$35,000,OOO*
CONSUMER PORTFOLIO SERVICES, INC.
____ % PARTICIPATING EQUITY NOTES-SM- DUE 2004
PURCHASE AGREEMENT
__________, 1997
XXXXX XXXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INCORPORATED
XXXX XXXXXXXX INCORPORATED
c/o Xxxxx Xxxxxxx Inc.
Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Pursuant to the terms of this Purchase Agreement (the "Agreement"),
Consumer Portfolio Services, Inc., a California corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), an aggregate of $35,000,000 aggregate principal amount of
its ____% Participating Equity Notes-SM- due 2004 (the "Firm Notes"). The
Firm Notes are to be sold to the Underwriters, acting severally and not
jointly in such amounts as are set forth in Schedule I hereto opposite the
name of such Underwriter. The Company also proposes to grant to the
Underwriters an option to purchase up to an additional $5,250,000 in
aggregate principal amount of ____% Participating Equity Notes-SM- due 2004 of
the Company as provided for in Section 2 of this Agreement (the "Option
Notes"). The Firm Notes and the Option Notes purchased pursuant to this
Agreement are herein collectively referred to as the "Notes." The Notes are
to be issued pursuant to an Indenture and a First Supplemental Indenture
(collectively, the "Indenture"), to be dated as of __________, 1997, among
the Company and Bankers Trust Company, New York, New York, as trustee (the
"Trustee").
________________________
* Plus an option to purchase up to an additional $5,250,000 aggregate
principal amount to cover over-allotments.
The Company hereby confirms its agreement with respect to the purchase and
sale of the Notes:
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has prepared and
filed with the Securities and Exchange Commission (the "Commission") in
conformity with the provisions of the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder (collectively, the
"Act"), a registration statement on Form S-3 (File No. 333-_______),
including a preliminary prospectus and a Statement of Eligibility on Form T-1
with respect to the Trustee (File No. __________) pursuant to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), relating to
the Notes; one or more amendments to such registration statement have also
been so prepared and have been, or will be, so filed; and, if the Company has
elected to rely upon Rule 462(b) under the Act to increase the size of the
offering registered under the Act, the Company will prepare and file with the
Commission a registration statement with respect to such increase pursuant to
Rule 462(b). Copies of such registration statement(s) and amendments and
each related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to
the registration statement and an amended prospectus (including a term sheet
meeting the requirements of Rule 434 of the Rules and Regulations). If the
Company has elected to rely upon Rule 430A of the Rules and Regulations, it
will prepare and file a prospectus (or a term sheet meeting the requirements
of Rule 434) pursuant to Rule 424(b) that discloses the information
previously omitted from the prospectus in reliance upon Rule 430A. Such
registration statement as amended at the time it is or was declared effective
by the Commission, and, in the event of any amendment thereto after the
effective date and prior to the Closing Date (as hereinafter defined), such
registration statement as so amended (but only from and after the
effectiveness of such amendment), including a registration statement (if any)
filed pursuant to Rule 462(b) of the Rules and Regulations increasing the
size of the offering registered under the Act and information (if any) deemed
to be part of the registration statement at the time of effectiveness
pursuant to Rules 430A(b) and 434(d) of the Rules and Regulations, is
hereinafter called the "Registration Statement." The prospectus included in
the Registration Statement at the time it is or was declared effective by the
Commission is hereinafter called the "Prospectus," except that if any
prospectus (including any term sheet meeting the requirements of Rule 434 of
the Rules and Regulations provided by the Company for use with a prospectus
subject to completion within the meaning of Rule 434 in order to meet the
requirements of Section 10(a) of the Rules and Regulations) filed by the
Company with the Commission pursuant to Rule 424(b) (and Rule 434, if
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applicable) of the Rules and Regulations or any other such prospectus
provided to the Underwriters by the Company for use in connection with the
offering of the Notes (whether or not required to be filed by the Company
with the Commission pursuant to Rule 424(b) of the Rules and Regulations)
differs from the prospectus on file at the time the Registration Statement is
or was declared effective by the Commission, the term "Prospectus" shall
refer to such differing prospectus (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations) from and after the time
such prospectus is filed with the Commission or transmitted to the Commission
for filing pursuant to such Rule 424(b) (and Rule 434, if applicable) or from
and after the time it is first provided to the Underwriters by the Company
for such use. The term "Preliminary Prospectus" as used herein means any
preliminary prospectus included in the Registration Statement prior to the
time it becomes or became effective under the Act and any prospectus subject
to completion as described in Rule 430A or 434 of the Rules and Regulations.
Any reference herein to the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act as of the date of such Prospectus. Any reference
to any amendment or supplement to the Prospectus (including any supplement to
the Prospectus) shall be deemed to refer to and include any documents filed
after the date of such Prospectus under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and incorporated therein by reference.
2. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations, warranties and agreements
of the Company herein contained and subject to the terms and conditions set
forth herein, the Company hereby agrees to issue and sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, at the purchase price of $___ per $1,000 principal
amount, the aggregate principal amount of Firm Notes set forth opposite the
name of such Underwriter in Schedule I hereto (or such aggregate principal
amount of Firm Notes as such Underwriter shall be obligated to purchase
pursuant to the provisions of Section 9 hereof).
(b) The Company agrees to sell to the Underwriters and, on the
basis of the representations, warranties and agreements of the Company set
forth herein and subject to the terms and conditions set forth herein, the
Underwriters shall have the right to purchase, severally and not jointly,
from the Company all or any portion of the Option Notes at the purchase price
set forth above plus accrued interest upon delivery to the Company of the
notice hereinafter referred to. Option Notes may be purchased solely for the
purpose of covering over-allotments made in connection with the offering of
the Firm Notes. If any Option Notes are to be purchased, each Underwriter,
severally and not jointly, agrees to
3
purchase from the Company the aggregate principal amount of Option Notes
which bears the same proportion to the total aggregate principal amount of
Option Notes to be purchased from the Company as the aggregate principal
amount of Firm Notes set forth opposite such Underwriter's name in Schedule I
(or such aggregate principal amount of Firm Notes increased pursuant to the
terms set forth in Section 9 hereof) bears to the total aggregate principal
amount of Firm Notes.
3. TERMS OF PUBLIC OFFERING. The Company is advised by the
Underwriters that the Underwriters have agreed to make a public offering of
their respective portions of the Notes as soon after the Registration
Statement has become effective and this Agreement has been executed as in the
judgment of the Underwriters is advisable and to first offer the Notes upon
the terms set forth in the Prospectus.
