CONTRACT SALE AGREEMENT
DATED AS OF MAY ___, 1999
BY AND BETWEEN
CONSUMER PORTFOLIO SERVICES, INC.
AND
FAIRLANE CREDIT, L.L.C.
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CONTRACT SALE AGREEMENT ( the "Sale Agreement"), dated as of May __,
1999 by and between CONSUMER PORTFOLIO SERVICES, INC. (the "Seller") a
California Corporation, its successors and permitted assigns and FAIRLANE
CREDIT LLC (the "Purchaser") a Delaware limited liability company, its
successors and assigns.
W I T N E S S E T H:
- - - - - - - - - - -
WHEREAS, the Seller purchases from Dealers certain retail installment
sales contracts secured by new and used automobiles and light-duty trucks
("Contracts");
WHEREAS, the Seller desires to purchase Contracts in accordance with
terms of the Originator's Manual, as described in Exhibit A, for sale and
assignment to the Purchaser;
WHEREAS, the Seller intends to sell and the Purchaser intends to
purchase, certain of such Contracts together with all of its rights
thereunder, as described herein;
NOW, THEREFORE, the parties agree as follows:
SECTION 1. DEFINITIONS.
"Adverse Claim" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, either
legal or in equity, or other type of preferential arrangement having the
effect of a lien or security interest upon or with respect to the Sold
Program Contracts or Purchased Assets other than in favor of the Purchaser
with respect to this Sale Agreement.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Amount Financed" has the meaning ascribed thereto in the applicable
Truth-in-Lending disclosure in the Program Contract given to the Obligor.
"Automobiles" means new and used automobiles and light-duty trucks, the
purchase of which the Obligors financed by the Program Contracts.
"Business Day" means any day other than a Saturday or a Sunday, or
another day on which banks in the State of Colorado are required, or
authorized by law to close.
"Buy Rate" means with respect to any Sold Program Contract the rate
specified as such in Exhibit A in effect on the Closing Date.
"Closing Date" means ________________, 1999.
"Contract File" means those documents described in Exhibit C. Seller
may modify the content of Exhibit C with prior written approval from
Purchaser.
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"Contract Rate" means with respect to any Sold Program Contract, the
interest rate on such Sold Program Contract as disclosed as the Annual
Percentage Rate.
"Dealer" means a franchise automobile dealer, or its Affiliate, who has
entered into a Dealer Agreement with the Seller with respect to, among
other things, the origination of the Sold Program Contracts.
"Dealer Agreement" means an agreement between the Seller and a Dealer
setting forth the terms for the purchase of Contracts by the Seller.
"Debt" means (a) indebtedness of the Seller for borrowed money, (b)
obligations of the Seller evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations of the Seller to pay the deferred
purchase price of property or services, (d) obligations of the Seller as
lessee under leases which have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or through the Seller, even though Seller
has not assumed or become liable for the payment of such obligations, (f)
obligations of the Seller under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to ensure a creditor against loss in respect of
indebtedness or obligations of others of the kinds referred to in clause
(a) through (e) above, and (g) liabilities in respect of unfunded vested
benefits under plans covered by the ERISA, as amended, and regulations
promulgated thereunder.
"Eligible Program Contracts" means all Program Contracts which, in the
sole judgment of the Purchaser, comply with the representations and
warranties set forth in Section 5(b) of this Sale Agreement, including
Program Contracts that, as of the Closing Date, have not been funded and
the Obligor's first payment is not yet due or Obligor's first payment is
included in the Contract File endorsed in favor of Purchaser.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Purchase Termination" has the meaning ascribed thereto in
Section 9 of this Sale Agreement.
"Fee Schedule" means the schedule agreed to between the Seller and the
Purchaser in the form of Exhibit D hereto, which schedule the Seller and
Purchaser may modify and which modification shall be effective with respect
to Sold Program Contracts having Sale Dates ten (10) Business Days
following the receipt of such acknowledged notice by the Seller of such
modification.
"Governmental Authority" means the United States of America, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"Indemnified Amounts" means any and all amounts necessary to indemnify
such Indemnified Party from and against any and all claims, losses and
liabilities and related costs and expenses, including reasonable attorneys'
fees and disbursements and any court costs.
"Indemnified Party" means the Purchaser or any employee, officer or
agent thereof.
"Obligor" means, with respect to any Program Contract, the Persons
obligated to make payments in respect thereto.
"Officer's Certificate" (Exhibit E) means, with respect to any Person,
a certificate signed by the Chairman of the Board, Vice Chairman of the
Board, the President, a Vice President, the Treasurer, the secretary, or
any other duly authorized officer of such Person.
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"Originator's Manual" shall mean the materials provided by Seller to
Purchaser as Exhibit A setting forth, among other things, Dealer
Agreements, Schedule A and its Exhibit A, rate participation, Buy Rate and
Contract Rate schedule, and Approval Authority Summary for Eligible Program
Contracts. Seller may modify the Originator's Manual with written approval
to be given by Purchaser within ten (10) business days from the date of
request.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, Governmental Authority or any other entity of
whatever nature.
"Principal Balance" of a Program Contract means, on any date of
determination, the Amount Financed reduced by that portion of all prior
payments received by the Purchaser with respect to such Program Contract
allocable to principal as reflected on the records maintained by the
Purchaser.
"Program Contracts" means Contracts originated by Seller pursuant to
Section 2 hereof and in accordance with the Originator's Manual
"Purchased Assets" means (a) with respect to each Sold Program
Contract, all of the Seller's right, title and interest in and to (i) the
Program Contract (including its interest in the proceeds of such Sold
Program Contract), including all payments on or with respect to such Sold
Program Contract after the Sale Date (ii) the security interests in the
Automobiles granted to the Seller by the Dealer pursuant to the Sold
Program Contract and to the Purchaser pursuant to this Sale Agreement,
(iii) any proceeds with respect to the Sold Program Contract from recourse
to the Dealer, if any, under the related Dealer Agreement, (iv) any
documents in the Contract File for such Sold Program Contract, (v) the
proceeds of any insurance policies maintained with respect to the
Automobile and Sold Program Contract, (vi) all income and proceeds of the
foregoing or relating thereto, and (vii) with respect to each Sold Program
Contract, all of the Seller's rights against the Dealer as described in the
Dealer Agreement .
"Purchase Price" means with respect to any Eligible Program Contract
the Amount Financed including rate participation minus any dealer discount
or fee, as described in Exhibit A.
"Repurchase Price" means with respect to any Sold Program Contract
which the Seller is obligated to repurchase, an amount equal to the sum of
(a) the outstanding Principal Balance of such Program Contract plus rate
participation and fees paid to Seller by Purchaser, as set forth in Exhibit
D, less any dealer discount or fee(b) any accrued but unpaid interest up to
180 days in respect thereof, and (c) any other amounts owing to Purchaser
by Obligor under the Sold Program Contract for collection, repossession or
other costs related to the enforcement of Purchaser's security interest in
the Vehicle or collection under the account, minus (c) all payments
received by the Purchaser but not applied as a reduction with respect to
such Sold Program Contract.
