust 1997-3, CPS Auto Receivables Trust 1997-4,
CPS Auto Receivables Trust 1997-5 and, CPS Grantor Trust 1998-1, together with
any other securitization transaction at any time included for purposes of
calculating the Borrowing Base, provided, that upon the occurrence and during
--------
the continuance of a "Trigger Event" (as such term is defined in any pooling and
-------------
servicing agreement, reimbursement agreement or other agreement executed in
connection with any Eligible Securitization Transaction) or Event of
Default/Credit Trigger under this Agreement or under any of the foregoing, such
securitization transaction shall immediately be removed from the Borrowing Base
for purposes of calculating the Available Line Commitment.
Eligible Securitization Transaction Documents: the meaning specified
---------------------------------------------
in subsection 5.7.
--------------
Eligible Subsidiaries: any of the Company's wholly-owned, special
---------------------
purpose, bankruptcy remote Subsidiaries (i) whose stock is pledged in its
entirety to the Agent and (ii) which is the issuer of, or depositor in respect
of notes or certificates in any securitization transaction which is or becomes
an Eligible Securitization Transaction in accordance with Section 4.12.
------------
Environmental Laws: the Resource Conservation and Recovery Act, the
------------------
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Water Pollution Control Act, the Federal Clean Water Act, the Federal Clean Air
Act, the Toxic Substances Control Act and any other federal, state or local
statute, regulation, ordinance, order or decree relating to health, safety
and/or the environment, as now or hereafter in effect.
ERISA: the meaning specified in subsection 3.15.
----- ---------------
Estimated Interest Payment: the meaning specified in subsection 5.11.
-------------------------- ---------------
Event of Default: the meaning specified in section 8.
---------------- ---------
FSA: the meaning specified in subsection 1.9.
--- --------------
FSA Intercreditor Agreements: the meaning specified in subsection
---------------------------- ----------
1.9.
---
FundCo: the meaning specified in subsection 1.9.
------ --------------
Future Servicing Cash Flows: means as of any date of determination
---------------------------
the present value on such date of the difference between the cash collected from
obligors on Automobile Contracts in each Eligible Securitization Transaction and
the sum of (i) principal and interest passed-through on the certificates issued
to investors in the Eligible Securitization Transaction, (ii) a two percent (2%)
annual servicing fee and (iii) other expenses, including trustee fees,
collateral agent fees, standby servicing fees, surety bond premiums and the
underwriter's discount.
GAAP: shall mean generally accepted accounting principles,
----
consistently applied.
Gross Principal Balance: shall mean the outstanding principal balance
-----------------------
of the Automobile Contracts plus unearned finance charges.
Hazardous Material: (a) any asbestos or insulation or other material
------------------
composed of or containing asbestos and (b) any petroleum product and any
hazardous, toxic or dangerous waste, substance or material defined as such in
(or for purposes of) the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, or any other
--------- ---------
applicable federal, state, local or other statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material, as now or at any time hereafter in effect.
Indebtedness: as applied to any Person, (i) all items (except items
------------
of capital or surplus or of retained earnings) which in accordance with GAAP
would be included in determining total liabilities as shown on the liability
side of the balance sheet of such Person as of the date of which Indebtedness is
to be determined, including without limitation Subordinated Debt and any Capital
Lease, (ii) all indebtedness secured by any mortgage, pledge, lien or
conditional sale or other title retention agreement to which any property or
asset owned or held by such Person is subject, whether or not the indebtedness
secured thereby shall have been assumed, and (iii) all indebtedness of others
which such Person has directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of business), discounted
or sold with recourse or agreed (contingently or otherwise) to purchase or
repurchase or otherwise acquire, or in respect of which such Person has agreed
to supply or advance funds (whether by way of loan, stock purchase, capital
contributions or otherwise) or otherwise to become directly or indirectly
liable.
Insurance Agreement Event of Default: the meaning specified in
------------------------------------
subsection 8.3.
--------------
Interest Expense: for any period, the aggregate amount (determined in
----------------
accordance with GAAP) of interest paid or payable during such period in respect
of all Indebtedness for borrowed money, Capital Leases and the deferred purchase
price of property.
Investment in Credit Enhancements: shall mean the aggregate cash
---------------------------------
balance in all of the Spread Accounts.
Irrevocable Payment Directives: the meaning specified in subsection
------------------------------ ----------
1.9.
---
Lender or Lenders: the meanings specified at the beginning of this
-----------------
Agreement.
Lenders' Value Model: shall mean the model utilized by the Lenders to
--------------------
calculate the present value of the Collateral. The Lenders' Value Model (with
such changes to correct any errors in the Lenders' Value Model as the Lenders
may from time to time implement in their reasonable and good faith business
judgment, after reasonable consultation with the Company) shall be re-run from
time to time in the discretion of the Lenders at the office of the Agent. The
inclusion of any amount in the Borrowing Base based on the Lenders' Value Model
shall not be deemed a determination by the Agent or any Lender as to the actual
value of the Collateral; it being the Company's responsibility to determine the
value/collectability of the Collateral, and the Company shall bear all risks
concerning the same. Without limiting the foregoing, the Company acknowledges
that it has received and reviewed the Lenders' Value Model, and expressly
approves the Lenders' Value Model for all purposes of this Agreement, including
for purposes of calculating the Borrowing Base.
Licenses: the meaning specified in subsection 3.5.
-------- --------------
Line of Credit: the meaning specified in subsection 1.2.
-------------- --------------
Liquidation Proceeds: with respect to any defaulted Automobile Loan,
--------------------
shall mean the sum of
(x) net proceeds from the sale of the repossessed vehicle(s) relating to such
Automobile Loan and without duplication, (y) insurance proceeds, if any,
-------------------
received in respect of such defaulted Automobile Contract.