4. DELIVERY OF THE NOTES AND PAYMENT THEREFOR.
(a) The Firm Notes to be purchased by each Underwriter in
book-entry form and in such authorized denominations and registered in the
name of the nominee of The Depository Trust Company, shall be delivered by or
on behalf of the Company through the facilities of The Depository Trust
Company for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer
or certified or official bank check or checks, in each case in New York
Clearing House (next-day) funds, payable to the order of the Company or, at
the option of the Underwriters, by wire transfer in federal (same-day) funds
on which the Company will pay one day's interest at the broker call rate as
reported in THE WALL STREET JOURNAL, at 9:00 a.m., California time, on the
third (or if the Firm Notes are priced, as contemplated by Rule 15c6-1(c)
under the Exchange Act, after 4:30 p.m. Eastern time on the date of this
Agreement, the fourth) business day following the date of this Agreement,
(the "Closing Date") at the offices of Xxxx & Xxxxx Professional Corporation,
0000 Xxxxxxx Xxxx Xxxx, Xxx Xxxxxxx, XX 00000. The place of the closing and
the Closing Date may be varied by agreement among the Underwriters and the
Company.
(b) The Option Notes to be purchased by each Underwriter in
book-entry form and in such authorized denominations and registered in the
name of the nominee of The Depository Trust Company, shall be delivered by or
on behalf of the Company through the facilities of The Depository Trust
Company for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor in the manner
specified in clause (a) above, at the offices of Xxxx & Xxxxx Professional
Corporation at such time and on such date (the "Option Closing Date"), which
may be the same as the Closing Date but shall in no event be earlier than the
Closing Date nor earlier than three nor
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later than ten business days after the giving of the notice hereinafter
referred to, as shall be specified in written notice from the Underwriters to
the Company of the determination to purchase Option Notes in such principal
amount as specified in said notice. Said notice may be given at any time
within 30 days after the date of the execution of this Agreement. The place
of the option closing and the Option Closing Date may be varied by agreement
between the Underwriters and the Company.
5. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(i) If the Registration Statement has not already been declared
effective by the Commission, the Company will use its best efforts to cause
the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you
promptly of the time when the Registration Statement or any post-effective
amendment to the Registration Statement has become effective or any
supplement to the Prospectus (including any term sheet within the meaning of
Rule 434 of the Rules and Regulations) has been filed and of any request by
the Commission for any amendment or supplement to the Registration Statement
or Prospectus or additional information; if the Company has elected to rely
on Rule 430A of the Rules and Regulations, the Company will prepare and file
a Prospectus (or term sheet within the meaning of Rule 434 of the Rules and
Regulations) containing the information omitted therefrom pursuant to Rule
430A of the Rules and Regulations with the Commission within the time period
required by, and otherwise in accordance with the provisions of, Rules
424(b), 430A and 434, if applicable, of the Rules and Regulations; if the
Company has elected to rely upon Rule 462(b) of the Rules and Regulations to
increase the size of the offering registered under the Act, the Company will
prepare and file a registration statement with respect to such increase with
the Commission within the time period required by, and otherwise in
accordance with the provisions of, Rule 462(b); the Company will prepare and
file with the Commission, promptly upon your request, any amendments or
supplements to the Registration Statement or Prospectus (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) that, in
your opinion, may be necessary or advisable in connection with the
distribution of the Notes by the Underwriters; and the Company will not file
any amendment or supplement to the Registration Statement or Prospectus
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations) to which you shall reasonably object by notice to the Company
after having been furnished a copy a reasonable time prior to the filing.
(ii) The Company will advise you, promptly after it shall receive
notice or obtain knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the
5
Registration Statement, of the suspension of the qualification of the Notes
for offering or sale in any jurisdiction, or of the initiation or threatening
of any proceeding for any such purpose; and the Company will promptly use its
best efforts to prevent the issuance of any stop order or to obtain its
withdrawal if such a stop order should be issued.
(iii) Within the time during which a prospectus (including any term
sheet within the meaning of Rule 434 of the Rules and Regulations) relating
to the Notes is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the Act,
as now and hereafter amended, and by the Rules and Regulations, as from time
to time in force, so far as necessary to permit the continuance of sales of
or dealings in the Notes as contemplated by the provisions hereof and the
Prospectus. If during such period any event occurs as a result of which the
Prospectus would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light
of the circumstances then existing, not misleading, or if during such period
it is necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act, the Company will promptly notify you and
will amend the Registration Statement or supplement the Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
(iv) The Company will furnish to each of the Underwriters and their
counsel, without charge, one signed copy of the Registration Statement and of
each amendment thereto, including all exhibits thereto and documents
incorporated therein by reference, and will also furnish to each of the
Underwriters, without charge, such number of conformed copies of the
Registration Statement and of each amendment thereto as each of the
Underwriters may reasonably request.
(v) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which the
Underwriters shall not previously have been advised or to which any of the
Underwriters promptly after being so advised shall reasonably have objected
in writing.
(vi) Prior to the effective date of the Registration Statement, the
Company will have delivered or will deliver to each Underwriter, without
charge, copies of each form of preliminary prospectus in such quantities as
such Underwriter has reasonably requested or may hereafter reasonably request
for the purposes contemplated by the Act.
(vii) On the effective date of the Registration Statement and
thereafter from time to time during such period as in the opinion of counsel
for the Underwriters a prospectus is
6
required by law to be delivered in connection with offers or sales of the
Notes by an Underwriter or a dealer, the Company will deliver to each
Underwriter and dealer, without charge, as many copies of the Prospectus (and
of any amendment or supplement thereto) as they may reasonably request.
During such period, if any event occurs which in the judgment of the Company,
or in the opinion of counsel for the Underwriters, should be set forth in the
Prospectus in order to ensure that no part of the Prospectus includes an
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances at the time the Prospectus is delivered to a purchaser, not
misleading, the Company will forthwith prepare, submit to the Underwriters,
file with the Commission and deliver, without charge to the several
Underwriters and dealers (whose names and addresses will be furnished by the
Underwriters to the Company) to whom Notes have been sold by the Underwriters
or to other dealers upon request, an amendment or supplement, as appropriate,
to the Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will comply with the standards set forth in this sentence. The
Company consents to the use of such Prospectus (and of any amendments or
supplements thereto) in accordance with the provisions of the Act and with
the securities or Blue Sky laws of the jurisdictions described in the
preliminary Blue Sky memorandum in which the Notes are lawfully offered by
the several Underwriters and by all dealers to whom Notes may be sold, both
in connection with the offering or sale of the Notes and for such period of
time thereafter as the Prospectus is required by law to be delivered in
connection therewith. In case any Underwriter is required to deliver a
Prospectus (and any amendment or supplement thereto) more than nine months
after the first date upon which the Notes are offered to the public, the
Company will, upon the request of the Underwriters but at the expense of such
Underwriter, furnish such Underwriter with reasonable quantities of a
Prospectus complying with Section 10(a)(3) of the Act.