"Sale" means a sale of a Program Contract from the Seller to the
Purchaser pursuant to this Sale Agreement.
"Sale Agreement" means this Contract Sale Agreement including the
Originator's Manual and any other exhibits to this Sale Agreement.
"Sale Assignment" means, with respect to any Sold Program Contract, the
assignment in the form of Exhibit F hereto.
"Sale Date" means the date on which each Sold Program Contract is sold
pursuant to this Sale Agreement.
"Sales Finance Company License" means a current license issued to the
Seller authorizing it to purchase and sell consumer Contracts in each state
in which such license is required.
"Securities" has the meaning ascribed thereto in Section 6(g).
"Sold Program Contract" means a Program Contract sold by the Seller
pursuant to Section 2 of this Sale Agreement.
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"Subsidiary" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting
power to elect a majority of the Board of Directors or other Persons
performing similar functions are at the time directly or indirectly owned
by such Person.
"Termination Date" has the meaning specified in Section 8.
"UCC" means the Uniform Commercial Code as in effect in the state where
the Program Contract is originated.
SECTION 2. SALE OF PROGRAM CONTRACTS. (a) From time to time, Seller
shall offer to sell to the Purchaser, subject to the terms and conditions
of this Sale Agreement, Eligible Program Contracts from Dealers and the
Purchaser agrees to purchase Eligible Program Contracts from the Seller
subject to the terms and conditions hereof. During the term of this
Agreement, the Seller shall sell, on the terms and conditions herein, to
the Purchaser Eligible Program Contracts which meets the underwriting
criteria set out in the Originator's Manual and Seller's credit scoring
criteria, such criteria as mutually agreed upon between Seller and
Purchaser. Seller shall begin offering Program Contracts commencing on the
Closing Date and continuing at least every third Business Day thereafter.
(b) In offering an Eligible Program Contract for sale to the Purchaser
pursuant to this Section 2,, the Seller shall deliver to the Purchaser, on
a Business Day (i) the Contract File, (ii) a copy of the consumer credit
report, (iii) a fully executed Sale Assignment in respect of such Program
Contracts, and (iv) a copy of the buy sheet evidencing the all amounts paid
by Seller to Dealer. Each Sale from the Seller to the Purchaser shall be
subject to the effectiveness of this Sale Agreement in accordance with the
provisions of Section 4(a) hereof and the satisfaction of the conditions
precedent specified in Section 4(b). Upon receipt of the complete Contract
File and the duly executed Sale Assignment by the Purchaser and subject to
the terms of this Sale Agreement, the Purchaser will pay the Purchase Price
with respect to such Program Contracts within 48 hours following the
receipt of each Contract File (or, if such day is not a Business Day by
5:00 p.m. California time on the second Business Day following the receipt
of such Contract File). Notwithstanding the provision of this Section 2,
Purchaser may decline to purchase a Program Contract if Purchaser
determines that it has not received the entire Contract File with respect
to such Program Contract.
(c) The Purchaser shall pay the Seller the Purchase Price and the Fee,
as described in Exhibit D hereunder, by electronic funds transfer and
check, respectively, to an account designated by the Seller in writing from
time to time, acceptable to the Purchaser. The Purchaser shall pay the
Seller the Purchase Price with respect to each Sold Program Contract within
the time period specified in Section 2 (b).
(d) Following payment of the Purchase Price and execution of the Sale
Assignment, the ownership of each Sold Program Contract specified in such
Sale Assignment and the Purchased Assets shall be vested in the Purchaser,
and the Seller shall not take any action inconsistent with such ownership
and shall not claim any ownership interest in any such Sold Program
Contract.
(e) The Seller shall indicate in its records that ownership of each
Sold Program Contract and the Purchased Assets is held by the Purchaser or
its assignee. In addition, the Seller shall respond to any inquiries with
respect to ownership of any Sold Program Contract by stating that it is no
longer the owner of such Sold Program Contract and that ownership of such
Sold Program Contract is held by Purchaser or its assignee. Seller agrees
to hold in trust for Purchaser any cash payments received in connection
with a Sold Program Contract and shall remit such funds by wire transfer or
in the form received within twenty-four hours of their receipt to an
account established by Purchaser.
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(f) The Seller agrees that, from time to time, at its expense, it will
promptly execute and deliver all further instruments, notices and
documents, and take all further action, that may be necessary or
appropriate, or that the Purchaser may reasonably request, in order to
perfect, protect or more fully evidence the transfer of ownership of the
Sold Program Contracts or to enable the Purchaser or its assignee to
exercise or enforce any of its rights hereunder or under any Sale
Assignment. Without limiting the generality of the forgoing, the Seller
will promptly, upon the request of the Purchaser, execute and file or cause
to be filed such financing or continuation statements, certificates of
title or other title documentation in support of the lien of the
Purchaser's assignee in the related Automobile, or amendments thereto or
assignments thereof. The Seller hereby authorizes the Purchaser to file one
or more financing or continuation statements, and amendments thereto and
assignments thereof, relating to all or any of the Sold Program Contracts
and proceeds thereof without the signature of the Seller. Seller also
hereby constitutes Purchaser, its permitted successors and assigns, as
Seller's true and lawful attorneys, with full power of substitution, in the
name of Seller or otherwise, whether in relation to tangible or intangible
property, to transfer all right title, title and interest in and to any
Automobile, to execute and deliver any and all certificates, instruments
and other documents necessary to effect such transfer of title, to endorse
and collect any checks or other payments owed to Purchaser under the Sold
Program Contract, to discharge any liens on Automobiles and to modify or
change or request modification or change of, the loss payee or additional
insured endorsement with respect to any insurance policy on an Automobile.
Seller also grants Purchaser the right to use its name to collect from
Dealers refundable insurance and warranty premiums included in the Amount
Financed. Seller will provide Purchaser with its logo and any applicable
trademarks for use on documents seeking collection of these amounts. Seller
agrees that the foregoing powers are irrevocable notwithstanding any reason
whatsoever, including without limitation Seller's dissolution, merger,
consolidation or any other change in Seller. Seller will, at Purchaser's
reasonable request, execute appropriate separate instruments evidencing the
forgoing powers. Purchaser will indemnify and hold Seller harmless from any
claims or liabilities arising from Purchaser's exercise of the powers
granted in this Section. A copy of that Power of Attorney is attached
hereto as Exhibit G.