Loan or Loans: the meanings specified in subsection 1.4.
------------- --------------
Loan Documents: collectively this Agreement, the Notes, the Security
--------------
Documents and any and all financing statements, agreements and instruments now
or hereafter related thereto or executed in connection therewith, as amended
from time to time.
Majority Lenders: at any time, (a) if none of the Loans shall be
----------------
outstanding, Lenders whose Percentages of the Total Commitment aggregate at
least sixty-six and two-thirds percent (66-2/3%) or (b) if any of the Loans
shall be outstanding, Lenders which are owed at least sixty-six and two-thirds
percent (66-2/3%) of the aggregate principal amount of all such Loans at the
time outstanding.
Material Adverse Effect: means any event, matter or condition which
-----------------------
could have a material adverse effect on (a) the financial performance or
condition, assets, operations or financial or other condition of the Company and
its Subsidiaries taken as a whole, (b) the Company's ability to pay and perform
all of the Loans and other material obligations owing by it to the Lenders in
accordance with the terms thereof, and/or (c) the Collateral (or any portion
thereof) or the security interests of the Agent and the Lenders in the
Collateral (or any portion thereof), or the priority of such security interests.
Minimum Servicing Balance: shall mean the aggregate face amount of
-------------------------
all Automobile Contracts serviced by the Company under any pooling and servicing
agreement or (without duplication) sale and servicing agreement.
Net Book Value: shall mean the value of such assets on the books of
--------------
the Company, determined in accordance with GAAP.
Net Income: net income (or loss), for the period in question,
----------
determined in accordance with GAAP.
Net Interest Receivable: shall mean at any date of determination, the
-----------------------
net present value as of such date of Future Servicing Cash Flows available to be
distributed to the Company by a Subsidiary in connection with an Eligible
Securitization Transaction as determined in accordance with Statement of
Financial Accounting Standards No. 125 ("SFAS 125"). Future Servicing Cash
--------
Flows represent the difference between the coupon rate on the Automobile
Contracts and the pass-through rate on the certificates issued to the investors
in the securitized pool in excess of a Base Servicing Fee of two percent (2%)
and any other continuing costs such as trustee or surety bond premiums. To
determine the Net Interest Receivable, the Future Servicing Cash Flows are first
estimated using an assumed rate of prepayment that is intended to be
conservative relative to historical experience and then discounted at a market
rate commensurate with the risk associated with this type of investment. The
Net Interest Receivable is then reduced by a credit loss provision based upon
historical experience and deemed adequate to cover net losses over the life of
the trust. The Net Interest Receivable is subsequently amortized against
servicing income on a level-yield basis. Periodically the Company reviews the
assumptions utilized in determining the Net Interest Receivable. Should the
present value of Future Servicing Cash Flows prove to be insufficient to recover
the capitalized amount, a charge to servicing income would be made in accordance
with SFAS 125.
Net Worth: at any date of determination, shall mean the Total Assets
---------
of the Company minus Total Liabilities of the Company, determined in accordance
-----
with GAAP.
New Building: the meaning specified in subsection 6.1(g).
------------ -----------------
Note or Notes: the meanings specified in subsection 1.3.
------------- --------------
Operating Account: the meaning specified in subsection 1.2.
----------------- --------------
PBGC: the meaning specified in subsection 3.15.
---- ---------------
Percentage: the meaning specified in subsection 1.1.
---------- --------------
Person: a corporation, an association, a partnership, an owner,
------
grantor or master trust, a joint venture, an organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.
Pool Summary Report: the meaning specified in subsection 5.1.
------------------- --------------
Prime-based Loans: shall mean collectively the Loans with an interest
-----------------
rate based on the Prime Rate.
Prime Rate: the per annum rate of interest announced from time to
----------
time by the Agent in Boston, Massachusetts.
Projections: the meaning specified in subsection 3.4.
----------- --------------
Proprietary Rights: any patents, registered and common law
------------------
trademarks, service marks, trade names, copyrights, licenses and other similar
rights, including, without limitation, know-how, trade secrets and other
confidential information, and applications for each of the foregoing.
Receivables: shall have the meaning set forth in the Uniform
-----------
Commercial Code as applied to the amounts attributable to retail installment
contracts secured by financed vehicles.
Register: the meaning specified in subsection 14.14.
-------- ----------------
Rejected Transaction: means any Subsequent Securitization Transaction
--------------------
with respect to which (i) the Company has delivered to each of the Lenders all
of the Required Information, together with a written request that such
Subsequent Securitization Transaction become an Eligible Securitization
Transaction and be included within the Borrowing Base under this Agreement, and
---
(ii) the Lenders shall have delivered written notice to the Company that such
Subsequent Securitization Transaction will not be included as an Eligible
---
Securitization Transaction under this Agreement, or the Lenders shall not have
issued any response to the Company's submission of the Required Information and
written request within ten (10) Banking Days after confirmed receipt by the
Lenders.
Related Events: the consummation of the transactions contemplated by
--------------
this Agreement (including the repayment of certain Indebtedness with proceeds of
the Loans), the Security Documents, and the Eligible Securitization Transaction
Documents, in accordance with the respective terms thereof.
Required Information: with respect to any Subsequent Securitization
--------------------
Transaction, shall mean: (i) the prospectus or, if a prospectus is not yet
available, a report outlining: initial pool balance; initial loan balance;
prefunding amount (if any); spread account initial deposit; spread account
maintenance level; spread account floor; spread account trigger levels; weighted
average coupon; weighted average maturity; estimated certificate coupon rate;
and (ii) service reports to date (if any); (iii) original book value; (iv)
current book value; and (vi) pool selection, with tables showing breakdowns and
averages of: original balances; current balances; coupon (APR) rate report;
original terms; remaining terms; collateral code (new, used, new light truck,
used light truck); vehicle model years; borrower monthly incomes; borrower
length of employment; borrower length of residency; borrower debt ratios; loan
to values; and geographic distribution.