(viii) The Company will cooperate with the Underwriters and
counsel for the Underwriters in connection with the registration or
qualification of the Notes for offer and sale by the several Underwriters and
by dealers under the securities or Blue Sky laws of such jurisdictions as the
Underwriters may designate and will file such consents to service of process
or other documents as may be necessary in order to effect such registration
or qualification; provided that in no event shall the Company be obligated
(w) to qualify to do business in any jurisdiction where it is not now so
qualified, (x) to file any general consent to service of process, (y) take
any action that would subject it to income taxation in any jurisdiction where
it is not so qualified or (z) to take any action to amend its Articles of
Incorporation in order to make the Company's securities eligible for
registration or qualification in any state.
7
(ix) The Company will make generally available to the holders of
Notes an earnings statement of the Company and its subsidiaries, which need
not be audited, as soon as practicable but not later than 18 months after the
effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including Rule 158).
(x) For a period of five years after the date of this Agreement:
(A) the Company will furnish to the Underwriters (1) as soon as
available, a copy of each report of the Company of general interest mailed
to any class of its security holders, (2) copies of all annual, quarterly
reports and current reports filed with the Commission on Forms 10-K, 10-Q
and 8-K and any amendment thereto or such other similar forms as may be
designated by the Commission or required to be filed by the Company
pursuant to Sections 13, 14 and 15 of the Exchange Act, which the Company
agrees to timely file with the Commission for so long as may be required,
(3) a copy of each report furnished to or filed with any securities
exchange or the National Market of the National Association of Securities
Dealers Automated Quotation System ("Nasdaq National Market") and (4) from
time to time, such other information concerning the Company as the
Underwriters may reasonably request; and
(B) if at any time during such five-year period, the Company shall
cease filing with the Commission the annual, quarterly reports and current
reports on Forms 10-K, 10-Q and 8-K or other similar forms referred to in
clause (A) above, the Company will forward to its stockholders generally
and the Underwriters (1) as soon as practicable after the end of each
fiscal year, copies of a balance sheet and statements of income and
retained earnings of the Company as of the end of and for such fiscal year,
audited by independent public accountants, and (2) as soon as practicable
after the end of each quarterly fiscal period, except for the last
quarterly fiscal period in each fiscal year, a summary statement (which
need not be audited) of income and retained earnings of the Company for
such period, which shall also be made publicly available.
If and so long as the Company shall have any subsidiaries, the financial
statements referred to above shall be consolidated to the extent the accounts
of the Company and such subsidiaries are consolidated, and separate financial
statements shall be furnished for each significant subsidiary, as defined in
Regulation S-X of the Commission, whose accounts are not so consolidated.
8
(xi) Prior to the Closing Date, the Company will issue no press
release or other public communication directly or indirectly and hold no
press conference with respect to the Company or any subsidiary or this
offering, without the Underwriters' prior written consent.
(xii) The Company will pay, or reimburse if paid by the
Underwriters, whether or not the transactions contemplated hereby are
consummated or this Agreement is prevented from becoming effective under the
provisions of Section 10 hereof or is terminated, all costs and expenses
incident to the performance by it of its obligations under this Agreement
including, without limiting the generality of the foregoing, (1) typesetting,
printing, duplicating, and filing (and all preparation therefor) and
distribution (including, without limitation, postage, air freight charges and
charges for counting and packaging) of the original registration statement,
the Registration Statement, each preliminary prospectus, the Prospectus, each
amendment and/or supplement to any of the foregoing, and this Agreement and
other underwriting documents and the Indenture, (2) all costs of furnishing
to the several Underwriters and dealers copies of the foregoing materials
(provided, however, that any such copies furnished by the Company more than
nine months after the first date upon which the Notes are offered to the
public shall be at the expense of the several Underwriters or dealers so
requesting as provided in paragraph (vi) above), (3) the registrations or
qualifications referred to in paragraph (viii) above (including reasonable
fees and disbursements of counsel in connection therewith) and expenses of
printing and delivering to the several Underwriters copies of the preliminary
and final Blue Sky memorandum, (4) the review of the terms of the public
offering of the Notes by the National Association of Securities Dealers, Inc.
(the "NASD") (including the filing fees paid to the NASD in connection
therewith) and the reasonable fees and disbursements of counsel for the
Underwriters in connection therewith, (5) the performance by the Company of
its other obligations under this Agreement, including the fees of the
Company's counsel and accountants, (6) the issuance of the Notes and the
preparation and printing of the certificates representing the Notes, (7) the
fees and expenses of the Trustee and any agent of the Trustee and any
transfer or paying agent for the Company, (8) all travel, lodging and
reasonable living expenses incurred by the Company in connection with
marketing, dealer and other meetings attended by the Company and the
Underwriters in marketing the Notes, (9) listing fees, if any, (10) any fees
charged by security rating services for rating the Notes and (11) furnishing
to the several Underwriters copies of all reports and information required by
paragraph (x) above, including costs of shipping and mailing.
(xiii) If the sale of the Notes provided for herein is not
consummated by reason of action by the Company pursuant to
9
Section 10 hereof which prevents this Agreement from becoming effective, or
by reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the several
Underwriters for all out-of-pocket disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with
their investigation, preparing to market and marketing the Notes or in
contemplation of performing their obligations hereunder. The Company shall
not in any event be liable to any of the Underwriters for loss of anticipated
profits from the transactions covered by this Agreement.
(xiv) The Company will apply the net proceeds from the sale of
the Notes to be sold by it under this Agreement for the purposes set forth in
the Prospectus under the caption "Use of Proceeds."
(xv) The Company confirms as of the date hereof that it is in
compliance with all provisions of Section 1 of Laws of Florida, Chapter
92-198, AN ACT RELATING TO DISCLOSURE OF DOING BUSINESS WITH CUBA, and the
Company further agrees that if it commences engaging in business with the
government of Cuba or with any person or affiliate located in Cuba after the
date the Registration Statement becomes or has become effective with the
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in the
Prospectus, if any, concerning the Company's business with Cuba or with any
person or affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(xvi) The Company will comply (1) with all registration, filing
and reporting requirements of the Exchange Act which may from time to time be
applicable to the Company and (2) all provisions of all undertakings
contained in the Registration Statement.
(xvii) The Company will not incur any liability for any finder's
or broker's fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby.
(xviii) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Notes.
10
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(i) [No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and] each Preliminary Prospectus,
at the time of filing thereof, did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing shall not apply to statements in or omissions from any Preliminary
Prospectus in reliance upon, and in conformity with, information furnished in
writing to the Company by any Underwriter expressly for use in the Prospectus.