(g) Notwithstanding any other rights or remedies afforded to Purchaser
under this Agreement, Purchaser may either terminate this Agreement
pursuant to Section 9 or require that the parties renegotiate the Fee, if
during any calendar month the aggregate random samples of Purchased
Contracts during that calendar month indicate that less than 90% of the
Purchased Contracts fail to meet the purchasing requirements in Section 2.
Before Purchaser may exercise any rights under this subsection (g), Seller
shall have the opportunity to cure the non-conforming Purchased Contracts
during the next calendar month. If Purchaser elects to renegotiate the Fee,
such reestablished Fee must be mutually agreed upon by the parties within
10 days of Seller's receipt of a notice from Purchaser indicating
Purchaser's intent to renegotiate the Fee. If the parties fail to
renegotiate the fee, then Purchaser may terminate this Agreement.
SECTION 3. INTENDED CHARACTERIZATION; GRANT OF SECURITY INTEREST. It is
the intention of the parties hereto that each transfer of Sold Program
Contracts to be made hereunder shall constitute a purchase and sale and not
a loan. In the event, however, that a court of competent jurisdiction were
to hold that the transaction evidenced hereby constitutes a loan and not a
purchase and sale, or a Governmental Authority determines that the
Purchaser may not purchase or acquire Program Contracts, it is the
intention of the parties hereto that this Sale Agreement shall constitute
as security agreement under applicable law and that the Seller shall be
deemed to have granted to the Purchaser as of the date hereof a first
priority security interest in all of the Seller's right, title and interest
in, to and under each Sold Program Contract, and all proceeds thereof.
SECTION 4. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SALE AGREEMENT AND
TO EACH SALE. (a) The effectiveness of this Sale Agreement is subject to
the conditions precedent that the Purchaser shall have satisfactorily
completed its due diligence review of the Seller and its operations and
that the Purchaser shall have received the following, in form and substance
satisfactory to the Purchaser, within 30 days of the Closing Date. In the
event Seller has not provided the following as set forth herein, an Event
of Purchase Termination shall automatically occur.
(i) the articles of incorporation of the Seller certified, as of a date
no more than ten days prior to the Closing Date, by the Secretary of
State of California.
(ii) a good standing certificate, dated no later than March, 1999, from
its jurisdiction of organization and each state in which the Seller is
required to qualify to do business;
(iii) a copy of each Sales Finance Company License;
(iv) a certificate of the Secretary or Assistant Secretary of the
Seller (on which certificate the Purchaser may conclusively rely until
such time as it shall receive from the Seller a revised certificate
meeting the requirements of the subsection) certifying as of the
Closing Date: (A) the names and true signature of the officers
authorized on its behalf to sign this Sale Agreement, (B) a copy of the
Seller's articles of incorporation and bylaws, and (C) a copy of the
resolutions of the board of directors of the Seller approving this Sale
Agreement and the transactions contemplated thereby;
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(v) an Officer's Certificate in the form of Exhibit E hereto;
(vi) acknowledgment copies of proper financing statements (Form UCC-1),
duly filed, in respect of Sold Program Contracts, naming the Seller as
the debtor and the Purchaser as the secured party, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Purchaser, desirable under the UCC of all appropriate jurisdictions or
any comparable law to perfect the Purchaser's ownership interests in
all Sold Program Contracts in which an interest may be assigned
hereunder;
(vii) the favorable opinion of Seller's outside counsel satisfactory to
the Purchaser in form and substance satisfactory to the Purchaser;
(viii) such other approvals, consents, opinions, documents and
instruments, as the Purchaser may reasonably request.
Upon the receipt by the Purchaser of the items referred to in paragraphs
(i) through (viii) of this section 4(a), the Purchaser shall notify the
Seller in writing that the conditions precedent to the effectiveness of
this Sale Agreement have been satisfied and that this Sale Agreement is
effective as of the date and time specified in such notice.
(b) Each Sale from the Seller to the Purchaser shall be subject to the
further conditions precedent that on the related date of such Sale, the
Seller shall have certified in the related Sale Assignment that, (except as
specifically disclosed in such Sale Assignment or in writing) and
specifically consented to by the Purchaser in its sole discretion
(provided, that no such consent shall be given as to any of the Events of
Purchase Termination described in subsections (c) and (h) of section 9):
(i) the representations and warranties of the Seller set forth in
Section 5 are true and correct on and as of such date, before and after
giving effect to such Sale and to the application of the proceeds
therefrom, as though made on and as of such date;
(ii) no event has occurred, or would result from such sale or from the
application of the proceeds therefrom, which constitutes an Event of
Purchase Termination or would constitute an Event of Purchase
Termination under Section 9 but for the requirement that notice be
given or time elapse or both; and
(iii) the Seller is in compliance with each of its covenants set forth
herein;
(iv) the Termination Date shall not have occurred;
(v) each Program Contract submitted by the Seller for purchase is an
Eligible Program Contract; and
(vi) the Seller shall have taken such other actions, including delivery
to the Purchaser of such approvals, consents, opinions, additional
information with respect to the Seller, documents and instruments, as
the Purchaser may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants to the Purchaser, as of the date hereof and on each
subsequent date on which a Sale is made, as follows:
(a) With respect to the Seller:
(i) the Seller is a corporation duly organized, validly
existing and in good standing under the laws of California, is
duly qualified to do business and is in good standing in every
jurisdiction in which the nature of its business requires it
to be so qualified and which failure to qualify could have a
material adverse affect on Seller;
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(ii) the Seller has the power and authority to own and convey
all of its properties and assets and to execute and deliver
this Sale Agreement and to perform the transactions
contemplated hereby;
(iii) the execution, delivery and performance by the Seller of
this Sale Agreement and the transactions contemplated hereby,
(A) have been duly authorized by all necessary action on the
part of the Seller, (B) do not contravene or cause the Seller
to be in default under (1) the Seller's articles of
incorporation and bylaws, (2) any contractual restriction with
respect to any debt of the Seller or contained in any
indenture, loan or credit agreement, lease, mortgage, security
agreement, bond, note, or other agreement or instrument
binding on or affecting the Seller or its property or (3) any
law, rule, regulation, order, writ, judgment, award,
injunction or decree applicable to, binding on or affecting
the Seller or its property, and (C) do not result in or
require the creation of any Adverse Claim;
(iv) each of this Sale Agreement and each Sale Assignment
executed on or prior to the Closing Date or the related Sale
Date has each been duly executed and delivered on behalf of
the Seller;
(v) no consent of, or other action by, and no notice to or
filing with, any Governmental Authority or any other party, is
required for the due execution, delivery and performance by
the Seller of this Sale Agreement or for the perfection of or
the exercise by the Purchaser of any of its rights or remedies
thereunder, each of which has been obtained and complete
copies of which have been provided to the Purchaser;
(vi) each Sale Agreement and each Sale Assignment delivered by
the Seller is (or will be if not executed and delivered as of
the date hereof) the legal, valid and binding obligation of
the Seller enforceable against the Seller in accordance with
their respective terms;
(vii) there is no pending or threatened action, suit or
proceeding, against or affecting the Seller, its Affiliates,
its officers , or the property of the Seller, in any court or
tribunal, or before any arbitrator of any kind or before or by
any Governmental Authority (A) asserting the invalidity of
this Sale Agreement, (B) seeking to prevent the sale and
assignment of any Program Contract or the consummation of any
of the transactions contemplated thereby, (C) seeking any
determination or ruling that might materially and adversely
affect (1) the performance by this Sale Agreement, (2) the
validity or enforceability of this Sale Agreement, (3) any
Program Contract or (4) the federal income tax attributes of
the Sales.