Residual Interest in Securitizations: means at any date of
------------------------------------
determination, the present value as
of such date of the aggregate (without duplication) of the Company's or any
Eligible Subsidiaries' interest in (i) the Net Interest Receivable relating to
Eligible Securitization Transactions, (ii) the Spread Accounts relating to
Eligible Securitization Transactions and (iii) over-collateralized accounts.
Restricted Payment: the meaning specified in subsection 6.5.
------------------ --------------
Revolving Credit Loan or Loans: the meanings specified in subsection
------------------------------ ----------
1.2.
---
SEC: the Securities and Exchange Commission or any governmental
---
authority succeeding to any of its functions.
Security Documents: the meaning specified in subsection 1.9.
------------------ --------------
SFAS 125: the meaning specified in the definition of "Net Interest
-------- ------------
Receivable".
----------
Spread Accounts: with respect to each Eligible Securitization
---------------
Transaction, the named "Spread Account", together with all other cash collateral
--------------
accounts or other escrow or reserve accounts established and maintained by the
trustee for the benefit of the Company, any Eligible Subsidiary, certificate
holders and/or the Credit Enhancer.
Subordinated Agreements: shall mean the Indenture dated as of
-----------------------
December 15, 1995 by and between the Company and Xxxxxx Trust and Savings Bank
as trustee, as amended, the Indenture dated April 15, 1997 by and between the
Company and Bankers Trust Company as trustee, as amended, the Company's
partially convertible subordinated 9% note dated June 12, 1997, in the original
principal amount of $15,000,000, payable to Stanwich Financial Services Corp.,
as amended from time to time, together with any and all other agreements now
existing or hereafter entered into between the Company and any Subordinated
Lenders.
Subordinated Debt: shall mean collectively, (i) the $20 million
-----------------
10.50% of participating equity notes (PENS) issued by the Company April 15, 1997
and due April 15, 2004, (ii) the $20 million of rising interest subordinate
redeemable securities (RISRS) issued by the Company December 20, 1995 and due
January 1, 2006, (iii) $15 million of unsecured debt from Stanwich Financial
Services Corp. and (iv) that portion of the Indebtedness of the Company
heretofore or hereafter consented to in writing by the Lenders and which is made
subordinate and junior in the right of payment to the Notes and to the Company's
other obligations to the Lenders hereunder by provisions satisfactory in form
and substance to the Lenders and their counsel. Without limiting the generality
of the foregoing, the subordination provisions of all "Subordinated Debt" shall
-----------------
be substantially similar to the subordination terms set forth in Article
Fourteen of the Indenture dated April 15, 1997 by and between the Company and
Bankers Trust Company as trustee. All Indebtedness of the Company to its
Subsidiaries or Affiliates will be Subordinated Debt.
Subordinated Lenders: means the lenders of the Subordinated Debt.
--------------------
Subsequent Securitization Transaction(s): the meaning specified in
----------------------------------------
subsection 4.12.
---------------
Subsidiary: any corporation of which more than 50% of the outstanding
----------
Voting Stock (other than director's qualifying shares) is at the time owned or
controlled by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.
Thirty (30) Day Delinquencies: shall mean, with respect to each
-----------------------------
Eligible Securitization Transaction, the sum of all Thirty (30) Day Delinquency
Automobile Contracts included in such Eligible Securitization Transaction. An
Automobile Contract shall, at any date of determination, be considered a Thirty
(30) Day Delinquency if there are at least two scheduled payments (or any part
thereof) due and unpaid, provided that if the obligors have paid more than 90%
--------
of the most overdue scheduled payment such scheduled
payment shall be deemed paid for purposes hereof.
Total Commitment: the meaning specified in subsection 1.1.
---------------- --------------
Total Assets: all assets of the Company which may be properly
------------
classified as assets in accordance with GAAP.
Total Liabilities: all Indebtedness, and all other liabilities which
-----------------
may be properly classified as liabilities in accordance with GAAP.
Total Senior Liabilities: means Total Liabilities less the aggregate
------------------------
balance of Subordinated Debt.
Trigger Event: shall have the meaning ascribed thereto in any
-------------
agreement executed in connection with any Eligible Securitization Transaction,
and in connection with subsequent securitization transactions which become
Eligible Securitization Transactions, shall include any other term or definition
having substantially the same meaning as "Trigger Event" as defined in the
-------------
Eligible Securitization Documents as of the Closing Date.
USAP Audit: shall mean an audit conducted according to the
----------
requirements and standards set forth in the Uniform Single Attestation Program
promulgated by the Mortgage Bankers Association of America.
Voting Stock: stock having ordinary voting power to elect a majority
------------
of the board of directors of the corporation in question, irrespective of
whether or not at the time stock of any class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency.
WareCo: the meaning specified in subsection 1.9.
------ --------------
Section 10. Setoffs, Pro Rata Treatment; etc. If the Company becomes
---------------------------------------------
insolvent, howsoever evidenced, or any Default or Event of Default occurs and is
continuing, any Indebtedness from any Lender to the Company or any Subsidiary
may, without regard to the value or adequacy of the Collateral, be offset and
applied toward the payment of any Indebtedness from the Company to the Lenders,
whether or not such Indebtedness, or any part thereof shall then be due. The
Lenders agree among themselves that, with respect to all sums received by the
Lenders applicable to the payment of principal of or interest on the Notes,
equitable adjustment will be made among the Lenders so that, in effect, all such
sums shall be shared ratably by each of the Lenders whether received by
voluntary payment, by the exercise of the right of setoff or Lender's lien, by
counterclaim or crossclaim or by the enforcement of any or all of the Notes. If
any Lender receives any payment on its Notes of a sum or sums in excess of its
pro rata portion, then such Lender receiving such excess payment shall purchase
--- ----
for cash from the other Lenders an interest in their Notes in such amounts as
shall result in a ratable participation by each of the Lenders in the aggregate
unpaid amount of the Notes then outstanding, provided, however, that if all or
any portion of such excess payment is thereafter recovered from such Lender, the
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
Section 11. Expenses; Indemnification.