(ii) As of the time the Registration Statement (or any
post-effective amendment thereto) is or was declared effective by the
Commission, upon the filing or first delivery to the Underwriters of the
Prospectus (or any supplement to the Prospectus (including any term sheet
meeting the requirements of Rule 434)) and at the Closing Date, (A) the
Registration Statement and Prospectus (in each case, as so amended or
supplemented) conformed or will conform in all material respects to the
requirements of the Act and Regulations, (B) the Registration Statement (as
so amended) did not or will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (C) the
Prospectus (as so supplemented) did not or will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of
the circumstances in which they are or were made, not misleading; except that
the foregoing shall not apply to statements in or omissions from any such
document in reliance upon, and in conformity with, written information
furnished to the Company by any Underwriter specifically for use in the
preparation thereof. The Registration Statement has been declared effective
by the Commission; [no stop order suspending the effectiveness of the
Registration Statement has been issued; and no proceeding for that purpose
has been initiated or to the Company's knowledge, threatened by the
Commission.]
(iii) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in
11
the Prospectus, or any amendment or supplement thereto, when such documents
become effective or are filed with the Commission, as the case may be, will
conform in all material respects to the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances in which they
are made not misleading; provided, however, that this representation and
warranty shall not apply to the Statement of Eligibility of the Trustee on
Form T-1 filed as an Exhibit to the Registration Statement or to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Underwriter expressly
for use in the Prospectus as supplemented to relate to the Notes.
(iv) The Registration Statement and Prospectus conform, and any
amendments or supplements thereto will conform, in all material respects to
the requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission thereunder
and do not and will not, as of the applicable effective date in the case of
the Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, provided, however, that this representation and
warranty shall not apply to the Statement of Eligibility of the Trustee on
Form T-1 filed as an Exhibit to the Registration Statement or to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Underwriter expressly
for use in the Prospectus as supplemented to relate to the Securities.
(v) Any contract, agreement, instrument, lease, or license required
to be described in the Registration Statement or Prospectus has been properly
described therein. Any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has been
filed with the Commission as an exhibit to the Registration Statement.
(vi) KPMG Peat Marwick LLP, the Company's auditors, are independent
public accountants with respect to the Company as required by the Act.
(vii) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries and the financial information with
respect to the subsidiaries of the Company included or incorporated by
reference in the Registration Statement and the Prospectus present fairly the
financial position of the Company and its consolidated subsidiaries
(including,
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without limitation, the reserves for credit losses) as of the dates
indicated, and the results of operations, cash flows and changes in financial
position of the Company and its consolidated subsidiaries for the periods
specified. Such financial statements and schedules have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except to the extent
disclosed therein. No other financial statements are required to be included
in the Registration Statement or Prospectus.
(viii) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
California, has all requisite corporate power and corporate authority to own
or lease its property and conduct its business as described in the
Registration Statement and the Prospectus and is qualified to do business as
a foreign corporation in each jurisdiction in which the ownership or lease of
its properties, or the conduct of its business, requires such qualification
and in which the failure to be so qualified or in good standing would have a
material adverse effect on the financial condition, affairs, business or
prospects of the Company and the Subsidiaries (defined below) considered as a
whole. The Company does not own or lease property or transact business in
any other jurisdiction where the ownership of such property or the
transaction of such business would require it to qualify as a foreign
corporation under the laws of such jurisdiction.
(ix) The Company has an authorized and outstanding
capitalization as set forth in the Prospectus and the Notes conform in all
material respects to the description thereof contained in the Prospectus.
All of the issued and outstanding shares of capital stock of the Company and
all of the issued and outstanding shares of capital stock of each Subsidiary
have been duly authorized, validly issued and are fully paid and
non-assessable and, in the case of the Subsidiaries, are owned of record and
beneficially by the Company, and, except as set forth in the Registration
Statement, are free and clear of any liens, claims, security interests,
pledges, charges, encumbrances, shareholders' agreements, and voting trusts
or rights of others. Except as set forth in the Prospectus, there are no
options, agreements, contracts, preemptive rights, or other rights in
existence (i) to acquire from the Company any shares of capital stock or (ii)
to acquire from the Company or any Subsidiary any of the capital stock of any
Subsidiary.
(x) The Company has no subsidiaries except for (G&A Financial
Services, Inc., a California corporation, Xxxxx Receivables Corp., a
California corporation, CPS Funding Corporation, a California corporation,
CPS Receivables Corp., a California corporation, Samco Acceptance Corp., a
Texas Corporation, LINC Acceptance Corp., a Connecticut Corporation, and
13
Stanwich Leasing, Inc., a __________ Corporation) (individually, a
"Subsidiary" and collectively, the "Subsidiaries"). Other than such
subsidiaries of the Company and its ownership of [38%] of the outstanding
stock of NAB Corp., the Company owns no capital stock or other equity or
ownership or proprietary interest in any corporation, partnership,
association, trust or other entity.
(xi) Each Subsidiary has been duly organized and is validly existing
as a corporation and is in good standing under the laws of its jurisdiction
of incorporation or charter, has all requisite corporate power and corporate
authority to own, lease and operate its properties and conduct its business
as described in the Registration Statement and Prospectus. Each Subsidiary
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership or lease of its
properties, or the conduct of its business, requires such qualification and
in which the failure to be so qualified or in good standing would have a
material adverse effect on the financial condition, affairs, business or
prospects of the Company and the Subsidiaries as a whole.
(xii) Each of the Company and each Subsidiary has all necessary
and material authorizations, approvals, licenses, certificates, permits and
orders (collectively, "Permits") of and from all governmental regulatory
officials and bodies to own its properties and to conduct its business as
described in the Registration Statement and Prospectus and is conducting its
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business including, but not limited
to, all applicable federal and state laws and regulations that regulate or
are concerned in any way with usury or consumer credit; except in any case
where the failure to possess any such Permit would not have a material
adverse effect on the financial condition, affairs, business or prospects of
the Company and the Subsidiaries considered as a whole.
(xiii) The Indenture, which will be substantially in the form
filed as an exhibit to the Registration Statement, has been duly authorized
and duly qualified under the Trust Indenture Act and when executed and
delivered by the Company and the Trustee, the Indenture will have been duly
authorized, executed and delivered by the Company and will constitute a valid
and legally binding agreement of the Company, enforceable against the Company
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws affecting creditors'
rights generally and to general principles of equity; and the Indenture
conforms in all material respects to the description thereof in the
Prospectus.