(viii) no injunction, writ, restraining order or other order
of any material nature adverse to the Seller or the conduct of
its business or which is inconsistent with the due
consummation of the transactions contemplated by this Sale
Agreement has been issued by a Governmental Authority;
(ix) no defaulted Debt exists under any instrument or
agreement evidencing, securing or providing for the issuance
of Debt of the Seller;
(x) the principal place of business and chief executive office
of the Seller are located at the address of the Seller set
forth in the designated space beneath its signature line in
this Sale Agreement and, there are now no, and during the past
four months there have not been, any other locations where the
Seller is located (as that term is used in the UCC in the
state of such location) except that, with respect to such
changes occurring after the date of this Sale Agreement, as
shall have been specifically disclosed to the Purchaser in
writing;
(xi) the legal name of the Seller is as set forth at the
beginning of this Sale Agreement and the Seller has not
changed its name in the last six years, and during such
period, the Seller did not use, nor does the Seller now use
any trade-names, fictitious names, assumed names or "doing
business as" names except that, with respect to such changes
occurring after the date of this Sale Agreement, as shall have
been specifically disclosed to the Purchaser in writing;
(xii) the Seller is solvent and will not become insolvent
after giving effect to the transactions contemplated by this
Sale Agreement; the Seller is paying its debts as they mature;
the Seller has not sold any Program Contract to the Purchaser
with intent to hinder, delay or defraud any entity to which
the Seller was, or became, after the date that such transfer
was made, indebted; the Seller's sales of the Program Contract
to the Purchaser have been and will be made for reasonably
equivalent value and fair consideration; the Seller has not
incurred debts beyond its ability to pay as they mature; and
the Seller, after giving effect to the transactions
contemplated by this Sale Agreement, will have an adequate
amount of capital to conduct its business in the foreseeable
future;
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(xiii) for federal income tax, reporting and accounting
purposes, the Seller will treat the sale of each Sold Program
Contract sold pursuant to this Sale Agreement as a sale, or
absolute assignment, of its full right, title and ownership
interest in such Sold Program Contract to the Purchaser, and
the Seller has not and will not account for or treat the
transactions contemplated by this Sale Agreement in any other
manner;
(xiv) the Seller has and maintains all permits, licenses,
authorizations, registrations, approvals and consents of
Governmental Authorities (including, without limitation, Sales
Finance Company Licenses, if any, necessary for (A) the
activities and business of the Seller as currently conducted
and as proposed to be conducted, (B) the ownership, use,
operation and maintenance of its properties, facilities and
assets and (C) the performance by the Seller of this Sale
Agreement;
(xv) the Seller has filed on a timely basis all tax returns
(federal, state, and local) required to be filed and has paid
or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from the
Seller;
(xvi) each pension plan or profit sharing plan to which the
Seller is a party has been fully funded in accordance with the
obligations of the Seller set forth in such plan;
(xvii) with respect to the Seller, there has occurred no event
which has or is reasonably likely to have a material adverse
effect on its ability to perform its obligations under this
Sale Agreement;
(xviii) the consolidated balance sheets of the Seller and its
consolidated Subsidiaries as of the date of its most recently
completed fiscal year and the related statements of income and
shareholders' equity of the Seller and its consolidated
Subsidiaries for the fiscal year then ended, and commencing
with the fiscal year ending December 31, 1999 certified by an
independent certified public accountant together with all
quarterly reports with respect to completed fiscal quarters
occurring after such fiscal year until the date of this
representation and warranty, copies of which have been
furnished to the Purchaser, fairly present the consolidated
financial condition, business and operations of the Seller and
its consolidated Subsidiaries as at such date and the
consolidated results of operations of the Seller and its
consolidated Subsidiaries for the period ended on such date,
all in accordance with generally accepted accounting
principles consistently applied, and since such date there has
been no material adverse change in any such condition,
business or operations;
(xix) the Seller has valid business reasons for selling its
interests in the Sold Program Contracts rather than obtaining
a loan with the Sold Program Contracts as collateral;
(xx) the Seller has not disclosed and will not disclose to any
Dealer or Obligor under a Program Contract the existence of
any insurance which has been or may be purchased by the
Purchaser to protect its interests under the Program
Contracts,
(xxi) all information heretofore or hereafter furnished with
respect to the Seller to the Purchaser in connection with any
transaction contemplated by this Sale Agreement is and will be
true and complete in all material respects and does not and
will not omit to state a material fact necessary to make the
statements contained therein not misleading.
(b) with respect to each Program Contract sold pursuant to this Sale
Agreement, Seller shall represent and warrant to Purchaser as follows
on such Sale Date:
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(i) Each Program Contract (1) arises from the sale of an
Automobile and which delivery and acceptance has been fully
performed by the Obligor and the Dealer party thereto, (2)
arises from the normal course of the Dealer's business, (3)
the Obligor of which is a natural person residing in any
state, (4) the Obligor of which is not a government or a
governmental subdivision or agency, (5) the Obligor of which
is not a minor and has full power and capacity to enter into
such Program Contract, (6) is denominated and payable in
dollars in the United States, (7) is in full force and effect
and constitutes the legal, valid and binding obligation of the
Obligor in accordance with its terms, (8) is not subject to
any dispute, litigation, counterclaim or defense, or any
offset, right of offset, and any exercisable right of
rescission, (9) has an original term to maturity of not less
than 24 nor more than 72 months, (10) provides for equal
monthly payments which will cause the Program Contract to
fully amortize during its term (11) has an Amount Financed
that has been fully disbursed of not less than $5,000 or more
than $30,000, (12) has an annual percentage rate of not less
than the lesser of (A) rates as determined in the Originator's
Manual, and (B) the maximum interest rate permissible by law
with respect to such Program Contract, (13) together with the
contract applicable thereto, does not contravene any
requirements of law applicable thereto, (14) is a Program
Contract with respect to which all required consents,
approvals and authorizations have been obtained, (15) is a
Program Contract secured by a purchase money security interest
in the Automobile that has been recorded or applied for in the
name of the Seller and assigned to the Purchaser which
security interest is or is reasonably expected to be in full
force and effect, in each case, subject to no prior or equal
liens, claims or encumbrances, (16) was purchased by the
Seller using and conforming to the Originator's Manual, (17)
requires the Seller to be named as loss payee or beneficiary
(as applicable) under an insurance policy with respect to the
Automobile related to such Program Contract and entitles the
Seller to the benefits of such insurance policy, (18) requires
no additional action by the Seller before becoming a valid and
binding obligation of the Obligor thereunder, enforceable
against such Obligor in accordance with its terms, (19)
relates to an Automobile with respect to which the Obligor
made at least the minimum down payment as specified in the
Originator's Manual and in the form and manner described in
the Originator's Manual, including, but not limited to a down
payment that is made with the Obligor's own cash money and
which is not borrowed, deferred (except for deferred payments
that are allowed by law and disclosed as deferred in the
Contract) or obtained as a cash advance on a credit card or
other open line of credit, and (20) complies in all respects
with the requirements of the Originator's Manual .