--------------------------------------
(a) Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees (i) to pay all reasonable expenses, including
reasonable fees and disbursements of counsel for the Agent (subject to the term
sheet), which the Agent has incurred or may hereafter incur in connection with
the preparation of this Agreement, the Security Documents, the Notes, the
Eligible Securitization Transaction Documents and all other documents related
hereto and thereto (including any amendment, consent or waiver hereafter
requested by the Company hereunder or thereunder) and the transactions
contemplated hereby or the protection, preservation and/or enforcement of the
rights of the Agent or the Lenders hereunder or under the
Notes or the Security Documents in the event of a Default hereunder or
thereunder (including without limitation amounts incurred with respect to any
so-called "workout" of the Loans) and (ii) to pay all taxes (other than the
------- ----- ----
Lenders' income taxes) and fees (including interest and penalties), including,
without limitation, all recording and filing fees, transfer and documentary
stamp and similar taxes, which may be payable in respect of the execution and
delivery of this Agreement, the Security Documents, the Notes, the Eligible
Securitization Transaction Documents and all other documents related hereto and
thereto (including any amendment, consent or waiver hereafter requested by the
Company hereunder or thereunder) and to indemnify the Agent and the Lenders and
hold the Agent and the Lenders harmless against any loss or liability resulting
from non-payment or delay in payment of any such tax. The Company hereby
authorizes the Agent to pay all such amounts described above to the Lenders and
to charge the same to the Operating Account or the Blocked Account or any other
depository account maintained by the Company with the Agent if the same are not
paid within five (5) days after the Agent and/or the Lender notifies the Company
of the amounts owed.
(b) The Company will indemnify the Agent, the Lenders, their respective
directors, officers and employees and each other Person, if any, who controls
the Agent or the applicable Lender, and will hold the Agent and the Lenders and
such other Persons harmless from and against any and all claims, damages,
losses, liabilities, judgments and expenses (including without limitation all
reasonable fees and expenses of counsel and all expenses of litigation or
preparation therefor) which the Agent, the Lenders or such other Persons may
incur or which may be asserted against the Lenders or such other Persons in
connection with or arising out of any investigation, litigation or proceeding
involving the Company or any shareholder or any Affiliate of the Company or any
such shareholder (including compliance with or contesting of any subpoenas or
other process issued against any Lender, or any director, officer or employee of
the Agent or any Lender, or any Person, if any, who controls the Agent or any
Lender in any proceeding involving the Company or any shareholder or any
Affiliate of the Company or any such shareholder), whether or not the Agent or
any Lender is party thereto, other than claims, damages, losses, liabilities or
judgments with respect to any matter as to which the Agent or such Lender or
such other Person seeking indemnity shall have been finally adjudicated not to
have acted in good faith or to have been grossly negligent in its actions or
inactions. Promptly upon receipt by any indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the Company hereunder, notify the Company
in writing of the commencement thereof.
(c) The Company acknowledges and agrees that its agreements and obligations
under this Section 11 shall survive the termination of this Agreement and
----------
repayment in full of the Loans. The Agent shall be entitled to retain
Collateral or require substitution therefor to the extent required to reasonably
assure the Agent and the Lenders of satisfaction of the Company's obligations
under this Section 11 and any Collateral not so required or, if sufficient cash
----------
collateral is substituted, then all of the Collateral, shall be released to the
Company.
Section 12. Amendments and Waivers, etc.
----------------------------------------
(a) Any term of this Agreement or of the Security Documents or the Notes or
the other Loan Documents may be amended and the observance of any term of this
Agreement or of the Security Documents or the Notes may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Majority Lenders, provided
--------
that no such amendment or waiver shall, without the prior written consent of all
of the Agent, the Lenders or the holders of all of the Notes at the time
outstanding, (a) extend the fixed maturity or reduce the principal amount of, or
reduce the rate or extend the time of payment of interest on, or reduce the
amount or extend the time of payment of any principal of, any Note, (b) change
any Commitment or Percentage, (c) change the percentage referred to in the
definition of "Majority Lenders" contained in Section 9 hereof, (d) amend this
---------------- ---------
Section 12, or (e) include a Subsequent Transaction within the definition of
----------
Eligible Securitization Transactions. Once a Default or Event of Default has
occurred, such Default or Event of Default shall be deemed to exist and be
continuing for all purposes of this Agreement and the other Loan Documents until
the Majority Lenders or all of the Lenders (in the circumstances described in
the foregoing clauses (a) through (e)) shall have waived such
Default or Event of Default in writing, stated in writing that the same has been
remedied or cured to such Lenders' reasonable satisfaction or entered into an
Amendment to this Agreement which by its express terms cures or waives such
Default or Event of Default, at which time such Default or Event of Default
shall no longer be deemed to exist or to have continued. Any amendment or waiver
effected in accordance with this Section 12 shall be binding upon each holder of
----------
any Note at the time outstanding, each future holder of any Note and the
Company.