(xiv) The Notes have been duly authorized and, when executed and
authenticated in accordance with the terms of the
14
Indenture and issued and delivered in accordance with the terms of this
Agreement against payment therefor, will have been duly authorized, executed,
authenticated and delivered by the Company and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, subject, as
to such benefit and enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and to
general principles of equity; the Notes conform in all material respects to
the description thereof contained in the Prospectus and will be substantially
in the form filed as an exhibit to the Registration Statement.
(xv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (A) any material adverse change in
the condition (financial or otherwise), affairs, business or key personnel,
property, prospects, net worth or results of operations of the Company or any
Subsidiary, whether or not arising in the ordinary course of business, (B)
any material transaction entered into, or any material liability or
obligation incurred, direct or contingent, by the Company or any Subsidiary,
other than in the ordinary course of business, (C) any change in the capital
stock (other than the issuance of shares of common stock upon exercise of
options under the Company's stock option plans), or material increase in the
short-term debt or long-term debt of the Company or any Subsidiary, or any
issuance of options, warrants, convertible securities or other rights to
purchase the capital stock of the Company or any Subsidiary or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
its capital stock.
(xvi) The Company and the Subsidiaries have good and marketable
title to all properties and assets described in the Prospectus as owned by
them, free and clear of all liens, charges, encumbrances or restrictions,
except such as are referred to in the Prospectus or are not materially
significant in relation to the financial condition, affairs, business or
prospects of the Company and the Subsidiaries considered as a whole; all of
the leases and subleases material to the business of the Company or under
which the Company or any Subsidiary holds properties described in the
Prospectus are in full force and effect; and neither the Company nor any
Subsidiary has any notice of any material claim of any sort which has been
asserted by anyone adverse to the rights of the Company or such Subsidiary as
owner or as lessee or sublessee under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or the
Subsidiary to the continued possession of the leased or subleased premises
under any such lease or sublease.
15
(xvii) Neither the Company nor any Subsidiary is in default nor
will the performance of this Agreement or the issuance and sale of the Notes
result in a default in the observance of any provision of its charter,
certificate of incorporation or by-laws, or in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease, license or other
agreement or instrument to which it is a party or by which it or any of its
respective properties are subject or may be bound, which would have a
materially adverse effect on the financial condition, affairs, business or
prospects of the Company and the Subsidiaries considered as a whole. No
consent of any party to any contract, indenture, mortgage, loan agreement,
note, lease, license or other agreement or instrument to which the Company or
any Subsidiary is a party, or by which it or any of its respective properties
or assets are subject or may be bound, is required for the execution,
delivery or performance of this Agreement, or the issuance and sale of the
Notes, other than such consents which have been obtained.
(xviii) This Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid, legal and binding
obligation of the Company, enforceable in accordance with its terms, except
as rights to indemnity hereunder may be limited by federal or state
securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights
of creditors generally and subject to general principles of equity. The
Company has full power and authority to enter into this Agreement and to
authorize, issue and sell the Notes as contemplated by this Agreement.
(xix) The execution and delivery by the Company of this
Agreement and the Indenture, the issuance and delivery of the Notes, the
consummation of the transactions contemplated herein and in the Registration
Statement and compliance with the terms of this Agreement have been duly
authorized by all necessary corporate action and will not result in any
violation of the Articles of Incorporation or by-laws of the Company, and
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary under any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the Company
or any Subsidiary is a party or by which the Company or any Subsidiary, or
any of their respective properties, is bound, or any existing applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their respective properties.
16
(xx) No consent, approval, authorization or order of, or filing with
any court, governmental authority or agency having jurisdiction over the
Company or any Subsidiary is required in connection with the execution,
delivery and performance of this Agreement or for the consummation of the
transactions contemplated hereby, including the issuance, sale and delivery
of the Notes in accordance with the terms of this Agreement and the
Indenture, except such as may be required under the Act, the Trust Indenture
Act and state securities or Blue Sky laws.
(xxi) Neither the Commission nor the Blue Sky or securities
authority of any jurisdiction has issued a stop order (a "Stop Order")
suspending the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus, the Prospectus, the
Registration Statement, or any amendment or supplement thereto, refusing to
permit the effectiveness of the Registration Statement, suspending the
registration or qualification of the Notes, nor has any of such authorities
instituted or, to the knowledge of the Company, threatened to institute, any
proceedings with respect to a Stop Order.
(xxii) Except as disclosed in the Prospectus, there is no action,
suit or proceeding before or by any court or governmental agency or body,
domestic or foreign, or any arbitrator or arbitration panel, now pending or,
to the knowledge of the Company, threatened against or affecting the Company
or any Subsidiary which might result in any material adverse change in the
financial condition, affairs, business, prospects, net worth or results of
operations of the Company and the Subsidiaries considered as a whole, or
which might materially and adversely affect their properties or assets; and
there is no decree, judgment or order of any kind in existence against or
restraining the Company or any Subsidiary, or any of the officers, employees
or directors of either, from taking any actions of any kind in connection
with the business of the Company or any Subsidiary.
(xxiii) The Company and each of its Subsidiaries owns or possesses
or has obtained all material governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to lease or own, as the
case may be, and to operate its properties and to carry on its business as
presently conducted, and the Company has not received any notice of
proceedings related to revocation or modification of any such licenses,
permits, consents, orders, approvals or authorizations which singly or in the
aggregate, if the subject of an unfavorable ruling or finding, would have a
materially adverse effect on the financial condition, affairs, business or
prospects of the Company and the Subsidiaries considered as a whole.
17
(xxiv) The Company is and each of its Subsidiaries is in
compliance with all applicable federal, state and local laws and regulations
that regulate or are concerned in any way with the business of the Company or
its Subsidiaries, where the effect of the failure to comply would be
materially adverse to the financial condition, affairs, business or prospects
of the Company and the Subsidiaries considered as a whole.
(xxv) The Company and the Subsidiaries own or possess, or can
acquire on reasonable terms, trademarks, service marks and trade names
necessary to conduct the businesses now operated by them, and neither the
Company nor any Subsidiary has received any notice of infringement of or
conflict with asserted rights of others with respect to any trademarks,
service marks or trade names which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, would materially
adversely effect the financial condition, affairs, business or prospects of
the Company and the Subsidiaries considered as a whole.
(xxvi) The Company and each of its Subsidiaries has filed all
necessary federal and state income and franchise tax returns and paid all
taxes shown as due thereon. Except as is otherwise expressly stated in the
Registration Statement, the Company has no knowledge of any tax deficiency
which might be asserted against it which would have a material adverse effect
on the financial condition, affairs, business or prospects of the Company and
the Subsidiaries considered as a whole.
(xxvii) The Company is not and does not intend to conduct
businesses in a manner which would cause it to be an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(xxviii) To the best of the Company's knowledge, there are no
affiliations between (i) any of the Company's officers, directors or 5% or
greater security holders, and (ii) any Underwriter or NASD-registered broker
or dealer except as set forth in the Registration Statement or as otherwise
disclosed in writing to the Underwriters.