(ii) Each Program Contract was originated by a Dealer that had
all necessary licenses and permits to originate Program
Contracts in the state where such Dealer was located, was
fully and properly executed by the parties thereto, was
purchased by the Seller from such Dealer under an existing
Dealer Agreement with the Seller, was a Dealer and was validly
assigned by the Dealer to the Seller.
(iii) Each Program Contract contains customary and enforceable
provisions such as to render the rights and remedies of the
holder thereof adequate for realization against the collateral
security.
(iv) Each Program Contract was originated by a Dealer to an
Obligor and was sold by the Dealer to the Seller without any
fraud or material misrepresentation on the part of such Dealer
or on the part of the Obligor.
(v) Such Program Contract complied at the time it was
purchased by the Seller including the sale of any related
physical damage, credit life and credit accident and death
insurance, Gap or debt cancellation coverage, and any extended
service contracts at the time it was originated or made, as of
the date hereof in all material respects with all requirements
of applicable federal, state and local laws and regulations
thereunder, including usury laws, the federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal
Reserve Board's Regulations B and Z, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the
▇▇▇▇-▇▇▇▇▇▇▇▇ Act, and state adaptations of the National
Consumer Act and of the Uniform Consumer credit Code, other
consumer credit laws and equal credit opportunity and
disclosure laws and other applicable legal requirements.
(vi) Such Program Contract has not been satisfied,
subordinated or rescinded, nor has the related Automobile been
released from the lien granted by such Program Contract, in
whole or in part.
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(vii) No provision of any Program Contract has been waived,
altered, extended, revised or otherwise modified in any
respect since its origination. No Program Contract has been
modified as a result of the Soldier's and Sailor's Relief Act
of 1940, as amended.
(viii) No right of rescission, setoff, counterclaim or defense
has been asserted or threatened against the Seller with
respect to such Program Contract.
(ix) The lien certificate for each Automobile either (i) shows
the Purchaser or Seller or their nominee named as the original
secured party under each Program Contract or (ii) has been
applied for in the name of the Purchaser or Seller or their
nominee. If the Program Contract was originated in a state in
which a filing or recording is required of the secured party
to perfect a security interest in motor vehicles, such filing
or recording has been duly made to show the Purchaser or
Seller or their nominee named as the original secured party
under the related Program Contract. Immediately after the
sale, transfer and assignment thereof to the Purchaser, each
Program Contract will be secured by an enforceable and
perfected security interest in the Automobile in favor of the
Purchaser or Seller as secured party, which security interest
is prior to all other liens and security interests in such
Automobile (except, as to priority, for any lien for taxes,
labor or materials affecting an Automobile that attach to the
Automobile after the sale of the Program Contract) and which
lien is not a preference under Section 544 of the United
States Bankruptcy Code. For purposes of this section, Seller
also represents and warrants that the lien, as applied for
pursuant to the requirements herein, will be obtained in a
timely manner such as not to adversely affect the interests of
Purchaser in the Automobile.
(x) No liens or claims have been asserted or filed for taxes,
work, labor or materials relating to the Automobile that are
liens prior to, or equal or coordinate with, the security
interest in the Automobile granted by any Program Contract,
and the Obligor has good and marketable title to the
Automobile subject to no liens other than the security
interest under the Program Contract.
(xi) Upon sale hereunder, such Program Contract has not been
sold, transferred, assigned, offered for purchase, or pledged
by the Seller to any Person or Financial Institution other
than the Purchaser; the Seller has good and marketable title
to such Program Contract free and clear of all liens and
rights of others claiming by or through the Purchaser (other
than the rights of the Obligor to the Automobile thereunder)
and, following the Sale Date, the Purchaser shall have good
and marketable title to such Program Contract, free and clear
of all liens and rights of others claiming by or through the
Purchaser (other than the rights of the Obligor to the
Automobile thereunder); and the transfer has been perfected
under UCC for the applicable jurisdiction.
(xii) Such Program Contract has not been purchased by the
Seller from a Dealer in, nor is subject to the laws of, any
jurisdiction under which the sale, transfer and assignment of
such Program Contract pursuant to the Sale Agreement is
unlawful, void or voidable. No agreement has been entered into
with any Obligor that prohibits, restricts or conditions the
assignment of any portion of the Program Contracts.
(xiii) There is only one originally executed contract for each
Program Contract.
(xiv) Such Program Contract constitutes "chattel paper" as
defined in the UCC.
(xv) Such Program Contract has not been included in a "fleet
sale" (i.e., a sale to a single Obligor of more than five
vehicles).
( xvi) all amounts due and payable by the Seller to the Dealer
under the Dealer Agreement with respect to such Program
Contracts have been paid and no Dealer has any rights in, or
claims against, the Program Contracts.
(xvii) The Seller has indicated in its computer files that
such Program Contract has been sold to the Purchaser.
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(xviii) The Seller has taken such action as is necessary to
obtain a first perfected security interest in favor of the
Purchaser in such Program Contract, and the proceeds thereof.
(xix) The Seller has done nothing to convey any right to any
Person that would result in such Person having a right to
payments due under such Program Contract or otherwise to
impair the rights of the Purchaser in any Program Contract or
the proceeds thereof.
(xx) No Program Contract is assumable by another Person in a
manner which would release the Obligor thereof from such
obligor's obligations to the Purchaser with respect to such
Program Contract.
(xxi) No selection procedures adverse to the Purchaser have
been utilized in selecting such Program Contract from all
other Program Contracts owned by the Seller.
(xxii) As of the Sale Date, no Obligor is subject to a current
bankruptcy proceedings and the Program Contract is current
with regard to payment and is not otherwise in default
according to its terms and conditions.
(xxiii) Each Program Contract is a fully amortizing simple
interest receivable which provides for level monthly payments
which, if made when due, shall fully amortize the Amount
Financed over the original term.