(b) The failure of the Agent or the Lenders to insist upon the strict
performance of any term, condition or other provision of this Agreement or the
Security Documents or the Notes or to exercise any right or remedy hereunder or
thereunder shall not constitute a waiver by the Agent or the Lenders of any such
term, condition or other provision or Default or Event of Default or Credit
Trigger in connection therewith; and any waiver of any such term, condition or
other provision or of any such Default or Event of Default or Credit Trigger
shall not affect or alter this Agreement or the Security Documents or the Notes,
and each and every term, condition and other provision of this Agreement, the
Security Documents and the Notes shall, in such event, continue in full force
and effect and shall be operative with respect to any other then existing or
subsequent Default or Event of Default or Credit Trigger in connection
therewith.
Section 13. Nature of the Lenders' Obligations. The Lenders' obligations to
-----------------------------------------------
make their respective Loans are several and not joint or joint and several. Any
Lender which is not in default in the performance of its said obligations may,
in its discretion, assume the obligations of any other Lender which is in
default.
A. Section 14. The Agent.
----------------------
14.1 Appointment, Powers and Immunities. Each Lender hereby irrevocably
----------------------------------------
appoints and authorizes the Agent to act as its agent hereunder and under each
of the Security Documents with such powers as are specifically delegated to the
Agent by the terms of this Agreement and the Security Documents, together with
such other powers as are reasonably incidental thereto. The Agent (which term as
used in this sentence and in subsection 14.5 and the first sentence of
---------------
subsection 14.6 hereof shall include reference to its Affiliates and its own and
---------------
its Affiliates' officers, directors, employees and agents): (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement to
be a trustee for any Lender; (b) shall not be responsible to the Lenders for any
recitals, statements, representations or warranties contained in this Agreement
or any Security Document, or in any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any
Security Document, or for the value, validity, effectiveness, genuineness,
enforceability, perfection or sufficiency of this Agreement, any Note, any
Security Document or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person to perform any of
its obligations hereunder or thereunder; (c) shall not be required to initiate
or conduct any litigation or collection proceedings hereunder except to the
extent requested by the Majority Lenders; and (d) shall not be responsible for
any action taken or omitted to be taken by it hereunder or under any Security
Document or other document or instrument referred to or provided for herein or
therein or in connection herewith, except for its own gross negligence or
willful misconduct. The Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Subject to the foregoing,
the Agent shall, on behalf of the Lenders: (i) execute any and all of the
Security Documents on behalf of the Lenders; (ii) hold and apply any and all
Collateral, and the proceeds thereof, at any time received by it, in accordance
with the provisions of the Security Documents and this Agreement; (iii) exercise
any and all rights, powers and remedies of the Lenders under this Agreement or
any of the Security Documents, including the giving of any consent or waiver or
the entering into of any amendment, subject to the provisions of Section 12(a);
-------------
(iv) execute, deliver and file UCC financing statements, mortgages, deeds of
trust, lease assignments and other such agreements, and possess instruments on
behalf of any or all of the Lenders; and (v) in the event of acceleration of the
Company's Indebtedness hereunder, use such efforts to sell or otherwise
liquidate or dispose of the Collateral referred to herein and in the Security
Documents and otherwise exercise the rights of the Lenders thereunder as the
Agent would customarily take with respect to loans made exclusively by it and of
a nature comparable to the Loans made hereunder.
14.2 Reliance by Agent. The Agent shall be entitled to rely upon any
-----------------------
certifications, notices or other communications (including any communications by
telephone, telex, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or Persons,
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. As to any matters not expressly provided
for by this Agreement, the Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Lenders (or the Majority Lenders, to the extent permitted by the
terms hereof), and such instructions of the Lenders or the Majority Lenders, as
applicable, and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.
14.3 Defaults. The Agent shall not be deemed to have knowledge of the
--------------
occurrence of a Default, Event of Default or Credit Trigger (other than the
nonpayment of principal of or interest on the Notes) unless the Agent has
received written notice from a Lender or the Company specifying such Default,
Event of Default or Credit Trigger. In the event that the Agent receives such a
notice of the occurrence of a Default, Event of Default or Credit Trigger, the
Agent shall give prompt notice thereof to the Lenders (and shall give each
Lender prompt notice of each such nonpayment). The Agent shall (subject to
subsection 14.7) take such action with respect to such Default, Event of Default
---------------
or Credit Trigger as shall be directed by the Majority Lenders, provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default, Event of Default or Credit Trigger as it
shall deem advisable in the best interest of the Lenders.
14.4 Rights as a Lender. With respect to its Commitment and the Loans made by
------------------------
it, the Agent in its capacity as a Lender hereunder shall have the same rights
and powers hereunder as any other Lender and may exercise the same as though it
were not acting as the Agent, and the term "Lender" or "Lenders" shall, unless
------ -------
the context otherwise indicates, include the Agent in its individual capacity.
The Agent and its Affiliates may (without having to account therefor to any
Lender) accept deposits from, lend money to and generally engage in any kind of
Banking, trust or other business with the Company and any of its Affiliates as
if it were not acting as the Agent, and the Agent may accept fees and other
consideration from the Company for services as the Agent or otherwise without
having to account for the same to the Lenders.
14.5 Indemnification. The Lenders agree to indemnify the Agent ratably in
---------------------
accordance with the aggregate principal amount of the Notes held by the Lenders
(or, if no such principal or interest is at the time outstanding, ratably in
accordance with their respective Percentages of the Total Commitment), for any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
any way relating to or arising out of this Agreement, the Notes or any Security
Document or any other document contemplated by or referred to herein or the
transactions contemplated by or referred to herein or therein (including,
without limitation, the costs and expenses which the Company is obligated to pay
but excluding, unless a Default, Event of Default or Credit Trigger has occurred
and is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms of this Agreement, the Notes or any Security Document or of any such other
documents, provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
14.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has,
---------------------------------------------
independently and without reliance on the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of the Company, the Collateral, the Eligible Securitization
Transactions and the Related Events, and its own decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement. Without limiting the
foregoing, each Lender has analyzed and approved the Lenders' Value Model, and
the Agent has no responsibility therefor. The Agent shall not be
required to keep itself informed as to the performance or observance by the
Company of this Agreement or any other document referred to or provided for
herein or to inspect the properties or books of the Company. Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Company (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. Notwithstanding the foregoing, the Agent will use its best efforts
to provide to the Lenders any and all information reasonably requested by them
and reasonably available to the Agent promptly upon such request.