(xxix) The Notes have been duly authorized for listing by the New
York Stock Exchange upon official notice of issuance.
(xxx) The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and
sale of the Notes other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act to be distributed by the Company.
18
(xxxi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon a untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including the
information deemed to be a part of the Registration Statement at the time of
effectiveness pursuant to Rules 430A and 434(d) under the Act, if applicable,
any Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto (including any term sheet within the meaning of Rule 434 under the
Act), or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each
Underwriter for any legal or other out-of-pocket expenses reasonably incurred
by it in connection with investigating or defending against such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action rises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by any Underwriter specifically
for use in the preparation thereof.
In addition to their other obligations under this Section 6(a), the
Company agrees that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission,
described in this Section 6(a), they will reimburse each Underwriter on a
monthly basis for all reasonable legal fees or other out-of-pocket expenses
incurred in connection with investigating or defending any such claim,
19
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the Company's obligation to reimburse the Underwriters for such expenses and
the possibility that such payments might later be held to have been improper
by a court of competent jurisdiction. To the extent that any such payments
might later be held to have been improper by a court of competent
jurisdiction. To the extent that any such interim reimbursement payment is
so held to have been improper, the Underwriter that received such payment
shall promptly return it to the party or parties that made such payment,
together with interest, compounded daily, determined on the basis of the
prime rate (or other commercial lending rate for borrowers of the highest
credit standing) announced from time to time by Norwest Bank Minnesota,
National Association (the "Prime Rate"). Any such interim reimbursement
payments which are not made to an Underwriter within 30 days of a request for
reimbursement shall bear interest a the Prime Rate from the date of such
request. This indemnity agreement shall be in addition to any liabilities
which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or an amendment or
supplement thereto (including any term sheet within the meaning of Rule 434
under the Act, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any such amendment
or supplement, in reliance upon and in conformity with written information
furnished to the Company by any Underwriter specifically for use in the
preparation thereof, and will reimburse the Company for any legal or other
out-of-pocket expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim, damage, liability or
action.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party
in writing of the commencement
20
thereof; provided, however, that the failure so to notify the indemnifying
party shall not relieve the indemnifying party from any liability that it may
have under this Section 7 except to the extent it has been materially
prejudiced by such failure and, provided further, that the failure to notify
the indemnifying party shall not relieve it from any liability which it may
have to an indemnified party otherwise than under this Section 7. In case
any such action shall be brought against any indemnified party, and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of the
indemnifying party's election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal or other out-of-pocket expenses subsequently
incurred by such indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however, that if, in
the sole judgment of the Underwriters, it is advisable for the Underwriters
to be represented as a group by separate counsel, the Underwriters shall have
the right to employ a single counsel to represent themselves, in which event
the reasonable fees and expenses of such separate counsel shall be borne by
the indemnifying party or parties and reimbursed to the Underwriters as
incurred (in accordance with the provisions of the second paragraph in
subsection (a) above). An indemnifying party shall not be obligated under
any settlement agreement relating to any action under this Section 7 to which
it has not agreed in writing.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or (b)
above, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear
21
to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relevant intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were to be determined by PRO RATA allocation
(even if the Underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this subsection (d). The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection
(d) shall be deemed to include any legal or other out-of-pocket expenses
reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject
of this subsection (d). Notwithstanding the provisions of this subsection
(d), no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Notes underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement of omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations
of the Underwriters under this Section 7 shall be in addition to any
liability that the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each director of the Company
(including any person who, with his consent, is named in the Registration
Statement as about to become a director of the Company), to each officer of
the Company has signed the Registration Statement and to each person, if any,
who controls the Company within the meaning of the Act.
22
8. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Notes hereunder are
subject to the following conditions:
(a) That the Registration Statement shall have become effective not
later than 4:00 p.m., __________ time, on the date hereof, or at such later
date and time as shall be consented to in writing by the Underwriters, and,
if the Underwriters and the Company have elected to rely upon Rule 430A under
the Act, the price of the Notes and any price-related or other information
previously omitted from the Registration Statement pursuant to such Rule 430A
under the Act shall have been transmitted to the Commission for filing
pursuant to Rule 424 (b) within the prescribed time period, and on or prior
to the Closing Date, the Company shall have provided evidence satisfactory to
the Underwriters of such timely filing, or a post-effective amendment
providing such information shall have been promptly filed and declared
effective in accordance with the requirements of Rule 430A.
(b) That subsequent to the effective date of the Registration
Statement, (i) there shall not have occurred any change, or any material
development involving a prospective change, in or affecting particularly the
business or properties of the Company not contemplated by the Prospectus,
which, in the Underwriters' opinion would materially adversely affect the
market for the Notes or make it impracticable or inadvisable to proceed with
the offering or the delivery of the Notes, as contemplated herein and in the
Prospectus, or to attempt to enforce contracts for the purchase of the Notes,
and (ii) the business and operations of the Company and the Subsidiaries
shall not have been materially interfered with by strike, fire, flood,
accident or other calamity (whether or not insured).
(c) That the Underwriters shall have received from Xxxx & Xxxxx
Professional Corporation, counsel for the Company, a favorable opinion dated
the Closing Date and satisfactory to the Underwriters and the Underwriters'
counsel to the effect that:
(i) Each of the Company and each Subsidiary has been duly organized
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation; each has all requisite corporate power
and corporate authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and the
Prospectus. Each of the Subsidiaries is wholly-owned by the Company and
the Subsidiaries are the Company's only subsidiaries.
(ii) The Company has an authorized capitalization as set forth in the
Prospectus. Each outstanding share of capital
23
stock of the Company and each outstanding share of capital stock of any
Subsidiary is duly authorized, validly issued, fully paid and
non-assessable, has not been issued and is not owned or held in violation of
any preemptive right of shareholders. Each outstanding share of capital
stock of a Subsidiary is owned of record and, to such counsel's knowledge,
beneficially by the Company and, except as disclosed in the Registration
Statement, to the knowledge of such counsel, is held free and clear of all
liens, claims, security interests, pledges, charges, encumbrances,
shareholders' agreements, voting trusts or claims of others. Except as set
forth in the Prospectus, neither the Board of Directors of the Company nor
any committee thereof has authorized or entered into any commitment or
arrangement to issue, and neither the Board of Directors nor any committee
thereof has authorized the issuance of any outstanding option, warrant or
other right calling for the issuance or sale of, any share of capital stock
of the Company or of any Subsidiary or any security or other instrument
which by its terms is convertible into, exercisable for or exchangeable
for capital stock of the Company or of any Subsidiary. Neither the Board
of Directors nor any committee thereof of any Subsidiary has authorized
any options, agreements, contracts or other rights in existence to purchase
or acquire from the Company or any Subsidiary any issued and outstanding
shares of the capital stock of the Company or any Subsidiary.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws relating to or affecting the rights of creditors, and by
equitable principles, except that such counsel need express no opinion as to
the enforceability of the indemnity and contribution provisions contained in
Section 7 of this Agreement.