(c) It is understood and agreed that the representations and warranties
set forth in this Section 5, measured as of the dates made, shall survive
the sale of the Sold Program Contract to the Purchaser and any assignment
of the Sold Program Contract by the Purchaser to any subsequent assignee
and shall continue so long as any Sold Program Contract shall remain
outstanding with regard to payment thereunder and shall remain subject to
any outstanding terms and conditions. The Seller acknowledges that the
Purchaser may assign all of its right, title and interest in and to the
Sold Program Contract and its right to exercise the remedies created by
this Section 5 hereof to a subsequent assignee. The Seller agrees that,
upon such assignment, any subsequent assignee may enforce directly, without
joinder of the Purchaser, the repurchase obligations of the Seller set
forth in Section 5(d) with respect to breaches of the representations and
warranties set forth in section 5(a) and Section 5(b) hereof.
(d) Upon discovery by the Seller, the Purchaser or any subsequent
assignee of a breach of any of the representations and warranties in
Section 5(a) or Section 5(b) hereof , the party discovering such breach
shall give prompt written notice to the other parties. Thereafter, if
requested by notice from the Purchaser or any subsequent assignee, the
Seller shall immediately repurchase such Sold Program Contract by remitting
the Repurchase Price in the manner specified in such notice. Any such
repurchase shall be made without recourse against, or warranty, express or
implied, of such party. Seller will not be under an obligation to
repurchase a Sold Program Contract but will assist Purchaser in obtaining a
Dealer repurchase where a Sold Program Contract involves fraud or a
material misrepresentation that the Seller had no knowledge of provided
Seller completed all required verification steps set forth in the
Originator's Manual .
(e) Upon such repurchase and the payment of the Repurchase Price, the
Purchaser or any subsequent assignee shall execute and deliver an
assignment and the Purchaser or any subsequent assignee shall assign to
Seller, all of the Purchaser's or any subsequent assignee's right, title
and interest in such repurchased Program Contract, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of the Purchaser
or any subsequent assignee other than liens, charges or encumbrances
created or arising out of this Sale Agreement. The Purchaser and any
subsequent assignee agree that it will promptly execute and deliver and
take all further action, that may be necessary or appropriate, or that the
Seller may reasonably request, in order to perfect, protect or more fully
evidence the transfer of ownership of such Program Contract to Seller
pursuant to Section 5(d). It is understood and agreed that the obligation
of the Seller to repurchase any Program Contract pursuant to Section 5(d)
shall constitute the sole remedy for the breach of any representation or
warranty under Section 5(b); provided, that the foregoing limitation shall
not be construed to limit in any manner the Purchaser's rights to (i)
declare the Termination Date to have occurred to the extent that such
breach also constitutes, or contributes to the determination of, an Event
of Purchase Termination, (ii) indemnification to the extent available under
Section 10, or (iii) offset the amount of the Repurchase Price from the
Purchase Price of any Sold Program Contracts.
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SECTION 6. ADDITIONAL COVENANTS OF THE SELLER. The Seller shall, unless
the Purchaser shall otherwise consent in writing:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders with respect to it, its business and properties and
all Program Contracts;
(b) Preserve and maintain its existence, rights, franchises and
privileges in the jurisdiction of its organization and all necessary Sales
Finance Company Licenses;
(c) Cause to be delivered to the Purchaser on, or within 30 days prior
to, each anniversary of the date of this Agreement, (i) an Officer's
Certificate of the Seller in the form of Exhibit E, dated the date of such
delivery; (ii) a certificate in the form required by Section 4(a)(vii); and
(iii) an opinion of counsel, in form and substance satisfactory to the
Purchaser, reaffirming as of the date of its delivery the opinion of
counsel with respect to the Seller and delivered to the Purchaser on the
Closing Date pursuant to Section 4(a)(viii);
(d) Furnish, or cause to be furnished, to the Purchaser, as soon as
available and in any event within 120 days after the end of each fiscal
year of the Seller, a copy of the consolidated financial statement of the
Seller, its consolidated Subsidiaries, as of the end of such year beginning
with the year ending December 31, 1999, and the related Consolidated
statements of income and retained earnings, and of cash flow, of the
Seller, and its consolidated Subsidiaries for such year, certified by a
firm of independent certified public accountants;
(e) Promptly after the occurrence thereof, notice of any pending or
threatened action, suit or proceeding of a type described in Section
5(a)(vii);
(f) As soon as possible and in any event within five days after the
occurrence of an Event of Purchase Termination (including without
limitation a material adverse change in the financial condition of the
Seller as determined by the Purchaser) or each event which, with the giving
of notice or lapse of time or both, would constitute an Event of Purchase
Termination, the statement of an officer of the Seller setting forth
complete details of such Event of Purchase Termination or event and the
action which the Seller has taken, is taking and proposes to take with
respect thereto;
(g) Promptly provide and verify the accuracy of any information
concerning the Seller required for any offering document with respect to
the sale of asset-backed securities backed by the Sold Program Contract
(the "Securities"), which may include information relating to the Seller
and its operations in connection with the origination of Program Contracts,
and such information may be published in such offering documents and relied
upon by the Purchaser and the assignee of the Purchaser;
(h) Acquire, maintain, and provide to the Purchaser such information as
the Purchaser may reasonably require (at least semi-annually) from time to
time regarding any Dealer whose Automobile sales are financed or are to be
financed by Program Contracts which are sold or to be sold hereunder and
shall represent that such information is, to the best knowledge,
information, and belief of the Seller, true and correct. To the extent
Seller has the right, by agreement or otherwise, to inspect or audit the
books and records of any Dealer, the Seller shall allow the Purchaser, at
its expense, to exercise such right on the Seller's behalf;
(i) Maintain, at its own expense, with responsible insurance companies
such insurance on such of its properties, in such amounts and against such
risks as is customarily maintained by similar businesses. No provision of
this Section 6(i) requiring insurance shall relieve the Seller from its
duties and obligations as set forth in this Sale Agreement. The Seller
shall be deemed to have complied with this provision in whole or in
applicable part if one of its Affiliates has such applicable policy or
policies and, by the terms thereof, the coverage afforded thereunder
extents to the Seller. The Seller shall, upon the request of the Purchaser,
file with the Purchaser a list of the insurance then in effect, stating the
names of the insurance companies, the amounts of the insurance, the dates
of the expiration thereof, and the properties and risks covered thereby.
Each policy required by this Section 6(i) shall not be canceled or modified
in a materially adverse manner without ten days' prior written notice to
the Purchaser; and
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(j) Promptly, deliver to the Purchaser, from time to time, such other
information, documents, records or reports respecting the Program Contract
or the condition or operations, financial or otherwise, of the Seller or
any of its Subsidiaries, as the Purchaser may, from time to time,
reasonably request (including, but not limited to, such information,
document, records or reports which the Purchaser is requested or required
by applicable law to provide to a third party -- including any Governmental
Authority).