14.7 Failure to Act. Except for action expressly required of the Agent
--------------------
hereunder, the Agent shall in all cases be fully justified in failing or
refusing to act hereunder unless it shall be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
14.8 Resignation of Agent. Subject to the appointment and acceptance of a
--------------------------
successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders and the Company. Upon any such resignation, the
Majority Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Lenders and shall
have accepted such appointment within 30 days after the retiring Agent's giving
of notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent which shall be a Lender which has a combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After the retiring Agent's resignation
hereunder as Agent, the provisions of this Section 14 shall continue in effect
----------
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as the Agent.
14.9 Cooperation of Lenders. Each Lender shall (a) promptly notify the other
----------------------------
Lenders and the Agent of any Events of Default known to such Lender under this
Agreement and not reasonably believed to have been previously disclosed to the
other Lenders; (b) provide the other Lenders and the Agent with such information
and documentation as such other Lenders or the Agent shall reasonably request in
the performance of their respective duties hereunder, including all information
relative to the outstanding balance of principal, interest and other sums owed
to such Lender by the Company; and (c) cooperate with the Agent with respect to
any and all collections and/or foreclosure procedures at any time commenced
against the Company or otherwise in respect of the Collateral by the Agent on
behalf of the Lenders.
14.10 Security. Notwithstanding the foregoing, the Agent and the other Lenders
--------------
agree, as among themselves, that (i) the Agent shall not without the consent of
the Majority Lenders make any sale or disposition of the Collateral pursuant to
any of the Security Documents, and (ii) the Agent shall not without the consent
of all of the Lenders release the security interest of the Lenders in any of the
Collateral or release or discharge any Person which is a party to any of the
Security Documents from its obligations thereunder, except in each case as
expressly provided in the Security Documents, or consent or agree to any
amendment or waiver of any material provision of any of the Security Documents.
The Agent acknowledges to the other Lenders that it is acting in an agency
capacity hereunder and that the security interest in the Collateral granted
under the Security Documents secures the Indebtedness of the Company owing to
all of the Lenders. In the event of any default, the Agent will apply and/or
pay over to the Lenders any net proceeds derived from the Collateral pro rata on
--- ----
the basis of the then outstanding portion of the total Indebtedness of the
Company owed to the Lenders.
The Agent will be reimbursed or properly indemnified by the Lenders in the
event the Agent is requested by the Lenders to take or omit to take any action
with respect to the Collateral (any such reimbursement or indemnification to be
pro rata as provided in subsection 14.5). The Agent shall have the
--- ---- ---------------
right to retain counsel to advise it as to any action or decision with respect
to the Collateral and shall be reimbursed by the other Lenders for the cost of
the same (to the extent the Agent is not reimbursed by the Company) prior to
distributing any of the Collateral or any proceeds thereof (any such
reimbursement to be pro rata as aforesaid).
--- ----
14.11 Amendment of Section 14. The Company hereby agrees that the foregoing
-----------------------------
provisions of this Section 14 constitute an agreement among, and solely for the
benefit of, the Agent and the Lenders (and the Agent and the Lenders acknowledge
that the Company is not a party to or bound by such foregoing provisions) and
that any and all of the provisions of this Section 14 may be amended at any time
----------
by the Lenders without the consent or approval of, or notice to, the Company
(other than the requirement of notice to the Company of the resignation of the
Agent).
B. Section 14. Assignment and Participation.
-----------------------------------------
14.12 Conditions to Assignment by Lenders. Except as provided herein, each
-----------------------------------------
Lender may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Percentage and Commitment and the same portion of the Loans at
the time owing to it) and the Note held by it; provided that (i) each such
--------
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Credit Agreement, (ii) each
assignment shall be in an amount that is at least $2,000,000 and a whole
multiple of $100,000 in excess of such $2,000,000 and (iii) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance, in the form required by
the Agent (an "Assignment and Acceptance"), together with any Note subject to
-------------------------
such assignment. Upon such execution, delivery, acceptance and recording, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least seven (7) Banking Days after the execution
thereof, (i) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (ii) the assigning Lender shall, to the extent provided in
such assignment and upon payment to the Agent of the registration fee referred
to in subsection 14.14, be released from its obligations under this Agreement.
----------------
The Company shall respond to any written request for the approval of an
assignment within seven (7) Banking Days of receipt thereof and the failure to
respond shall be deemed approval.
14.13 Certain Representations and Warranties; Limitations; Covenants. By
--------------------------------------------------------------------
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Lender makes no representation of warranty, express
or implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or the attachment, perfection or priority of
any security interest;
(b) the assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company and its
Subsidiaries, or the performance or observance by the Company and its
Subsidiaries of any of their obligations under this Agreement or any of the
other Loan Documents or any other instrument or document furnished pursuant
thereto or thereto;
(c) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred to in
Section 5 and such other documents and information as it has deemed appropriate
---------
to make its own credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Lender, the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible Assignee;
(f) such assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to the Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are required to
be performed by it as a Lender; and
(h) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance.