(iv) The Notes have been duly and validly authorized, executed and
delivered by the Company and when delivered and paid for pursuant hereto will
constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, except (i) as enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
rights of creditors, and by equitable principles, and (ii) (a) the waiver
contained in Section 514 of the Indenture may be deemed unenforceable and (b)
the indemnification provisions contained in Section 607 of the Indenture may
be deemed unenforceable. The Notes conform in all material respects to the
description thereof in the Prospectus. For purposes of this opinion, such
counsel
24
shall be entitled to assume that New York law is the same as California law.
(v) The Indenture has been duly authorized, executed and delivered
by the Company and constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
(i) as enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the rights of
creditors, and by equitable principles, and (ii) (a) the waiver contained in
Section 514 of the Indenture may be deemed unenforceable and (b) the
indemnification provisions contained in Section 607 of the Indenture may be
deemed unenforceable. The Indenture conforms in all material respects to the
description thereof in the Prospectus and has been duly qualified under the
Trust Indenture Act. For purposes of this opinion, such counsel shall be
entitled to assume that New York law is the same as California law.
(vi) No authorization, approval or consent of any governmental
authority is required for the execution, delivery, or performance by the
Company of this Agreement, or for the issuance, sale, or delivery of the
Notes, except such as have been received or as may be required under the Act,
the Trust Indenture Act or the rules and regulations of the Commission
thereunder or state securities laws.
(vii) The issuance and sale of the Notes, the execution,
delivery, and performance of this Agreement and the Indenture by the Company
and the consummation of the transactions contemplated hereby and thereby will
not violate, conflict with or result in a breach of any of the provisions of,
or constitute a default under (A) the Company's Articles of Incorporation or
by-laws, (B) any indenture, mortgage, deed of trust or other instrument or
agreement known to such counsel to which the Company or a Subsidiary is a
party or by which the Company or a Subsidiary is bound or to which any of
their properties is subject or (C) any order known to such counsel, rule or
regulation applicable to the Company or a Subsidiary of any court or other
governmental authority.
(viii) The Registration Statement has become effective under the
Act, and, to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued,
nor has any proceeding for the issuance of such an order been initiated or,
to the knowledge of such counsel, threatened.
(ix) The Registration Statement and the Prospectus and any
supplements or amendments thereto comply in all material respects as to form
with the requirements of the Act, the Trust Indenture Act and the rules and
regulations of the Commission
25
thereunder, except in each case as to the financial statements, schedules,
financial information, statistical data, pro forma and other financial data
included or incorporated by reference in the Registration Statement or the
exhibits to the Registration Statement, including the Form T-1, as to which
such counsel need not express any opinion.
In addition, such counsel shall state that such counsel has
participated in conferences with representatives of the Company, the
Company's auditors, the Underwriters and counsel for the Underwriters at
which conferences the contents of the Registration Statement, the Prospectus
and each preliminary prospectus and related matters were discussed, and
although such counsel need not pass upon and need not assume any
responsibilities for the accuracy, completeness, or fairness of the
statements contained in the Registration Statement or Prospectus and have not
made any independent check or verification thereof, on the basis of the
foregoing (relying as to materiality on the statements of officers and other
representatives of the Company), nothing has come to the attention of such
counsel that causes such counsel to believe that the Registration Statement,
at the time it became effective and at the Closing Date, contained or
contains any untrue statement of a material fact or omitted or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, at the date
thereof and at the Closing Date, contained or contains any untrue statement
of any material fact or omitted or omits to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except in each case
as to the financial statements, schedules, financial information, statistical
data, pro forma and other financial data included or incorporated by
reference in the Registration Statement or the exhibits to the Registration
Statement, including the Form T-1, as to which such counsel need not express
any opinion.
(x) The statements in the Prospectus in the sections captioned
"Risk Factors -- Subordination of the Notes and Encumbrances on the Company's
Assets," "-- Restrictions Imposed by the Terms of the Company's
Indebtedness," "--Potential for Additional Senior Indebtedness," "-- Ability
to Repay Notes Upon Accelerated Redemption," "-- Limited Covenants in the
Indenture," "--Litigation," "-- Contractual Recourse by Purchasers of
Contracts, and "--Government Regulation; "Description of the Notes,"
"Description of Common Stock," "Business--Government Regulation" and "Certain
Transactions" included in the Prospectus, insofar as such statements
constitute a summary of the documents referred to therein or matters of law,
are accurate summaries and fairly and correctly present the information
called for with respect to such documents and matters.
26
(xi) Such counsel does not know of (A) any pending or threatened
litigation which would prevent the consummation of the transactions
contemplated by this Agreement or the Indenture, (B) any statutes or
regulations or provisions of the laws of the State of California or any
pending or threatened litigation or governmental proceedings against the
Company or any Subsidiary required to be described in the Prospectus which
are not so described, or (C) any contracts or documents required to be
described in or filed as a part of the Registration Statement which are not
so described or filed.
(xii) The Company is not an "investment company" or a person
"controlled by" an "investment company" within the meaning of the Investment
Company Act.
In rendering such opinions, such counsel may rely as to matters of
fact, to the extent they deem proper on certificates of responsible officers
of the Company and the Subsidiaries and on certificates of public officials.
(d) That the Underwriters shall have received on the Closing Date a
favorable opinion dated the Closing Date from Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx
LLP, counsel for the Underwriters, as to such matters as the Underwriters may
reasonably require.
(e) That the Underwriters shall have received letters addressed to
the Underwriters and dated the date hereof and the Closing Date and the
Option Closing Date, as the case may be, from KPMG Peat Marwick LLP,
independent public accountants for the Company, substantially in the forms
heretofore approved by the Underwriters and counsel for the Underwriters.
(f) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company or any
Subsidiary nor any material increase in the short or long-term debt of the
Company and its Subsidiaries taken as a whole from that set forth or
contemplated in the Registration Statement and Prospectus; (iii) the Company
and its Subsidiaries shall not have incurred any material liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), other than those reflected in or contemplated by the Registration
Statement and Prospectus; and (iv) all of the representations and warranties
of the Company contained in this Agreement shall be true and correct in all
material respects on and as of the date hereof and on and as of the Closing
Date as if made on and as of each such date, and the Underwriters shall have
received a certificate, dated the Closing
27
Date and in form and substance reasonably satisfactory to the Underwriters
signed by the President or a Vice President and the Secretary of the Company
(or such other officers as are acceptable to the Underwriters) to the effect
set forth in this Section 8(f) and in Section 8(h) hereof.