(k) Upon receipt of seven days prior written notice, Seller shall
permit Purchaser to audit Seller's operations at Seller's locations. Such
audit shall be limited to a review of those items that relate to this
Agreement. Such audit shall be during Seller's normal business hours. All
of Purchaser's costs for such audit shall be borne by Purchaser. In lieu of
an audit at the Seller's location, Purchaser may, from time to time,
request that information, documents, or records required pursuant to such
audit be sent to Purchaser.
(l) Seller shall provide Purchaser with copies of all contracts,
agreements or other forms that will be included in the Contract File or
included in the Purchased Assets. Purchaser shall have the right to approve
all such forms before its purchase of any Program Contracts under this
Agreement.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The
Purchaser represents and warrants to the Seller as follows:
(a) Purchaser is duly organized, validly existing and in good standing
as a limited liability company under the laws of Delaware, with the power and
authority to own its properties and to conduct its business.
(b) Purchaser is duly qualified to do business, in good standing and
possesses all of the necessary licenses and approvals in all jurisdictions where
failure to do so would adversely affect its ability to perform its obligations
under this Sale Agreement or the enforceability or collectibility of the Sold
Program Contracts.
(c) Purchaser has the power, authority and legal right to execute and
deliver this Sale Agreement and to carry out its terms, and the execution,
delivery and performance of this Sale Agreement has been duly authorized by
Purchaser by all necessary corporate action.
(d) this Sale Agreement constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms.
(e) the execution, delivery and performance of this Sale Agreement, the
consummation of the transaction contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of or constitute (with
or without notice or lapse of time) a default under the charter or bylaws of the
Purchaser, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement, mortgage, deed of trust or other instrument to which
Purchaser is a party or by which Purchaser is bound or to which any of its
properties are subject, or result in the creation or imposition of any lien upon
any of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, or constitute a violation of any
law, order, rule or regulation applicable to Purchaser or its properties of any
Governmental Authority having jurisdiction over Purchaser or any of its
properties.
(f) There are no proceedings, investigations pending, or, to
Purchaser's knowledge, threatened, before any Governmental Authority having
jurisdiction over Purchaser or any of their respective properties: (i) asserting
the invalidity of this Sale Agreement, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Sale Agreement, or (iii) seeking
any determination or ruling that might materially and adversely affect the
performance by Purchaser of its respective obligations under, or the validity or
enforceability of, this Sale Agreement.
SECTION 8. TERMINATION. This Sale Agreement will terminate on the
earlier to occur of (such date, the "Termination Date") the following
events:
(a) The date of Event of Purchase Termination shall have been declared
or automatically occurred in accordance with the provisions of Section 9;
or
14
(b) The first anniversary of the date hereof (it being understood that
if neither party has notified the other before 45 days of said anniversary
date of its intention to terminate then the term of this Sale Agreement
will automatically be renewed for successive one-year terms, provided that
Purchaser or Seller can terminate this Agreement without cause during the
renewal period by providing 90 days prior written notice ).
SECTION 9. EVENTS OF PURCHASE TERMINATION. If any of the following
events (each an "Event of Purchase Termination") shall occur and be
continuing:
(a) The Seller shall materially fail to perform or observe any term,
covenant or agreement contained in this Sale Agreement and such
failure shall remain unremedied for thirty days after written
notice thereof shall have been given by the Purchaser to the
Seller; or
(b) The Purchaser shall materially fail to perform or observe any
term, covenant or agreement contained in this Sale Agreement and
such failure shall remain unremedied for thirty days after written
notice thereof shall have been given by the Seller to the
Purchaser; or
(c) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the issuance
of Debt of the Seller; or
(d) The Seller shall generally not pay any of its respective Debts as
such Debts become due, or the Seller shall admit in writing its inability
to pay its Debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Seller seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or any of its Debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a
conservator, receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, or any of the actions sought
in such proceeding (including, without limitation, the entry of and order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Seller shall take any corporate action to authorize any
of the actions set forth in this subsection; or
(e) Judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained
for the payment thereof) in excess of $15,000 in the aggregate against the
Seller shall remain unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of 30 days or more; or
(f) There is a material breach of any of the representations and
warranties of the Seller set forth in Section 5(a);
(g) Any Governmental Authority (including the Internal Revenue Service
or the Pension Benefit Guaranty Corporation) shall file notice of a lien
with regard to the assets of the Seller other than a lien (i) limited by
its terms to assets other than Program Contracts and (ii) not materially
adversely affecting the financial condition of the Seller; or
(h) A deterioration has taken place in the quality of the Sold Program
Contracts (and Seller and Purchaser are unable to renegotiate the Fee
Schedule within 10 days of Purchaser's notice of deterioration of the Sold
Program Contracts) or in the collectibility thereof which the Purchaser, in
its sole discretion, determines to be material; or
(i) This Sale Agreement shall for any reason cease to evidence the
transfer to the Purchaser of the legal and equitable title to, and
ownership of the Sold Program Contracts; or
(j) any company providing insurance to the Purchaser in respect of the
Sold Program Contracts determines that the Sold Program Contracts
originated by the Seller are, as a general matter, ineligible for insurance
coverage; or the rating agency rating the Securities determines that
inclusion of Sold Program Contracts originated by the Seller in the
applicable trust will result in a review with negative implications,
suspension, downgrade, withdrawal or other impairment of the rating
assigned to such Securities.
15
(k) Seller does not offer at least 500 Eligible Program Contracts per
month beginning three (3) months after the Closing Date.
(l) In the event that any of the Events of Purchase Termination
described above (except for subsections (d) or (i)) herein shall have
occurred, the Purchaser shall have provided the Seller (or the Seller shall
have provided the Purchaser) with a written notice of its intent to
terminate this Sale Agreement and 30 Business Days shall have lapsed since
such notice; then and in any such event, the Purchaser (or the Seller) may,
by notice to the Seller (or the Purchaser) declare an Event of Purchase
Termination to have occurred, whereupon the Termination Date shall
forthwith occur, without demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Seller (or the Purchaser). In
the event that any of the Events of Purchase Termination described in
subsections (d) or (i) herein shall have occurred, an Event of Purchase
Termination shall automatically occur, without demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Seller
and the Purchaser. Upon any such declaration or automatic occurrence, the
Purchaser shall have, in addition to all other rights and remedies under
this Sale Agreement, all other rights and remedies provided under the UCC
and other applicable law, which rights shall be cumulative.