14.14 Register. The Agent shall maintain a copy of each Assignment and
--------------
Acceptance delivered to it and a register or similar list (the "Register") for
--------
the recordation of the names and addresses of each of the Lenders and the
Commitment and Percentage of, and principal amount of the Loans owing to the
Lenders from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Company and the Lenders at any reasonable time and from time
to time upon reasonable prior notice. Upon each recordation in the Register
arising from execution of an assignment and acceptance, the assigning Lender
agrees to pay to the Agent a registration fee in the sum of $2,500.
14.15 New Notes. Upon its receipt of an Assignment and Acceptance executed by
---------------
the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (i) record the information contained therein in the
Register, and (ii) give prompt notice thereof to the Company and the Lenders
(other than the assigning Lender). Within seven (7) Banking Days after receipt
of such notice, the Company, at its own expense, shall execute and deliver to
the Agent, in exchange for each surrendered Note, a new Note to the order of
such Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Lender in an amount equal to the amount retained by it
hereunder. Such new Notes shall provide that they are replacements for the
surrendered Notes, shall be in an aggregate principal amount equal to the
aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of the assigned Notes. Within seven (7) Banking Days of
issuance of any new Notes pursuant to this subsection 14.15, if so requested by
----------------
the Agent the Company shall deliver an opinion of counsel, addressed to the
Lenders and the Agent, relating to the due authorization, execution and delivery
of such new Notes and the legality, validity and binding effect thereof,
substantially in the same form as the corresponding portion of the legal opinion
delivered on the Closing Date. The surrendered Notes shall be canceled and
returned to the Company. The Company shall be reimbursed for reasonable expenses
incurred in connection with obtaining such opinion of counsel.
14.16 Participants. Each Lender may (subject to the provisions of this
------------------
subsection 14.16 and without the consent of the Agent) sell participations to
----------------
one or more Lenders or other entities in all or a portion of such Lender's
rights and obligations under this Agreement and the other Loan Documents;
provided that (i) each such participation shall be in amount of not less than
--------
$1,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Company, (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on any Loans, extend the term or increase
the amount of the Commitment of such Lender as it relates to such participant,
reduce the amount of any commitment fees to which such participant is entitled
or extend any regularly scheduled payment date for principal or interest and
(iv) each Lender desiring to sell a participation shall notify the Agent in
writing prior to committing to such sale.
14.17 Disclosure. The Lenders shall hold all non-public information relating to
----------------
the Company obtained by it under this Agreement in accordance with its customary
procedures for handling confidential information of this nature.
14.18 Assignee or Participant Affiliated with the Company. If any assignee
---------------------------------------------------------
Lender is an Affiliate of the Company, then any such assignee Lender shall have
no right to vote as a Lender hereunder or under any of the other Loan Documents
for purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Agent, and the determination of the Majority Lenders
shall for all purposes of this Agreement and the other Loan Documents be made
without regard to such assignee Lender's interest in any of the Loans. If any
Lender sells a participating interest in any of the Loans to a participant, and
such participant is an Affiliate of the Company, then such transferor Lender
shall promptly notify the Agent of the sale of such participation. A transferor
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan Documents
or for purposes of making requests to the Agent to the extent that such
participation is beneficially owned by any Affiliate of the Company, and the
determination of the Majority Lenders shall for all purposes of this Agreement
and the other Loan Documents be made without regard to the interest of such
transferor Lender in the Loans to the extent of such participation.
14.19 Miscellaneous Assignment Provisions. Any assigning Lender shall retain
-----------------------------------------
its rights to be indemnified pursuant to Section 11 with respect to any claims
----------
or actions arising prior to the date of such assignment. If any assignee Lender
is not incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Company and the Agent certification as to its exemption from deduction or
withholding of any United States federal income taxes. Anything contained in
this Agreement to the contrary notwithstanding, any Lender may at any time
pledge all or any portion of its interest and rights under this Agreement
(including all or any portion of its Notes) to any of the twelve Federal Reserve
Lenders organized under '4 of the Federal Reserve Act, 12 U.S.C. '341 without
the Company's prior approval. No such pledge or the enforcement thereof shall
release the pledgor Lender from its obligations hereunder or under any of the
other Loan Documents.
Section 15. Miscellaneous.
--------------------------
15.1 Notices, etc. All notices and other communications hereunder shall be in
------------------
writing and shall be personally delivered or mailed by first class mail, postage
prepaid, as follows:
(a) If to the Lenders or the Agent:
State Street Lender and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
with a copy to:
Xxxxx X. Xxxxxxxxx, P.C.
Xxxxxx, Xxxx & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
and, in the case of all notices relating to payments,
The Prudential Insurance Company of America
The Structured Finance High Yield Fund, LLC
c/o Prudential Investments - Structured Finance Group
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Managing Director
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
The Prudential Insurance Company of America
x/x Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Manager
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and in the case of all notices relating to borrowings, to:
The Prudential Insurance Company of America
The Structured Finance High Yield Fund, LLC
x/x Xxxxx Xxxxxxxxxx
Xxxx Xxxxxxx Xxxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Manager
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
with a copy to:
The Prudential Insurance Company of America
c/o Prudential Investments - Structured Finance Group
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attention: Managing Director
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
and, in the case of all other notices, to:
The Prudential Insurance Company of America
c/o Prudential Investments - Structured Finance Group
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Managing Director
Telephone No.: 000-000-0000
Telecopy No.: 000-000-0000
(b) If to the Company:
Consumer Portfolio Services, Inc.
0 Xxx
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxx and Xxxx Xxxxxxxx, Esq.
or to such other address or addresses as the party to whom such notice is
directed may have designated in writing to the other parties hereto. A notice
shall be deemed to have been given upon receipt by the party to whom such notice
is directed.