(g) The Notes shall have been qualified for sale or exempted from
such qualification under the securities laws of such jurisdictions as the
Underwriters shall have designated prior to the time of execution of this
Agreement and such qualification or exemption shall continue in effect to and
including the Closing Date.
(h) That the Company shall not have failed at or prior to the
Closing Date to have performed or complied in all material respects with any
of the agreements herein contained and required to be performed or complied
with by it at or prior to the Closing Date.
(i) That the Notes shall not have received from Xxxx Xxxxxx Credit
Rating Co. a credit rating lower than ___.
The several obligations of the Underwriters to purchase Option Notes
hereunder are subject to the satisfaction on and as of the Option Closing
Date of the conditions set forth in paragraphs(a) through (i); except that
the opinions called for in paragraphs (c) and (d) shall be revised to reflect
the sale of Option Notes and shall be dated the Option Closing Date, if
different from the Closing Date.
9. EFFECTIVE DATE OF AGREEMENT.
(a) If the Registration Statement has not yet been declared
effective, this Agreement shall become effective contemporaneously with the
effectiveness of the Registration Statement. Until such time as this
Agreement shall have become effective, it may be terminated by the Company by
notifying the Underwriters, or by the Underwriters by notifying the Company.
(b) If any Underwriter shall fail or refuse to purchase Firm Notes
which it has agreed to purchase under this Agreement and the aggregate
principal amount of Firm Notes which such defaulting Underwriter agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of Firm Notes, the other Underwriters shall be obligated,
PRO RATA to purchase the Firm Notes which the defaulting Underwriter agreed
but failed or refused to purchase. If any Underwriter shall fail or refuse
to purchase Firm Notes and the aggregate principal amount of Firm Notes with
respect to which such default occurs is more than one-tenth of the aggregate
principal amount of Firm Notes and arrangements satisfactory to the
non-defaulting Underwriters and
28
the Company for the purchase of such Firm Notes are not made within 36 hours
after such default, this Agreement will terminate without liability on the
part of the non-defaulting Underwriters or the Company. In any such case
which does not result in termination of this Agreement, either the
non-defaulting Underwriters or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that
the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of its default under this Agreement.
(c) Any notice under this Section 9 may be made by telecopy or
telephone but shall be subsequently confirmed by letter.
10. TERMINATION OF AGREEMENT. The Underwriters shall have the right to
terminate this Agreement at any time prior to the Closing Date (and with
respect to the Option Notes, the Option Closing Date) by notice to the
Company from the Underwriters, without liability (other than with respect to
Section 7) on the Underwriters' part to the Company if, on or prior to such
date, (i) the Company shall have failed, refused or been unable to perform in
any material respect any agreement on its part to be performed hereunder,
(ii) any other condition to the obligations of the Underwriters hereunder as
provided in Section 8 is not fulfilled when and as required in any material
respect, (iii) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the NASD Automated Quotation System
shall have been suspended or materially limited, or minimum prices shall have
been established on such exchange or system by the Commission, or by such
exchange or system or other regulatory body or governmental authority having
jurisdiction, (iv) a general banking moratorium shall have been declared by
Federal, California or New York State authorities, (v) there is an outbreak
or material escalation of armed hostilities involving the United States on or
after the date hereof, or there has been a declaration by the United States
of a national emergency or war, the effect of which shall be, in the
Underwriters' reasonable judgment, to make it inadvisable or impracticable to
proceed with the public offering or delivery of the Notes on the terms and in
the manner contemplated in the Prospectus as supplemented or amended prior to
the occurrence of such event, (vi) in the Underwriters' reasonable opinion
any material adverse change shall have occurred since the respective dates as
of which information is given in the Registration Statement or the Prospectus
(as supplemented or amended prior to the occurrence of such event) in the
condition (financial or other) of the Company whether or not arising in the
ordinary course of business other than as set forth in the Prospectus as
supplemented or amended prior to the occurrence of such event, or (vii) there
29
shall have been such a material adverse change in general economic, political
or financial conditions or if the effect of international conditions on the
financial markets in the United States shall be such as, in the Underwriters'
reasonable opinion, makes it inadvisable or impracticable to proceed with the
delivery of the Notes as contemplated hereby. Notice of such cancellation
shall be given to the Company by telecopy or telephone but shall be
subsequently confirmed by letter.
11. MISCELLANEOUS.
(a) Except as otherwise provided in Sections 9 and 10 hereof,
notice given pursuant to any of the provisions of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 0 Xxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention: President and
Chief Executive Officer, with a copy to Xxxxxxx X. Xxxx, Esq., Xxxx & Xxxxx a
Professional Corporation, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, or (ii) if to the Underwriters, at the offices of Xxxxx
Xxxxxxx Inc., Xxxxx Xxxxxxx Tower, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000, Attention: Corporate Finance Department, with a copy to
Xxxxx X. Xxxx, Esq., Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, Washington Harbour,
0000 X Xxxxxx, XX, Xxxxxxxxxx, X.X. 00000, or in any case to such other
address as the person to be notified may have requested in writing.
(b) This Agreement is made solely for the benefit of the several
Underwriters, the Company, their directors and officers and other controlling
persons referred to in Section 7 hereof, and their respective successors and
assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. The term "successors and assigns" as used in this
Agreement shall not include a purchaser from any of the several Underwriters
of any of the Notes in his status as such purchaser.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of California.
13. COUNTERPARTS. This Agreement may be signed in various counterparts
which together shall constitute one and the same instrument.
30
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the Underwriters.
Very truly yours,
CONSUMER PORTFOLIO SERVICES, INC.
By:
------------------------------------
Name:
Title:
Accepted and delivered as of
the date first written above
XXXXX XXXXXXX INC.
XXXX XXXXX XXXX XXXXXX, INC.
XXXX XXXXXXXX, INC.
By: XXXXX XXXXXXX INC.
By:
------------------------------------
Name:
Title:
31
CONSUMER PORTFOLIO SERVICES, INC.
SCHEDULE I
UNDERWRITERS
Principal Amount
Name of Firm Notes
---- ----------------
Xxxxx Xxxxxxx Inc. . . . . . . . . . . . . . . . . . . . . . . . . .$
----------
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated.. . . . . . . . . . . . . . . .$
----------
Xxxx Xxxxxxxx Incorporated.. . . . . . . . . . . . . . . . . . . . .$
----------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$
----------
----------
32