SECTION 10. INDEMNIFICATION. Without limiting any other rights that an
Indemnified Party may have hereunder or under applicable law, the Seller
hereby agrees to pay on demand to each Indemnified Party Indemnified
Amounts which may be imposed on, incurred by or asserted against an
Indemnified Party in any way arising out of or resulting from this Sale
Agreement including without limitation:
(a) use by the Seller of proceeds of any Sale or in respect of any Sold
Program Contract;
(b) reliance on any representation or warranty made or deemed made by
the Seller (or any of its officers) under or in connection with this Sale
Agreement;
(c) the failure by the Seller to comply with any term, provision or
covenant contained in this Sale Agreement, or any agreement executed in
connection with this Sale Agreement; or
(d) the failure to vest and maintain vested in the Purchaser, or to
transfer to the Purchaser, legal and equitable title to and ownership of
the Program Contracts which are, or are purported to be, Sold Program
Contracts, together with all proceeds in respect thereof, free and clear of
any Adverse Claim (except as permitted hereunder) whether existing at the
time of the proposed sale of such Program Contract or at any time
thereafter and without limitation to the remedies set forth in Section 5;
excluding, however, (a) recourse for any uncollectible Sold Program
Contract (provided that the foregoing shall not be deemed to limit the
Purchaser's rights under Sections 5(d) and 9(c )), and (b) Indemnified
Amounts to the extent resulting from the negligence or willful misconduct
on the part of such Indemnified Party. The Seller acknowledges that the
Purchaser may assign its rights of indemnity granted hereunder to an
assignee and upon such assignment, such assignee shall have all rights of
the Purchaser hereunder and may in turn assign such rights. The Seller
agrees that, upon such assignment, such assignee may enforce directly,
without joinder of the Purchaser, the indemnities set forth in this
Section.
(e) any actions by Seller that result in a loss by or claim against
Purchaser arising out of Seller's performance under this Agreement,
provided this indemnification shall not cover loss or claims that are the
result of any actions by Purchaser.
SECTION 11. CONFIDENTIALITY; NONCOMPETITION. Except to the extent
otherwise required by applicable law or unless the Purchaser shall
otherwise consent in writing, the Seller (including directors, officers,
employees, and counsel) agrees to keep confidential the existence of this
Agreement and to maintain the confidentiality of the original or any copy
of all or any part of this Sale Agreement (and all drafts hereof and
documents ancillary hereto including any letters of intent) and all
proprietary information relating to Purchaser's business, including but not
limited to, credit underwriting criteria, products, customer lists, pricing
policies, employment records and policies, operational methods, marketing
plans and strategies, product development techniques or inventions and
research programs, trade know-how, trade secrets, specific software,
algorithms, computer processing systems, object and source codes, user
manuals, systems documentation, and other business and financial affairs of
Purchaser in its communications with third parties and otherwise and agrees
not to disclose, deliver or otherwise make available such materials to any
third party (other than its directors, officers, employees, accountants or
counsel).
16
SECTION 12. NO PROCEEDINGS. The Seller hereby agrees that it will not,
directly or indirectly, institute, or cause to be instituted, against the
Purchaser any proceeding of the type referred to in Section 9(dc) so long
as there shall not have elapsed one year plus one day since the latest
maturing Securities issued by the Purchaser have been paid in full in cash
it being understood that such provision in no way limits the Seller's
rights and remedies pursuant to this Sale Agreement.
SECTION 13. NOTICES, ETC. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing and
mailed or telecommunicated, or delivered as to each party hereto, at its
address set forth under its name on the signature page hereof or at such
other address as shall be designated by such party in a written notice to
the other parties hereto. All such notices and communications shall not be
effective until received by the party to whom such notice or communication
is addressed.
SECTION 14. NO WAIVER; REMEDIES. No failure on the part of the Seller
or the Purchaser to exercise, and no delay in exercising, any right
hereunder or under any Sale Assignment shall operate as a waiver thereof;
nor shall any single or partial exercise of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right,
The remedies herein provided are cumulative and not exclusive of any other
remedies provided by law.
SECTION 15. BINDING EFFECT; ASSIGNABILITY. This Sale Agreement shall be
binding upon and inure to the benefit of the Seller and the Purchaser, and
their respective successors and permitted assigns. The Seller may not
assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Purchaser. The Purchaser may,
assign all of its rights hereunder to one or more Persons. This Sale
Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms, and shall remain in full force
and effect until its termination; provided, that the rights and remedies
with respect to any breach of any representation and warranty made by the
Seller pursuant to Section 5 and the indemnification and payment provisions
of Section 10 shall be continuing and shall survive any termination of this
Sale Agreement.
SECTION 16. AMENDMENTS; CONSENTS AND WAIVERS; ENTIRE AGREEMENT. No
modification, amendment or waiver of, or with respect to, any provision of
this Sale Agreement, and all other agreements, instruments and documents
delivered hereto, nor consent to any departure by the Seller from any of
the terms or conditions hereof shall be effective unless it shall be in
writing and signed by each of the parties hereto. Any waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. No consent to or demand by the Seller in any case shall, in
itself, entitle it to any other consent or further notice or demand in
similar or other circumstances. This Sale Agreement and the documents
referred to herein embody the entire agreement of the Seller and the
Purchaser with respect to the Sold Program Contracts and supersede all
prior agreements and understandings relating to the subject hereof.
SECTION 17. SEVERABILITY. In case any provision in or obligation under
this Sale Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provision or obligations, or of such provision or obligation, shall not in
any way be affected or impaired thereby in any other jurisdiction.
SECTION 18. MISCELLANEOUS.
Purchaser shall provide Seller data relating to the
performance of all Sold Program Contracts. Such data will be of the type
and level of detail considered necessary by the Seller, in its sole
discretion, to allow Seller to perform static pool and other analyses on
such Sold Program Contracts. It is understood that this condition becomes
effective once the volume of Sold Program Contracts reaches a level where
such analyses would be considered by the Seller to be meaningful. It is
also understood that, once effective, this provision shall apply to all
Sold Program Contracts since the date of this Sale Agreement and for the
life of all such Sold Program Contracts.
SECTION 19. GOVERNING LAW. THIS SALE AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT
OF LAWS PROVISIONS) OF THE STATE OF COLORADO.
17
SECTION 20. EXECUTION IN COUNTERPARTS. This Sale Agreement may be
executed by the parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original and both of which when taken
together shall constitute one and the same agreement.
IN WITNESS WHREOF, the parties have cause this Sale Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CONSUMER PORTFOLIO SERVICES, INC.
By _________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Title: President and CEO
Address: Consumer Portfolio Services, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. , President/CEO
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇, Senior Vice President Originations
Telephone number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile number: (▇▇▇) ▇▇▇-▇▇▇▇
FAIRLANE CREDIT LLC
By _________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇, Vice President,
Marketing and Strategic Planning
Telephone number: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile number: ▇▇▇-▇▇▇-▇▇▇▇