15.2 Calculations, etc. Calculations hereunder shall be made and financial
-----------------------
data required hereby shall be prepared, both as to classification of items and
as to amounts, in accordance with GAAP and practices which principles and
practices shall be consistently applied and in conformity with those used in the
preparation of the financial statements referred to herein.
15.3 Governmental Approval. The Company agrees to take any action which the
---------------------------
Lenders may reasonably request in order to obtain and enjoy the full rights and
benefits granted to the Lenders by this Agreement and the Security Documents,
including specifically, at the Company's own cost and expense, the use of its
best efforts to assist in obtaining approval of the any applicable governmental
or regulatory authority or court for any action or transaction contemplated by
this Agreement or the Security Documents which is then required by law.
15.4 Survival of Agreements, etc. This Agreement shall inure to the benefit of
---------------------------------
the Lenders and their successors and assigns including any subsequent holder or
holders of the Notes, and the terms "Lenders" and "Lender" shall include any
------- ------
such holder or holders whenever the context permits. In the event of a sale or
assignment by any Lender in accordance with the terms of this Agreement of all
or any part of the Loans or any of the Secured Obligations (as defined in the
Security Documents) held by it, such Lender may assign or transfer its rights
and interests under this Agreement and any one or more of the Security Documents
in whole or in part to the purchaser or purchasers thereof, whereupon such
purchaser or purchasers shall become vested with all of the powers and rights of
such Lender hereunder and thereunder, and such Lender shall thereafter be
forever released and fully discharged from any liability or responsibility
hereunder or thereunder accruing or arising after the effective date of the
assignment with respect to the rights and interests so assigned. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the making of the Loans hereunder.
15.5 Counterparts, etc. This Agreement may be executed in any number of
-----------------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument.
15.6 Entire Agreement, etc. This Agreement constitutes the entire contract
---------------------------
between the parties hereto and shall supersede and take the place of any other
instrument purporting to be an agreement of the parties hereto relating to the
transactions contemplated hereby. This Agreement may not be changed orally but
only by an agreement in writing signed by the party against whom any waiver,
change, modification or discharge is sought.
15.7 Governing Law, etc.; Construction. (a) This Agreement and the Notes,
---------------------------------------
including the validity thereof and the rights and obligations of the parties
hereunder and thereunder, shall be construed in accordance with and governed by
the internal laws of The Commonwealth of Massachusetts (without reference to
conflicts of laws
principles) and is intended to take effect as a sealed instrument. Except as
prohibited by law which cannot be waived, the Company hereby waives any right
that it may have to claim or recover in any litigation involving the Lenders any
special, exemplary, punitive or consequential damages or any damages other than,
or in addition to, actual damages. The provisions of this Agreement are
severable; the unenforceability of any provision of this Agreement shall not
affect the validity, binding effect and enforceability of any other provision or
provisions of this Agreement.
(b) Any reference to this Agreement, the Notes, the Security Documents and
the other Loan Documents contained herein or in any other Loan Document shall
(unless otherwise indicated) be deemed to refer to such writing as the same may
be amended and/or restated from time to time in accordance with the terms
thereof. The words "herein", "hereof", "hereunder" and words of like import
------ ------ ---------
shall refer to this Agreement as a whole and not to any particular section or
paragraph of this Agreement. In the event of any conflict between the
provisions of this Agreement (on the one hand) and the provisions of any of the
other Loan Documents (on the other hand), the provisions of this Agreement shall
prevail.
15.8 Jurisdiction; Waiver of Jury Trial. THE COMPANY, TO THE EXTENT THAT IT
----------------------------------------
MAY LAWFULLY DO SO, HEREBY CONSENTS TO SERVICE OF PROCESS, AND TO BE SUED, IN
THE COMMONWEALTH OF MASSACHUSETTS AND CONSENTS TO THE JURISDICTION OF THE COURTS
OF THE COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF MASSACHUSETTS, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO
WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT,
ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF ITS OBLIGATIONS HEREUNDER OR
UNDER THE NOTES OR ANY OF THE SECURITY DOCUMENTS OR WITH RESPECT TO THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND EXPRESSLY WAIVES ANY AND ALL
OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY SUCH COURTS. THE COMPANY FURTHER
AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY OF
SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF
SERVED PERSONALLY OR BY CERTIFIED MAIL TO IT AT ITS ADDRESS PROVIDED IN
SUBSECTION 15.1 OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE COMMONWEALTH OF
---------------
MASSACHUSETTS. THE COMPANY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN
ANY PROCEEDING HEREAFTER INSTITUTED IN RESPECT OF THIS AGREEMENT, THE NOTE, THE
SECURITY DOCUMENTS, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR
THEREWITH. The Company hereby certifies that neither the Agent nor the Lenders
nor any of their representatives, agents or counsel have represented, expressly
or otherwise, that the Lenders would not, in the event of any such suit, action
or proceeding, seek to enforce this waiver of right to trial by jury. The
Company acknowledges that the Lenders have been induced to enter into this
Agreement by, among other things, this waiver. The Company acknowledges that it
has read the provisions of this Agreement and in particular this paragraph; has
consulted legal counsel; understands the rights it is granting in this Agreement
and is waiving under this section in particular; and makes the above waiver
knowingly, voluntarily and intentionally.
* * * * * * * * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as a
sealed instrument as of the date first above written.
CONSUMER PORTFOLIO SERVICES, INC.
By:
--------------------------------------
(Title)
STATE STREET BANK AND TRUST COMPANY,
INDIVIDUALLY AND AS AGENT
By:
--------------------------------------
(Title)
THE STRUCTURED FINANCE HIGH YIELD FUND,
LLC
By:
--------------------------------------
(Title)
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
--------------------------------------
(Title)
